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HomeMy WebLinkAbout1429 WalterIn Re: Robert Walter, Respondent File Docket: X -ref: Date Decided: Date Mailed: Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella 05 -059 Order No. 1429 3/27/07 3/28/07 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegation. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was not filed and a hearing was waived. A Stipulation of Findings and a Consent Agreement were subsequently submitted by the parties to the Commission for consideration. The Stipulation of Findings is quoted as the Findings in this Order. The Consent Agreement has been approved. This adjudication of the State Ethics Commission is issued under the Ethics Act and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with the Ethics Act. Any person who violates such confidentiality commits a misdemeanor and, upon conviction, may be subject to a fine of not more than $1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Walter, 05 -059 Page 2 I. ALLEGATION: That Robert Walter, a public official /public employee, in his capacity as a Treasurer /Tax Collector for Upper Moreland Township, Montgomery County, violated Section 1103(a) provisions of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. §1103(a) when he used the authority of his office for private pecuniary gain by collecting tax certification fees without having said fees approved by the township board of commissioners. II. FINDINGS: 1. Robert Walter has served as the Tax Collector /Treasurer for Upper Moreland Township, Montgomery County since approximately 1981. 2. Walter's general job duties as tax collector /treasurer include but may not be limited to the following: a. Collection of real estate taxes due from Upper Moreland Township property owners. b. Collection of revenues generated as the result of parking tickets, zoning fees, and other fines. c. Fees made payable to Upper Moreland Township through the tax office such as a refuge fee. d. Collection of real estate tax certification fees. 3. Walter for his services as tax collector /treasurer receives compensation from Upper Moreland Township, the Upper Moreland Township School District, and Montgomery County. a. Walter's compensation is set by each of these taxing bodies. 4. Walter's duties as tax collector include the issuance of real estate tax certifications. 5. Real estate tax certifications are required by title /abstract companies as part of real estate closing documents. a. Closing companies pay the various fees charged by tax collectors for tax certifications as a cost of doing business. b. Real estate tax certification fees are passed on to the client by these companies normally without any mark -up. 6. A real estate tax certification gets initiated as a result of a request submitted to the tax collector by an individual, title /abstract company or law firm on behalf of a client. a. The tax collector would research their collection records and provide the requesting party with a certification indicating whether or not the real estate taxes were paid on the subject property. b. The township's administration plays no role in this process. 7 Tax Collectors generally charge a fee for this service. a. The fee is set by ordinance or resolution of the municipality. Walter, 05 -059 Page 3 b. Fees for certifications vary by municipality. 8. Walter has collected a fee ranging from $20 to $25 from title, abstract, and /or closing agents for a [sic] issuing the certification that taxes on the subject property for the past three years have been paid. 9. The practice of a tax certification fee being charged by the Upper Moreland Township Tax Collector /Treasurer predates Walter's tenure as tax collector. a. At the time Walter took office the fee being charged was $2.00. b. Over the years the fee has been increased by Walter from $2.00 per certification to the current rate of $25.00 per certification. c. From 2001 to January 2003 Walter charged $20 per tax certification. d. Since January 2003 Walter has charged $25.00 per certification. e. Walter asserts that he only charges the fee to title, abstract, and /or closing companies but does not charge individual township residents for the service. 10. Upper Moreland Township records include no authorization for the treasurer /tax collector to charge or accept a real estate tax certification fee prior to December 5, 2005. 11. Upper Moreland Township does not maintain records of the number of real estate tax certifications issued by its tax collector /treasurer. a. No township records are maintained since all of the certification fees paid are retained by the tax collector /treasurer as compensation for preparing tax certifications. 12. In or about October 2005 the issue of Walter receiving tax certification fees without ordinance or resolution of the township was raised. a. An individual who was running against Walter for the treasurer's position made the issue public. b. The issue was later brought up by the township board of commissioners. 13. Upper Moreland Township officials including the treasurer /tax collector, manager, and commissioners were unaware of the need for enabling legislation for the treasurer /tax collector to charge and accept a tax certification fee prior to it being questioned in October 2005. 14. On October 26, 2005, Mary Martin submitted a letter David Dodies, Upper Moreland Township Manager complaining about Robert Walter's receipt of real estate tax certification fees. a. Mary Martin's husband, James Martin Jr. was running for the position of Upper Moreland Township Treasurer against Robert Walter in the November 2005 municipal election. 15. Mary Martin's letter to Dodies estimated that Walter received approximately $10,000 per year as the result of charging and receiving tax certification fees. Martin requested the following steps be taken: Walter, 05 -059 Page 4 a. Send a letter to Mr. Walter informing him that it is illegal for him to continue charging and retaining tax certification fees for personal use. b. Advise that he is not authorized to retain the fees, which should instead be turned over to Upper Moreland Township. c. Notify the Bonding Company IMMEDIATELY that there is a potential claim. Failure to do this could put the township at risk for the exposed amount, as the bonding company requires notification as soon as any financial irregularity is discovered. d. Mr. Walter should be sent a letter demanding total repayment, with interest, of the fees belonging to the township. The demand letter should also require a precise accounting of the fees charged and collected by Mr. Walter over his tenure that is property of the township. e. Obtain the Solicitor's legal opinion as to whether the State Ethics Commission's Regulations were violated. There appears to be a State Ethics Commission violation because of an opinion issued in Case #03 -047 involving the South Whitehall Township's Treasurer. It was found that she was collecting, also for personal use, unauthorized tax certification fees and was deemed to be in violation of 1103(a) of the act. Note that Section 1109 states that violations of section 1103(a) are considered felonies and treble damages may be assessed to the extent of any personal gain. 16. On October 25, 2005, Mary Martin wrote a letter to Richard Booth, Chairman, Upper Moreland Township Board of Commissioners complaining about Treasurer Walter's receipt of real estate tax certifications without enabling legislation. a. Martin requested that Treasurer Walters be required to reimburse the township all certification fees [he] collected. b. Martin's letter dated October 25, 2005, was forwarded by Chairman Booth and Manager Dodies to Walter for review. 17. Walter's receipt of real estate tax certification fees was discussed by the township Board of Commissioners during their November 21, 2005, Budget and Finance Committee meeting. a. At that meeting, Commissioner Michael Crilly informed the board that the Treasurer (Walter) was collecting a fee that was not authorized by the board and that the board needed to adopt an ordinance to correct the problem. b. Commissioner Joseph Nagy suggested that $25.00 be inserted into the ordinance. c. Commissioner Crilly indicated that this item would be moved for action at their regular meeting. 18. The Upper Moreland Township Board of Commissioners took action at the December 5, 2005, meeting to enact ordinance number 1517 establishing and authorizing the treasurer to charge and retain fees for the preparation of tax certifications in the amount of $25.00 per certification. 19. Minutes from the Upper Moreland Township Board of Commissioners December 5, 2005, meeting confirmed extensive discussion of Ordinance No. 1517 relative to the Walter, 05 -059 Page 5 setting of tax certification fees. a. After extensive discussion the board enacted an amended ordinance #1517 by a 4 -2 margin. b. As Treasurer, Walter had no role in the approval process. 20. Language in ordinance #1517 authorized tax certification fees up to $25.00 per certification along with a detailed accounting of fees collected. Ordinance #1517 reads as follows: An ordinance of the township of Upper Moreland authorizing the treasurer as real estate tax collector to charge and retain fees for the preparation of tax certifications. The board of Commissioners of Upper Moreland Township enacts and ordains as follows: Section 1. The Treasurer in his capacity as real estate Tax Collector is hereby authorized to set a fee for the preparation of tax certifications. Such fee not to exceed $25.00. The Treasurer is also authorized to retain said fees as reimbursement for the cost of preparing the tax certifications. Section 2. Such certifications shall be recorded in a log indicating the date thereof and the amount received therefore. Enacted and ordained this 5 th day of December, 2005. 21. On December 14, 2005, Walter submitted correspondence to Upper Moreland Township confirming his intention to comply with terms of ordinance number 1517 effective January 1, 2006. 22. Prior to January 1, 2006, Walter asserts he did not retain records of the number of real estate tax certifications issued. a. Between 2001 and December 2005 Walter charged and accepted fees ranging from $20.00 and $25.00 per tax certification issued. b. Walter did not turn any of the fees collected over to the township. 23. Subsequent to the State Ethics Commission investigation into Walter's receipt of tax certification fees, he elected to file amended federal income tax returns detailing additional income received in the form of the tax certification fees. a. Walter had not previously disclosed the receipt of the tax certification fees as income on tax returns filed for 2001 to 2005. 24. On or about May 25, 2006, Walter filed amended Federal Income Tax forms for calendar years 2001 through 2005. a. Amended tax returns were prepared for Walter by Michael W. Schoedler, CPA, 2370 York Road, Jamison, PA 18929. b. The reason for the amended forms was to disclose and pay federal income tax on income received from the tax certification fees charged. c. Total receipts were based on a rate of $25.00 per certification. Walter, 05 -059 Page 6 25. Walter's amended Federal Income Tax filings report the following annual income claimed from tax certifications during calendar years 2001 through 2004. a. Calendar Year Total Reported 2001 $8,650 2002 $10,350 2003 $9,550 2004 $9,600 2005 $8,050 $46,200 26. Based on a rate of $25.00 per certification, Walter disclosed issuing at least 1848 real estate tax certifications between 2001 and 2005. Totals based on the following calculations: Total fees reported in the previous finding divided by 25. a. Calendar Year a. b. 2001 2002 2003 2004 2005 a. Calendar Year 2001 2002 2003 2004 2005 Total Reported $8,650 $10,350 $9,550 $9,600 $8,050 $46,200 Total _ 25 346 414 382 384 322 1,848 27. Walter accepted tax certification payments by way of cash, check or money order. a. Payments made by check were deposited by Walter into PNC bank accounts under his control. b. Checks were deposited by Walter into PNC bank accounts [with] last four digits of 4465 and 4584. 28. Deposits into Walter's PNC accounts listed above confirm his receipt of tax certification fees from private individuals, real estate, title, closing and other abstract companies. Payments were made in multiples of $20.00 and $25.00. Payments frequently were made by companies for multiple certifications ordered at the same time. 29. A review of tax certification fees deposited by Walter into his PNC accounts identify the following amounts deposited by year: Known Totals $5,182.00* $4,570.00 $16,260.00 $8,645.00 $9,192.00 $44,479.00 b. Individual tax certification payments detailed above are included as attachment #1. c. The totals above do not take into consideration any tax certification fees received by Walter in the form of cash, check or money orders which were Walter, 05 -059 Page 7 not deposited into his PNC accounts identified in this report. *[sic] [cf., Fact Finding 30 a.] 30. Walter's amended federal income tax returns for 2001 through 2005 disclose the following income received from tax certifications compared to known deposits. a. Year Income Claimed Known Totals 2001 $8,650.00 $5,812.00 2002 $10,350.00 $4,570.00 2003 $9,550.00 $16,260.00 2004 $9,600.00 $8,645.00 2005 $8,050.00 $9,192.00 $46,200.00 $44,479.00 b. Walter's amended tax returns for 2001 through 2005 disclose the receipt of $1,721.00 more in tax certification fees than was known to have been deposited in the form of checks into his PNC accounts. 31. Walter's amended tax returns confirm his receipt of tax certification fees totaling $46,200.00 without enabling legislation between 2001 and 2005. a. $44,479.00 of the $46,200 was deposited by Walter into PNC bank accounts under his control during this same time frame. b. No tax certification fees received by Walter were forwarded to Upper Moreland Township. 32. Walter's specific uses of the authority of his office as Treasurer/Tax Collector for his private pecuniary benefit include the following: a. Walter made the decision to charge and receive a fee for real estate tax certifications between 2001 -2005 without enabling legislation. b. Walter made the decision of the amount of the fee including increasing the amount charged per certification from $20.00 to $25.00 in December 2002 without enabling legislation. 33. Walter's use of the authority of his public position resulted in a private pecuniary gain of $46,200.00 as a result of tax certification fees received between 2001 and 2005 without enabling legislation. III. DISCUSSION: As Tax Collector /Treasurer for Upper Moreland Township ( "Township ") since approximately 1981, Respondent Robert Walter, hereinafter also referred to as "Respondent," "Respondent Walter," or "Walter" is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The allegation is that Walter violated Section 1103(a) of the Ethics Act when he used the authority of his aforesaid public office for private pecuniary gain by collecting tax certification fees without having said fees approved by the Township Board of Commissioners. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest: Walter, 05 -059 Page 8 65 Pa.C.S. § 1103(a). § 1103. Restricted Activities (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are reproduced above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Respondent Walter has served as the Township's Tax Collector /Treasurer since approximately 1981. Walter's duties as Tax Collector include the issuance of real estate tax certifications. Prior to December 2005, the Township's records did not include any authorization for the Township Tax Collector /Treasurer to charge or accept a real estate tax certification fee. However, tax certification fees have been charged by the Township Tax Collector /Treasurer since before Walter took office. When Walter took office, the Township Tax Collector /Treasurer was charging $2.00 per certification. Walter increased the tax certification fee from $2.00 per certification to $20 per certification from 2001 to January 2003, and then to the current rate of $25.00 per certification from January 2003 forward. Walter asserts that prior to January 1, 2006, he did not retain records of the number of real estate tax certifications issued. Walter did not turn over to the Township any of the tax certification fees that he collected. In or about October 2005, an issue was raised regarding the fact that Walter was receiving tax certification fees without authority to do so. Township officials including Walter, the Township Manager, and Township Commissioners had previously been unaware that enabling legislation was required in order for the tax collector /treasurer to Walter, 05 -059 Page 9 charge and accept a tax certification fee. At its December 5, 2005, meeting, the Township Board of Commissioners enacted ordinance number 1517 (see, Fact Findings 18 -20), which authorized the treasurer as real estate tax collector to charge and retain tax certification fees in an amount not to exceed $25.00 per certification, and which required that a detailed accounting of such certification fees be maintained. Following the Investigative Division's investigation into Walter's receipt of tax certification fees, Walter filed amended Federal Income Tax returns to include tax certification fees totaling $46,200 that he received between 2001 and 2005 when there was no enabling legislation. Fact Findings 23 -26, 30 -31. The parties have stipulated that Walter's specific uses of the authority of his office as Tax Collector /Treasurer with regard to the collection of tax certification fees included making the decision to charge and receive a fee for real estate tax certifications between 2001 -2005, when there was no enabling legislation authorizing the collection of such fees, and deciding the amount of the fee, including increasing the amount charged per certification. The parties have stipulated that Walter's use of the authority of his public position resulted in a private pecuniary gain of $46,200, consisting of tax certification fees received between 2001 and 2005 when there was no enabling legislation. Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegation as follows: 3. The Investigative Division will recommend the following in relation to the above allegations: a. That a violation of Section 1103(a) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(a) occurred in relation to Walter collecting tax certification fees without having said fees approved by the township board of commissioners. 4. Walter agrees to make payments to the Commonwealth of Pennsylvania in the amount of $1,000 per month, for twenty (20) months, for a total restitution amount of $20,000. Said payments are to be forwarded to the Pennsylvania State Ethics Commission for processing with the first payment due within thirty (30) days of the issuance of the final adjudication in this matter. 5. The Investigative Division will recommend that the State Ethics Commission take no further action in this matter; and make no specific recommendations to any law enforcement or other authority to take action in this matter. Such, however, does not prohibit the Commission from initiating appropriate enforcement actions in the event of Respondent's failure to comply with this agreement or the Commission's order or cooperating with any other authority who may so choose to review this matter further. 6. Walter's acceptance and execution of this Consent Agreement and Stipulation of Findings is solely for the purpose of resolving the matter Walter, 05 -059 Page 10 currently pending before the Pennsylvania State Ethics Commission and is in no way related to any other proceedings or matters that may be currently ongoing or which may be initiated in the future. Consent Agreement, at 1 -2. In considering the Consent Agreement, each element of the recommended violation of Section 1103(a) of the Ethics Act has been established. Walter used the authority of his public office as Tax Collector /Treasurer when he charged and received unauthorized tax certification fees between 2001 -2005 and when he increased the amount of such fees in 2001 and in 2003. But for being the Township Tax Collector /Treasurer, Walter would not have been in a position to provide tax certifications or to impose a fee for providing them. Walter's uses of the authority of his public office as Tax Collector /Treasurer resulted in a private pecuniary gain to Walter in the amount of $46,200, consisting of tax certification fees received between 2001 and 2005 when there was no enabling legislation. Therefore, we hold that a violation of Section 1103(a) of the Ethics Act occurred in relation to Walter collecting tax certification fees without having said fees approved by the Township Board of Commissioners. Cf., Trexler, Order 1353; Grogan, Order 972; Merriman, Order 933; Thee, Order 919; Allen, Order 612 -R. Section 1107(13) of the Ethics Act empowers this Commission to impose restitution in instances where a public official /public employee has obtained a financial gain in violation of the Ethics Act. Restitution is warranted in this case. Walter has agreed to pay restitution to the Commonwealth of Pennsylvania through payments in the amount of $1,000 per month for twenty (20) months, for a total restitution amount of $20,000. Per the Consent Agreement, said payments are to be made payable to the Commonwealth of Pennsylvania and are to be forwarded to this Commission for processing, with the first payment being due within thirty (30) days of the issuance of the final adjudication in this matter. We determine that the Consent Agreement submitted by the parties sets forth the proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, per the Consent Agreement of the parties, Walter is directed to pay restitution to the Commonwealth of Pennsylvania through payments in the amount of $1,000 per month for twenty (20) months, for a total restitution amount of $20,000, with said payments to be made payable to the Commonwealth of Pennsylvania and forwarded to this Commission for processing, and with the first payment due within thirty (30) days of the issuance of this Order. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV. CONCLUSIONS OF LAW: 1. As Tax Collector /Treasurer for Upper Moreland Township ( "Township ") since approximately 1981, Respondent Robert Walter ( "Walter") is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. 2. Walter violated Section 1103(a) of the Ethics Act when he collected tax certification fees without having said fees approved by the Township Board of Commissioners. In Re: Robert Walter ORDER NO. 1429 File Docket: 05 -059 Date Decided: 3/27/07 Date Mailed: 3/28/07 1 Respondent Robert Walter ( "Walter "), a public official in his capacity as Tax Collector /Treasurer for Upper Moreland Township ( "Township ") since approximately 1981, violated Section 1103(a) of the Ethics Act when he collected tax certification fees without having said fees approved by the Township Board of Commissioners. 2. Per the Consent Agreement of the parties, Walter is directed to pay restitution to the Commonwealth of Pennsylvania through payments in the amount of $1,000 per month for twenty (20) months, for a total restitution amount of $20,000, with said payments to be made payable to the Commonwealth of Pennsylvania and forwarded to this Commission for processing, and with the first payment due within thirty (30) days of the issuance of this Order. a. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. b. Non - compliance will result in the institution of an order enforcement action. BY THE COMMISSION, Louis W. Fryman, Chair