HomeMy WebLinkAbout1441 KistlerIn Re: Kenneth Kistler,
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
Nicholas A. Colafella
04 -037
Order No. 1441
6/11/07
6/29/07
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 "), Act 93 of 1998, Chapter 11, 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 allegations. Upon completion of its
investigation, the Investigative Division issued and served upon Respondent a Findings
Report identified as an "Investigative Complaint." An Answer was filed and a hearing was
held. The record is complete.
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.
Kistler, 04 -037
Page 2
I. ALLEGATIONS:
That Kenneth Kistler, a (public official /public employee) in his capacity as President
of the Carbon - Lehigh Intermediate Unit Board of Directors violated the following provisions
of the State Ethics Act (Act 93 of 1998) when he used the authority of his position for the
private pecuniary gain of himself and /or businesses with which he is associated, Kistler
Pole Buildings and Kistler Building Products; when he participated in discussions and
actions of the board of directors to award contracts to Dale Roth, and /or businesses owned
by the same, without an open and public process; and when his company subsequently
entered into subcontracts with Roth to construct those buildings.
§ 1103. Restricted activities
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
65 Pa.C.S. § 1103(a).
§ 1103. Restricted activities
(f) Contract. —No public official or public employee or
his spouse or child or any business in which the person or his
spouse or child is associated shall enter into any contract
valued at $500 or more with the governmental body with which
the public official or public employee is associated or any
subcontract valued at $500 or more with any person who has
been awarded a contract with the governmental body with
which the public official or public employee is associated,
unless the contract has been awarded through an open and
public process, including prior public notice and subsequent
public disclosure of all proposals considered and contracts
awarded. In such a case, the public official or public employee
shall not have any supervisory or overall responsibility for the
implementation or administration of the contract. Any contract
or subcontract made in violation of this subsection shall be
voidable by a court of competent jurisdiction if the suit is
commenced within 90 days of the making of the contract or
subcontract.
65 Pa.C.S. § 1103(f).
§ 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.
Kistler, 04 -037
Page 3
65 Pa. C. S. § 1102.
II. FINDINGS:
A. Pleadings
1. On August 4, 2004, a letter was forwarded to Kenneth Kistler, by the Investigative
Division of the State Ethics Commission informing him that a complaint against him
was received by the Investigative Division and that a full investigation was being
commenced.
a. The domestic return receipt bore the signature of Shannon Kistler, with a
delivery date of August 5, 2004.
2. Kistler has served as a member of the Carbon - Lehigh Intermediate Unit Board of
Directors since [at least] January 1999.
3. The Carbon - Lehigh Intermediate Unit Board of Directors is comprised of
representatives from fourteen (14) School Districts.
a. School Districts that comprise the Carbon - Lehigh Intermediate Unit
(hereinafter "CLIU ") include Allentown, Catasauqua Area, East Penn, Jim
Thorpe Area, Lehighton Area, Northern Lehigh, Northwestern Lehigh,
Palmerton Area, Panther Valley, Salisbury Township, Southern Lehigh,
Weatherly Area, Whitehall - Coplay, and Parkland.
b. Each district gets one representative on the CLIU Board.
4. Kistler was the Northwestern Lehigh School District representative on the CLIU
Board.
a.
Kistler has served as a member of the Northwestern Lehigh Board of School
Directors since [at least] January 1994.
5. Professionally Kistler has an ownership interest in Kistler Building Supply and
Kistler Pole Buildings.
6. Copies of Statements of Financial Interests forms filed by Kistler with the
Northwestern Lehigh School District were forwarded to the Carbon Lehigh
Intermediate Unit 21 for record retention purposes.
7 Article[s] of Incorporation on file with the Pennsylvania Department of State,
Corporation Bureau include corporate filings for Kistler Building Supply and Kistler
Pole Building Company.
a. Kenneth Kistler is President of Kistler Building Supply Inc.
b. Corporation officers of Kistler Pole Building Company are Kenneth Kistler,
President; Roland Keen, Vice President; and Beverly Kistler, Secretary.
8. The CLIU maintained a building and ground committee (hereinafter, "building
committee ") consisting of select members of the CLIU board of directors.
9. The building committee was charged with pursuing the board of directors' interest in
various construction projects ....
a. Non - committee members were permitted to attend committee meetings.
Kistler, 04 -037
Page 4
10. Kistler has served as a member of the building committee since [at least] January
1998.
11. Kistler had been the chairman of the building committee from [at least] January
1998 until March 18, 2002, when he resigned from his position as chairman.
12. Keegan was the staff member who was most active with building committee
projects.
THE FOLLOWING FINDINGS CONCERN THE TRANSPORTATION FACILITY.
13. In late 1999, the CLIU began exploring the possibility of constructing a garage
(hereinafter "Transportation facility ") in order to house the buses it utilized to serve
Carbon and Lehigh Counties.
a. The board of directors no longer deemed the facility previously used to store
its buses adequate to meet the growing needs of the intermediate unit.
14. Between March 2000 and November 2001 Kistler advised the CLIU board of
developments and /or participated in actions of the board regarding the
transportation facility:
March 20, 2000:
June 22, 2000:
July 17, 2000:
2000: Building committee met prior to board meeting to discuss sites
for the transportation facility.
Motion by Bruchak, second by Foster to request quotes for the
cost of a feasibility study for development of a property to build
the transportation center. Motion approved unanimously with
Kistler voting.
February 15, 2001: Kistler reports receipt of the realtor's appraisal, feasibility and
zoning studies are underway with reports due by 2/19/2001.
Kistler reports the agreement of sale on the White property
rescinded on 5/31/01. The committee's first choice was back
on the market.
November 20,
June 18, 2001:
Kistler reports Keegen and Tourtellott are researching nine
possible sites to house a new transportation facility.
Kistler advises building committee will look at land after the
board meeting and report back to board with a
recommendation on the purchase of land to house the
transportation facility.
Kistler report[s] the committee narrowed the search for the
transportation facility to two sites.
July 16, 2001: Kistler provided update of transportation facility.
Motion unanimously approved to authorize Barry, (sett &
Associates to perform Land Feasibility Study, Phase I Study,
and Well- Septic Testing on Lesher property in an amount not
to exceed $10,000. Kistler recorded as voting.
October 15, 2001: CLIU Assistant Executive Director Keegan reports that after
approvals facility can be started in about six months.
Kistler, 04 -037
Page 5
November 19, 2001: Kistler turned meeting over to Keegen. Keegen reported
meeting with Roth Marz, architectural firm, many options
pursued. Roth Marz to get back to Keegen re: square footage
costs and lease option costs.
15. ... [In /about June] 2000, ... [site visits were conducted as to] the top four candidates.
a. Kistler was in attendance during these visits.
16. Minutes from the CLIU's December 18, 2000, meeting included the following
discussion and official action taken by the board to secure property for the
transportation facility:
"Building and Grounds /Special Education Transportation Committee
Report
Mr. Kenneth Kistler, Chairperson, discussed the CLIU Transportation Facility
and property on which to house such a facility. After discussion, the
following motion was brought to the floor:
- Motion: The Carbon Lehigh Intermediate Unit Board of
Directors grants the Administration permission to bid on
a property to house the CLIU transportation facility."
a. The motion carried with Kistler voting in its favor.
17. Respondent denies paragraph 30 of the Investigative Complaint as stated but
admits that Respondent revealed during the June 18, 2001, Board meeting that the
larger " Lesher" property was available and that the purchase price had dropped
from $600,000 to $450,000. (Investigative Complaint, at paragraph 30; Answer to
Investigative Complaint, at paragraph 30).
18. ... [O]n June 6, 2001, Realtor Briedinger forwarded a letter of intent to purchase the
Lesher property.
a. The letter was sent to Sharon Gage, a realtor working on behalf of the
Leshers.
b. The CLIU's offer was accepted by the Lesher's ... [in June] 2001.
19. Dale Roth has an ownership interest in Roth Marz Partnership, P.C. (hereinafter,
"RMP "), a firm that addresses architectural needs, as well as construction project
planning and management.
a. RMP is principally located in Erie, Pennsylvania.
b. At all time relevant to the construction of the transportation facility, RMP
maintained a Lehigh Valley Office at 2970 Corporate Court, Suite 2, Orefield,
PA 18069.
20. On June 13, 2001, Assistant Executive Director Keegan submitted written questions
to attorney Charles Watters regarding restrictions on building and leases.
Keegan's specific questions were:
a. Can the IU own a property and have a building built by a contractor and
lease the building?
Kistler, 04 -037
Page 6
b. Can the IU enter into a lease /purchase agreement and be relieved of certain
construction requirements?
21. Keegan's requested advice on behalf of the CLIU's did not inquire whether Kistler
would legally be permitted to enter into a contract regarding the transportation
facility.
22. On June 19, 2001, the CLIU signed an agreement of sale regarding the Lesher
property.
a. The board, including Kistler, voted on June 18, 2001, to approve the
purchase.
23. Although not a party to ... [litigation regarding the Lesher property], the CLIU was
affected by having construction of the transportation facility delayed until the suit
was settled.
24. The choice and relative costs of leasing vs. purchasing the Lesher property during
construction were presented to the CLIU board during its public meeting of March
18, 2002, during executive session.
a. Kistler was present during this public meeting of the Board of directors.
25. Immediately following an executive session of the March 18, 2002, public meeting
of the CLIU board of directors Kistler resigned as Chairman of the Building and
Grounds Committee.
26. The CLIU accepted Kistler's resignation and also took action to approve Roth Marz
as its agent to pursue the purchase provision of the agreement:
a. Building & Grounds /Special Education Transportation Committee
Report
Per having met with the Building & Grounds /Special Education
Transportation Committee prior to our Board meeting, the following
motions were made:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
approve the resignation of Kenneth Kistler as Chairperson of the
Building and rounds [sic] /Special Education Transportation
Committee and approve James Pollard as Chairperson of said
committee. Moved: Kenneth K. Kistler; Seconded: John Wieand;
Vote: Yes — 13; No — 0; Abstentions — 0; Absent — 1.
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby elects to exercise its option provision under Paragraph 1 in
the existing Agreement of Sale for the property in Lehigh Township by
signing its purchase rights to a third party. Moved — John Wieand;
Seconded: Linda Pacifico; Vote: Roll Call: Yes — Pacifico, Richwine,
McGuire, Dorshimer, Pollard, Vavra, Foster, Furst, Auteri, Palmer,
Wieand, and Hoffman; No — 0; Abstentions — Kistler; Absent — 1.
Motion carried.
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby names Roth Marz as its agent to pursue the purchase
provision in the existing Agreement of Sale for the property located in
Lehigh Township. Moved: Bryan Dorshimer; Seconded: James
Kistler, 04 -037
Page 7
Pollard; Vote: Roll Call: Yes — Richwine, McGuire, Dorshimer,
Pollard, Vavra, Foster, Furst, Auteri, Palmer, Wieand, Hoffman, and
Pacifico; No — 0; Abstentions — Kistler; Absent — 1. Motion carried.
27. On February 6, 2002, Kistler, prior to his abstention on CLIU actions on the
transportation facility, had faxed a bid[ /preliminary cost estimate] to Gary Caldwell,
an employee of Roth Marz Partnership regarding project construction costs.
28. Also during the Board's March 18, 2002, meeting, the Directors approved a motion
to exercise its option under the Agreement of Sale for the property located in Lehigh
Township by [as]signing its purchase rights to a third party.
a. Kistler abstained from voting on this motion.
29. On ... [March 26, 2002] Roth met with Kistler.
30. On April 26, 2002, Kistler sent a fax to Gary Caldwell that contained an adjusted
proposal to construct the CLIU Transportation facility.
a. This offer indicated that the total cost of the project was $553,805.00.
31. On May 28, 2002, Dale Roth sent an email to Kistler informing him what colors Roth
desired for the roof, gutters, downspouts, and sidewall panels of the transportation
facility.
32. On July 12, 2002, Kistler and Roth sign a contract regarding the CLIU
Transportation Facility.
a. The contract states that Kistler will perform construction work regarding the
CLIU Transportation facility for $550,492.00.
33. On July 12, 2002, Kistler and Roth signed a purchase agreement.
a. The agreement is for a 70 foot X 256 foot pole construction building.
b. Under the agreement construction is [estimated] to begin on the week of
August 19, 2002.
34. On July 15, 2002, the CLIU Board of Directors voted and approved of a four -part
motion concerning the Building and Grounds /Special Education Transportation
facility. The Board approved the following motion:
a. MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby:
(1)Authorized its Executive Director to execute the Assignment of
Real Estate Sales Agreement as filed with the Official Minutes;
(2) Approves the Lease Agreement with Cornerstone, R.E., LLC, and
authorized CLIU' Board Resident [sic] to execute the Lease
Agreement as filed with the Official Minutes;
(3) Approves the Option Agreement with Cornerstone, R.E., LLC, and
authorized CLIU'S Board President to execute the Option Agreement
as filed with the Official Minutes; and
(4) Approves the Subordination, Non - Disturbance, and Attornment
Kistler, 04 -037
Page 8
Agreement with Allfirst Bank, and authorized CLIU's Board President
to execute such Agreement as filed with the Official Minutes.
b. Kistler abstained from the vote on this motion ....
35. On August 1, 2002 CLIU entered into a lease with Cornerstone R.E., LLC regarding
the transportation facility.
36. Contemporaneous with the lease, on August 1, 2002, CLIU and Cornerstone
entered into an option agreement regarding the transportation facility.
37. On August 15, 2002, Ray Reppert, of Roth Martz Partnership, sent an email to
Kistler pertaining to the CLIU Bus Transportation facility.
a. The email contained an attachment containing progress drawings for the
CLIU us [sic] Transportation facility.
b. The email stated that the attached drawings were to enable Kistler to
coordinate them with Kistler's pole building drawings, and update
accordingly.
38. Kistler filed two Conflict of Interest Abstention Memorandums, each dated August
19 2002, that stated the reasons he abstained from votes on March 18 and July
15 2002.
a. He listed the reason for his March 18, 2002, abstention as: May be involved
with construction."
b. He listed the reason for his July 15, 2002, abstention as: May be involved
with construction."
c. Kistler already had a signed contract, dated July 12, 2002, when he filed
these abstention memoranda.
d. Kistler ... had faxed a bid[ /estimate] to Roth on February 6, 2002, five months
before the [aforesaid] disclosures.
39. The CLIU began making monthly lease payments to Cornerstone pursuant to the
lease of August 1, 2002, on April 9, 2003. Between April 9, 2003, and June 21,
2004, Kistler participated in the approval of these payments [at /about the meeting
dates listed below] as follows:
a.
Amount
($)
21,459.00
21,459.00
21,459.00
21,459.00
21,459.00
21,459.00
21,459.00
21,459.00
3,382.76
34,183.55
Meeting Official
Date Action Payment
04/17/03 Vote Rent
05/19/03 Vote Rent
06/16/03 Vote Rent
07/21/03 Vote Rent
07/21/03 Vote Rent
08/18/03 Absent Rent
09/15/03 Absent Rent
10/20/03 Vote Rent
(Real estate tax
10/20/03 Vote pymt)
01/15/04 Vote (Includes $12,724.55
Kistler, 04 -037
Page 9
Total
b. CLIU bill lists are approved in their entirety by roll call vote.
c. Bill lists are approved as part of the same motion ratifying all monthly fiscal
matters.
40. The Lesher property contained a golf shack that the CLIU wanted renovated for use
in conjunction with the transportation facility.
41. On March 15, 2004, the CLIU board appointed a financing team to present and
recommend an appropriate financing plan for purchasing the transportation facility
from Cornerstone.
a. Kistler voted in favor of the motion.
tax pymt)
(Includes $380.86 tax
21, 839.86 01/15/04 Vote pymt)
(Includes $4,605.89
26,064.89 02/19/04 Vote tax pymt)
(Includes $988.25 tax
22,667.25 03/15/04 Vote pymt)
21,459.00 04/19/04 Vote Rent
21,459.00 05/17/04 Vote Rent
21,459.00 06/21/04 Absent Rent
344,187.3
1
42. Having acquired the necessary funding, the CLIU entered in to a special warranty
deed with Cornerstone on July 29, 2004, for the purpose of purchasing the
transportation facility.
a. Consideration was listed as $2,348,882.61.
b. The property contained 40.588 acres and is identified as Northampton
County parcel Map J2, block 7, lot 5.
43. On August 11, 2004, a mortgage was entered into between the CLIU and the Bank
of New York N.A.
a. The LLIU [sic] borrowed $2,510,000.
b. This mortgage was on property identified as Northampton County parcel
Map J2, block 7, lot 5.
c. Kenneth K. Kistler signed the mortgage in his official capacity as President
to the Carbon Lehigh IU -21 Board of Directors.
44. The CLIU did not solicit bids for the construction of the transportation facility.
a. A no bid contract was awarded to Dale Roth of Cornerstone, L.L.C.
(1) In response to an Investigative Complaint averment that Dale
Roth /Cornerstone, L.L.C. "ultimately subcontracted the [transportation
facility] project to Kistler," Respondent pleads as follows:
"Respondent further specifically denies that all work was
Kistler, 04 -037
Page 10
subcontracted by Cornerstone, R.E. LLC to Respondent. Rather,
Respondent merely provided certain construction services limited to
erecting the shell of the building." (Investigative Complaint, at
paragraph 75 a; Answer to Investigative Complaint, at paragraph 75
a).
45. Kistler submitted invoices to Cornerstone for the construction of the transportation
facility at various stages of the projects completion.
a. The dates and amounts of the invoices were as follows:
Date Amount
07/19/02 $25,000.00
10/01/02 $42,571.00
11/01/02 $82,897.00
12/02/02 $190,839.00
01/02/03 $136,345.00
02/04/03 $61,217.00
Total: 538,869.00
46. Kistler received a total commission of $26,858.45 for constructing the transportation
facility.
THE FOLLOWING FINDINGS CONCERN THE LEHIGH
LEARNING AND ADJUSTMENT CENTER.
47. Contained within the Carbon - Lehigh Intermediate Unit is the Lehigh Learning and
Adjustment Center (LLAC).
a. The LLAC is devoted to educating ... children with ... [various] needs.
48. On August 20, 1999, the CLIU had entered into a lease with Steven Hirsh
(hereinafter "Hirsh ") for the purpose of housing the LLAC in a property located at
7580 Kernsville Road, Orefield, Pennsylvania.
a. The lease was to commence on October 1, 1999.
b. The lease was for a term of 10 years.
49. The CLIU experienced mold problems in the building leased from Hirsh.
a. [Following the first outbreak of mold,] Hirsh attempted to rectify the
problems.
b. This occurred in or about November 2001.
50. In or about March 2002 the mold problem resurfaced.
a. On March 18, 2002, the CLIU board authorized J. Miller and Son to perform
a complete environmental evaluation of the property at a cost not to exceed
$6,500.00.
b. Kistler voted to authorize the study.
51. In or about May 15, 2002, Miller ... provided a report of findings and
recommendations.
Kistler, 04 -037
Page 11
52. The CLIU board minutes of the June 17, 2002, meeting state in pertinent part:
"Termination of Lease
- MOTION: The Carbon Lehigh Intermediated [sic] Unit Board of
Directors hereby authorizes its solicitor to provide lease termination
notice to the Landlord for the property located at 7580 Kernsville
Road, Orefield, Pennsylvania."
a.
b.
This motion carried with Kistler voting in favor of breaching the lease.
53. On June 17, 2002, the CLIU board of directors approved a motion authorizing Dale
Roth to pursue construction of the LLAC on property adjacent to the Roth's Lehigh
Valley office located at 2970 Corporate Court, Orefield Pennsylvania.
a. The CLIU's board minutes of the June 17, 2002, meeting state in pertinent
part:
"Construction of Facility
- MOTION: The Carbon Lehigh Intermediate Unit Board of
Directors hereby authorizes Dale Roth to pursue construction
of a facility on property adjacent to the Lehigh Valley office at
2970 Corporate Court, Orefield, Pennsylvania, for the purpose
of providing leased space to the Carbon Lehigh Intermediate
Unit Lehigh Learning and Adjustment School."
This motion carried with Kistler voting in its favor.
54. Kistler had done work for Roth on ... the CLIU transportation facility.
55. Minutes of the CLIU board meeting of October 20, 2003, confirm the board's
authorization for Roth Marz to construct the LLAS:
WHEREAS, the Carbon Lehigh Intermediate Unit #21 ( "CLIU ")
previously authorized Roth Marz Partnership to initiate the
planning process for the construction of a facility for the Lehigh
Learning Adjustment School ( "LLAS ");
WHEREAS, Township approval for the construction of the
LLAS facility has been given;
WHEREAS, the Board of Directors of CLIU ( "the Board ") has
determined it to be in the best interest of CLIU to pursue the
construction of the LLAS Facility;
NOW THEREFORE BE IT RESOLVED, by the Board of
Directors of Carbon Lehigh Intermediate Unit #21, as follows:
1. The Board hereby authorizes Roth Marz Partnership to
begin the construction phase of the LLAS Facility. Any
Lease for the Facility shall be subject to the approval of
the Board.
Motion approved by an 8 to — vote with Kistler abstaining.
56. Kistler met with Roth on April 18, 2003.
Kistler, 04 -037
Page 12
57. On May 16, 2003, Ray Reppert sent a fax to Kistler containing the updated floor
plan for the CLIU classroom building.
a. Reppert advised Kistler to update his proposal and send it to Dale Roth as
soon as possible.
58. On October 8, 2003, Kistler sent a fax to Reppert containing a catalog of various
roof trusses that may be used in the construction of the CLIU classroom building.
a. Kistler obtained the truss information on September 4, 2003.
59. On November 5, 2003, Kistler sent an email to Reppert requesting specific details
regarding the classroom building's construction.
a. Roth Marz sends a letter to Kistler providing HVAC plans ....
60. Respondent admits that he met with Roth on December 4, 2003, but asserts that
the meeting did not pertain to the LLAS or transportation facility; Respondent
admits meeting with Roth on September 18, 2003, October 30, 2003, and
December 4, 2003, relative to design options for the Northern Lehigh Community
Center, and Respondent avers that these meetings, like "many other preliminary
contacts," did not result in a contract or compensable work being performed by
Respondent. (Investigative Complaint, at paragraph 90 f; Answer to Investigative
Complaint, at paragraph 90 f).
61. On May 4, 2004, Ray Reppert, an employee of Roth Marz Partnership, emailed
Kistler the floor plan for the CLIU classroom building.
62. On May 17, 2004, the CLIU board approved the Lease Agreement between Dale
and Ruth Roth for LLAC.
a. The vote was unanimous with Kistler abstaining.
63. On June 17, 2004, Kistler and Roth executed a purchase agreement and a price
quote for the CLIU classroom building.
a. The purchase agreement and price quote each were in the amount of
$641,943.00 [sic].
64. The CLIU did not solicit bids for the construction of the LLAS classroom building.
a. A no bid contract was awarded to Dale and Ruth Roth, who then entered into
a subcontract with Kistler.
(1) Respondent admits that he became a subcontractor to Roth as to the
construction of the LLAS facility, but asserts that this was pursuant to
an open and public process within the meaning of the Ethics Act
without any applicable competitive bid requirement. (Investigative
Complaint, at paragraph 95 a -b; Answer to Investigative Complaint, at
paragraphs 95 a -b).
b. Kistler's subcontract with Roth was in excess of $500.00.
65. The CLIU began making monthly lease payments to Dale and Ruth Roth pursuant
to lease ... [approved] May 17, 2004, on February 10, 2005. Kistler participated in
the approval of these payments [at /about the meeting dates listed below] as follows:
Kistler, 04 -037
Page 13
Amount ($) Meeting Official Payment
Date Action
16,900.00 02/17/05 Absent Rental
16,900.00 02/17/05 Absent Rental
16,900.00 03/21/05 Vote Rental
18,991.85 04/18/05 Vote Rental 16,900; Bottle Gas
2,091.85
16,900.00 05/16/05 Absent Rent
27,672.14 06/20/05 Vote Repairs 10,772.14; Rent
16, 900.00
26,044.93 07/18/05 Absent Taxes 9,144.93; Rent
16, 900.00
Total 140,308.92
b. These payments were approved in the same manner as lease payments
made for the transportation center.
66. Reed was the CLIU Solicitor.
67. Kistler submitted invoices to Dale and Ruth Roth for the construction of the CLIU
classroom building at various stages of the project's completion.
a. The dates and amounts of the invoices were as follows:
Date Amount
05/06/04 $10,000.00
06/23/04 $60,000.00
10/25/04 $218,360.00
11/22/04 $300,361.00
01/31/05 $45,712.00
03/31/05 $4,000.00
Total: $638,433.00
b. Roth paid each of Kistler's invoices as follows:
06/21/04
10/21/04
11/23/04
02/01/05
04/01/05
$60,000.00
218, 360.00
300, 361.00
45, 712.00
4,000.00
68. Kistler received a total commission of $31,921.65 for constructing the LLAC
classroom building.
a. Kistler's commission is 5% of $638,433.00, which total [is] the amount paid
by the Roth's.
B. Testimony
69. Diane Carfara ( "Carfara ") is an Administrative Assistant and the Secretary for the
Carbon Lehigh Intermediate Unit ( "CLIU ") Board of Directors ( "Board "), having
served in these capacities since approximately 1991.
a. Carfara's duties as secretary for the CLIU Board include taking minutes at
the Board's regular public meetings.
Kistler, 04 -037
Page 14
(1) Minutes are not taken of the CLIU Board's executive sessions.
b. Carfara's duties with the CLIU include preparing any advertisements for any
type of bidding for purchases made by the CLIU.
c. Carfara was never directed to prepare any bid advertisements for the
construction of the Transportation facility.
d. Carfara was never directed to prepare any bid advertisements for the
construction of the Lehigh Learning Adjustment School ( "LLAS ").
e. ID 23 -1 -3 consists of two abstention memoranda dated August 19, 2002, and
one abstention memorandum dated November 17, 2003, from Respondent to
Carfara. (See, Finding 97).
(1) The dates of the abstention memoranda are the dates they were filed.
(2) Abstention memoranda were available and were filed by CLIU Board
members at least as early as September 17, 2001.
70. Dr. Frank J. Ferrari ( "Ferrari ") served as the Executive Director of the CLIU from
2000 until his retirement on March 30, 2006.
a. CLIU Board committees are advisory and take no official action on behalf of
the CLIU Board.
b. Only the CLIU Board made decisions for the CLIU.
c. The CLIU Building and Grounds /Special Education Transportation
Committee ( "building committee ") was involved with the Transportation
facility project.
(1)
Respondent served as Chairperson of the building committee as of
December 20, 1999, when the building committee was formed by
combining two committees.
d. The building committee visited approximately four of fifteen sites that had
been identified by CLIU staff as potential sites for the Transportation facility.
(1) The first property that was considered for the Transportation facility
was known as the "White Christmas Tree Farm," which property was
ultimately rejected due to its topography and size.
(2) The property that was ultimately used for the Transportation facility
was known as the " Lesher" property.
e. The Lesher property was initially too expensive for the CLIU, but the price
was later reduced.
f. The CLIU Board decided to lease the property for the Transportation facility
from a third party rather than to purchase the land outright and build the
facility, based upon information that it would be more cost - effective to do so.
(1) Ferrari was informed by other Intermediate Unit Executive Directors
that lease- and - purchase arrangements were cost effective and legal.
Kistler, 04 -037
Page 15
g.
(2) The CLIU administrative staff worked on the development of cost
comparisons for purchasing versus leasing with an option to
purchase.
It was Ferrari's understanding that based upon the cost estimates, the
cost of the Transportation facility under a lease- and - purchase
arrangement was estimated to be $470,719 less than the cost under
an outright purchase approach.
(a) Ferrari testified that he believed the cost estimates under the
lease- and - purchase approach versus the purchase approach
were shared with the CLIU Board prior to the Board's decision
on March 18, 2002, to assign its purchase rights to Roth Martz
Partnership.
(3)
The CLIU Board did not put the assignment of its purchase rights or the
construction of the Transportation facility out for bid.
(1) Ferrari testified that because the CLIU decided to lease the
Transportation facility, it did not have to put the project out for
competitive bids.
h. Ferrari testified that because the Transportation facility was to be leased, the
building committee did not discuss contractors.
(1) Under a lease arrangement, the CLIU only had to deal with the
Lessor.
CLIU staff, the "cabinet," and the building committee were involved in
providing input as to what was needed for the Transportation facility.
(1) The administration advised the building committee, and the building
committee forwarded information to the entire CLIU Board for a
decision.
(a) Only the CLIU Board voted.
(2) Ferrari's assistant, Robert Keegan ( "Keegan "), helped plan the
Transportation facility and remained involved in the Transportation
facility project through construction.
(a) Keegan was involved in the day -to -day matters concerning
potential sites for the Transportation facility.
(b) Keegan reported to Ferrari and the building committee
regarding potential sites for the Transportation facility.
(3) Keegan provided monthly memoranda /reports to the building
committee chairperson to share with the CLIU Board.
(a) Keegan testified that during Respondent's tenure as building
committee chairperson, it was Respondent's practice to read
Keegan's memoranda to the CLIU Board.
(b) Sometimes during CLIU Board meetings, Keegan provided
reports regarding the Transportation facility project directly to
the CLIU Board.
Kistler, 04 -037
Page 16
j. The CLIU used architect Dale Roth of Roth Marz Partnership for the
Transportation facility due to the CLIU's satisfaction with work that had been
performed in the past for the CLIU by that firm.
k. Ferrari provided inconsistent testimony regarding Respondent's notifications
to Ferrari and the CLIU Board that Respondent might be doing construction
work on the Transportation facility.
(1) On direct examination, Ferrari testified that after the CLIU Board had
approved leasing the Transportation facility from Cornerstone R.E.,
LLC, Respondent called Ferrari and said that he was going to see
whether it would be legal for him (Respondent) to work with Roth on
the Transportation facility building. (Tr. at 86).
(a) It was not until the March 18, 2002, meeting — immediately
after Respondent's resignation as Chairman of the building
committee —that the CLIU Board acted to approve exercising
its option to assign its purchase rights to third party Roth Marz.
(ID 7 -193). (See, Finding 87 h(1)).
(2) On cross - examination, Ferrari testified that prior to the March 18,
2002, meeting at which Respondent resigned as Chairperson of the
building committee, Respondent notified Ferrari that he (Respondent)
was potentially going to be involved in working with Roth in the
construction of the Transportation facility. (Tr. at 146 -148).
Ferrari provided inconsistent testimony as to whether Respondent
was involved in discussions at the March 18, 2002, executive session
regarding his participation in the construction of the Transportation
facility, stating first that he (Ferrari) was certain that the March 18,
2002, executive session was one of the executive sessions in which
Respondent engaged in such discussions (Tr. at 161 -162), and
moments later stating that he (Ferrari) was not sure if Respondent
made such remarks at the March 18, 2002, executive session or one
or two prior to that (Tr. at 163).
Respondent resigned as Chairman of the building committee at the CLIU
Board's March 18, 2002, meeting. (ID 7 -193).
(3)
(1) The meeting minutes do not include any disclosure by Respondent
that he would be pursuing a subcontract with Roth with regard to the
construction of the Transportation facility.
(2) The meeting minutes do not include any indication or record of the
Solicitor's opinion with regard to Respondent's involvement with any
type of construction as to the Transportation facility.
(a) Ferrari testified that the Solicitor's opinion on this issue was
given at an executive session and was not put in writing.
(b) Ferrari testified that the essence of what the Solicitor stated
was that there was no problem with Respondent performing
work on the Transportation facility because Respondent would
be working for an investment group and would not be
contracting with the CLIU. (Tr. at 150).
Kistler, 04 -037
Page 17
m. Ferrari did not recall any instance following the March 18, 2002, meeting at
which Respondent attempted to influence the CLIU Board's deliberations or
discussed its actions concerning the Transportation facility.
n. After leasing the Transportation facility for a time, the CLIU ultimately
purchased the Transportation facility.
o. By law, intermediate units are prohibited from owning child classroom space.
p. The original LLAS facility was leased from an individual named Stephen
Hirsh.
q.
Because of a mold recurrence problem, the CLIU Board decided to terminate
its lease with Mr. Hirsh and find alternative facilities for the students at the
LLAS.
r. At its June 17, 2002, regular meeting, the CLIU Board voted to approve
motions to terminate the lease with Hirsh and to authorize Roth to pursue
construction of a new facility for the purpose of providing leased space to the
LLAS. ID 7- 232 -233. (See, Finding 87 i).
(1) Respondent voted in favor of both motions. ID 7- 232 -233. (See,
Finding 87 i).
s. The LLAS students were removed from the Hirsh facility and were placed in
temporary facilities.
t. Construction of the LLAS facility was delayed due to litigation involving
appeals from the Township Zoning Hearing Board's approval of the
construction of the LLAS facility.
(1) The appeals progressed from the County Court of Common Pleas to
the Commonwealth Court of Pennsylvania and ultimately to the
Pennsylvania Supreme Court.
u. At some point, Ferrari became aware that Respondent was going to be
involved in the construction of the LLAS facility.
(1) Ferrari testified that Respondent informed Ferrari that Respondent
was going to be involved in the construction of the LLAS facility, but
Ferrari could not recall when that occurred.
v. At the CLIU Board's regular meeting on October 20, 2003, the CLIU Board
took the following actions.
(1) The CLIU Board voted to authorize entering into and executing a
lease with R &T Management LLC with regard to the leasing of an
Administrative Facility from R &T Management LLC. ID 7 -393.
(a) This project related to the construction of a new central
services building and was distinct from the LLAS project.
(b) R &T Management LLC was a business with which Roth was
involved.
(c) Respondent voted in favor of this Motion.
Kistler, 04 -037
Page 18
(2) The CLIU Board voted to authorize the leasing of administrative
facilities from R &T Management LLC based upon a variable interest
rate program. ID 7 -394.
(a) Respondent voted in favor of this Motion.
The CLIU Board voted to authorize Roth Marz Partnership to begin
the construction phase of the LLAS Facility. ID 7 -394.
(a) Respondent abstained as to this Motion.
(b) This vote occurred after Commonwealth Court upheld the
Zoning Hearing Board's decision as to the LLAS facility.
w. Ferrari testified that at some point in time, Respondent announced that he
was going to be involved in the construction of the LLAS facility, but Ferrari
did not recall when that announcement occurred.
x. At its May 17, 2004, regular Board meeting, the CLIU Board voted to ratify
Lease Agreement between Dale and Ruth Roth and the CLIU for the LLAS
facility. (See, Finding 87 0(1)).
(1) Respondent abstained as to this vote.
(2) Ferrari testified that he was sure the CLIU Board knew at the time of
the May 17, 2004, meeting that Respondent was involved with the
construction of the LLAS facility, but that he (Ferrari) did not recall
whether Respondent expressed the reason for his abstention from
this vote at that time.
y.
(3)
Ferrari testified that he believed that the CLIU did not begin paying on the
lease for the LLAS facility until after taking possession.
z. The CLIU did not take possession of the LLAS facility until after the building
was completed.
71. James Pollard ( "Pollard ") is a former Member of the CLIU Board, having served on
the Board for six years.
a. Pollard testified that at the March 18, 2002, CLIU Board meeting,
Respondent resigned from the building committee completely, such that he
was no longer Chairperson or a member of the committee.
(1) Pollard testified that after resigning, Respondent no longer attended
building committee meetings.
b. Pollard testified that he did not recall Respondent participating in any
discussions or offering any comments in regards to the Transportation
facility after resigning from the building committee. (Tr. at 246 -247).
c. Pollard provided various testimony as to when he learned that Respondent
might be doing work on the Transportation facility and who provided that
information.
(1) Pollard initially testified that it was after Respondent resigned from
the building committee that Pollard learned that Respondent might bid
on doing work on the Transportation facility. (Tr. at 233 -234).
Kistler, 04 -037
Page 19
(2) Pollard subsequently testified that prior to the March 18, 2002,
meeting at which Respondent resigned from the building committee,
he heard that Respondent was going to have some interest in
building the Transportation facility. (Tr. at 240 -241).
Pollard testified that after Respondent resigned from the building
committee Respondent stated that he might have intentions of bidding
on the Transportation facility building job. (Tr. at 233, 234).
(4) Pollard also testified that "somebody" said that Respondent resigned
from the building committee because there was a good possibility that
Respondent might get work on the Transportation facility, but that it
might not have been Respondent who said that. (Tr. at 234 -235).
Pollard subsequently testified that Respondent announced that he
had a potential interest in working on the Transportation facility
project. (Tr. at 241).
d. Pollard testified that when he (Pollard) asked whether there was going to be
a conflict of interest, he was told: that there would not be a conflict of
interest; that the solicitor said it would be "okay" for Respondent to do the
work on the Transportation facility because it was being leased; that
Respondent would still remain on the Board but not on the building
committee; and that Respondent would have to abstain from anything having
to do with the Transportation facility. (Tr. at 241 -242).
e. When Respondent resigned as Chairperson of the building committee,
Pollard became the new Chairperson of the building committee.
(1) Pollard's building committee reports to the CLIU Board were based
upon information provided to Pollard by administrative staff
member(s) involved in the day -to -day work on the project
development.
f. Pollard testified that the building committee discussed using Roth as the
architect for the Transportation facility, but that such discussions did not
occur until after Respondent was no longer on the building committee.
The CLIU Board decided to lease the Transportation facility from Roth Marz
rather than buy it outright.
(1) CLIU administrative staff provided cost comparison information to
Pollard, which indicated that the lease option would result in a
savings of $470,719 as compared to the purchase option.
h. The CLIU Board named Roth Marz to be the third party to pursue the
purchase of the property for the Transportation facility.
(1) Pollard testified that he had the cost comparison information prior to
voting to assign the purchase rights to Roth Marz.
(2) Pollard testified, No other contractor was mentioned. All it was, was
Roth Marz, you know." (Tr. at 243).
CLIU public board meetings were open meetings that were advertised.
g.
(3)
(5)
Kistler, 04 -037
Page 20
J.
Respondent abstained from the CLIU Board's action at the October 20,
2003, regular Board meeting to authorize Roth Marz Partnership to begin the
construction phase of the LLAS facility.
(1) Pollard testified that Respondent stated that he might get the job to
build the LLAS facility. (Tr. at 254).
k. Pollard's last meeting as a Member of the CLIU Board was in November
2003.
72. John Arthur Young ( "Young ") is a registered architect who served as a consultant to
Roth Marz Partnership from approximately 2001 until 2004.
a. ID 9, pages 1 -3 consists of a memorandum of a "scope of work" that Young
prepared to Dale Roth for the construction of the CLIU Transportation facility
as a pole building structure.
(1) The date on ID 9 -1 /Roth -3 is November 9, 2001. (See, Finding 89 a).
(2) Young spoke to Respondent by telephone for the purpose of
gathering information regarding the column spacing for a general pole
building structure.
(a) Young had not had any prior dealings with Respondent.
(b) Young testified that he does not recall whether he identified
himself as working for Roth or Roth Marz Partnership.
(c) Young testified that he does not recall whether he informed
Respondent of the project about which he was inquiring, but
that he would generally not reveal such information until
further into a project.
(d) Young testified that his telephone call with Respondent lasted
about ten minutes.
b. Young testified that a pole building was an appropriate type of structure for
the Transportation facility.
c. Young testified that a pole building is more economical than a masonry
building.
73. Linda Pacifico ( "Pacifico ") is a former CLIU Board Member who served on the Board
for approximately two years commencing in August 2001.
a. The CLIU Board considered purchasing the Lesher property versus leasing it
with an option to purchase and chose the lease with option to purchase
because it resulted in a cost savings.
b. Pacifico does not recall whether Respondent ever made
statements /disclosures that he might be involved with the construction of the
Transportation facility or that he was bidding or submitting bids as to the
construction of the Transportation facility. (Tr. at 280 -281).
c. Pacifico does not remember Respondent ever talking about the
Transportation facility, either before or after the March 18, 2002, CLIU Board
meeting.
Kistler, 04 -037
Page 21
74. Robert J. Keegan, Jr. ( "Keegan ") is the Executive Director of the CLIU, having
served in that capacity since April 1, 2006.
a. Keegan has been associated with the CLIU for 23 years.
(1) Keegan served as Assistant Executive Director of the CLIU from 2000
to March 31, 2006.
(2) Prior to serving as Assistant Executive Director of the CLIU, Keegan
served as Director of Special Education.
b. Only the CLIU Board has decision - making power as to any type of project at
the CLIU.
c. CLIU committees make recommendations to the full CLIU Board but do not
have ultimate decision - making power.
d. Discussions at the CLIU regarding a new Transportation facility began at the
December 20, 1999, CLIU Board meeting.
(1) At that time, Keegan was Director of Special Education and was
responsible for supervising transportation.
(2) At or about that time, Keegan was placed in charge of developing a
replacement facility for transportation.
e. Keegan performed duties with regard to planning the Transportation facility
and reviewing potential sites for the facility.
(1) The CLIU administration and staff developed information as to what
was needed for the Transportation facility.
(2) Keegan worked with a realtor and also received suggestions from
CLIU Board Members and district board members regarding
prospective sites.
Keegan reviewed 27 prospective sites for the Transportation facility,
which were narrowed down to three sites for consideration.
g.
(3)
(a) Keegan testified that the reduction of the list to three
properties under consideration was done by the administration
without any input from Respondent.
f. Keegan testified that the building committee's prime purpose during the
planning and site review phase of the Transportation facility project was to
visit and narrow down the potential sites.
Keegan prepared monthly "update" reports regarding the Transportation
facility project, which reports he provided to the building committee
Chairperson shortly before CLIU Board meetings.
(1) Keegan's reports were provided to Respondent during Respondent's
tenure as Chairperson of the building committee.
(2) Keegan's reports were prepared for the benefit of the full CLIU Board.
Kistler, 04 -037
Page 22
(3) Keegan's reports were read and provided to the full CLIU Board at the
Board's public meetings.
(4) Keegan's reports reflected Keegan's day -to -day supervision of the
Transportation facility project and did not reflect any substantial input
from Respondent.
h. ID 6 consists of documents prepared and /or maintained by Keegan,
including updates /monthly reports prepared by Keegan regarding the
Transportation facility project. (ID 6 -5, 6 -15, 6 -21, 6 -22, 6 -24, 6 -25, 6 -34, 6-
38, 6 -40, 6 -42, 6 -44, 6 -46).
(1) Respondent never refused to accept these reports.
(2) Respondent never asked Keegan to not send the reports to
Respondent because Respondent might have a conflict of interest.
J.
The Lesher property was chosen for the Transportation facility when the
price was reduced from $600,000 to $450,000.
Pursuant to action of the CLIU Board at its June 18, 2001, regular meeting
(ID 7 -116), the CLIU entered into a purchase agreement for the Lesher
property, which agreement included a right to assign purchase rights.
(1) Keegan testified that prior to the CLIU Board's approval of the
agreement of sale, there was no expectation or commitment on behalf
of the CLIU or Keegan to build any particular type of buildings for the
Transportation facility.
k. Keegan gathered information for consideration by the CLIU Board regarding
a purchase transaction as compared to a lease with option to purchase
transaction.
(1) On June 13, 2001, Keegan requested a legal opinion from Attorney
Waters regarding a purchase transaction as compared to a lease with
option to purchase transaction for the Transportation facility.
(a) Attorney Waters provided his legal opinion (ID 6 -32) by letter
dated June 18, 2001.
(2) On June 13, 2001, Keegan spoke with Roth and asked Roth to
provide cost comparison information related to an outright purchase
and build arrangement versus a lease /purchase arrangement for the
Transportation facility.
(a) Keegan testified that Respondent did not suggest or direct that
Keegan talk to Roth about leasing versus purchasing.
(b) Keegan testified that to his knowledge, Respondent did not
influence anyone else to have Keegan talk to Roth about the
lease versus purchase issue.
Keegan did not seek any cost proposals or bid proposals from anyone
other than Roth with regard to a difference between a purchase and
lease with option to purchase.
(3)
Kistler, 04 -037
Page 23
(4) The information provided by Roth reflected that a lease arrangement
would result in a cost savings as compared to a purchase
arrangement.
Settlement on the Lesher property transaction was delayed due to unrelated
litigation involving the property that had to be resolved before the CLIU
Board would finalize the transaction.
m. On August 22, 2001, Keegan spoke with Respondent regarding the costs
and elements of certain environmental testing relative to the Transportation
facility. (ID 6 -42).
n. On December 13, 2001, Keegan and Respondent discussed the need to get
purchase versus lease /purchase costs before the CLIU Board in the event
there would be a settlement of the litigation as to the Lesher property.
(1) Keegan testified that Respondent was not influencing Keegan with
respect to the costs for the type of construction that should be
considered.
o. Keegan testified that at the executive session of the CLIU Board on March
18, 2002, he (Keegan) presented to the CLIU Board the cost comparison
information for purchase versus lease /purchase as to the Transportation
facility, as well as information that the litigation involving the Lesher property
had been settled.
P.
(1) Keegan testified that the cost information that he presented to the
CLIU Board on March 18, 2002, indicated that per the projected costs
from Roth, the lease arrangement with Roth would result in a cost
savings to the CLIU in the amount of $470,719 as compared to a
purchase arrangement.
(a) Keegan testified that the cost savings would be attributable to
not bidding the project and not having to pay prevailing wages.
(2) Keegan provided inconsistent testimony regarding Respondent's
participation in discussions of the CLIU Board regarding the cost
comparison information, initially testifying that there were discussions
among the Board Members, that Respondent probably participated in
those discussions, but that Keegan did not have a recollection of
specific words Respondent said (Tr. at 470 -471; 474), and
subsequently testifying that his earlier testimony was erroneous and
that Respondent remained silent and did not participate in the
discussions of the Board (Tr. at 478).
The CLIU Board chose the lease and option to purchase arrangement for the
Transportation facility despite the opinion of Attorney Waters that the CLIU
would be exposing itself to a significant amount of risk of a legal challenge if
prevailing wages were not paid in the context of the lease with option to
purchase arrangement." (See, ID 6 -32).
(1) Keegan testified that the CLIU Board chose the lease with option to
purchase arrangement based upon information that other IU boards
had successfully used that type of arrangement, and that one IU had
prevailed in a legal challenge.
Kistler, 04 -037
Page 24
At the March 18, 2002, regular meeting of the CLIU Board, the CLIU Board
assigned its purchase rights for the Lesher property to Roth Marz
Partnership. ID 7 -193.
r. The CLIU Board did not request or receive bids as to the assignment of the
purchase agreement. (Tr. at 322).
s. Keegan testified that it was his understanding that the School Code did not
require bidding for leases for real estate or classroom space.
(1) The CLIU has never invited competitive bids for its leases except with
respect to leases of multiple /fleet vehicles.
t. Dale Roth of Roth Marz Partnership was the chief architect and general
contractor for the Transportation facility.
(1) Keegan testified that the CLIU Board determined that Roth Marz
Partnership would be the architect for the Transportation facility
based upon past positive experiences with the firm.
u. Keegan testified that he believed that all information concerning the Roth
proposal was available for public inspection.
v. Keegan worked with Roth and Roth's staff with regard to the design of the
Transportation facility and equipment to be included in the Transportation
facility.
(1) Keegan testified that the building committee did not play any role in
designing the Transportation facility.
(2) Keegan testified that neither Respondent nor the building committee
were involved in any way with the ideas for storage space, office
space, and the instructional classroom at the Transportation facility.
w. Keegan testified that at the March 18, 2002, executive session of the CLIU
Board, Respondent indicated that he had the potential to be involved with
the Transportation facility project and that he was going to step down as
Chairperson of the building committee.
(1) Keegan testified that it was at this time that he became aware of
Respondent's potential involvement in constructing a portion of the
Transportation facility.
(2) Keegan testified that during this executive session, the CLIU Solicitor
stated that Respondent was "twice removed" from the project and that
there would not be a conflict of interest as to Respondent's
involvement in the project.
(a) Keegan testified that he recalled the CLIU Solicitor giving this
advice three times and that not all of those times occurred at
this executive session.
q.
x. At the March 18, 2002, regular meeting of the CLIU Board, Respondent
resigned as Chairperson of the building committee. (ID 7 -193).
(1) Keegan testified that after resigning, Respondent did not get involved
with the building committee at all.
Kistler, 04 -037
Page 25
Keegan testified that following the March 18, 2002, CLIU Board meeting,
Keegan had no conversations with Respondent regarding the Transportation
facility, and he did not recall Respondent attempting to discuss the
Transportation facility with the CLIU Board.
z. ID 7, pages 235 -244 consist of the CLIU Board meeting minutes from the
July 15, 2002, regular Board meeting.
(1) Keegan testified that the agenda for this meeting would have been
provided in advance to newspapers and would have included the
items listed regarding the Transportation facility.
(2) The recorded minutes include Respondent's abstention as to the
CLIU Board's vote to authorize the execution of the Assignment of
Real Estate Sales Agreement and Lease Agreement and Option
Agreement with Cornerstone, R.E., LLC, as well as a bank agreement
relating to the Transportation facility. (See, Finding 87 j(1)).
The recorded minutes do not include any disclosure by Respondent
that three days prior to the July 15, 2002, CLIU Board meeting, he
had entered into a Purchase Agreement with Cornerstone, R.E., LLC
for the construction of a pole building structure for the Transportation
facility. (See, Finding 92).
aa. Keegan testified that construction on the Transportation facility began in
approximately late August or September 2002.
bb. Respondent constructed a portion of the Transportation facility.
cc. Keegan testified that he did not talk to Respondent with respect to
construction issues arising after construction started.
(1) Keegan testified that once construction began, he had contacts with
Roth, an individual named "Ray Reppert," whom Keegan assumed
worked for Roth, and an individual named "Dennis Trexler" who was
an independent contractor contracted for the project by Roth.
dd. Keegan testified that the CLIU did not take possession of the Transportation
facility or pay on the lease before construction was completed.
(1) The CLIU was moving into the Transportation facility in April 2003,
although the paving had not been completed at that time.
ee. The CLIU lease for the Transportation facility included an option to purchase.
(1) Keegan testified that the purchase price of the Transportation facility
would have eventually been paid through the lease payments. (Tr. at
537).
(2) Keegan testified that the CLIU Board wanted options in case it was
not satisfied with the Transportation facility.
ff. At the March 15, 2004, regular meeting of the CLIU Board, Respondent
voted in favor of Board action to appoint a financing team to perform duties
relating to the possible acquisition of the Transportation facility. ID 7 -404.
y.
(3)
Kistler, 04 -037
Page 26
Keegan testified that the financing team recommended that the CLIU engage
in some indebtedness to purchase the Transportation facility.
hh. At the May 17, 2004, regular meeting of the CLIU Board, Respondent voted
in favor of CLIU Board action to borrow $2,510,000 for the purchase of the
Transportation facility. ID 7 -422.
ii. At the May 17, 2004, regular meeting of the CLIU Board, Respondent voted
in favor of CLIU Board action authorizing the execution of an agreement of
sale and related documents for the purchase of the Transportation facility
per the option agreement with Cornerstone R.E., LLC (ID 7 -422).
jj. The CLIU Board purchased the Transportation facility.
kk. There was no bidding relative to the CLIU's purchase of the Transportation
facility. (Tr. at 323 -324).
(1) Keegan testified that there was no bidding as to the CLIU's purchase
of the Transportation facility because the Transportation facility was
designed for the CLIU, the CLIU was going to purchase it, and there
was no other property or facility to meet the CLIU's needs.
II. When the second mold outbreak occurred at the LLAS property leased from
Hirsh, the CLIU Board voted at its March 18, 2002, meeting to have an
environmental study performed. ID 7 -194.
gg.
(1) Keegan testified that the purchase of the Transportation facility was
an option at the time and depended upon how favorable interest rates
were for the CLIU.
(1) Kistler voted in favor of that motion.
mm. Dale Roth contacted Keegan and offered to work with the CLIU on a LLAS
facility.
nn. The CLIU determined that a new LLAS facility was necessary.
oo. At the June 17, 2002, regular meeting of the CLIU Board, the Board voted to
authorize the Solicitor to provide lease termination notice to Hirsh and to
authorize Dale Roth to pursue construction of a new LLAS facility. ID 7 -232-
233.
(1) Respondent voted in favor of both of these motions. ID 7- 232 -233.
pp. Dale Roth was the architect and general contractor for the construction of
the LLAS facility.
qq. No bids were submitted with regard to the construction of the LLAS facility.
(Tr. at 326).
rr. The CLIU did not discuss purchasing the LLAS facility because by law,
intermediate units are not permitted to own classroom space.
ss. The construction of the LLAS facility was delayed by litigation involving a
zoning issue.
Kistler, 04 -037
Page 27
tt. At the October 20, 2003, regular meeting of the CLIU Board, Respondent
abstained from voting on a motion authorizing Roth Marz Partnership to
begin the construction phase of the LLAS facility. (ID 7 -394).
(1) This action of the CLIU Board occurred shortly after the issuance of a
decision of the Commonwealth Court of Pennsylvania upholding the
decision of the Lowhill Township Zoning Hearing Board to grant a
variance for the LLAS facility.
(2) Keegan testified that he does not recall Respondent participating in
any way in a discussion with respect to the LLAS facility during this
meeting.
The recorded minutes do not include any disclosure by Respondent
of the reasons for his abstention as to the CLIU Board's vote to
authorize Roth Marz Partnership to begin the construction phase of
the LLAS Facility.
(4) The recorded minutes do not include any disclosure by Respondent
that he had a prior business relationship with Dale Roth.
uu. Keegan testified that he did not recall any time after the October 20, 2003,
regular meeting of the CLIU Board when Respondent participated in any
discussions with the CLIU Board concerning the LLAS facility.
vv. At the May 17, 2004, regular meeting of the CLIU Board, Respondent
abstained from Board action ratifying and authorizing a lease agreement with
Dale and Ruth Roth for the LLAS facility.
(1) Keegan testified that he did not recall Respondent discussing the
LLAS facility prior to or following this action by the CLIU Board.
(2) The agenda for this meeting was sent to the media.
ww. At the October 20, 2003, regular meeting of the CLIU Board, Respondent
voted in favor of two motions authorizing the leasing of administrative
facilities from R &T Management LLC based upon a variable interest rate
program (ID 7- 393 -394).
(1) The administrative facilities were not built at the location
contemplated by this action, but they were built at another location.
(2) Roth was the architect and general contractor for the construction of
the administrative facilities.
(3)
xx. The process for approving payment of CLIU bills is that the bills are
calculated and related documents are sent to the CLIU Board Members prior
to the Board meeting at which a motion is made to pay the bills and /or
approve the payment of bills that has already occurred. (Tr. at 356).
(1) Bills are approved by the full CLIU Board at regular monthly
meetings.
(a) Hundreds of bills are approved by the CLIU Board each
month.
(2) Respondent participated in CLIU Board votes to pay bills.
Kistler, 04 -037
Page 28
(3)
To Keegan's knowledge, Respondent never abstained from votes to
pay bills.
(4) Bills from Cornerstone R.E., LLC for the Transportation facility lease
would have been in the amount authorized by the lease.
(5) Bills from Dale and Ruth Roth for the LLAS facility lease would have
been in the amount authorized by the lease.
yy. Public meetings of the CLIU Board are advertised in area newspapers.
(1) The CLIU Board's public meeting agendas are provided to the media
in advance of the meetings.
75. John Wieand ( "Wieand ") served on the CLIU Board for six years from
approximately 1997 to 2003.
a. The decisions as to the Transportation facility were made by the entire CLIU
Board.
b. Cost was an important factor for CLIU Board Members.
c. Wieand testified that there were committee /Board discussions regarding
purchasing versus leasing the Transportation facility.
(1) Wieand testified that there were committee /Board discussions that a
lease arrangement would be more convenient and easier for the CLIU
Board than being the landowner and having to build the facility.
(2) Keegan reported to the Board that there was at least one other
Intermediate Unit that had entered into such a lease arrangement.
Wieand voted for the lease with option to purchase arrangement
based upon his view that the focus of the CLIU Board was to be on
special needs education and that it was not the job of the CLIU Board
to administer construction costs.
(3)
(4) Wieand was also motivated to vote for the lease with option to
purchase arrangement based upon his awareness of problems arising
when a job had to be awarded to the low bidder.
d. Wieand became aware that Respondent was going to be involved with the
construction of the Transportation facility through a telephone call that
Wieand received from Ferrari.
(1) Wieand was vice - president of the CLIU Board at the time and was
filling in for the Board president.
(2) Wieand testified that Ferrari informed Wieand that Respondent had
received the bid" for the Transportation facility.
Wieand testified that he asked Ferrari whether Solicitor Kevin Reid
was comfortable with that and Ferrari responded in the affirmative.
(4) Wieand testified that he (Wieand) then stated that he did not have a
problem with it.
(3)
Kistler, 04 -037
Page 29
e. Wieand recalled Respondent resigning from the building committee and
stating that he would be abstaining, but Wieand did not recall whether
Respondent ever disclosed that he had received "a bid."
f. The CLIU Board voted to pay bill lists at its monthly meetings.
(1) The CLIU Board Members had an opportunity to review the bills prior
to the Board's vote to approve the bills.
76. Stephen Furst ( "Furst ") served on the CLIU Board from in or about February 2002
until October 21, 2003. (See, Finding 109).
a. Furst was appointed to serve on the CLIU Board as a Member of the
Salisbury Township School Board.
b. Furst testified on direct examination that he believed that his service on the
CLIU Board commenced in 2000 or 2001. (Tr. at 594).
(1) On cross - examination, having reviewed CLIU Board meeting minutes,
Furst testified that it appeared his first CLIU Board meeting was on
February 21, 2002. (Tr. at 614; ID 7 -178).
c. Furst provided inaccurate testimony regarding his attendance at CLIU Board
meetings.
(1) Furst initially testified that he missed one CLIU Board meeting and
that it could have been the September 16, 2002, meeting. (Tr. at 591,
611).
(2) Subsequently, having reviewed CLIU Board meeting minutes, Furst
acknowledged that he was absent from the April 17, 2003, May 19,
2003, July 21, 2003, August 2003, September 15, 2003, and October
20, 2003, CLIU Board meetings. (Tr. at 615 -616, 618 -619).
d. Furst testified that he does not recall Respondent ever formally disclosing to
the CLIU Board that he (Respondent) might be involved in the construction
of the Transportation facility. (Tr. at 599; 628 -630).
(1) Furst testified that he was not saying that such a disclosure by
Respondent did not happen, but rather, that he (Furst) did not recall
it. (Tr. at 628 -630).
e. Furst testified that he did not recall Respondent making any disclosures as
to why he was stepping down from the building committee. (Tr. at 604, 628,
632).
f. Furst testified that he did not have a recollection of the CLIU Board Solicitor
providing any type of legal opinion or legal advice in connection with
Respondent's involvement or potential involvement with the construction of
the Transportation facility. (Tr. at 599 -600).
With respect to the motion at the June 17, 2002, CLIU Board meeting
authorizing Dale Roth to pursue construction of the LLAS facility (ID 7 -233),
Furst testified that he did not recall Respondent disclosing that he
(Respondent) had a prior business relationship with Dale Roth. (Tr. at 607-
608).
g.
Kistler, 04 -037
Page 30
h. The CLIU Board discussed the pros and cons of purchasing versus leasing
property.
(1) Furst found the cost savings of the lease arrangement to be
significant.
Furst testified that he believed the information regarding the cost savings of
the lease arrangement as compared to a purchase arrangement was shared
with the CLIU Board prior to the vote on March 18, 2002, to assign purchase
rights to Roth Marz for the property on which the Transportation facility was
to be built.
J.
Furst testified that he has no recollection of Respondent ever attempting to
influence the CLIU Board in connection with the Transportation facility
construction or the designation of Roth Marz for the Transportation facility
project.
77. Dennis Foster ( "Foster ") served on the CLIU Board for eight years.
a. Foster testified that the CLIU Board decided to lease the Transportation
facility rather than to purchase the property and build the facility because the
lease arrangement was more economical.
b. At the regular meeting of the CLIU Board on March 18, 2002, Respondent
resigned as Chairperson of the building committee and Pollard became the
new Chairperson.
(1) Foster testified that during a building committee or executive meeting
on March 18, 2002, prior to the regular CLIU Board meeting that
same day, Respondent indicated that he (Respondent) was interested
in potentially being involved in the Transportation facility project and
was going to step down from the building committee chairmanship.
(2) Foster testified that he recalled Solicitor Reid stating verbally that this
was the proper way of addressing the matter and that there would be
no conflicts of interest if this direction were followed.
c. When the LLAS facility developed mold, the students and staff had to be
moved from the facility.
d. Foster testified that the first time he recalls hearing that Respondent was
involved with the construction of the LLAS facility was when he was so
informed by Commission staff.
e. Foster did not recall Solicitor Reid providing an opinion with regard to
Respondent's involvement with the construction of the LLAS facility.
78. Bryan Dorshimer ( "Dorshimer ") is a current Member of the CLIU Board, having
served on the Board for approximately six or seven years.
a. Dorshimer served on the building committee during the Transportation
facility project.
b. The CLIU Board was initially planning to buy property and build the
Transportation facility, but decided instead to lease the facility with an option
to purchase in order to save money.
Kistler, 04 -037
Page 31
(1) Dorshimer testified that Ferrari or Keegan first suggested the lease
arrangement to the CLIU Board.
(2) Dorshimer testified that the lease arrangement avoided prevailing
wage requirements and therefore was cheaper than buying the
property and building the facility.
c. Dorshimer testified that he became aware that Respondent was involved in
the construction of the Transportation facility during the construction phase,
when he drove by the site and observed Respondent's business sign posted
on the property.
d. Dorshimer testified that he did not recall Respondent disclosing at the March
18, 2002, CLIU Board meeting that he (Respondent) might have an interest
in the construction of the Transportation facility.
(1) Dorshimer testified that he was not saying such a disclosure did not
happen but that he did not remember it happening.
e. Dorshimer testified that he did not recall Solicitor Reid ever giving an opinion
with regard to Respondent's involvement or potential involvement in the
Transportation facility.
f. At the June 17, 2002, regular meeting of the CLIU Board, the CLIU Board
authorized the Solicitor to provide lease termination notice to Hirsh, the
landlord of the prior LLAS facility, which facility had recurring mold problems.
ID 7 -232.
g.
J.
At the June 17, 2002, regular meeting of the CLIU Board, the CLIU Board
authorized Dale Roth to pursue construction of a new LLAS facility. ID 7-
233.
h. The new LLAS facility was to be leased from Dale Roth or his business
because by law, the CLIU was not permitted to own classroom space.
Dorshimer testified that he became aware that a pole building was being
used for the LLAS facility when he drove by the property during construction
of the facility.
Dorshimer testified that he did not recall Respondent ever disclosing to
Dorshimer or to any other CLIU Board Members during a CLIU Board
meeting that he (Respondent) might be involved in the construction of the
new LLAS facility.
79. Dale Roth (also referred to herein as "Roth ") is a self - employed architect.
a. Roth is associated with the following businesses /business interests: Roth
Marz Partnership (an architectural practice, also referred to herein as "Roth
Marz "); Cornerstone R.E., LLC (also referred to herein as "Cornerstone" and
"Cornerstone, LLC "); R &T Management, LLC (also referred to herein as
"R &T Management "); and "Dale and Ruth Roth."
b. Roth Marz Partnership developed concept plans for site development of the
CLIU Transportation facility.
c. Cornerstone R.E., LLC constructed /developed the CLIU Transportation
facility.
Kistler, 04 -037
Page 32
d. Dale and Ruth Roth constructed /developed the CLIU LLAS facility.
e. R &T Management constructed /developed an office building for the CLIU.
f. Roth testified that Cornerstone R.E., LLC became involved with the
Transportation facility as a result of inquiries Roth made to Ferrari and
Keegan about providing lease -back arrangements to the CLIU.
At Keegan's request, Roth provided cost information comparing prices of a
purchase versus a lease arrangement for the Transportation facility.
h. Cornerstone R.E., LLC entered into a build /lease back arrangement with the
CLIU for the Transportation facility.
(1) Under the build /lease back arrangement, Cornerstone purchased and
owned the property and designed and built the facility.
Roth testified that initially a pre- engineered building was considered for the
Transportation facility but a pole building structure was ultimately chosen
because that was the least expensive way to properly build the facility.
j. Roth testified that between June and November 2001, there were
discussions between Roth or his staff and Respondent regarding the
possible use of a pole building for construction of the Transportation facility.
k. As of November 5, 2001, Roth was still considering using a pre- engineered
steel building for the Transportation facility. (Tr. at 802 -803).
A few days after November 5, 2001, Roth directed Young to start looking at
pole building options. (Tr. at 804; ID 9 -1 /Roth -3).
(1) Roth directed Young to contact Respondent for particular spacing
information relative to constructing the Transportation facility as a
pole building. (Tr. at 784).
(2) ID 9 -1 /Roth -3 consists of a memorandum from Young to Roth dated
November 9, 2001, which includes a handwritten notation regarding
Kistler Pole Buildings.
Roth testified that he received this memorandum from Young within a
couple days of November 9, 2001.
m. Roth testified that it was not until March or April 2002, that Cornerstone R.E.,
LLC was seriously looking at the pricing of a pole building.
n. Roth testified that Respondent's company was chosen to build the
Transportation facility because Respondent was the only pole building
business owner Roth knew, and Roth knew Respondent to be a reputable
contractor.
g.
(3)
(1) Roth did not solicit or receive any bids from any other pole building
contractors.
o. Roth -5 consists of estimates faxed by Kistler Buildings to Gary Caldwell of
Roth's office on February 6, 2002, quoting costs for a main building and
ancillary storage building for the Transportation facility.
Kistler, 04 -037
Page 33
p.
q.
(1) Roth testified that as of this fax on February 6, 2002, he had not
made any commitment to the type of building he was going to build for
the Transportation facility.
On March 18, 2002, the CLIU Board voted to assign its rights to purchase
the Lesher property to Roth Marz Partnership.
Roth's calendar indicates that he met with Respondent on March 26, 2002.
(ID 8 -3).
(1) Roth testified that the purpose of this meeting with Respondent would
have been to talk about the Transportation facility.
(2) Roth testified that as of March 26, 2002, he (Roth) had not indicated
to Respondent that Respondent would be the contractor for the pole
building construction for the Transportation facility.
r. ID 10 -1 -9 consists of a scope of services and quote from Respondent for the
construction of the Transportation facility. (See also, Roth -13, pages 1 -5).
(1) The quote was received by Roth or Cornerstone staff on April 26,
2002.
(2) With regard to ID 10 -1 -9, Roth testified, "It's just typed - -- outlining the
type of construction and what would be included in his -- -what we call
his subcontract, along with a price." (Tr. at 744 -745).
s. Roth testified that on or about May 2, 2002, Roth gave Respondent an initial
commitment to use Kistler Building for the Transportation facility.
t. ID 12 -1 /Roth -15 consists of a memorandum from Roth to Respondent dated
May 28, 2002, providing Roth's color selections for the roof, gutters,
downspouts, and sidewall panels of the CLIU Transportation facility.
(1) This memorandum pre -dated by approximately 11/2 months the formal
contract between Kistler Pole Building Company, Inc. and
Cornerstone, LLC for construction as to the CLIU Transportation
facility.
u. Roth -18 consists of the final agreement between Kistler Pole Building
Company, Inc. and Cornerstone, LLC for construction as to the CLIU
Transportation facility. (See also, ID 11 -1).
(1) The agreement is dated July 12, 2002.
(2) The contract price was $550,492.
(3) Per a change order approved July 12, 2002, the contract price was
reduced to $539,737.
v. Kistler Pole Building Company, Inc. issued an invoice dated July 19, 2002, to
Cornerstone, LLC in the amount of $25,000 for a down payment on the
Transportation facility work. (ID 14 -2 /Roth 19).
w. In or about September 2002, Kistler Pole Building Company, Inc. began
working on the Transportation facility project.
Check Date
Check Number
Check Amount
10/24/2002
200
$42,571
11/20/2002
213
$82,897
12/24/2002
229
$190,839
1/21/2003
241
$136,345
2/25/2003
263
$59,717
9/8/2003
332
$14,377
Kistler, 04 -037
Page 34
x. Cornerstone R.E., LLC issued the following 6 checks to Kistler Pole Building
Company, Inc. for work on the Transportation facility, which checks were
dated from October 24, 2002, through September 8, 2003:
y.
(Roth -38/ID 14 -27).
(1) The total amount of the checks was $526,746. (Roth -38/ID 14 -27).
Roth testified that Kistler Pole Building Company, Inc. substantially
completed its work on the Transportation facility in February 2003.
(1) On May 28, 2003, Ray Reppert of Roth Marz Partnership P.C. notified
Tom Golden of Kistler Buildings of construction defect(s) and the
need for installation of weather stripping on exterior doors of the
Transportation facility. (Roth 65).
(2) On July 8, 2003, Ray Reppert of Roth Marz Partnership P.C. notified
Tom Golden of Kistler Buildings of construction defect(s) as to the
Transportation facility. (Roth 66).
z. Roth testified that toward the end of the Transportation facility project,
additional work was requested with respect to the renovation of an existing
building (referred to as a golf shack or caddy shack), which work included
work by Kistler Pole Building Company, Inc.
(1) The quotation (ID 13 -2 /Roth -60) for the work by Kistler Buildings on
the golf shack was accepted on May 4, 2003, by Dale Roth at a price
of $14,377.
(2) Roth -61 is an invoice dated June 30, 2003, from Kistler Pole Building
Company, Inc. to Cornerstone, LLC in the amount of $14,377 for
completion of the golf shack renovation.
Check number 332 dated September 8, 2003, in the amount of
$14,377 was payment by Cornerstone, R.E., LLC for work by Kistler
Pole Building Company, Inc. on the golf shack. Roth -62.
aa. Roth testified that Cornerstone R.E., LLC absorbed the cost of the golf shack
renovation and did not charge the CLIU for it.
bb. Roth testified that he had a discussion with Keegan in or about 2001
regarding whether Roth and Roth's wife would be interested in constructing
the LLAS facility.
cc. On October 24, 2002, the Lowhill Township Zoning Hearing Board granted
the request of Dale and Ruth Roth for special exception approval for the
LLAS facility, with certain conditions. Roth -73.
(3)
Check Date
Check Number
Check Amount
5/7/2004
000
$10,000
6/21/2004
4562
$60,000
10/21/2004
4592
$218,360
11/18/2004
4603
$300,361
1/26/2005
4637
$45,712
3/29/2005
4672
$4,000
10/4/2005
4752
$3,500
Kistler, 04 -037
Page 35
(1) The decision of the Lowhill Township Zoning Hearing Board was
appealed to the County Court of Common Pleas, the Commonwealth
Court of Pennsylvania, and the Pennsylvania Supreme Court.
dd. Roth testified that he received an initial proposal from Respondent regarding
construction of the LLAS facility shortly before April 18, 2003.
ee. Roth's initial meeting with Respondent regarding construction of the LLAS
facility occurred on April 18, 2003. Roth -75.
ff. While the Lowhill Township Zoning Hearing Board decision was on appeal,
Roth proceeded with a land development plan based upon an office building.
On May 16, 2003, Ray Reppert of Roth Marz Partnership P.C. faxed to
Respondent an updated floor plan and elevations for the LLAS facility. Roth -
76.
gg .
hh. On April 1, 2004, the Lowhill Township Board of Supervisors approved the
plan for the LLAS facility. LC -1.
ii. On April 22, 2004, Roth met with Respondent regarding the LLAS facility.
Roth -97.
On May 7, 2004, Roth provided a down payment to Respondent for
Respondent's work on the LLAS facility.
kk. The lease between Dale and Ruth Roth and the CLIU for the LLAS facility
was approved effective May 7, 2004.
II. Roth -102 consists of an agreement dated June 17, 2004, between Kistler
Pole Building Company, Inc. and Roth and /or Dale and Ruth Roth for the
construction of the shell structure for the LLAS facility. (See also, ID 15; ID
16 -1).
(1) The contract price was $641,933.
mm. On July 19, 2004, Roth reported to the CLIU Board that building of the LLAS
facility would begin the week of July 26, 2004, and the projected completion
date was January 2005.
nn. The following checks were issued to Kistler Pole Building Company, Inc. for
work on the LLAS facility, which checks were dated from May 7, 2004,
through October 4, 2005:
Roth -99. (See also, ID 18).
(1) The May 7, 2004, payment was the first payment made to Kistler Pole
Building Company, Inc. on the LLAS facility.
Kistler, 04 -037
Page 36
pp.
qq.
(2) Roth testified that Respondent's work on the LLAS facility was
basically complete as of January 26, 2005, when 98.8% of the total
payments for such work had been made, but that there might have
been some touch -up work remaining to be done.
(3)
The $7,500 that remained due Kistler Pole Building Company, Inc. as
of January 26, 2005, was retainage held by the Roths.
(4) The total amount of the checks was $641,933. (Roth -99).
00. Roth testified that R &T Management became involved with the construction
of an office building for the CLIU as a result of contacts by the CLIU.
The CLIU Board approved the execution of a lease with R &T Management
LLC for an administrative facility at its regular meeting on October 20, 2003
(ID 7 -393).
(1) This action by the CLIU Board authorized R &T Management to begin
the conceptual phase of the project.
Roth testified that a pole building was not contemplated for the CLIU central
services building /administrative facility, because it is a three -story building
and a pole building would not be suitable. (Tr. at 912).
rr. Roth testified that the first time he ever hired Respondent /Respondent's
company to do any work for anything was for the CLIU Transportation
facility. (Tr. at 911).
ss. Roth testified that in addition to working with Respondent on the
Transportation facility and the LLAS, he has worked with Respondent on a
band shell for Lynn Township.
tt. Both as to the construction of the Transportation facility and the LLAS
facility, the individual overseeing construction for Kistler Pole Building
Company, Inc. was "Thomas Golden," and the contact person at Roth's
office was "Ray Reppert."
uu. Roth testified that for all of the paperwork filed relating to the Transportation
facility, Cornerstone R.E., LLC was the contractor and all of the people
working under Cornerstone were subcontractors.
vv. Roth testified that for all of the paperwork filed relating to the LLAS facility,
Dale and Ruth Roth were the contractors and all of the people working under
them were subcontractors.
80. Patricia Ann Noga ( "Noga ") is a former Member of the CLIU Board.
a. Noga served on the CLIU Board for three years ending at or about 2001.
b. Noga is a licensed architect.
c. The CLIU administration led the site search for the Transportation facility.
d. Noga testified that during her tenure on the CLIU Board, Respondent did not
say anything about being involved in the construction of the Transportation
facility.
Kistler, 04 -037
Page 37
e. Noga testified that a pole building was a cost effective choice to use for the
Transportation facility.
f. Noga testified that the idea of a leaseback arrangement for the
Transportation facility was presented to the building committee by the CLIU
administration and Roth and was well received.
g.
(1) Noga testified that using the leaseback arrangement avoided
problems associated with competitive bidding.
Noga testified that the building committee recommended the leaseback
arrangement to the CLIU Board, and it was up to the CLIU Board to make a
final decision at a public meeting.
h. Noga testified that the building committee meetings were open and
advertised.
81. Patricia Dickinson Hoffman ( "Hoffman ") served as a Member of the CLIU Board
from 1989 to 2003.
a. Hoffman testified that there had been some discussion that Respondent
might have an interest in being involved in the building of the Transportation
facility, and so to avoid a conflict of interest, Respondent resigned as
building committee chair. (ID 7 -193).
b. The CLIU Board entered into a lease purchase arrangement with Roth Marz
Partnership for the Transportation facility. (ID 7 -193).
(1) The CLIU Board was informed that such an arrangement would result
in a financial savings to the CLIU.
(2) Hoffman testified that to the best of her recollection, Roth had done
other projects for the CLIU, and his name was mentioned as someone
the CLIU would want to use for the Transportation facility.
c. At the June 17, 2002, meeting, the CLIU Board took action regarding the
lease for the LLAS building due to a mold problem. (ID 7 -232).
d. At the June 17, 2002, meeting, the CLIU Board took action to authorize Roth
to pursue construction of a new facility for the LLAS. (ID 7 -232).
(1) Hoffman testified that Roth Marz Partnership was chosen by the CLIU
Board to construct the LLAS facility because of the CLIU
administration's and Board's satisfaction with past work by Roth.
82. Lisa Auteri served as a Member of the CLIU Board from December 2001 until
December 2005.
a. Auteri testified that the documents in evidence as Keegan 49 were
presented to the CLIU Board by either Ferrari or Keegan with respect to
discussion as to whether the CLIU Board should build the Transportation
facility or should do a lease /purchase arrangement instead.
(1) It was financially advantageous for the CLIU to do a lease /purchase
arrangement as opposed to building the Transportation facility and
owning it outright.
Kistler, 04 -037
Page 38
g.
J.
(2) Auteri testified that a purchase arrangement involving outright
ownership of the Transportation facility would have required
competitive bidding.
It was Auteri's view that competitive bidding was a more complicated
and costly procedure offering less choice as to selection of the
builder.
(3)
b. Auteri testified that CLIU was pleased with Roth's construction work.
c. Auteri testified that the CLIU Board voted to assign its purchase rights for the
Lesher property to Roth Marz to save taxpayer dollars. (Board 20, page 6;
ID 7 -193).
d. It was Auteri's belief that it was at a CLIU Board meeting that she learned
that Respondent would be constructing the Transportation facility.
e. Auteri testified that she could not recall who made her aware that
Respondent was constructing the Transportation facility but that the CLIU
Board was made aware of the fact when Roth hired the builder.
f. Auteri testified that Solicitor Kevin Reid was asked whether there was a
conflict of interest with regard to Respondent's participation in constructing
the Transportation facility.
Auteri testified that Reid stated that there was not a conflict of interest /issue
with regard to Respondent's participation in building the Transportation
facility because another party, not the CLIU, was building it.
(1) Auteri testified that Reid made this statement in executive session.
(2) Auteri did not recall whether Reid made this statement at a public
meeting.
h. Auteri testified that after Respondent resigned as Chairperson of the building
committee at the March 18, 2002, CLIU Board meeting, Respondent no
longer participated in or voted on issues that had to do with the
Transportation facility.
i. At the June 17, 2002, CLIU Board meeting, Auteri voted in favor of the
motion authorizing Dale Roth to pursue construction of the LLAS facility.
(Board 23, page 16; ID 7 -233).
At the October 20, 2003, CLIU Board meeting, the CLIU Board authorized
Roth Marz Partnership to begin the construction phase of the LLAS facility.
(Board 39, page 12; ID 7 -394).
(1) Respondent abstained from the vote on this matter.
(2) When asked whether she recalled Respondent stating a reason for
his abstention, Auteri testified:
don't remember specifically what he said, but I know
that he stopped voting. He never voted on any issues having
to do with the Roth construction projects.
Kistler, 04 -037
Page 39
(3)
(Tr. at 1047).
Upon further questioning, Auteri testified that at the same CLIU Board
meeting on October 20, 2003, Respondent had voted to approve
leasing an administrative facility from R &T Management, LLC. (Tr. at
1049 -1051) (Board 39, page 11; ID 7 -393).
k. Auteri testified that she was not aware that Respondent was building the
LLAS facility at the time it was being built.
I. Auteri testified that Respondent never attempted to steer the CLIU Board on
any matter.
83. Respondent Kenneth F. Kistler ( "Kistler ") has an ownership interest in Kistler Pole
Building Company, Incorporated and Kistler Building Supply, Incorporated.
a. Kistler Pole Building Company, Incorporated (also referred to herein as
"Kistler Pole Building Incorporated," "Kistler Pole Building Company, Inc.,"
"Kistler Pole Buildings," "Kistler Pole Building," "Kistler Pole Building
Company" and "Kistler Buildings ") is primarily a construction company.
(1) Kistler Pole Building Company, Incorporated builds pole buildings.
b. Kistler Building Supply, Incorporated (also referred to herein as "Kistler
Building Supply" and "Kistler Building Products ") is a building materials
provider.
c. Kistler's company built the Transportation facility and the LLAS facility for
Roth's organizations.
(1) Kistler testified that prior to the construction of the Transportation
facility, he never built anything for Roth.
(2) Kistler testified that the only buildings he built for Roth were the
Transportation facility and the LLAS facility.
d. Kistler testified that he recalled receiving a telephone call from Young
requesting general information regarding pole buildings.
(1) Kistler provided information to Young regarding pole spacing and
framing spacings for a pole building.
(2) Kistler testified that Young did not indicate where the project was for
which he was requesting such information.
e. Kistler testified that he sent the document in evidence as Roth -5 to Gary
Caldwell at Roth Marz Partnership on February 6, 2002, in response to a
request from Caldwell, providing a "ballpark" quote for a main building at
$394,453 and an ancillary storage building at $32,589.
(1) Kistler knew Roth Marz was the architectural firm that the CLIU used,
and he knew that Gary Caldwell worked for Roth Marz Partnership.
(2) Kistler testified that he does not believe that when he provided this
quote to Gary Caldwell, he knew it was for the Transportation facility.
Kistler, 04 -037
Page 40
g.
(3)
(3)
Kistler testified that this quote was prepared based upon general
information, and that if he had had specific information, he would
have listed it.
f. Kistler testified that at some point between March 18, 2002, and the prior
CLIU Board meeting, he received a call from Roth, who asked Kistler to
come to Roth's office to take a look at a project.
(1) Kistler testified that at this meeting, Roth informed Kistler that Roth
was considering using a pole building for the Transportation facility.
(2) Kistler testified that following this meeting with Roth, Kistler contacted
Ferrari.
(a) Kistler testified that he told Ferrari that Roth was considering
using a pole building, that Kistler would probably need to be
away" from the building committee, and that Ferrari would
need to find someone else to take over the building committee.
Kistler testified that as of the March 18, 2002, executive session of the CLIU
Board, it was not definite that he would be building the Transportation
facility, but Roth had asked him (Kistler) to provide pricing and planning
information, and Roth was going to be providing details and prints to Kistler.
h. With regard to the March 18, 2002, executive session, Kistler testified, This
was the executive session that we discussed my involvement in the
construction and subcontracting portion of the bus garage." (Tr. at 1062-
1063).
(1) Kistler testified that Solicitor Reid informed the CLIU Board that as
long as Kistler did not vote on anything that involved Kistler and as
long as Kistler did not participate in the discussions, that it was going
to be all right." (Tr. at 1063; 1136).
(2) Kistler testified that he specifically asked Reid whether there was any
reason why he (Kistler) should not be involved in the construction of
the Transportation facility, and Reid said, "None that I know of." (Tr.
at 1063 - 1064).
Kistler testified that he asked Reid to check into the matter and that
Reid stated that he would do so.
(4) Kistler stated that he did not know whether the discussion at the
March 18, 2002, executive session regarding his involvement in the
construction of the Transportation facility was mentioned in the public
meeting on March 18, 2002.
Kistler testified that at the meeting following the March 18, 2002, CLIU Board
meeting, he asked Reid whether Reid had checked on the issue, and Reid
indicated that he (Reid) had done so.
(1) Kistler testified that he could not recall whether this meeting was an
executive session or a public meeting.
(2) Kistler testified that he asked Reid whether there was any reason why
he (Kistler) should not be involved in the construction of the
Kistler, 04 -037
Page 41
Transportation facility and that Reid said, "Absolutely not." (Tr. at
1082).
j. Kistler never asked Reid to provide a written opinion or to state his opinion in
the minutes of the CLIU Board as to whether Kistler could potentially be
involved in the construction of the Transportation facility.
k. Kistler testified that based upon Reid's recommendations to him at the March
18, 2002, executive session, he (Kistler) removed himself from the building
committee and from discussion and votes on matters that involved him
(Kistler). (Tr. at 1064).
I. Kistler testified that at the March 18, 2002, public meeting of the CLIU Board,
his intentions were that he resigned completely from the building committee.
(1) Following Kistler's resignation from the building committee, he no
longer attended building committee meetings.
m. Kistler testified that at the March 18, 2002, public meeting of the CLIU Board,
when his name was called during the roll call vote as to the motion to assign
the CLIU Board's purchase rights for the Lesher property to a third party
(Board 20, page 6; ID 7 -193), he specifically stated that he abstained
because he might be involved in the construction of the building. (Tr. at
1067- 1068).
(1) Respondent testified that it was his habit to announce the reason for
an abstention because he believes that a Board Member has an
obligation to vote. (Tr. at 1068).
(2) Respondent testified that in his capacity as President of the
Northwestern Lehigh School Board, he always made sure that
individuals stated the reason for their abstentions. (Tr. at 1068).
n. Kistler testified that at the March 18, 2002, public meeting of the CLIU Board,
when he abstained as to the motion naming Roth Marz as the CLIU Board's
agent to pursue the purchase of the Lesher property (Board 20, page 6; ID
7 -193), he stated, "I abstain for the same reasons." (Tr. at 1069).
o. Roth -13, pages 1 -5 is a set of specifications and scope of work dated April
26, 2002, which was provided by Kistler for Roth specifically for the
construction of the Transportation facility. (See also, ID 10 -1 -5).
(1) Kistler testified that the documents at Roth -13, pages 1 -5 were
prepared after Roth had provided a floor plan and additional
information to Kistler.
p.
q.
(2) Kistler testified that while Roth -5 was a ballpark estimate for the
Transportation facility, he does not believe he knew that at the time
he prepared Roth -5.
Kistler testified that Roth made sure that Kistler knew he (Roth) was looking
at other building types for the Transportation facility and that Kistler's
company was in competition. (Tr. at 1075).
Roth -18 consists of the final agreement between Kistler Pole Building
Company, Inc. and Cornerstone, LLC for construction as to the CLIU
Transportation facility. (See also, ID 11 -1).
Kistler, 04 -037
Page 42
(1) The agreement is dated July 12, 2002. (See, Finding 92).
(2) The contract price was $550,492.
r. Respondent testified that it was approximately two weeks prior to the
execution of the final agreement between Kistler Pole Building Company,
Inc. and Cornerstone, LLC for construction as to the CLIU Transportation
facility (Roth -18) that he (Kistler) had a definitive commitment from Roth that
Kistler / Kistler's company was going to build the Transportation facility.
s. Respondent abstained from the CLIU Board actions on July 15, 2002,
relating to the Transportation facility, including the assignment of purchase
rights to Cornerstone, R.E., LLC; approval of a Lease Agreement and Option
Agreement with Cornerstone, R.E., LLC; and approval of a related bank
agreement. (Board 24, pages 1 -2; ID 7- 235 -236).
(1) Kistler did not announce at this CLIU Board meeting that he had just
signed a purchase agreement with Roth to construct the
Transportation facility. (Tr. at 1127 - 1128).
(2) Kistler stated that the reason he did not announce at the July 15,
2002, CLIU Board meeting that he had just signed a purchase
agreement with Roth to construct the Transportation facility was that
he was following what he thought were the instructions from Reid that
he was to remain silent on matters involving the Transportation
facility. (Tr. at 1083, 1128; see, similar testimony at Tr. at 1135 -1136
regarding the LLAS facility).
(a) Kistler's testimony on this point conflicts with his other
testimony that he always announces the reason for an
abstention and that he in fact did so at other meetings where
the basis for the abstention was that he might work on the
construction of a building for the CLIU. (See, Findings 83 m,
n, and ff).
t. At the CLIU Board's June 17, 2002, Board meeting, the CLIU Board voted to
terminate its lease with Stephen Hirsh for the LLAS facility. (Board 23, page
15; ID 7 -232).
(1) Kistler participated in this vote.
u. Also at the CLIU Board's June 17, 2002, Board meeting, the CLIU Board
voted to authorize Dale Roth to pursue construction of a LLAS facility.
(Board 23, page 16; ID 7 -233).
(1) Kistler participated in this vote.
v. Kistler testified that on June 17, 2002, when he voted to terminate the lease
with Stephen Hirsh for the old LLAS facility and to authorize Dale Roth to
pursue construction of a new LLAS facility, he (Kistler) had no idea that he
would be involved in the construction of the LLAS facility. (Tr. at 1091).
w. Kistler testified that to his knowledge, as of June 17, 2002, there were no
approved plans in place to actually commence physical construction of the
LLAS facility.
Kistler, 04 -037
Page 43
x. Kistler testified that prior to the June 17, 2002, CLIU Board meeting, he had
not had any conversations with Roth or anyone concerning the potential
development of a structure that could be used for classroom facilities.
(1) Kistler testified that he was unaware of the fact that Keegan had
talked with Roth in 2001 about the possibility of building a school on
three acres near Roth's office. (See, ID 6 -45 /Keegan 36; Tr. at 1133).
Kistler testified that as of June 17, 2002, he had no idea that Roth would
consider using a pole building for a classroom facility. (Tr. at 1090).
(1) Kistler testified that it was not typical for a classroom building to be a
pole building. (Tr. at 1134).
(2) Kistler testified that classroom facilities are generally perceived as
permanent and require durability and longevity greater than that for
which pole buildings are generally classified. (Tr. at 1090- 1091).
Kistler testified that architects and engineers rarely consider using a
pole building for a classroom building. (Tr. at 1091, 1134).
z. Kistler provided consistent testimony that on April 18, 2003, he learned, to
his surprise, that Roth was considering a pole building for the LLAS facility,
but provided inconsistent testimony as to when he knew he was going to be
involved with the construction of the LLAS facility.
(1) On direct examination, Kistler testified that April 18, 2003, was
definitely the day he learned that he was going to be involved with the
construction of the LLAS facility. (Tr. at 1093 -1095; 1134 - 1135).
(a) Kistler testified that on April 18, 2003, Roth met with Kistler.
(b) Kistler testified as follows regarding his discussions with Roth
on April 18, 2003:
y.
(3)
So I sat down in the conference room and he rolled out a floor
plan, and he said, we're going to build the LLAS building over
here on a piece of property right across from our office. I said
okay. And he said, do you want to take a shot at building a
pole building. And I said, Dale, would you honestly seriously
consider using a pole frame constructed building for this
structure. And he said, yes, he would. And I said, then I'm
interested in looking at it. And from there on is where we
proceeded.
(Tr. at 1093).
(2) On cross - examination, Kistler testified in part as follows:
Dale Roth told me and I asked the specific question, would you
consider using a pole building for this structure. And his answer to
me was, yes, he would consider using it. That by no means, to me,
indicates, number one, that he is going to use a pole building, or
number two, we're going to build it....You have no guarantee that
you're going to build something until the man says to you -- -looks you
in the eye and says, you know what, prepare the documents. We're
going to go with you.
Kistler, 04 -037
Page 44
(3)
(Tr. at 1139).
On redirect examination, Kistler testified in part as follows:
Dale called me and asked me to come look at a project that he
had planned —that he was planning. It would be a fair assumption on
my part to assume that he is looking at using a pole building. Well,
why would he call me? So I went over to his office. I sat down and I
looked at it, and I looked up at him and I said, are you -- -would you
really consider using a pole building for this project, the assumption
being that that's why I'm there.
(Tr. at 1151).
aa. Kistler testified that as soon as he became aware that he was being
considered for work on the LLAS facility, he stopped participating in any
discussions or votes of the CLIU Board with respect to the LLAS facility. (Tr.
at 1096- 1097).
bb. Kistler testified that he asked Reid whether there was any reason that he
should not be involved in the construction of the LLAS facility, and that Reid
said, "No, as long as you don't participate in the discussions and as long as
you don't vote in anything that has anything to do with you." (Tr. at 1096)
(See also, Tr. at 1136).
cc. The first meeting following April 18, 2003, at which the CLIU Board
considered action involving the LLAS was the October 20, 2003 meeting.
dd. Kistler abstained from the CLIU Board's action at the October 20, 2003,
meeting to authorize Roth Marz Partnership to begin the construction phase
of the LLAS facility. (Board 39, page 12; ID 7 -394).
(1) Kistler testified that when he abstained from this matter on October
20, 2003, he stated that he abstained because he might be involved
in the construction of the building. (Tr. at 1096).
(a) Kistler had previously testified that he knew he would be
involved in the construction of the LLAS facility approximately
six months earlier on April 18, 2003. (Tr. at 1093 - 1095).
(2) Kistler filed an abstention memorandum dated November 17, 2003,
regarding his abstention from the October 20, 2003, Board action on
the motion approving construction of the LLAS facility. ID 23 -3.
(a) Kistler's abstention memorandum states that he abstained for
the following conflict /reason: Have worked for Roth Marz
Partnership in the past." ID 23 -3.
(b) Kistler's abstention memorandum makes no mention of the fact
that he was going to be involved in the construction of the
LLAS facility. ID 23 -3.
ee. At the same October 20, 2003, meeting, Respondent voted in favor of
leasing an administrative facility from R &T Management, LLC and approving
a particular funding arrangement for the lease. (Board 39, pages 11 -12; ID
7- 393 -394) (See, Finding 87 I).
Kistler, 04 -037
Page 45
ff. Kistler abstained from the CLIU Board's action at the May 17, 2004, meeting
ratifying and authorizing the Lease Agreement between Dale and Ruth Roth
and the CLIU for the LLAS facility. (Board 41, page 10; ID 7 -422).
(1) Kistler testified that when he abstained from this matter on May 17,
2004, he stated that he abstained because he might be involved in
the construction of the building. (Tr. at 1098).
(2) At this point, Kistler was president of the CLIU Board, having been
appointed to that office on January 15, 2004. (Board 39a, page 2).
By letter dated August 4, 2004, Kistler was notified that he was being
investigated for possible violations of the Ethics Act. (S &S -1 /Reid -1).
(1) At the time Kistler received this notification, Kistler Pole Building
Company, Inc. was already under contract to construct the LLAS
facility but had not yet commenced construction. (See, Finding 95;
Tr. at 1100- 1101).
(2) On Kistler's behalf, a request for an advisory dated August 20, 2004,
was faxed to this Commission's former Chief Counsel, asking whether
Kistler would be in violation of the Ethics Act if he would proceed to
fulfill the contractual obligations he had already undertaken. (S &S -2).
By letter dated August 20, 2004, former Chief Counsel responded that
an advisory could not be issued because the Commission does not
address in an advisory format matters involving past conduct or
matters under investigation, and that the scenario raised in the
request was part of the ongoing investigation by the Investigative
Division. (S &S -3).
hh. Kistler contacted Reid's firm and received an opinion letter dated August 27,
2004, from Attorney John Freund, which letter concluded that it was the
firm's opinion that there had been no violation of the Ethics Act. (Reid -5).
gg.
(3)
ii. Kistler testified that based upon the opinion letter he received from Freund
(Reid -5), he proceeded to build the LLAS facility.
jj. Kistler / Kistler's company profited from the construction of the Transportation
facility.
kk. Kistler / Kistler's company profited from the construction of the LLAS facility.
II. The CLIU Board votes to approve lengthy monthly bill lists en masse.
mm. Kistler testified that to his knowledge, he has never abstained from voting on
any bills that the CLIU has presented for payment.
84. Kevin Reid, Esquire ( "Reid ") served as Solicitor for the CLIU from on or about
December 17, 2001, through the middle of 2005.
a. Reid testified that on March 18, 2002, prior to the CLIU Board meeting, he
received a telephone call from Ferrari who indicated that Respondent
intended to remove himself from the building committee and from any of the
discussions regarding the Transportation facility because there was a
possibility he might be engaged in some of the work.
Kistler, 04 -037
Page 46
b. Reid testified that at the CLIU Board's executive session on March 18, 2002,
there were discussions regarding Respondent removing himself from the
building committee.
(1) Reid testified that during this executive session, Respondent
indicated that he would be stepping down from the building
committee, and that there was a possibility that he might be engaged
by the landlord, Dale Roth.
(2) Reid testified that at the time Respondent made the aforesaid
disclosures, the CLIU Board, Ferrari, Keegan, and Reid were present.
c. Reid testified that on March 18, 2002, he shared with Ferrari and the CLIU
Board his (Reid's) opinion that it would be appropriate for Respondent to
remove himself entirely from the process involving the Transportation facility,
including any discussions or deliberations, and to abstain from voting on any
matter related to it.
d. Reid testified that he provided his opinion during the March 18, 2002,
executive session and public meeting of the CLIU Board.
(1) The minutes of the March 18, 2002, public meeting do not include any
mention of Reid's opinion.
e. Reid testified that the discussions that were held in the March 18, 2002,
executive session were brought forward into the public meeting.
(1) Reid testified that Respondent disclosed his potential involvement in
the construction of the Transportation facility in both the March 18,
2002, executive session and public meeting of the CLIU Board.
(2) The minutes of the March 18, 2002, public meeting do not include any
mention of Respondent's reason for abstaining from votes involving
the Transportation facility.
f. Reid testified that it was his recollection that on March 18, 2002, Respondent
stepped down completely from the building committee.
Reid testified that he did not recall Respondent discussing anything with
regard to the Transportation facility from March 18, 2002, to March 15, 2004.
h. Reid testified that all of the discussions concerning the proposal from Roth,
the lease terms, and the option to buy the Transportation facility occurred at
open public regular meetings of the CLIU Board.
Reid testified that at the time of the June 17, 2002, action by the CLIU Board
to terminate the lease between the CLIU and Stephen Hirsh and to authorize
Roth to pursue construction of a new LLAS, the process was at a preliminary
planning stage, and there was no construction underway. Board 23, pages
15 -16; ID 7- 232 -233.
(1) The minutes of the June 17, 2002, CLIU Board meeting do not
include any mention of Respondent's potential involvement with the
construction of the Transportation facility or of Respondent having
any association with a business owned by Roth.
g.
Kistler, 04 -037
Page 47
J.
Reid testified that at the October 20, 2003, CLIU Board meeting, the CLIU
Board elected to move into the construction phase of the LLAS facility.
(Board 39, page 12; ID 7 -394).
k. Reid testified that he does not recall Respondent participating in any CLIU
Board discussions regarding the LLAS facility from the time of the October
20, 2003, CLIU Board meeting, when Respondent began abstaining as to
the LLAS facility, through the time the CLIU took possession and started
paying on the lease for the LLAS facility.
I. Reid testified that it was Respondent's practice to always announce a reason
for abstention.
m. Reid testified that it is customary for members of the Northwestern Lehigh
School Board to make disclosures of the reasons for abstentions by board
members.
n. Reid -4 and Reid -5 are letters referencing the opinion of Reid's firm regarding
Respondent's involvement with the LLAS facility and Transportation facility.
o. The first time Respondent asked Reid for advice regarding Respondent's
potential involvement in the Transportation facility was on the evening of
March 18, 2002.
(1) Respondent did not ask for a written opinion from Reid regarding
Respondent's potential involvement in the construction of the
Transportation facility.
(2) Reid never provided a written opinion to Respondent regarding
Respondent's potential involvement in the construction of the
Transportation facility.
p. In providing his opinion to Ferrari and Respondent regarding Respondent's
potential involvement in the construction of the Transportation facility, Reid
did not do any research of rulings under the Ethics Act but based his opinion
upon his general knowledge.
q. Reid did not have a specific recollection of Respondent indicating to Reid
that he (Respondent) was going to be involved in the construction of the
LLAS facility.
C. Documents
85. ID 4, pages 1 -9 consist of lists of the CLIU Board committee members in various
years.
a. ID 4 -4 reflects that James Pollard became Chairperson of the Building and
Grounds /Special Education Transportation Committee effective 3/18/02.
(1) The entry of Respondent's name on this Exhibit under the Building
and Grounds /Special Education Transportation Committee has the
word "Chairperson" stricken, but there is no line through
Respondent's name as a Member of the Committee.
86. ID 6 consists of documents prepared and /or maintained by Keegan, including
reports prepared by Keegan regarding the Transportation facility project. (See also,
various of the "Keegan Exhibits ").
Kistler, 04 -037
Page 48
a. ID 6 -32 /Keegan 23 consists of a letter dated June 18, 2001, from Attorney
Charles A. Waters to Keegan regarding various options for structuring the
construction of the CLIU Transportation facility project.
(1) The letter includes the following:
The first question was whether the CLIU could own a
property and have a building built by a contractor and then
subsequently lease the building from the contractor. It is my
opinion, that this type of arrangement would require the CLIU
to bid the project and pay prevailing wages. As such, I can
see no particular advantage to otherwise doing the project in
the traditional manner of owning the property and building the
structure and improvements.
The next question was whether the CLIU could enter
into a lease purchase agreement and thereby be relieved of
certain construction requirements such as prevailing wages. If
the agreement is structured as a true lease /purchase (Le. the
CLIU must purchase the property in the future) then I believe
that the project must be bid and subject to prevailing wages.
If, however, the agreement is structured as a lease with option
to purchase, then an argument could be made that since the
option has not yet been exercised, the arrangement is purely a
straight forward lease agreement which, in my opinion, would
not require competitive bidding and prevailing wages. Having
stated this argument, it is my position that the CLIU would be
exposing itself to a significant amount of risk of a legal
challenge if prevailing wages were not paid in the context of
the lease with option to purchase arrangement. The Board
has to realize that there is not a tremendous amount of case
law which would give clear direction in this situation, and we
can probably all agree that we would not want to be the test
case.
ID 6 -32.
b. ID 6 -45 /Keegan 36 is a copy of handwritten notes bearing a date in 2001,
which notes include, "Talked to Dale Roth about a School — 3 acres near his
offics [sic] available."
87. Both parties have submitted into evidence copies of various official CLIU Board
meeting minutes.
a. Board 1 consists of the July 19, 1999, CLIU Board meeting minutes at which
the CLIU Board approved entering into a 10 -year lease with Stephen Hirsh
for building space to house the LLAS at 7580 Kernsville Road, Orefield, PA
18069. Board 1, page 2.
b. Board 2 consists of the December 20, 1999, CLIU Board meeting minutes at
which the CLIU Board combined the Building and Grounds Committee and
the Special Education Transportation Committee and also discussed
alternative options for a Transportation facility. Board 2, page 6.
c. Board 13/ID 7- 104 -117 consist of the CLIU Board meeting minutes from the
June 18, 2001, regular Board meeting.
Kistler, 04 -037
Page 49
(1) The minutes include the following:
Building & Grounds /Special Education Transportation Committee
Report
Ken Kistler, Chairperson, brought the Board up -to -date on recent
events related to the CLIU Transportation Facility. Since the May 21,
2001 CLIU Board meeting, steps were taken to rescind our
agreement of sale on the White property. On May 31, agreement of
sale release was signed by Grant White with deposit returned to
CLIU. The Committee's first choice, a larger piece of property, was
placed back on the market. Mr. Kistler made a motion to enter into an
agreement of sale for said property:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
enters into a conditional agreement of sale of land with Fred Lesher
at a cost of $450,000. Moved: Patricia Noga; Seconded: John
Wieand; Vote: Roll Call: Yes - Hoffman, Cappadocia, Herman,
Dorshimer, Kistler, Pollard, Vavra, Foster, McFadden, Noga, Grega,
and Wieand; No -0; Abstentions -0; Absent -2.
Board 13, page 13; ID 7- 115 -116.
d. Board 14/ID 7- 118 -127 consists of the July 16, 2001, CLIU Board meeting
minutes at which the following motion was approved by the CLIU Board:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
approves Barry (sett and Associates, Inc., to perform Land Feasibility
Study, Phase I Study, and Well and Septic Testing on the Lesher
Property in Lehigh Township in an amount not to exceed $10,000.
Moved: Kenneth K. Kistler; Seconded: Patricia Noga; Vote: Roll
Call: Yes - Hoffman, Richwine, Herman, Dorshimer, Kistler, Pollard,
McFadden, and Noga; No -0; Abstentions -0; Absent -6.
Board 14, page 8; ID 7 -125.
e. Board 17/ID 7- 154 -161 consist of the CLIU Board meeting minutes from the
November 19, 2001, regular Board meeting.
(1)
The minutes include the following:
Proposed Transportation Facility Update
Ken Kistler, Chairperson of the Building and Grounds /Special
Education Transportation Committee, turned the floor over to Mr.
Robert J. Keegan, Jr., who reported to the Board on the proposed
transportation facility. Since the last Board meeting, Mr. Keegan
reported that he had met with the architecture firm of Roth Marz.
Many options were pursued in regard to space needs for storage,
office space for nonpublic staff, and curriculum and instruction
classrooms. The firm will get back to Mr. Keegan with the additional
square footage costs and lease option costs of the facility.
Mr. Keegan also noted that the court decision on the lawsuit on the
property would be appealed to the State Superior Court, which could
Kistler, 04 -037
Page 50
delay the project by a proposed six to nine months. Mr. Kistler and
Mr. Keegan will continue to keep the Board up -to -date on this project.
Board 17, page 7; ID 7 -160.
f. The CLIU Board meeting minutes from the December 17, 2001, regular
Board meeting record an update by Keegan as to the Transportation facility
which included: "CLIU developing costs for purchase or lease purchase of
building ..." Board 17, page 6; ID 7 -167.
The CLIU Board meeting minutes from the February 21, 2002, regular Board
meeting record an update by Keegan as to the Transportation facility which
included: "Costs for the project will be shared with the Board next month."
Board 19, page 8; ID 7 -185.
g.
h. Board 20 /ID 7- 188 -195 consist of the CLIU Board meeting minutes from the
March 18, 2002, regular Board meeting.
(1) The minutes include the following:
Building & Grounds /Special Education Transportation Committee
Report
Per having met with the Building & Grounds /Special Education
Transportation Committee prior to our Board meeting, the following
motions were made:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
approve the resignation of Kenneth Kistler as Chairperson of the
Building and Grounds /Special Education Transportation Committee
and approve James Pollard as Chairperson of said committee.
Moved: Kenneth K. Kistler; Seconded: John Wieand; Vote: Yes -13;
No -0; Abstentions -0; Absent -1.
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby elects to exercise its option provision under Paragraph 1 in
the existing Agreement of Sale for the property in Lehigh Township by
signing its purchase rights to a third party. Moved —John Wieand;
Seconded: Linda Pacifico; Vote: Roll Call: Yes — Pacifico, Richwine,
McGuire, Dorshimer, Pollard, Vavra, Foster, Furst, Auteri, Palmer,
Wieand, and Hoffman; No -0; Abstentions - Kistler; Absent -1. Motion
carried.
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby names Roth Marz as its agent to pursue the purchase
provision in the existing Agreement of Sale for the property located in
Lehigh Township. Moved: Bryan Dorshimer; Seconded: James
Pollard; Vote: Roll Call: Yes - Richwine, McGuire, Dorshimer, Pollard,
Vavra, Foster, Furst, Auteri, Palmer, Wieand, Hoffman, and Pacifico;
No -0; Abstentions - Kistler; Absent -1. Motion carried.
Board 20, page 6; ID 7 -193.
(2) The meeting minutes do not include any disclosure by Respondent
that he would be pursuing a subcontract with Roth in regard to the
construction of the Transportation facility.
Kistler, 04 -037
Page 51
J.
(3)
The meeting minutes do not include any indication or record of the
Solicitor's opinion in regard to Respondent's involvement with any
type of construction as to the Transportation facility.
(4) The CLIU Board commissioned a professional environmental study of
the LLAS by vote at its March 18, 2002, regular meeting. Board 20,
page 7 /ID 7 -194.
Board 23/ID 7- 218 -234 consist of the CLIU Board meeting minutes from the
June 17, 2002, regular Board meeting.
(1) At this meeting, the CLIU Board voted to terminate its lease with
Stephen Hirsh for the LLAS facility:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby authorizes its solicitor to provide lease termination notice to
the Landlord for the property located at 7580 Kernsville Road,
Orefield, Pennsylvania. Moved: John Wieand; Seconded: Linda
Pacifico; Vote: Roll Call: Yes - Hoffman, Pacifico, Herman, Dorshimer,
Kistler, Pollard, Vavra, Foster, Furst, Auteri, Palmer, and Wieand; No-
0; Abstentions -0; Absent -2.
Board 23, page 15; ID 7 -232.
(2) At this same meeting, the CLIU Board authorized Dale Roth to pursue
construction of a LLAS facility:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby authorizes Dale Roth to pursue construction of a facility on
property adjacent to the Lehigh Valley office at 2970 Corporate Court,
Orefield, Pennsylvania, for the purposes of providing leased space to
the Carbon Lehigh Intermediate Unit Lehigh Learning and Adjustment
School. Moved: John Wieand; Seconded: Dennis Foster; Vote: Roll
Call: Yes - Hoffman, Pacifico, Herman, Dorshimer, Kistler, Pollard,
Vavra, Foster, Furst, Auteri, Palmer, and Wieand; No -0; Abstentions -
0; Absent -2.
Board 23, page 16; ID 7 -233.
Board 24/ID 7- 235 -244 consist of the CLIU Board meeting minutes from the
July 15, 2002, regular Board meeting.
(1) The minutes include the following:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby:
(1) Authorizes its Executive Director to execute the Assignment of
Real Estate Sales Agreement as filed with the Official Minutes;
(2) Approves the Lease Agreement with Cornerstone, R.E., LLC,
and authorizes CLIU's Board President to execute the Lease
Agreement as filed with the Official Minutes;
Approves the Option Agreement with Cornerstone, R.E., LLC,
and authorizes CLIU'S Board President to execute the Option
Agreement as filed with the Official Minutes; and
(3)
Kistler, 04 -037
Page 52
Moved: John Wieand; Seconded: Bryan Dorshimer; Vote: Roll Call:
Yes -Linda Pacifico, Peter McGuire, Olivia Herman, Bryan Dorshimer,
James Pollard, Dennis Vavra, Dennis Foster, Stephen Furst, Lisa
Auteri, Julius Palmer, and John Wieand; No -0; Abstentions - Kenneth
Kistler; Absent - Patricia D. Hoffman and Terry Richwine.
Board 24, pages 1 -2; ID 7- 235 -236.
(2) The recorded minutes do not include any disclosure by Respondent
of the reasons for his abstention as to the CLIU Board's vote to
authorize the execution of the Assignment of the Real Estate Sales
Agreement and Lease Agreement and Option Agreement with
Cornerstone, R.E., LLC, as well as a bank agreement relating to the
Transportation facility.
The recorded minutes do not include any disclosure by Respondent
that three days prior to the July 15, 2002, CLIU Board meeting, he
had entered into a Purchase Agreement with Cornerstone, R.E., LLC
for the construction of a pole building structure for the Transportation
facility.
(3)
(1)
(4) Approves the Subordination, Non - Disturbance, and Attornment
Agreement with AIIFirst Bank, and authorizes CLIU's Board
President to execute such Agreement as filed with the Official
Minutes.
k. The CLIU moved into the Transportation facility in March and April 2003.
Board 32, page 6; ID 7 -321; Board 33, page 8; ID 7 -331.
Board 39/ID 7- 383 -395 consist of the CLIU Board meeting minutes from the
October 20, 2003, regular Board meeting.
The minutes include the following:
Approval to Lease Administrative Facility from R &T Management LLC
WHEREAS, the Carbon Lehigh Intermediate Unit #21 ( "CLIU ") is an
Intermediate Unit created by statute.
WHEREAS, R &T Management LLC has indicated that it can provide
an administrative facility suitable for CLIU's future needs to serve its
member school districts;
WHEREAS, the Board of Directors of CLIU (the "Board ") has
determined it to be in the best interest of CLIU to lease Administrative
facilities from R &T Management LLC.
NOW THEREFORE BE IT RESOLVED, by the Board of Directors of
Carbon Lehigh Intermediate Unit #21, as follows:
1. The Board hereby authorizes the entering into a lease with
R &T Management LLC under a Lease Agreement substantially
in the form of the Lease Agreement which is appended hereto
made part hereof and marked as Exhibit "A "; with any further
modifications to the Lease Agreement being subject to the
approval of the Board's Solicitor.
Kistler, 04 -037
Page 53
2. The Board hereby further authorizes its President, to execute
the Leas [sic] Agreement and any other documents related to
the Lease or to take any and all necessary and required or
appropriate action with regard to the leasing of an
Administrative Facility from R &T Management LLC.
Moved: Dennis Foster; Seconded: Patricia D. Hoffman; Vote: Roll
Call: Yes — Kistler, Pollard, Vavra, Foster, Auteri, Wieand, Hoffman,
Richwine, and McGuire; No — 0; Abstentions — 0; Absent — 5.
Approval of Fund Lease of New Facility
WHEREAS, the Carbon Lehigh Intermediate Unit #21 ( "CLIU ") is an
Intermediate Unit created by statute;
WHEREAS, the Board of Directors of the CLIU (the "Board ") has
determined it to be in the best interest of CLIU to lease Administrative
facilities from R &T Management LLC;
WHEREAS, R &T Management LLC has presented two Lease Rental
Payment options;
WHEREAS, the Lease Rental Payment options are to either base the
Lease Rentals on the construction costs of the facilities with a fixed
interest rate "(Fixed Rate Program ") or to base the Lease Rentals on
construction costs of the facilities with a variable interest rate
( "Variable Rate Program ");
WHEREAS, the Board has determined it to be in the best interest of
CLIU to Lease administrative facilities from R &T Management LLC
based upon the Variable Rate Program.
NOW THEREFORE BE IT RESOLVED, by the Board of Directors of
Carbon Lehigh Intermediate Unit #21, as follows:
1. The Board hereby authorizes the leasing of administrative
facilities from R &T Management LLC based upon the Variable
Rate Program with the variable interest rate specified as the
LIBOR rate plus 1.5 %.
Moved: James Pollard; Seconded: Peter McGuire; Vote: Roll Call:
Yes — Pollard, Vavra, Foster, Auteri, Wieand, Hoffman, Richwine,
McGuire, and Kistler; No — 0; Abstentions — 0; Absent — 5.
Approval of Construction of LLAS Facility
WHEREAS, the Carbon Lehigh Intermediate Unit #21 ( "CLIU ")
previously authorized Roth Marz Partnership to initiate the planning
process for the construction of a facility for the Lehigh Learning
Adjustment School ( "LLAS ");
WHEREAS, Township approval for the construction of the LLAS
facility has been given;
Kistler, 04 -037
Page 54
WHEREAS, the Board of Directors of CLIU ( "the Board ") has
determined it to be in the best interest of CLIU to pursue the
construction of the LLAS Facility;
NOW THEREFORE BE IT RESOLVED, by the Board of Directors of
Carbon Lehigh Intermediate Unit #21, as follows:
1. The Board hereby authorizes Roth Marz Partnership to begin
the construction phase of the LLAS Facility. Any Lease for the
Facility shall be subject to the approval of the Board.
Moved: James Pollard; Seconded: Terry Richwine; Vote: Roll Call:
Yes — Vavra, Foster, Auteri, Wieand, Hoffman, Richwine, McGuire,
and Pollard; No — 0; Abstentions — Kistler; Absent — 5.
Board 39, pages 11 -12; ID 7- 393 -394.
(2) The recorded minutes do not include any disclosure by Respondent
of the reasons for his abstention as to the CLIU Board's vote to
authorize Roth Marz Partnership to begin the construction phase of
the LLAS Facility.
The recorded minutes do not include any disclosure by Respondent
that he had a prior business relationship with Dale Roth.
m. Board 40 /ID 7- 399 -405 consist of the CLIU Board meeting minutes from the
March 15, 2004, regular Board meeting.
(1) The minutes include the following:
Financing of Transportation Facility
WHEREAS, the Carbon Lehigh Intermediate Unit 21 ("IU ") is
considering the acquisition of a transportation facility ( "Project "); and
WHEREAS, the Board of School Directors (the "Board ") for the IU, in
order to the [sic] fund the Project, is considering the sale and
issuance of Bonds (the "Bonds "); and
WHEREAS, the Board has determined to appoint a financing team to
present and recommend an appropriate financing plan for the Project.
NOW, THEREFORE, BE IT HEREBY RESOLVED, by the Board of
School Directors for the Carbon Lehigh Intermediate Unit #21, as
follows:
(3)
1. A financing team (the "Financing Team "), consisting of
the Executive Director and the Business Manager of the IU, Kevin C.
Reid, Esquire, the IU's Solicitor, Parker /Hunter Incorporated, as
Financial Advisors, and King, Spry, Herman, Freund & Faul LLC as
Bond Counsel is hereby appointed to plan the financing.
2. The Financing Team is authorized and directed to
present a financing plan and to prepare and disseminate a
Preliminary Official Statement with regards to the Bonds, to present
financial information to rating agencies and bond insurance
Kistler, 04 -037
Page 55
companies, to prepare any other necessary preliminary documents
with reference to the financing plan.
3. Any issuance of Bonds, however, shall be subject to
definitive action by the Board of School Directors for the Carbon
Lehigh Intermediate Unit #21 at an advertised public meeting.
Moved: Bryan Dorshimer; Seconded: Terry Richwine; Vote: Roll
Call: Yes -Hahn, Richwine, McGuire, Eidem, Dorshimer, Kistler,
Yeakel, Vavra, Bartlett, Feinberg, Auteri, and Luchansky; No -0;
Abstentions -0; Absent -2.
Board 40, page 6; ID 7 -404.
n. ID 7- 406 -412 consists of the CLIU Board meeting minutes from the April 19,
2004, regular Board meeting.
(1) The minutes include the following:
Amended Motion — Financing Option —CLIU Transportation Facility/
Walnutport
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
approves Option #1 /Full Wraparound Option, from Parker /Hunter,
Inc., and will offset borrowing costs with the first year savings to pay
bond issuance costs, for the CLIU Transportation Facility, Walnutport,
as filed with the Official Minutes. Moved: Terry Richwine; Seconded:
Penny Hahn; Vote: Roll Call: Richwine, Eidem, Kistler, Yeakel,
Vavra, Bartlett, McDonnell Feinberg, Auteri, Barbush, Luchansky, and
Hahn; No -0; Abstentions -0; Absent -3.
ID 7 -407.
o. Board 41/ID 7- 413 -423 consist of the CLIU Board meeting minutes from the
May 17, 2004, regular Board meeting.
(1) The minutes include the following:
Ratification of LLAS Lease Agreement
- MOTION: The Carbon Lehigh Intermediate Unit Board ratifies and
authorizes the Lease Agreement appended hereto between Dale and
Ruth Roth and the Carbon Lehigh Intermediate Unit. Moved: Penny
Hahn; Seconded: Darlene Yeakel; Vote: Roll Call: Yes -Hahn,
McGuire, Eidem, Dorshimer, Yeakel, Vavra, Bartlett, and Auteri; No -0;
Abstentions - Kistler; Absent - Stecker, Richwine, Feinberg, Barbush,
and Luchansky.
Board 41, page 10; ID 7 -422.
(a) The minutes do not include any disclosure by Respondent of
the reasons for his abstention as to the CLIU Board's vote to
ratify the Lease Agreement with Dale and Ruth Roth for the
LLAS Facility.
(2) Respondent voted in favor of the following motion:
Kistler, 04 -037
Page 56
Board 41, page 10; ID 7 -422.
Respondent voted in favor of the following motion:
Approval to Execute Agreement of Sale for CLIU Transportation
Facility
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby authorizes its Board President, the Executive Director, or any
other officer of the Board as required, to execute an agreement of
sale and any other related documents for the purchase of the
Transportation Facility in a manner consistent with Option Agreement
entered into between Cornerstone R.E. LLC and CLIU #21 subject to
review of any and all such documents by the Solicitor. Moved: Bryan
Dorshimer; Seconded: Penny Hahn; Vote: Yes - Eidem, Dorshimer,
Kistler, Yeakel, Vavra, Bartlett, Auteri, Barbush, Hahn, and McGuire;
No -0; Abstention -0; Absent -4.
Board 41, page 10; ID 7 -422.
Board 42 consists of the CLIU Board meeting minutes from the July 19,
2004, regular Board meeting.
(1) The minutes include the following:
Mr. Roth also updated the Board on the progress of the new Lehigh
Learning and Adjustment School. He reported that the building pad is
done and they are ready to begin building during the week of July 26,
2004. Projected completion date is January 2005.
Board 42, page 2.
88. Keegan 26 is the Sales Agreement dated June 28, 2001, between Freddie J.
Lesher and Pamela R. Lesher and the CLIU for the property where the
Transportation facility was subsequently constructed.
p.
(3)
Approval of Borrowing Resolution for CLIU Transportation Facility
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby adopts the Borrowing Resolution as presented in its entirety
authorizing the issuance of the Carbon Lehigh Intermediate Unit #21
Educational Facility Revenue Bonds, Series of 2004, in the aggregate
principal amount of $2,510,000. Moved: Penny Hahn; Seconded:
Bryan Dorshimer; Vote: Roll Call: Yes - McGuire, Eidem, Dorshimer,
Kistler, Yeakel, Vavra, Bartlett, Auteri, Barbush, and Hahn; No -0;
Abstentions -0; Absent -4.
a. The purchase price was $450,000.
89. ID 9 -1 -3 consists of a memorandum of a "scope of work" that Young prepared to
Dale Roth for the construction of the CLIU Transportation facility as a pole building
structure. (See also, Roth -3).
a. The date on ID 9 -1 /Roth -3 is November 9, 2001, while ID 9 pages 2 -3 bear
the date January 29, 2002. (See, Finding 72 a(1)).
Kistler, 04 -037
Page 57
90. ID 10 -1 -9 consists of a scope of services and quote from Respondent for the
construction of the Transportation facility. (See also, Roth -13, pages 1 -5).
91. Roth -13, pages 1 -5 is a set of specifications and scope of work dated April 26,
2002, which was provided by Kistler to Gary Caldwell for the construction of the
Transportation facility. (See also, ID 10 -1 -5).
92. Roth -18 consists of the Purchase Agreement between Kistler Pole Building
Company, Inc. and Cornerstone, LLC for construction as to the CLIU Transportation
facility. (See also, ID 11 -1).
a. The agreement is dated July 12, 2002.
b. The contract price was $550,492.
c. The Purchase Agreement is signed by Kenneth K. Kistler as President of
Kistler Pole Building Company, Inc. and by Dale H. Roth.
93. ID 19 -1 -37 consist of bills and checks for the CLIU's rental of the Transportation
facility from Cornerstone R.E., LLC.
94. ID 20 -1 -28 /Keegan 80 and 81 consist of a deed, mortgage and security agreement,
settlement sheet and other documents related to the CLIU's purchase from
Cornerstone R.E., LLC, of the Transportation facility property (formerly the "Lesher
property ") located at 4850 Mountain View Drive, Lehigh Township, Northampton,
PA.
a. The contract sales price was $2,348,882.61.
b. The deed is dated July 29, 2004.
95. Roth -102 consists of the Purchase Agreement dated June 17, 2004, between
Kistler Pole Building Company, Inc. and Dale Roth and /or Dale and Ruth Roth for
the construction of the shell structure for the LLAS facility. (See also, ID 15; ID 16-
1).
a. The contract price was $641,933. (Roth 102, page 4).
b. The Purchase Agreement is signed by Kenneth K. Kistler as President of
Kistler Pole Building Company, Inc. and by Dale H. Roth.
96. ID 21 -1 -4 /Roth -23, pages 1 -4 consists of an Option Agreement dated August 1,
2002, between Cornerstone R.E., LLC (Lessor) and the CLIU (Lessee), which
provided the CLIU with an option to purchase the Transportation facility leased from
Cornerstone R.E., LLC.
a. The purchase price for the leased premises was to be equal to the sum of
the unpaid principal balances on all loans obtained by Cornerstone R.E.,
LLC, to purchase the leased premises and construct improvements thereon;
the architectural fees of Roth Marz Partnership, P.C. in the amount of
$85,000, relative to construction on the leased premises; and the
construction overhead and profit of Cornerstone R.E., LLC in the amount of
$153,800 for the construction of the leased premises.
b. Per the Option Agreement, the CLIU had the option to purchase the
Transportation facility at any time during the term of the lease.
Kistler, 04 -037
Page 58
97. ID 23 -1 -3 consist of two abstention memoranda dated August 19, 2002, and one
abstention memorandum dated November 17, 2003, from Respondent to Carfara.
a. The abstention memorandum at ID 23 -1 dated August 19, 2002, references
Respondent's abstention from the following issue /motion at the March 18,
2002, CLIU Board meeting, for the stated reason May be involved in the
construction ":
ID 23 -1.
ID 23 -2.
Building /Grounds Special Education Transportation Facility
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby elects to exercise its option provision under Paragraph 1 in
the existing Agreement of Sale for the property in Lehigh Township by
signing its purchase rights to a third party.
b. The abstention memorandum at ID 23 -2 dated August 19, 2002, references
Respondent's abstention from the following issue /motion at the July 15,
2002, CLIU Board meeting, for the stated reason May be involved in the
construction ":
Building /Grounds Special Education Transportation Facility
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors
hereby:
(1) Authorizes its Executive Director to execute the Assignment of
Real Estate Sales Agreement as filed with the Official Minutes;
(2) Approves the Lease Agreement with Cornerstone, R.E., LLC,
and authorizes CLIU's Board President to execute the Lease
Agreement as filed with the Official Minutes;
Approves the Option Agreement with Cornerstone, R.E., LLC,
and authorizes CLIU'S Board President to execute the Option
Agreement as filed with the Official Minutes; and
(4) Approves the Subordination, Non - Disturbance, and Attornment
Agreement with AIIFirst Bank, and authorizes CLIU's Board
President to execute such Agreement as filed with the Official
Minutes.
(3)
c. The abstention memorandum at ID 23 -3 dated November 17, 2003,
references Respondent's abstention from the following issue /motion at the
October 20, 2003, CLIU Board meeting, for the stated conflict/reason, Have
worked for Roth Marz Partnership in the past ":
Approval of Construction of LLAS Facility
WHEREAS, the Carbon Lehigh Intermediate Unit #21 ( "CLIU ")
previously authorized Roth Marz Partnership to initiate the planning
process for the construction of a facility for the Lehigh Learning
Adjustment School ( "LLAS ");
Kistler, 04 -037
Page 59
ID 23 -3.
WHEREAS, Township approval for the construction of the LLAS
facility has been given;
WHEREAS, the Board of Directors of CLIU ( "the Board ") has
determined it to be in the best interest of CLIU to pursue the
construction of the LLAS Facility;
NOW THEREFORE BE IT RESOLVED, by the Board of Directors of
Carbon Lehigh Intermediate Unit #21, as follows:
1. The Board hereby authorizes Roth Marz Partnership to begin
the construction phase of the LLAS Facility. Any Lease for the
Facility shall be subject to the approval of the Board.
(1) Respondent's abstention memorandum makes no mention of the fact
that he was going to be involved in the construction of the LLAS
facility. ID 23 -3.
98. Advertise 1 -9 consist of the proofs of publication for public meetings of the CLIU
Board for the fiscal years between July 1999 and June 2007 (as of November 9,
2006).
a. None of these documents make any mention of the construction of a
Transportation facility or LLAS facility.
b. None of these documents include the CLIU Board's meeting agenda.
99. TF -1 consists of a demonstrative chart submitted by Respondent as a chronology of
events relating to the Transportation facility.
100. LLAS -1 consists of a demonstrative chart submitted by Respondent as a chronology
of events relating to the LLAS facility.
101. Keegan 49 consists of cost comparison information provided by Roth Marz for the
Transportation facility under a purchase versus purchase /lease arrangement.
a. The cost comparison information indicates a cost savings of $470,719
through a purchase /lease arrangement.
102. Keegan 112 consists of a Lease Agreement dated May 7, 2004, between Dale Roth
and Ruth Roth ( "Lessor ") and the CLIU ( "Lessee ") for the LLAS facility at 2936
Corporate Court, Orefield, Pennsylvania.
a. The Lease Agreement provides for monthly rental installments of $16,900 in
2005; a fixed annual rental of $213,600 payable in equal, advance monthly
installments of $17,800 in 2006 and for nine years thereafter; and terms for
adjusting the rental thereafter.
103. Reid -3 consists of a letter dated August 23, 2004, from Dale H. Roth to Kevin Reed,
Esquire, which letter references controversy concerning a possible conflict of
interest regarding Kistler's involvement with the Transportation facility.
a. Roth's letter states, in part: "Prior to starting construction on the CLIU
Transportation Center, both Kenneth Kistler and Dr. Frank Farrari [sic]
indicated to me that Kenneth Kistler had taken the appropriate action, per
Kistler, 04 -037
Page 60
your directive, that would allow him to hold a sub - contract with my company
Cornerstone LLC."
b. Roth's letter further states, in part: "I would appreciate receiving a prompt
response to my request for written confirmation of no conflict regarding
Kistler Buildings acting as sub - contractor on the CLIU Learning and
Adjustment Center."
104. Reid -4 consists of a letter dated August 27, 2004, from Freund to Roth, which letter
states in part: We have prepared and delivered to Mr. Kistler our legal opinion that
no conflict arises."
D. Stipulations
105. The Pennsylvania Supreme Court disposed of the appeal affecting the Zoning
Hearing Board decision in Lowhill Township (as to the construction of the LLAS
facility) on April 15, 2004. (Tr. at 196).
a. The Pennsylvania Supreme Court refused to hear the appeal. (Tr. at 889-
890).
106. The CLIU Board approved the first two rental payments on the LLAS lease to Mr.
and Mrs. Roth during the Board's February 17, 2005, meeting. (Tr. at 204).
a. That vote occurred with Respondent absent. (Tr. at 204).
107. At the CLIU Board's June 17, 2002, regular meeting, the Board approved the
following motion:
- MOTION: The Carbon Lehigh Intermediate Unit Board of Directors hereby
authorizes Dale Roth to pursue construction of a facility on property adjacent
to the Lehigh Valley office at 2970 Corporate Court, Orefield, Pennsylvania,
for the purposes of providing leased space to the Carbon Lehigh
Intermediate Unit Lehigh Learning and Adjustment School. (Tr. at 205 -206).
a. The motion was made by John Wieand and seconded by Dennis Foster and
the vote was by roll call with Respondent voting "yes" in favor of the motion.
(Tr. at 206).
108. Based upon the report of J. Miller and Son, Inc., regarding the environmental study
of the LLAS at the property leased from Hirsh, the CLIU Board decided that it
should terminate its lease with Hirsh. (Tr. at 508 -509).
109. Furst resigned from the Salisbury School Board on October 21, 2003, and was no
longer available to participate in CLIU Board matters after that time. (Tr. at 617).
110. The minutes of the March 18, 2002, regular CLIU Board meeting are silent as to
Solicitor Reid providing any opinion regarding Respondent's potential future
involvement with the Transportation facility. (Tr. at 673).
111. On October 20, 2003, Dorshimer left the executive session of the CLIU Board at
9:45 p.m. (ID 7 -392). (Tr. at 714). (See, Finding 78 m(4)).
a. As of that time, Respondent had not stated that he had a prior business
relationship with Dale Roth. (Tr. at 714).
Kistler, 04 -037
Page 61
112. The only relevance of Exhibit ID 9 is that John Young contacted Respondent for
particular spacing information (eight -foot on- center spaces) relative to constructing
a pole building. (Tr. at 784).
113. ID 11 -1 consists of a page of the final agreement between Kistler Pole Building
Company, Inc. and Cornerstone, LLC for construction as to the CLIU Transportation
facility. (Tr. at 786).
114. The sum of the payment requests in Roth 114, 115 and 116 is $300,361. (Tr. at
904).
115. Respondent is not pursuing any procedural challenges relating to: the date that the
preliminary investigation was done; the number of extensions granted up through
and including the date the Investigative Division filed its Investigative Complaint on
July 29, 2005; the time that the Investigative Complaint was filed; manner of
service; or the number of updates and the timeliness of updates and extensions of
time from the commencement of the investigation through the filing of the
Investigative Complaint. (Tr. at 925 -926).
116. The first lease payment for the CLIU Transportation facility was approved on April
17, 2003. (Tr. at 1012 - 1013).
117. Respondent /Respondent's company commenced construction on the CLIU
Transportation facility in September of 2002 and completed construction in early
February of 2003. (Tr. at 1013).
118. Respondent /Respondent's company commenced construction of the LLAS facility in
September of 2004 and completed all work on the LLAS except for minor touch -up
work in early January 2005. (Tr. at 1014).
119. The CLIU Board meeting minutes are silent as to whether Respondent announced
his potential interest with regard to the Transportation facility and the LLAS facility
at the time he abstained. (Tr. at 1217 - 1218).
III. DISCUSSION:
At all times relevant to this matter, Respondent Kenneth Kistler (also referred to
herein as "Respondent," "Respondent Kistler," and "Kistler "), in his capacity as a Member
of the Carbon - Lehigh Intermediate Unit ( "CLIU ") Board of Directors ( "Board "), has been 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 allegations are that Kistler violated Sections 1103(a) and 1103(f) of the Ethics
Act when he used the authority of his position for the private pecuniary gain of himself
and /or businesses with which he is associated, Kistler Pole Buildings and Kistler Building
Products; when he participated in discussions and actions of the Board to award contracts
to Dale Roth, and /or businesses owned by the same, without an open and public process;
and when his company subsequently entered into subcontracts with Roth to construct
those buildings.
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.
Kistler, 04 -037
Page 62
Section 1103(f) of the Ethics Act provides in part that no public official /public
employee or spouse or child or business with which he or the spouse or child is associated
may enter into a contract with his governmental body valued at five hundred dollars or
more or any subcontract valued at five hundred dollars or more with any person who has
been awarded a contract with the governmental body with which the public official /public
employee is associated unless the contract is awarded through an open and public
process including prior public notice and subsequent public disclosure.
We preliminarily address a procedural issue raised by Respondent. Specifically,
Respondent objected to the simultaneous briefing deadline set by the Hearing Officer. (Tr.
at 1225 -1227; March 21, 2007, letter of Healy; Post - Hearing Brief of Respondent, at 1
(Note 1), 34 (Note 11)). We note that it is a standard practice at the Commission to set
such a briefing schedule, but in any event, when Investigative Division Counsel broached
the subject of filing reply briefs (May 21, 2007, letter of Jacisin), both Counsels reached a
stipulation concerning potential supplemental briefs (May 22, 2007, letter of Healy). In that
neither party pursued the opportunity to file reply briefs, we deem Respondent's aforesaid
objection to have been withdrawn.
facts.
Having noted the issues and applicable law, we shall now summarize the relevant
Respondent Kistler has served as a member of the CLIU Board since at least
January 1999.
In his private capacity, Kistler has an ownership interest in two corporations, Kistler
Pole Building Company, Incorporated and Kistler Building Supply, Incorporated. Kistler
Pole Building Company, Incorporated (also referred to herein as "Kistler Pole Building
Incorporated," "Kistler Pole Building Company, Inc.," "Kistler Pole Buildings," "Kistler Pole
Building," "Kistler Pole Building Company" and "Kistler Buildings ") is primarily a
construction company that builds pole buildings. Kistler Building Supply, Incorporated
(also referred to herein as "Kistler Building Supply" and "Kistler Building Products ") is a
building materials provider. Respondent is President of both corporations.
The CLIU Transportation facility:
Respondent served as Chairman of the CLIU building committee from December 20,
1999, when the building committee was formed by combining two committees, to March 18,
2002, when Respondent resigned as Chairman of the building committee.
The CLIU building committee made recommendations to the CLIU Board but did not
have decision - making power. Only the CLIU Board had decision - making power as to any
type of project at the CLIU.
In late 1999, the CLIU began exploring the possibility of constructing a garage
(hereinafter "Transportation facility ") in order to house its buses. The facility then in use
was no longer considered adequate to meet the growing needs of the CLIU. At the
December 20, 1999, CLIU Board meeting, the CLIU Board initiated discussions regarding
alternative options for a Transportation facility.
In December 1999, Robert J. Keegan, Jr. ( "Keegan "), who is currently Executive
Director of the CLIU, was serving as the CLIU's Director of Special Education and was
responsible for supervising transportation. Keegan was placed in charge of developing a
replacement facility for transportation.
Keegan reviewed numerous prospective sites for the Transportation facility, which
were narrowed down to a few sites for consideration. The CLIU administration and staff
developed information as to what was needed for the Transportation facility. Keegan
Kistler, 04 -037
Page 63
testified that the building committee's prime purpose during the planning and site review
phase of the Transportation facility project was to visit and narrow down the potential sites.
Building committee members including Respondent participated in site visits.
Keegan prepared monthly "update" reports regarding the Transportation facility
project, which reports he provided to the building committee Chairperson shortly before
CLIU Board meetings. Keegan's reports reflected Keegan's day -to -day supervision of the
Transportation facility project and did not reflect any substantial input from Respondent.
Keegan's reports were prepared for the benefit of the full CLIU Board and were read and
provided to the full CLIU Board at the Board's public meetings. Keegan or the building
committee Chairperson would read the reports at the CLIU public meetings.
The site ultimately purchased for the Transportation facility was known as the
" Lesher" property. The CLIU Board, including Kistler, voted on June 18, 2001, to approve
the purchase of the Lesher property. The Sales Agreement between the CLIU and the
Leshers is dated June 28, 2001. (Keegan 26).
Keegan testified that prior to the CLIU Board's approval of the agreement of sale,
there was no expectation or commitment on behalf of the CLIU or Keegan to build any
particular type of buildings for the Transportation facility.
Commencing prior to the execution of the Sales Agreement for the Lesher property,
the CLIU administrative staff began developing information regarding the advantages of a
lease- and - purchase arrangement versus a purchase- and -build approach by the CLIU. Dr.
Frank J. Ferrari ( "Ferrari ") who served as the Executive Director of the CLIU from 2000
until March 30, 2006, had been informed by other Intermediate Unit Executive Directors
that lease- and - purchase arrangements were cost effective and legal. The CLIU
administrative staff, and in particular, Keegan, worked on the development of cost
comparisons for a lease- and - purchase arrangement versus a purchase- and -build
approach.
Testimony before this Commission established that a lease- and - purchase
arrangement avoided requirements for paying prevailing wages and also allowed greater
choice in the selection of the builder than the traditional purchase- and -build approach.
On June 13, 2001, Keegan spoke with Dale Roth (also referred to herein as "Roth "),
a self - employed architect who had previously done work for the CLIU. Keegan requested
that Roth provide cost comparison information related to a lease- and - purchase
arrangement versus a purchase- and -build approach for the Transportation facility.
Keegan did not seek any cost proposals or bid proposals from anyone other than Roth with
regard to a difference between a lease- and - purchase arrangement versus a purchase -and-
build approach.
On June 13, 2001, Keegan requested a legal opinion from Attorney Charles A.
Waters regarding a lease- and - purchase arrangement versus a purchase- and -build
approach for the Transportation facility. Attorney Waters provided a legal opinion by letter
dated June 18, 2001. (ID 6 -32 /Keegan 23). The opinion letter of Attorney Waters stated,
inter alia, that the CLIU would be exposing itself to a significant amount of risk of a legal
challenge if prevailing wages were not paid in the context of the lease with option to
purchase arrangement." (See, ID 6 -32 /Keegan 23). Despite the advice of Attorney
Waters, the lease- and - purchase arrangement remained an option for the CLIU.
At this juncture, we note that Roth is associated with the following
businesses /business interests relevant to this matter: Roth Marz Partnership (an
architectural practice, also referred to herein as "Roth Marz "); Cornerstone R.E., LLC (also
referred to herein as "Cornerstone" and "Cornerstone, LLC "); R &T Management, LLC (also
referred to herein as "R &T Management "); and "Dale and Ruth Roth."
Kistler, 04 -037
Page 64
Settlement on the Lesher property was delayed due to unrelated litigation involving
the property. On December 13, 2001, Keegan and Respondent discussed the need to get
cost comparison information before the CLIU Board, in the event there would be a
settlement of the litigation as to the Lesher property.
The cost comparison information provided by Roth was shared with the CLIU Board
by CLIU administrative staff at the Board's March 18, 2002, executive session. The
information that Roth provided reflected that a lease arrangement would result in a cost
savings of $470,719 as compared to an outright purchase arrangement. (Keegan 49).
Meanwhile, other significant events occurred leading up to the March 18, 2002,
CLIU Board meeting.
At some point prior to November 9, 2001, Roth began considering using a pole
building for the Transportation facility. The precise point at which this occurred is not
established by the evidence before us. Roth testified that between June and November
2001, there were discussions between Roth or his staff and Respondent regarding the
possible use of a pole building for construction of the Transportation facility. However,
Roth also testified that a few days after November 5, 2001, Roth directed John Arthur
Young ( "Young "), a registered architect who served as a consultant to Roth Marz
Partnership, to "start" looking at pole building options.
The evidence establishes that as of November 5, 2001, Roth was still considering a
pre- engineered steel building as one option for the Transportation facility.
On or about November 9, 2001, Young spoke to Respondent by telephone for the
purpose of gathering information regarding the column spacing for a general pole building
structure. Young had not had any prior dealings with Respondent, and Young testified that
he does not recall whether he identified himself as working for Roth or Roth Marz
Partnership. Young testified that he does not recall whether he informed Respondent of
the project about which he was inquiring, but that he would generally not reveal such
information until further into a project. Young testified that his telephone call with
Respondent lasted about ten minutes.
Respondent testified that he recalled receiving a telephone call from Young
requesting general information regarding pole buildings. Respondent testified that Young
did not indicate where the project was.
On February 6, 2002, Respondent faxed the quote in evidence as Roth -5 to Gary
Caldwell ( "Caldwell ") at Roth Marz Partnership. Respondent testified that he sent the
quote to Caldwell in response to a request from Caldwell. Respondent testified that the fax
provided a "ballpark" quote for a main building at $394,453 and an ancillary storage
building at $32,589. At the time, Respondent knew Roth Marz was the architectural firm
that the CLIU used, and he knew that Caldwell worked for Roth Marz Partnership.
However, Respondent testified that he does not believe that he knew the quote was for the
Transportation facility at the time he provided it. Respondent testified that this quote was
prepared based upon general information, and that if he had had specific information, he
would have listed it.
Roth testified that as of the February 6, 2002, fax from Respondent (Roth -5), he had
not made any commitment to the type of building he was going to build for the
Transportation facility. Roth testified that it was not until March or April 2002 that
Cornerstone was seriously looking at the pricing of a pole building.
Respondent testified that at some point between February 21, 2002, and March 18,
2002, he received a call from Roth, who asked Respondent to come to Roth's office to take
Kistler, 04 -037
Page 65
a look at a project. Respondent testified that it was at this meeting that Roth informed
Respondent that he was considering using a pole building for the Transportation facility.
Respondent testified that following this meeting with Roth, Respondent told Ferrari
that Roth was considering using a pole building, that Respondent would probably need to
be away" from the building committee, and that Ferrari would need to find someone else
to take over the building committee.
Respondent testified that as of March 18, 2002, it was not definite that he would be
building the Transportation facility, but Roth had asked him to provide pricing and planning
information, and Roth was going to be providing details and prints to Respondent.
At the March 18, 2002, CLIU Board meeting, the following significant events
occurred. First, the CLIU Board held an executive session, which involved the building
committee. Immediately following the executive session, the CLIU Board voted to approve
the resignation of Respondent as Chairperson of the building committee and to replace
him with Board Member James Pollard. The CLIU Board then voted to approve motions to
exercise its option to assign its purchase rights for the Lesher property and to name Roth
Marz as its agent to pursue the purchase of the property. Respondent made and voted in
favor of the first motion, involving his resignation. Respondent abstained as to the other
two motions.
Kevin Reid, Esquire ( "Reid ") served as Solicitor for the CLIU from on or about
December 17, 2001, through the middle of 2005.
Reid testified that on March 18, 2002, at both the executive session and the public
meeting of the CLIU Board, Respondent disclosed his potential involvement in the
construction of the Transportation facility. Reid further testified that at both the executive
session and public meeting on March 18, 2002, he (Reid) expressed his opinion that it
would be appropriate for Respondent to remove himself entirely from the process involving
the Transportation facility, including any discussions or deliberations, and to abstain from
voting on any matter related to it.
Other witnesses provided varying testimony as to whether Respondent disclosed to
the CLIU Board his potential involvement in the construction of the Transportation facility.
Respondent testified that Reid informed the CLIU Board that as long as Respondent
did not vote on anything that involved Respondent, and as long as Respondent did not
participate in the discussions, that it was going to be all right." (Tr. at 1063; 1136).
Respondent testified that he specifically asked Reid whether there was any reason why he
(Respondent) should not be involved in the construction of the Transportation facility, and
Reid said, "None that I know of." (Tr. at 1063- 1064). Respondent testified that he asked
Reid to check into the matter and that Reid stated that he would do so.
Respondent testified that at the meeting following the March 18, 2002, CLIU Board
meeting, he asked Reid whether Reid had checked on the issue, and Reid indicated that
he had done so. Respondent testified that he could not recall whether this meeting was an
executive session or a public meeting. Respondent testified that he asked Reid whether
there was any reason why he (Kistler) should not be involved in the construction of the
Transportation facility and that Reid said, "Absolutely not." (Tr. at 1082). Respondent
never asked Reid to provide a written opinion or to state his opinion in the minutes of the
CLIU Board as to whether Respondent could potentially be involved in the construction of
the Transportation facility.
The minutes regarding Respondent's resignation as Chairman of the building
committee are ambiguous as to whether Respondent stepped down completely from the
building committee or only from the position as Chairman. However, other evidence
Kistler, 04 -037
Page 66
established that Respondent intended to remove himself completely from the building
committee as of March 18, 2002, and that following his resignation, he was no longer
involved with the building committee.
The CLIU Board's actions at the March 18, 2002, public meeting to exercise its
option to assign its purchase rights for the Lesher property and to name Roth Marz as its
agent to pursue the purchase of the property followed an executive session discussion
concerning the cost comparison information that had been provided by Roth. Keegan
provided inconsistent testimony regarding Respondent's participation in discussions of the
CLIU Board regarding the cost comparison information, initially testifying that there were
discussions among the Board Members, that Respondent probably participated in those
discussions, but that Keegan did not have a recollection of specific words Respondent said
(Tr. at 470 -471; 474), and subsequently testifying that his earlier testimony was erroneous
and that Respondent remained silent and did not participate in the discussions of the
Board (Tr. at 478). The CLIU Board's action at the public meeting to exercise its option to
assign its purchase rights for the Lesher property and to name Roth Marz as its agent to
pursue the purchase of the property constituted the Board's official action to choose a
lease- and - purchase arrangement rather than a purchase- and -build approach for the
Transportation facility. Keegan testified that the CLIU Board chose the lease with option to
purchase arrangement based upon information that other IU boards had successfully used
that type of arrangement, and that one IU had prevailed in a legal challenge.
The CLIU Board did not put the assignment of its purchase rights or the construction
of the Transportation facility out for bid. Ferrari and Keegan testified that because the
CLIU decided to lease the Transportation facility, it did not have to put the project out for
competitive bids. Keegan testified that the CLIU Board determined that Roth Marz
Partnership would be the architect for the Transportation facility based upon past positive
experiences with the firm.
Respondent testified that at the March 18, 2002, public meeting of the CLIU Board,
when his name was called during the roll call vote as to the motion to assign the CLIU
Board's purchase rights for the Lesher property to a third party (Board 20, page 6; ID 7-
193), he specifically stated that he abstained because he might be involved in the
construction of the building. (Tr. at 1067 - 1068). Respondent testified that when he
abstained as to the motion naming Roth Marz as the CLIU Board's agent to pursue the
purchase of the Lesher property (Board 20, page 6; ID 7 -193), he stated, "I abstain for the
same reasons." (Tr. at 1069). The minutes of the March 18, 2002, public meeting do not
include any mention of Respondent's reason for abstaining from votes involving the
Transportation facility, or of Reid providing any legal opinion regarding Respondent's
potential involvement in the construction of the Transportation facility.
Following the March 18, 2002, CLIU Board meeting, Roth met with Respondent on
March 26, 2002. Roth testified that the purpose of this meeting with Respondent would
have been to talk about the Transportation facility. Roth testified that as of March 26,
2002, he had not indicated to Respondent that Respondent would be the contractor for the
Transportation facility.
On April 26, 2002, Roth or Cornerstone staff received from Respondent the
document in evidence as ID 10 -1 -9, consisting of a scope of services and quote from
Respondent for the construction of the Transportation facility. (See also, Roth -13, pages
1 -5).
Roth testified that on or about May 2, 2002, Roth gave Respondent an initial
commitment to use Kistler Building for the Transportation facility.
ID 12 -1 /Roth -15 consists of a memorandum from Roth to Respondent dated May
28, 2002, providing Roth's color selections for the roof, gutters, downspouts, and sidewall
Kistler, 04 -037
Page 67
panels of the CLIU Transportation facility. This memorandum pre -dated by approximately
11/2 months the formal contract between Kistler Pole Building Company, Inc. and
Cornerstone, LLC for construction as to the CLIU Transportation facility.
Roth -18 consists of the Purchase Agreement between Kistler Pole Building
Company, Inc. and Cornerstone, LLC for construction as to the CLIU Transportation
facility. (See also, ID 11 -1). The Purchase Agreement is dated July 12, 2002. The
Purchase Agreement is signed by Respondent as President of Kistler Pole Building
Company, Inc. and by Dale H. Roth. The contract price was $550,492, but per a change
order approved July 12, 2002, the contract price was reduced to $539,737.
Respondent testified that approximately two weeks prior to the execution of the final
agreement between Kistler Pole Building Company, Inc. and Cornerstone, LLC for
construction as to the CLIU Transportation facility, he had a definitive commitment from
Roth that Kistler /Kistler's company was going to build the Transportation facility.
Roth testified that this was the first time he ever hired Respondent /Respondent's
company to do any work for anything. Roth testified that Respondent's company was
chosen to build the Transportation facility because Respondent was the only pole building
business owner Roth knew, and Roth knew Respondent to be a reputable contractor. Roth
did not solicit or receive any bids from any other pole building contractors.
At the July 15, 2002, regular CLIU Board meeting, the Board approved a motion
authorizing the execution of the Assignment of Real Estate Sales Agreement to
Cornerstone; approving a Lease Agreement and Option Agreement with Cornerstone; and
approving a related bank agreement. Respondent abstained from the vote. The recorded
minutes do not include any disclosure by Respondent of the reasons for his abstention.
Respondent did not disclose at this meeting that three days earlier he had entered into a
Purchase Agreement with Cornerstone, R.E., LLC for the construction of a pole building
structure for the Transportation facility. Respondent stated that the reason he did not
make such an announcement was that he was following what he thought were the
instructions from Reid that he was to remain silent on matters involving the Transportation
facility. Respondent's testimony on this point conflicts with his other testimony that he
always announces the reason for an abstention and that he in fact did so at other meetings
where the basis for the abstention was that he might work on the construction of a building
for the CLIU.
On August 1, 2002, the CLIU entered into a Lease and Option Agreement with
Cornerstone R.E., LLC regarding the Transportation facility. Per the Option Agreement,
the CLIU had the option to purchase the Transportation facility at any time during the term
of the lease. The purchase price for the leased premises was to be equal to the sum of the
unpaid principal balances on all loans obtained by Cornerstone R.E., LLC, to purchase the
leased premises and construct improvements thereon; the architectural fees of Roth Marz
Partnership, P.C. in the amount of $85,000, relative to construction on the leased
premises; and the construction overhead and profit of Cornerstone R.E., LLC in the
amount of $153,800 for the construction of the leased premises.
On August 19, 2002, Respondent filed two Conflict of Interest Abstention
Memoranda, which stated that the reasons he gbstained from votes relating to the
Transportation facility on March 18 and July 15 2002 was: May be involved in the
construction." Respondent already had a signed contract with Cornerstone, dated July 12,
2002, when he filed these abstention memoranda.
Respondent /Respondent's company commenced construction on the CLIU
Transportation facility in September of 2002 and completed construction in early February
of 2003. The CLIU moved into the Transportation facility in March and April 2003.
Kistler, 04 -037
Page 68
Kistler Pole Building Company, Incorporated submitted invoices to Cornerstone and
Cornerstone issued payments to Kistler Pole Building Company, Incorporated for a down
payment and the construction of the Transportation facility as detailed in Findings 45, 79 v,
and 79 x. Respondent received a total commission of $26,858.45 for constructing the
Transportation facility.
On April 9, 2003, the CLIU began making monthly lease payments to Cornerstone
pursuant to the lease of August 1, 2002. Between April 9, 2003, and June 21, 2004,
Respondent participated in the approval of these payments as detailed in Finding 39.
The Lesher property contained a golf shack that the CLIU wanted renovated. Kistler
Pole Building Company, Inc. submitted a quote for the work at a price of $14,377, which
quote was accepted by Dale Roth on May 4, 2003. By invoice dated June 30, 2003, Kistler
Pole Building Company, Inc. billed Cornerstone, LLC in the amount of $14,377 for
completion of the golf shack renovation. Cornerstone, R.E., LLC paid for the work by
check number 332 dated September 8, 2003, in the amount of $14,377. Roth testified that
Cornerstone absorbed the cost of the golf shack renovation and did not charge the CLIU
for it.
Except for his participation in approving bill lists that included pre- determined lease
payments, Respondent did not vote on matters at the CLIU Board involving the
Transportation facility from March 18, 2002, until March 15, 2004, when the CLIU Board
appointed a financing team to present and recommend an appropriate financing plan for
purchasing the Transportation facility from Cornerstone. Respondent voted in favor of that
motion as well as subsequent action of the CLIU Board to borrow $2,510,000 for the
purchase of the Transportation facility. Respondent signed the related mortgage in his
official capacity as President of the CLIU.
There was no bidding relative to the CLIU's purchase of the Transportation facility.
Keegan testified that this was because the Transportation facility was designed for the
CLIU, the CLIU was going to purchase it, and there was no other property or facility to
meet the CLIU's needs.
The CLIU Lehigh Learning and Adjustment School facility:
In 1999, the CLIU entered into a 10 -year lease with Steven Hirsh (hereinafter
"Hirsh ") for the purpose of housing the Lehigh Learning and Adjustment School ( "LLAS ") in
a property located at 7580 Kernsville Road, Orefield, Pennsylvania. The CLIU
experienced recurring mold problems in the building leased from Hirsh. On March 18,
2002, the CLIU Board authorized a complete environmental evaluation of the property.
Respondent voted to authorize the study.
At the CLIU Board's June 17, 2002, meeting, the CLIU Board approved motions to
terminate its lease with Hirsh for the LLAS facility and to authorize Dale Roth to pursue
construction of a LLAS facility on a property adjacent to Roth's Lehigh Valley office.
Respondent voted in favor of both motions.
Respondent testified that on June 17, 2002, when he cast the aforesaid votes, he
had no idea that he would be involved in the construction of the LLAS facility. Respondent
testified that prior to the June 17, 2002, CLIU Board meeting, he had not had any
conversations with Roth or anyone concerning the potential development of a structure
that could be used for classroom facilities. Respondent testified that he was unaware of
the fact that Keegan had talked with Roth in 2001 about the possibility of building a school
on three acres near Roth's office.
Kistler, 04 -037
Page 69
Respondent further testified that as of June 17, 2002, he had no idea that Roth
would consider using a pole building for a classroom facility. Respondent testified that a
pole building would not ordinarily be used for classroom space.
Construction of the LLAS facility was delayed due to a series of appeals on a zoning
matter. The appeal process as to the zoning issue ended favorably for the Roths, on April
15, 2004. During the appeal process, Roth proceeded with a land development plan
based upon an office building.
Respondent testified that on April 18, 2003, in a meeting with Roth, Respondent first
learned that Roth was considering using a pole building for the LLAS. In contrast to
Respondent's testimony on this point, Roth testified that he received an initial proposal
from Respondent regarding construction of the LLAS facility shortly before April 18, 2003.
Respondent testified that as soon as he became aware that he was being
considered for work on the LLAS facility, he stopped participating in any discussions or
votes of the CLIU Board with respect to the LLAS facility.
Respondent testified that he asked Reid whether there was any reason that he
should not be involved in the construction of the LLAS facility, and that Reid said, "No, as
long as you don't participate in the discussions and as long as you don't vote in anything
that has anything to do with you." (Tr. at 1096) (See also, Tr. at 1136). Reid testified that
he did not have a specific recollection of Respondent indicating that Respondent was
going to be involved in the construction of the LLAS facility.
On May 16, 2003, Ray Reppert ( "Reppert ") of Roth Marz sent a fax to Respondent
containing the updated floor plan for the CLIU classroom building. Reppert advised
Respondent to update his proposal and send it to Dale Roth as soon as possible.
On October 8, 2003, Respondent sent a fax to Reppert containing a catalog of
various roof trusses that could be used in the construction of the CLIU classroom building.
Following Respondent's meeting with Roth on April 18, 2003, and the above
exchanges of information with Reppert /Roth Marz, the first meeting at which the CLIU
Board considered action involving the LLAS was the October 20, 2003 meeting.
Respondent abstained from the CLIU Board's action at the October 20, 2003, meeting to
authorize Roth Marz Partnership to begin the construction phase of the LLAS facility.
(Board 39, page 12; ID 7 -394). Respondent testified that when he abstained from this
matter on October 20, 2003, he stated that he abstained because he might be involved in
the construction of the building. The recorded minutes do not include any disclosure by
Respondent of the reasons for his abstention as to the CLIU Board's vote to authorize
Roth Marz Partnership to begin the construction phase of the LLAS Facility. The recorded
minutes do not include any disclosure by Respondent that he had a prior business
relationship with Dale Roth.
On November 5, 2003, Respondent sent an email to Reppert requesting specific
details regarding the classroom building's construction. Roth Marz sent a letter to
Respondent providing HVAC plans.
On November 17, 2003, Respondent filed an abstention memorandum regarding his
abstention from the October 20, 2003, Board action on the motion approving construction
of the LLAS facility. ID 23 -3. Respondent's abstention memorandum states that he
abstained for the following conflict /reason: Have worked for Roth Marz Partnership in the
past." ID 23 -3. Respondent's abstention memorandum made no mention of the fact that
he was going to be involved in the construction of the LLAS facility.
On May 4, 2004, Reppert emailed to Respondent the floor plan for the CLIU
Kistler, 04 -037
Page 70
classroom building.
On May 7, 2004, following the completion of the aforesaid zoning - related appeals,
Roth provided a down payment to Respondent for Respondent's work on the LLAS facility.
On May 17, 2004, the CLIU Board approved the Lease Agreement between Dale
and Ruth Roth and the CLIU for the LLAS, effective May 7, 2004. Respondent abstained
from the vote. Respondent testified that when he abstained from this vote on May 17,
2004, he stated that he abstained because he might be involved in the construction of the
building.
The CLIU did not solicit bids for the construction of the LLAS facility.
On June 17, 2004, Respondent and Roth executed a Purchase Agreement (Roth
102) in the amount of $641,933.00 for the construction of the LLAS facility. The Purchase
Agreement is signed by Kenneth K. Kistler as President of Kistler Pole Building Company,
Inc.
By letter dated August 4, 2004, Respondent was notified that he was being
investigated for possible violations of the Ethics Act. (S &S -1 /Reid -1). At the time
Respondent received this notification, Kistler Pole Building Company, Inc. was already
under contract to construct the LLAS facility but had not yet commenced construction.
On Respondent's behalf, a request for an advisory dated August 20, 2004, was
faxed to this Commission's Chief Counsel, asking whether Respondent would be in
violation of the Ethics Act if he would proceed to fulfill the contractual obligations he had
already undertaken. (S &S -2). By letter dated August 20, 2004, Chief Counsel responded
that an advisory could not be issued because the Commission does not address in an
advisory format matters involving past conduct or matters under investigation, and that the
scenario raised in the request was part of the ongoing investigation by the Investigative
Division. (S &S -3).
Respondent contacted Reid's firm and received an opinion letter dated August 27,
2004, from Attorney John Freund, which letter concluded that it was the firm's opinion that
there had been no violation of the Ethics Act. (Reid -5). Respondent testified that based
upon the opinion letter received from Freund, he proceeded to build the LLAS facility.
Respondent /Respondent's company commenced construction of the LLAS facility in
September of 2004 and completed all work on the LLAS except for minor touch -up work in
early January 2005.
Roth paid invoices submitted by Respondent for the construction of the LLAS facility
as detailed in Finding 79 nn. Kistler received a total commission of $31,921.65 for
constructing the LLAS facility.
Keegan 112 consists of the Lease Agreement dated May 7, 2004, between Dale
Roth and Ruth Roth ( "Lessor ") and the CLIU ( "Lessee ") for the LLAS facility at 2936
Corporate Court, Orefield, Pennsylvania. The Lease Agreement provides for monthly
rental installments of $16,900 in 2005; a fixed annual rental of $213,600 payable in equal,
advance monthly installments of $17,800 in 2006 and for nine years thereafter; and terms
for adjusting the rental thereafter. Fact Finding 102 a.
The CLIU began making monthly lease payments to Dale and Ruth Roth for the
LLAS facility on February 10, 2005. Kistler participated in the approval of these payments
as detailed in Finding 65.
The CLIU Administrative Facility:
Kistler, 04 -037
Page 71
At the October 20, 2003, CLIU Board meeting, immediately prior to abstaining from
CLIU Board action to authorize Roth Marz Partnership to begin the construction phase of
the LLAS facility, Respondent voted in favor of leasing an administrative facility from R &T
Management, LLC (a Roth company) and approving a particular funding arrangement for
such lease.
Roth testified that a pole building was not contemplated for the CLIU central
services building /administrative facility, because it is a three -story building and a pole
building would not be suitable.
Other facts:
Respondent testified that the only buildings he built for Roth organizations were the
Transportation facility and the LLAS facility.
Respondent admitted in his Answer to the Investigative Complaint that his
contractual relationships with Cornerstone as to the Transportation facility and with Dale
and Ruth Roth as to the LLAS facility were "subcontracts" under no -bid contracts awarded
by the CLIU to Cornerstone and Dale and Ruth Roth respectively. Fact Findings 44(a),
64(a) -(b).
Roth described the contractual relationships with Respondent /Respondent's
company as "subcontracts." Fact Findings 79 r(2); 79 uu; 79 vv. Respondent also
described the contractual relationship with Cornerstone for the Transportation facility in
terms of a "subcontract." Fact Finding 83 h.
Public meetings of the CLIU Board are open to the public and are advertised in
advance, with the agendas being provided to the media.
The process for approving payment of CLIU bills is that the bills are calculated and
related documents are sent to the CLIU Board Members prior to the Board meeting at
which the bills are approved. Hundreds of bills are approved by the CLIU Board each
month at the Board's regular meetings.
Bills from Cornerstone R.E., LLC for the Transportation facility lease would have
been in the amount authorized by the lease.
Bills from Dale and Ruth Roth for the LLAS facility lease would have been in the
amount authorized by the lease.
Having highlighted the facts and issues, we note that the Investigative Division filed
a Closing Statement raising the following arguments /contentions:
• That prior to March 18, 2002, Respondent was involved in matters pertaining to the
Transportation facility when, as early as June 2001, he knew he could /would be
involved with the Transportation facility;
• That Respondent engaged in a conflict of interest when he actively participated in
discussions concerning the decision to assign purchase rights to Roth Marz
Partnership, regarding the CLIU's desires to obtain a Transportation facility;
• That after March 18, 2002, Respondent never disclosed to the CLIU Board that he
was actually awarded a contract with Roth;
Kistler, 04 -037
Page 72
• That it is a conflict of interest under the Ethics Act to vote to award business to a
company with which one is actively seeking to contract, even if the vote is not for
the same project;
• That it is irrelevant that the projects Respondent voted on were different from those
he was engaged in constructing because all the projects were tied to Roth;
• That Respondent violated Section 1103(a) of the Ethics Act when, on June 17,
2002, he voted in favor of authorizing Roth to pursue the construction of the LLAS
facility while Respondent was actively engaged in seeking a contract to build the
Transportation facility and had a reasonable expectation that he would receive such
a contract;
• That Respondent violated Section 1103(a) of the Ethics Act when, on October 20,
2003, he voted in favor of leasing an administrative facility from R &T Management,
LLC while Respondent was actively engaged in seeking the contract to build the
LLAS facility; and
• That Respondent violated Section 1103(f) on two occasions when his business
entered into subcontracts with Roth for the construction of the Transportation facility
and the LLAS facility, when the contracts to Roth were awarded without an open
and public process.
Respondent has filed a Brief raising the following arguments /contentions:
• That the earliest evidence of any contact between Roth Marz Partnership and
Respondent regarding the CLIU Transportation facility occurred in November2001;
that such contact did not identify the particular project involved; and that following
that date, Respondent did not use the authority of his public position with respect to
the Transportation facility;
• That Respondent announced his potential conflict of interest and resigned from the
building committee on March 18, 2002, and that he subsequently abstained from
matters pertaining to the Transportation facility;
• That Respondent had received 99.56% of the contract price for his work on the
Transportation facility before the CLIU paid anything to Roth or Cornerstone under
the lease agreement;
• That on April 17, 2003, when Respondent voted with a unanimous Board to approve
a list of 490 bills, including the initial lease payment for the Transportation facility,
Respondent voted to approve payment of the precise sum required under a lease
approved by the remaining Board members; Respondent had received all but
$2,368 (0.44 %) of his contract price for work on the Transportation facility; the
approval was unrelated to the balance due Respondent by Cornerstone; the
amount of the lease payment was 0.61 % of the total amount of the bills approved
that night and had a de minimis economic impact upon the CLIU; and the bills were
approved as to a class /subclass of creditors;
• That the golf shack was renovated at no additional expense to the CLIU;
• That Respondent first learned that Roth was considering a pole building for the
LLAS facility on April 18, 2003, approximately ten months after the June 17, 2002,
meeting at which Respondent had voted with a unanimous Board to direct Roth to
pursue construction of the LLAS facility on property adjacent to Roth's Lehigh
Valley office;
Kistler, 04 -037
Page 73
• That following his April 18, 2003, meeting with Roth, Respondent was not
convinced he was going to get work on the LLAS facility but abstained from further
matters involving the LLAS facility;
• That on March 21, 2005, when Respondent voted with a unanimous Board to
approve the release of the third lease payment to the Roths, such vote was
legitimized for all of the reasons cited above as to the vote on the CLIU lease
payment;
• That any alleged violation of Section 1103(a) of the Ethics Act based upon
Respondent's vote to approve a lease between the Intermediate Unit and R &T
Management LLC for a new central services building was not raised in the
Investigative Complaint and is not before this Commission (Tr. at 335 -337);
• That Snyder v. State Ethics Commission, 686 A.2d 843 (Pa. Cmwlth. 1996), alloc.
denied, 1997 Pa. LEXIS 2719 (Pa. Dec. 22, 1997) does not stand for the
proposition that a public official must abstain from voting on everything coming
before the governmental body relating to a person with whom the public official has
any kind of relationship;
• That Respondent announced his interests when he abstained, and the CLIU Board
Members were aware as early as March 2002 that Respondent had a "potential
generalized business interest" with Roth;
• That Respondent is not a subcontractor within the meaning of Section 1103(f) of the
Ethics Act because he constructed the Transportation facility and the LLAS for
private owners who in turn leased those buildings to the CLIU;
• That the CLIU could have decided to not purchase the Transportation facility, in
which case Cornerstone would have continued to own the structure as constructed
by Kistler Pole Buildings;
• That by law, the CLIU was barred from owning the LLAS facility;
• That absent some special legal authority or provision in the Act, Respondent cannot
be qualified as a subcontractor for erecting a building for an owner who thereafter
leases the mere right of possession for a period of time to a third party" (Post-
Hearing Brief of Respondent, at 64);
• That Respondent received 99.56% of his contract price with Cornerstone two full
months before the CLIU, a lessor, approved the first lease payment to Cornerstone;
• That Respondent received all but 1.17% of his substantial contract price for the
LLAS before the CLIU approved any lease payments on the LLAS;
• That the requirements of Section 1103(f) for an open and public process do not
reference or require competitive bidding;
• That Section 1103(f) is to be interpreted based upon the Sunshine Act, 65 Pa.C.S.
§ 701 et seq., and the Right -to -Know Act, 65 P.S. § 66.1 et seq.;
• That the language of Section 1103(f) requiring "subsequent public disclosure of all
proposals considered and contracts awarded" requires that the option or options
considered by the governmental body be revealed but falls short of requiring
multiple proposals;
Kistler, 04 -037
Page 74
• That the requirements of Section 1103(f) for an open and public process are
satisfied by discussions of contracting opportunities at public meetings and in
media coverage, and by awarding contracts at public meetings;
• That although some Commission precedents under Section 1103(f) of the Ethics
Act expressly require invitations for bids, Bassi, Opinion 86- 007 -R, decided under
Act 170 of 1978, found that an open and public process occurred where local news
media reported an authority's desire to seek new office space and competitive
proposals were in fact received and reviewed by the authority;
• That the CLIU's regular meetings are public meetings that are advertised, with the
Board agendas provided to the media in advance;
• That discussions, reports and actions by the CLIU Board as to the Transportation
facility and LLAS occurred in public meetings, such that the public was aware of the
CLIU's interest in acquiring such facilities prior to the CLIU entering into leases
establishing a commitment with respect to such facilities; and
• That the former Chief Counsel's refusal to issue an Advice of Counsel to
Respondent as to whether he would violate the Ethics Act by proceeding to
construct the LLAS violated a mandatory statutory requirement for issuance of an
advice upon request, and resulted in a complete defense to Respondent for any
related alleged wrongdoing arising more than 21 days after his August 20, 2004,
request for an Advice of Counsel.
We must now determine whether the actions of Respondent Kistler violated Section
1103(a) or Section 1103(f) of the Ethics Act.
As we apply the facts to the allegations, due process requires that we not depart
from the allegations. Pennsy v. Department of State, 594 A.2d 845 (Pa. Cmwlth. 1991).
A violation of the Ethics Act must be based upon clear and convincing proof. 65
Pa.C.S. § 1108(g). Clear and convincing proof is "so `clear, direct, weighty, and
convincing as to enable the trier of fact to come to a clear conviction, without hesitance, of
the truth of the precise facts in issue." In Re: Charles E.D.M., 550 Pa. 595, 601, 708 A.2d
88, 91 (Pa. 1998) (Citation omitted).
In applying Section 1103(a) of the Ethics Act and the facts before us to the alleged
violations, we first conclude that there is an insufficient basis for finding a violation of
Section 1103(a) as to Respondent's actions prior to March 18, 2002, regarding the
Transportation facility. There is insufficient evidence to establish that prior to February
2002, Respondent knew or had a reasonable expectation that he would receive a contract
to perform work on the Transportation facility. First, there was no prior business
relationship between Respondent and Roth. Second, Roth's testimony that between June
and November 2001, there were discussions between Roth or his staff and Respondent
regarding the possible use of a pole building for construction of the Transportation facility
is rendered ambiguous by Roth's additional testimony that a few days after November 5,
2001, Roth directed John Arthur Young ( "Young "), a registered architect who served as a
consultant to Roth Marz Partnership, to "start" looking at pole building options. From
Roth's testimony, it is not clear whether Young's contact to Respondent on or about
November 9, 2001, was the first contact to Respondent or whether there were earlier
contacts. As for Young's contact, there is insufficient evidence to establish that
Respondent knew Young was calling on behalf of Roth Marz or that Young was calling
about the Transportation facility.
Kistler, 04 -037
Page 75
Based upon the evidence, February 2002 was the earliest point at which
Respondent knew or had a reasonable expectation that he would receive a contract to
perform work on the Transportation facility. There were no significant actions taken by
Respondent with respect to the Transportation facility from February 2002 up to the time of
the March 18, 2002, CLIU executive session and Board meeting.
At the March 18, 2002, CLIU Board's executive session, there was a discussion
concerning the cost comparison information that had been provided by Roth with respect
to a lease- and - purchase arrangement versus a purchase- and -build approach. Keegan
provided inconsistent testimony regarding Respondent's participation in discussions of the
CLIU Board regarding the cost comparison information, initially testifying that there were
discussions among the Board Members, that Respondent probably participated in those
discussions, but that Keegan did not have a recollection of specific words Respondent said
(Tr. at 470 -471; 474), and subsequently testifying that his earlier testimony was erroneous
and that Respondent remained silent and did not participate in the discussions of the
Board (Tr. at 478). From the evidence before us we are unable to determine whether
Respondent participated in these discussions. We find that there is a lack of clear and
convincing proof to support a violation of Section 1103(a) as to Respondent's possible
participation in discussions at the March 18, 2002, executive session regarding cost
comparison information for the Transportation facility.
Respondent /Respondent's company commenced construction on the CLIU
Transportation facility in September of 2002 and completed construction in early February
of 2003. Except for his participation in approving bill lists that included pre- determined
lease payments, Respondent did not vote on matters at the CLIU Board involving the
Transportation facility from March 18, 2002, until March 15, 2004.
With respect to Respondent's participation in approving lease payments, we
conclude from the record before us that such payments were for a pre- determined amount
under a lease agreement that had been approved by the CLIU Board without Respondent's
participation. The approval of pre- fixed, routine, uncontested bills does not in and of itself
rise to the level of a violation of Section 1103(a) of the Ethics Act. See, Krushinski, Order
168; Yezzi, Order 825 at 58; Brooks, Opinion 89 -023; Maholick, Opinion 90 -010.
On March 15, 2004, the CLIU Board appointed a financing team to present and
recommend an appropriate financing plan for purchasing the Transportation facility from
Cornerstone. Respondent voted in favor of that motion as well as subsequent action of the
CLIU Board to borrow $2,510,000 for the purchase of the Transportation facility.
Respondent signed the related mortgage in his official capacity as President of the CLIU.
Such actions were uses of the authority of Respondent's public office. However, based
upon the particular terms of the Option Agreement dated August 1, 2002, between
Cornerstone R.E., LLC (Lessor) and the CLIU (Lessee) (ID 21 -1 -4 /Roth -23, pages 1 -4), we
determine that the CLIU's purchase of the Transportation facility prior to the expiration of
the lease did not result in a financial benefit to Respondent, Cornerstone, or Roth. See,
Fact Finding 96. We conclude that Respondent's aforesaid actions from March 15, 2004,
forward regarding the purchase of the Transportation facility from Cornerstone did not
transgress Section 1103(a) of the Ethics Act, based upon the lack of a private pecuniary
benefit.
There is evidence that Respondent disclosed his potential business relationships
with Roth to at least some CLIU Board Members and administrative staff members.
Respondent might not have made the requisite disclosures each time and in the manner
he was required to make them. However, we do not address any potential violation of
Section 1103(j) of the Ethics Act in that the allegations are limited to Sections 1103(a) and
1103(f) of the Ethics Act. Cf., Palovich, Order 1164; Klutzaritz, Order 1078.
Kistler, 04 -037
Page 76
We determine that Respondent unintentionally violated Section 1103(a) of the
Ethics Act when, on June 17, 2002, he voted in favor of authorizing Roth to pursue the
construction of the LLAS facility while Respondent was actively engaged in seeking a
contract to build the Transportation facility and had a reasonable expectation that he would
receive such a contract.
There is no question that as of June 17, 2002, Respondent had a reasonable
expectation of getting a contract with Cornerstone to construct the Transportation facility.
Roth testified that on or about May 2, 2002, he gave Respondent an initial commitment to
use Kistler Building for the Transportation facility. On May 28, 2002, Roth faxed a
memorandum to Respondent providing Roth's color selections for the roof, gutters,
downspouts, and sidewall panels of the CLIU Transportation facility. Respondent testified
that approximately two weeks prior to the execution of the July 12, 2002, agreement
between Kistler Pole Building Company, Inc. and Cornerstone, LLC for construction of the
Transportation facility, he had a definitive commitment from Roth that Kistler /Kistler's
company was going to build the Transportation facility. By Respondent's testimony, he
had actual knowledge that he was going to get the contract by the end of June. Thus,
Respondent's June 17, 2002, vote in favor of authorizing Roth to pursue the construction
of the LLAS facility occurred precisely as Respondent was actively pursing the contract to
construct the Transportation facility. The finding of a violation of Section 1103(a) under
these circumstances is supported by case law and Commission precedent.
In Snyder v. State Ethics Commission, 686 A.2d 843 (Pa. Cmwlth. 1996), alloc.
denied, 1997 Pa. LEXIS 2719 (Pa. Dec. 22, 1997), Commonwealth Court affirmed Snyder,
Order 979 -2, in which this Commission determined that a township supervisor who had
participated and voted on development issues when he had actual or anticipated contracts
to perform work in the developments had violated Section 3(a) (now Section 1103(a)) of
the Ethics Law. Commonwealth Court, in affirming this Commission's Order, stated that
Snyder "should not have considered and voted on issues involving his personal business
dealings." Snyder, 686 A.2d at 849. It is our view that "personal business dealings"
encompass the persons or entities with which one does business or actively seeks to do
business.
In Amato, Opinion 89 -002, this Commission held that a reasonable and legitimate
anticipation of the development of a financial /business relationship would support a finding
of a conflict of interest. On June 17, 2002, when Respondent voted to authorize Roth to
pursue construction of the LLAS facility, Respondent clearly had a reasonable and
legitimate anticipation /expectation of developing a financial /business relationship with Roth
through Cornerstone for the construction of the Transportation facility.
We conclude that it is irrelevant that the particular project Respondent voted on,
specifically the LLAS facility, was a different project than the Transportation facility for
which he was actively pursuing a contract. Both projects were CLIU projects with Roth or
Roth organizations. Cf., Kannebecker, Opinion 92 -010. In Respondent's capacity as a
public official, Respondent was in a position to vote to award the LLAS facility work to
Roth. In Roth's capacity as general contractor for the CLIU, Roth was in a position to
award a subcontract to Respondent to construct the CLIU Transportation facility. Under
the circumstances of this case, each of these individuals -- Respondent as a public official
and Roth as a CLIU general contractor -- exercised the authority of his respective position in
a manner that financially benefited the other. Cf., Elisco, Opinion 00 -003; and Confidential
Opinion, 05 -004.
Based upon the above analysis, we hold that on June 17, 2002, Respondent
unintentionally violated Section 1103(a) of the Ethics Act when he voted in favor of
authorizing Roth to pursue the construction of the LLAS facility while Respondent was
actively engaged in seeking a contract to build the Transportation facility and had a
reasonable expectation that he would receive such a contract from Roth /Cornerstone.
Kistler, 04 -037
Page 77
Intent is not a requisite element for a violation of Section 1103(a) of the Ethics Act. See,
e.q., Yocabet v. State Ethics Commission, 531 A.2d 536 (Pa. Cmwlth. 1987) (holding that
the township supervisor in that case violated Section 3(a) of the Ethics Act even if he did
not intend to do so). Nevertheless, we specifically conclude that Respondent's aforesaid
violation of Section 1103(a) of the Ethics Act was unintentional. Respondent acted based
upon his understanding of the legal advice he had received from the CLIU Solicitor. It is
unfortunate that Respondent did not contact this Commission for an advisory until August
20, 2004, after Respondent was already under investigation by the Investigative Division.
There were no other uses of authority of office by Respondent as to the LLAS
facility except for Respondent's participation in approving lease payments. With respect to
Respondent's votes to approve lease payments as to the LLAS, we find no basis for a
violation of Section 1103(a) for the same reasons set forth above as to the lease payments
for the Transportation facility. Such payments were for a pre- determined amount under a
lease agreement that had been approved by the CLIU Board without Respondent's
participation, and the approval of pre- fixed, routine, uncontested bills does not in and of
itself rise to the level of a violation of Section 1103(a). See, Fact Finding 102 a;
Krushinski, supra; Yezzi, supra; Brooks, supra; Maholick, supra.
We do not address Respondent's October 20, 2003, vote in favor of leasing an
administrative facility from R &T Management, LLC. That particular vote is not
encompassed within the averments of the Investigative Complaint. See, Pennsy v.
Department of State, 594 A.2d 845, 847 (Pa. Cmwlth. 1991).
We shall now consider the alleged violations of Section 1103(f) of the Ethics Act.
Respondent contends that he is not a subcontractor within the meaning of Section
1103(f) of the Ethics Act as to the construction of the Transportation facility and the LLAS
facility for private owners who in turn leased those buildings to the CLIU. We reject this
argument for the following reasons.
First, Respondent has explicitly admitted in his Answer to the Investigative
Complaint that with respect to the LLAS facility, he was a subcontractor under a no -bid
contract awarded by the CLIU to Dale Roth /Dale and Ruth Roth. Fact Findings 64(a),
(a)(1), (b). Further, Respondent's Answer to Paragraph 75(a) of the Investigative
Complaint is an implicit admission that the portion of the work on the Transportation facility
project performed by Respondent was subcontracted by Cornerstone, R.E. LLC to
Respondent, such that Respondent's contractual relationship with Cornerstone as to the
Transportation facility was a subcontract under a no -bid contract awarded by the CLIU to
Cornerstone. See, Fact Findings 44(a), (a)(1). We conclude that Respondent has
admitted his status as a subcontractor as to both the Transportation facility and the LLAS
facility projects, and Respondent is bound by these admissions. Bartholomew v. State
Ethics Commission, 795 A.2d 1073 (Pa. Cmwlth. 2002). See also, Finding 83 h.
However, even if Respondent had not admitted his status as a subcontractor, an
application of the relevant provisions of the Ethics Act to the facts in this case results in the
same conclusion that Respondent was a subcontractor as to both the Transportation
facility and the LLAS facility projects.
The Ethics Act defines the term "contract" broadly:
§ 1102. Definitions
"Contract." An agreement or arrangement for the
acquisition, use or disposal by the Commonwealth or a
political subdivision of consulting or other services or of
supplies, materials, equipment, land or other personal or real
Kistler, 04 -037
Page 78
property. The term shall not mean an agreement or
arrangement between the State or political subdivision as one
party and a public official or public employee as the other
party, concerning his expense, reimbursement, salary, wage,
retirement or other benefit, tenure or other matters in
consideration of his current public employment with the
Commonwealth or a political subdivision.
65 Pa.C.S. § 1102.
The above definition includes "agreements" or "arrangements" for the "use" by the
Commonwealth or a political subdivision of services, supplies, equipment, land, and other
personal or real property.
Intermediate units are part of the public school system of the Commonwealth. 24
P.S. § 9 -951. Intermediate units are also comprised of political subdivisions (school
districts). See, 24 P.S. § 9 -952; 65 Pa.C.S. § 1101. In the instant matter, we determine
that for purposes of the Ethics Act, the CLIU is both comprised of political subdivisions and
is itself a political subdivision organized by the component school districts, which appoint
the CLIU Board Members and supply the CLIU with funding. See, 65 Pa.C.S. § 1101
(definition of "political subdivision "); Eiben, Opinion 04 -002.
We further determine that the agreements and arrangements between the CLIU and
Roth Marz /Cornerstone with respect to the Transportation facility, and between the CLIU
and Dale Roth and /or Dale and Ruth Roth for the LLAS facility, were agreements and
arrangements for the use of such facilities by both the CLIU and the component school
districts to provide for the needs of both.
We determine that the above definition of the term "contract" encompasses the
lease agreements as well as other related agreements and arrangements: (1) between the
CLIU and Roth Marz /Cornerstone with respect to the Transportation facility; and (2)
between the CLIU and Dale Roth and /or Dale and Ruth Roth for the LLAS facility.
Section 1103(f) of the Ethics Act prohibits a public official or a business with which a
public official is associated from entering into any subcontract valued at $500 or more with
a "person" who has been awarded a contract with the governmental body with which the
public official is associated unless the contract with the governmental body has been
awarded "through an open and public process, including prior public notice and
subsequent public disclosure of all proposals considered and contracts awarded." 65
Pa.C.S. § 1103(f).
The terms "business," "business with which he is associated," "governmental body,"
"governmental body with which a public official or public employee is or has been
associated," and "person" are specifically defined in the Ethics Act as follows:
§ 1102. Definitions
"Business." Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self - employed individual, holding company, joint
stock company, receivership, trust or any legal entity
organized for profit.
"Business with which he is associated." Any
business in which the person or a member of the person's
immediate family is a director, officer, owner, employee or has
a financial interest.
Kistler, 04 -037
Page 79
"Governmental body. " Any department, authority,
commission, committee, council, board, bureau, division,
service, office, officer, administration, legislative body or other
establishment in the executive, legislative or judicial branch of
a state, a nation or a political subdivision thereof or any
agency performing a governmental function.
"Governmental body with which a public official or
public employee is or has been associated." The
governmental body within State government or a political
subdivision by which the public official or employee is or has
been employed or to which the public official or employee is or
has been appointed or elected and subdivisions and offices
within that governmental body.
"Person." A business, governmental body, individual,
corporation, union, association, firm, partnership, committee,
club or other organization or group of persons.
65 Pa.C.S. § 1102.
As corporations, Kistler Pole Building Company, Incorporated and Kistler Building
Supply, Incorporated are "businesses." Moreover, they are businesses with which
Respondent, as an officer and owner, is associated.
The CLIU Board is a "governmental body." At all times during Respondent's service
as a CLIU Board Member, the CLIU Board has been a governmental body with which
Respondent has been associated.
The CLIU Board entered into "contracts " - -as that term is defined by the Ethics Act —
with "persons," specifically Roth Marz Partnership and subsequently Cornerstone as to the
Transportation facility, and with Dale Roth and /or Dale and Ruth Roth as to the LLAS.
Roth Marz Partnership and Cornerstone are "persons" because they are businesses, and
the definition of "person" includes businesses. Dale Roth and Ruth Roth are "persons,"
both because they are individuals and because together they are an "association." The
Ethics Act does not define the term "association," but the Statutory Construction Act
defines the term (1 Pa.C.S. § 1991), such that for our purposes, the applicable definition is
from the Associations Code and encompasses Dale and Ruth Roth:
§ 102. Definitions
"ASSOCIATION." A corporation, a partnership, a
limited liability company, a business trust or two or more
persons associated in a common enterprise or undertaking.
The term does not include a testamentary trust or an inter
vivos trust as defined in 20 Pa.C.S. § 711(3) (relating to
mandatory exercise of jurisdiction through orphans' court
division in general).
15 Pa.C.S. § 102 (Emphasis added).
Respondent's business entered into subcontracts under the aforesaid no -bid
contracts. Respondent signed these subcontracts in his capacity as President of Kistler
Pole Building Company, Inc. The aforesaid contracts and subcontracts were in excess of
$500.
Kistler, 04 -037
Page 80
The remaining question is whether the requirements of Section 1103(f) were
satisfied.
Respondent argues: that the requirements of Section 1103(f) for an open and public
process do not specifically reference or require competitive bidding; that the language of
Section 1103(f) requiring "subsequent public disclosure of all proposals considered and
contracts awarded" requires that the option or options considered by the governmental
body be revealed but falls short of requiring multiple proposals; and that the requirements
of Section 1103(f) for an open and public process are satisfied by discussions of
contracting opportunities at public meetings and in media coverage, and by awarding
contracts at public meetings.
In considering Respondent's arguments, we initially note that public office is a
public trust. 65 Pa.C.S. § 1101.1(a). Insofar as public officials and public employees are
concerned, the public trust is paramount over private interests. Hutchins, Order 1320;
Mohr, Order 1293; Urtz, Order 1274; Billetdeaux, Order 1222; Kannebecker, Opinion 92-
010; Crisci, Opinion 89 -013; see also, 1 Pa.C.S. § 1922. Additionally, the Pennsylvania
Supreme Court has declared that the Ethics Act, as remedial legislation, must be liberally
construed, Maunus v. State Ethics Commission, 518 Pa. 592, 598, 544 A.2d 1324, 1327
(1988), and that "[t]he duty of government to establish and promote standards of the
highest order is perhaps its most compelling obligation, in view of the public trust reposed
within its auspices." Id., 518 Pa. 592, 600, 544 A.2d 1324, 1328 (1988).
The interpretation of Section 1103(f) of the Ethics Act advanced by Respondent
essentially reduces to an assertion that the CLIU Board could steer contracts directly to its
architect /general contractor of choice, without competitive bidding, and Respondent could
subcontract under such contracts, as long as the public could watch what was happening.
We reject the interpretation advanced by Respondent as an absurd and narrow
construction that would elevate private interests over the public interest (see, 1 Pa.C.S. §
1922(1), (5)) and that would diminish public trust in government rather than establish and
promote standards of the highest order. We likewise reject Respondent's unfounded
assertions that Section 1103(f) of the Ethics Act is to be interpreted based upon the
Sunshine Act and the Right -to -Know Act; we find no basis whatsoever for these assertions
by Respondent.
We interpret the requirements of Section 1103(f) for an open and public process,
including prior public notice and subsequent public disclosure of all proposals considered
and contracts awarded" to mean that there must actually be a meaningful opportunity for
competitors to submit proposals. We hold that a meaningful opportunity for competitors to
submit proposals requires an actual public solicitation for such proposals through a
publicly distributed notice or advertisement. Discussions at a public meeting of the
governmental body's intentions to build a facility or to enter into a contract with a particular
contractor and /or advertisements of its public meetings and the distribution of its agendas
to the media are insufficient to satisfy the requirements of Section 1103(f) of the Ethics Act.
Respondent's reliance upon Bassi, Opinion 86- 007 -R, decided undera prior version
of the Ethics Act, Act 170 of 1978, is misplaced. In Bassi, not only did the media actually
report the authority's desire to seek new office space, but also the authority itself had
actively requested and received proposals from the public. The combination of public
notice that in fact occurred was found to be adequate in that instance under the former
Ethics Act. The instant matter is distinguishable from Bassi because, in the instant matter,
no proposals were requested from anyone other than Roth /Roth interests. Additionally,
there is no indication in the record that the media reported regarding the CLIU Board's
desire for a Transportation facility or LLAS facility. The "proofs of publication" for public
meetings of the CLIU Board - -which are in evidence as "Advertise 1- 9 " - -do not make any
mention of the construction of a Transportation facility or LLAS facility, nor do they include
CLIU Board meeting agendas (Fact Finding 98).
Kistler, 04 -037
Page 81
We shall now address Respondent's arguments that the former Chief Counsel's
refusal by letter dated August 20, 2004, to issue an Advice of Counsel to Respondent as to
whether Respondent would violate the Ethics Act by proceeding to construct the LLAS
facility: (1) violated a mandatory statutory requirement for issuance of an advice upon
request; and (2) resulted in a complete defense to Respondent for any related alleged
wrongdoing arising more than 21 (working) days after Respondent's August 20, 2004,
request for an Advice of Counsel. All of Respondent's arguments in this regard lack merit
for the following reasons.
First, the former Chief Counsel correctly responded that an advisory could not be
issued because the Commission does not address in an advisory format matters involving
past conduct and matters under investigation. Pursuant to Sections 1107(10) and (11) of
the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), an opinion /advice may be given only as to
prospective (future) conduct. This is because an advisory affords a defense to an
individual who truthfully discloses all of the material facts in advance of taking action and
then proceeds to act in reliance upon the advisory. Id. An advisory is not available to
afford a defense to a requester who has already taken action and is under investigation.
By the time Respondent requested an advisory from this Commission, he was
already under investigation by the Investigative Division, and he had been so notified by
letter dated August 4, 2004. Furthermore, Kistler Pole Building Company, Inc. was already
under contract to construct the LLAS facility. (See, Finding 95; Tr. at 1100- 1101).
The latter point is particularly significant in this case. Under Section 1103(f) of the
Ethics Act, the "entering into the contract is the conduct prohibited." Bixler v. State Ethics
Commission, 847 A.2d 785, 789 (Pa. Cmwlth. 2004). At the time Respondent requested
an advisory, he had already entered into the June 17, 2004, purchase agreement with
Roth and /or Dale and Ruth Roth in the amount of $641,933.00 for the construction of the
LLAS facility. Each element of a violation of Section 1103(f) as to Respondent's
subcontract for construction of the LLAS facility had already occurred at the time he
requested an advisory from this Commission. (We parenthetically note that the only
violation of Section 1103(a) that we have found as to Respondent does not in any way
depend upon Respondent's receipt of a financial benefit under the LLAS subcontract.)
We hold that Respondent violated Section 1103(f) of the Ethics Act on July 12,
2002, when on behalf of his business, Kistler Pole Building Company, Inc., he entered into
a subcontract with Cornerstone for the construction of the Transportation facility, where the
contract(s) awarded by the CLIU Board to Roth Marz Partnership and Cornerstone R.E.,
LLC as to the Transportation facility had been awarded without an open and public
process.
We further hold that Respondent violated Section 1103(f) of the Ethics Act on June
17, 2004, when on behalf of his business, Kistler Pole Building Company, Inc., he entered
into a subcontract with Roth and /or Dale and Ruth Roth for the construction of the LLAS
facility, where the contract(s) awarded by the CLIU Board to Dale Roth and /or Dale and
Ruth Roth had been awarded without an open and public process.
Finally, we note that although Respondent violated Section 1103(f) of the Ethics Act
as set forth above, he did so based upon information he received from various
professionals (CLIU administrators and Solicitor) upon whom he relied. The focus at the
CLIU apparently was upon avoiding a competitive bidding process under the Public School
Code; no thought was given to the requirements of Section 1103(f) of the Ethics Act.
Although "ignorance of the law is no excuse," Respondent erroneously believed that he
could lawfully enter into the aforesaid subcontracts.
IV. CONCLUSIONS OF LAW:
Kistler, 04 -037
Page 82
1 At all times relevant to this matter, Respondent Kenneth Kistler ( "Kistler "), in his
capacity as a Member of the Carbon - Lehigh Intermediate Unit ( "CLIU ") Board of
Directors ( "Board "), has been 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. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his official
actions prior to March 18, 2002, regarding a new CLIU Transportation facility,
based upon an insufficiency of evidence.
3. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his possible
participation in discussions at the March 18, 2002, executive session of the CLIU
Board regarding cost comparison information for the Transportation facility, based
upon an insufficiency of evidence.
4. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his official
actions on or after March 15, 2004, in furtherance of the CLIU's purchase of the
Transportation facility, based upon the lack of a private pecuniary benefit.
5. On June 17, 2002, Kistler unintentionally violated Section 1103(a) of the Ethics Act
when he voted in favor of authorizing Dale Roth ( "Roth ") to pursue the construction
of the CLIU Lehigh Learning and Adjustment School ( "LLAS ") facility while Kistler
was actively engaged in seeking a contract to build the CLIU Transportation facility
and had a reasonable expectation that he would receive such a contract from
Roth /Cornerstone R.E., LLC.
6. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his
participation in approving CLIU lease payments for the Transportation facility or
LLAS facility in that such payments were for pre- determined amounts under lease
agreements that had been approved by the CLIU Board without Respondent's
participation.
7 Kistler violated Section 1103(f) of the Ethics Act on July 12, 2002, when on behalf
of his business, Kistler Pole Building Company, Inc., he entered into a subcontract
with Cornerstone for the construction of the Transportation facility, where the
contract(s) awarded by the CLIU Board to Roth Marz Partnership and subsequently
Cornerstone R.E., LLC as to the Transportation facility had been awarded without
an open and public process.
8. Kistler violated Section 1103(f) of the Ethics Act on June 17, 2004, when on behalf
of his business, Kistler Pole Building Company, Inc., he entered into a subcontract
with Roth and /or Dale and Ruth Roth for the construction of the LLAS facility, where
the contract(s) awarded by the CLIU Board to Roth and /or Dale and Ruth Roth as to
the LLAS facility had been awarded without an open and public process.
In Re: Kenneth Kistler,
Respondent
File Docket: 04 -037
Date Decided: 6/11/07
Date Mailed: 6/29/07
ORDER NO. 1441
1 Respondent Kenneth Kistler ( "Kistler "), a public official in his capacity as a Member
of the Carbon - Lehigh Intermediate Unit ( "CLIU ") Board of Directors ( "Board "), did
not violate Section 1103(a) of the Ethics Act with regard to his official actions prior
to March 18, 2002, regarding a new CLIU Transportation facility, based upon an
insufficiency of evidence.
2. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his possible
participation in discussions at the March 18, 2002, executive session of the CLIU
Board regarding cost comparison information for the Transportation facility, based
upon an insufficiency of evidence.
3. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his official
actions on or after March 15, 2004, in furtherance of the CLIU's purchase of the
Transportation facility, based upon the lack of a private pecuniary benefit.
4. On June 17, 2002, Kistler unintentionally violated Section 1103(a) of the Ethics Act
when he voted in favor of authorizing Dale Roth ( "Roth ") to pursue the construction
of the CLIU Lehigh Learning and Adjustment School ( "LLAS ") facility while Kistler
was actively engaged in seeking a contract to build the CLIU Transportation facility
and had a reasonable expectation that he would receive such a contract from
Roth /Cornerstone R.E., LLC.
5. Kistler did not violate Section 1103(a) of the Ethics Act with regard to his
participation in approving CLIU lease payments for the Transportation facility or
LLAS facility in that such payments were for pre- determined amounts under lease
agreements that had been approved by the CLIU Board without Respondent's
participation.
6. Kistler violated Section 1103(f) of the Ethics Act on July 12, 2002, when on behalf
of his business, Kistler Pole Building Company, Inc., he entered into a subcontract
with Cornerstone for the construction of the Transportation facility, where the
contract(s) awarded by the CLIU Board to Roth Marz Partnership and subsequently
Cornerstone R.E., LLC as to the Transportation facility had been awarded without
an open and public process.
7 Kistler violated Section 1103(f) of the Ethics Act on June 17, 2004, when on behalf
of his business, Kistler Pole Building Company, Inc., he entered into a subcontract
with Roth and /or Dale and Ruth Roth for the construction of the LLAS facility, where
the contract(s) awarded by the CLIU Board to Roth and /or Dale and Ruth Roth as to
the LLAS facility had been awarded without an open and public process.
BY THE COMMISSION,
Kistler, 04 -037
Page 84
Louis W. Fryman, Chair