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In Re: Michael Conti,
Respondent
STATE ETHICS COMMISSION
FINANCE BUILDING
613 NORTH STREET, ROOM 309
HARRISBURG, PA 17120-0400
File Docket:
X-ref:
Date Decided
Date Mailed:
FACSIMILE: 717-787-0806
WEBSITE: www.ethLrspp.M y
17-039
Order No. 1762
9/26/19
10/10/19
Before: Nicholas A. Colafella, Chair
Mark R. Corrigan, Vice Chair
Roger Nick
Melanie DePalma
Michael A. Schwartz
Shelley Y. Simms
This is a final adjudication of the State Ethics Commission.
Procedurally, the Investigative Division of the State Ethics Commission conducted
an investigation regarding possible violation(s) of the Public Official and Employee Ethics
Act ("Ethics Act"), -65 Pa.C.S. § 1101 et seg., by the above -named Respondent. At the
commencement of its investigation, theTh'vestigative 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 to the Investigative Complaint was filed by
Respondent. A Stipulated Record/Amended Stipulated Record was filed by the parties in
lieu of an evidentiary hearing in this matter. The parties filed briefs, and a hearing limited to
oral argument was held. The record is complete.
1. ALLEGATIONS:
That Michael Conti Conti") violated Section 1103(a) of the State Ethics Act (Act 93
of 1998), 65 Pa.C.S - 2(a), when, as the Chief Executive Officer of the Agora Cyber
Charter School, Conti simultaneously received compensation from both Agora Cyber
Charter School and another charter school, namel the Pennsylvania Cyber Charter School
("PCCS"), in violation of 24 P.S. § 17-1715-A(12� of the Public School Code of 1949, A
violation of 24 P.S, § 17-1715-A(12) shall Constitute a violation of 65 Pa.C.S. 1103(a),
and the violator shall be subject to the penalties imposed under the jurisdiction o7the State
Ethics Commission.
111. STIPULATED FINDINGS:
1 The Investigative Division of the State Ethics Commission received information
alleging
r�Conti,,'
that Michael Conti (also referred to herein as "Conti," "Dr. Michael Conti,"
"D onti ' ""Respondent," and "Respondent Conti") violated provisions of the State
Ethics Act. (Act 93 of 1998).
2. Upon review of the information, the Investigative Division initiated a preliminary
inquiry on November 28, 2017.
3, The preliminary inquiry was completed within sixty days. (See, 65 Pa.C.S, §
1108(2)).
a. The Commission, through the Executive Director, initiated a full investigation
on January 26, 2018.
Conti, 17-039
Page 2
4. On January 26,2018, a letter was forwarded to Michael Conti, c/o Guy A. Donatelli,
Esquire, by the Investigative Division of the State Ethics Commission, informing him
that a full investigation was being commenced concerning the alleged violations of
the Ethics Act. (See, 65 Pa.C.S. § 11 08(c)).
a. Said letter was forwarded by certified mail, no. 7016 3560 0001 0041 4194.
b. The domestic return receipt bore the signature of Karen Clark, with no
delivery date listed.
5. Periodic notice letters were forwarded to Michael Conti, c/o Guy A. Donatelli,
Esquire at least every ninety days in accordance with the provisions of the Ethics
Act advising him of he general status of the investigation. (See, 65 Pa.C.S. §
1108 (c)).
6. The Investigative Complaint/Findings Report was mailed to the Respondent on July
25,2018.
a. The Investigative Complaint/Findings Report was issued within 180 days of
the initiation of a full investigation (see, 65 Pa.C.S. § 1108(c)).
7. Dr. Michael Conti was employed by the Pennsylvania Cyber Charter School
("PCCS") from or about August 2000 to July 18, 2016.
8. From August 2000 through July 2012 Dr. Conti held various positions with the
PCCS, including the following:
a. Enrollment Counselor - 2000 through 2007
b. Director of Federal Programs — 2007 through 2009
C. Director of Administrative Services — 2009 through 2011
d. Chief of Staff — July 1, 2011, through June 30, 2012
9, On July 1, 2012, Conti was named Interim Chief Executive Officer ("CEO") for
PCCS.
a. A Memorandum of Employment was created between PCCS and Michael
Conti on June 26, 2012, confirming the appointment of Dr. Conti as Interim
CEO, at a salary of $110,000.00, beginning July 1, 2012, through June 30,
20113.
b, Dr. Conti was named Interim CEO after former PCCS CEO, Nick Trombetta,
resigned„ Dr. Conti was told that Mr. Trombetta resigned due to a criminal
investigation.
C. A subsequent Memorandum of Employment was established between the
PCCS and Dr. Conti on August 1, 2013,
1. The Memorandum of Employment reaffirmed Dr. Conti as the Interim
CEO from July 1, 2013, through June 30, 2014, at a salary of
$113,300.00, plus bonus/compensation of $1,500.00 relating to Dr.
Conti's Doctorate Degree, for a total compensation package of
$114,800.00,
d. Dr. Conti continued to serve as the PCCS Interim CEO until January 20,
Grind, 17-039
Page 3
OR I El I
10. On January 20, 2014, Conti was appointed by the PCCS Board of Trustees as the
I
Permanen CEO, at a yearly salary of $150,000.00.
a. Conti was appointed to serve as CEO until June 30, 2017.
b. On March 20, 2014, a Memorandum of Employment was entered between
the PCCS and Conti, whereby Dr. Conti was appointed CEO at a base salary
of $150,000.00 lus a bonus/additional $1,500.00 in relation to holding a
Doctorate, for a Fotal compensation package of $151,500.00,
C. On July 1, 2015, Conti's salary was increased to $153,000.00, plus Doctorate
bonus of $1,500.00, for a total compensation package of $154,500.00.
d. The Public School Code/Charter School Law establishes that "iflhe board of
trustees shall determine the level of compensationI terms and
conditions of employment of the staff except as may otherwise be provided in
this article." 24 .& § 17-1724-A.
e. Conti served as PCCS CEO until on or about July 18, 2016.
11. Beginning in or about August 1, 2016, Dr. Conti began serving as Interim CEO of
the Agora Cyber Charter School and was appointed Permanent CEO of Agora on
September 1:2, 2016.
12, PCCS is one of approximately 15 cyber charter schools in Pennsylvania.
a. A "cyber charter school" is an independent public school established and
9perated under a charter from the Pennsylvania Department of Education
('PDE"), in which the school uses technology in order to provide a significant
portion of its curriculum and to deliver a significant portion of instruction to its
students through the Internet or other electronic means. A cyber charter
school must be organized as a public, nonprofit corporation. A charter may
not be granted to a for -profit entity. See, 24 P.S. § 17-1703-A.
b. A cyber charter school may be established by: an individual; one or more
teachers who will teach at the proposed cyber charter school; parents or
guardians of students who will enroll in the cyber charter school; a
nonsectarian college, university or museum located in this Commonwealth; a
nonsectarian corporation not -for -profit as defined in 15 Pa.C.S. § 5103
(relating to definitions); a corporation, association, or partnership; or any
combination of the foregoing. See, 24 P.S. § 17-1745-A.
13. Articles of Incorporation were filed with the Pennsylvania Department of State for the
"Western Pennsylvania Cyber Charter School" on August 25, 2000.
a. On April 18, 2005, the Articles of Incorporation were amended to reflect a
name change from "Western Pennsylvania Cyber Charter School" to "The
Pennsylvania Cyber Charter School (PCCS), although Dr. Conti does not
recall the specific date of the amendment.
14. In 2007 and 2012, the PCCS Articles of Incorporation were amended again to
change the school's address.
a. The address for the PCCS, effective 2012, is as follows:
Conti, 17-039
Page 4
652 Midland Avenue
Midland, PA 15059
Beaver County
15. In addition to a change of address, the 2012 amendments to the PCCS Articles of
Incorporation changed the purpose of PCCS to the following:
The PCCS is organized exclusively for charitable, religious,
education, and scientific purposes, including such purposes,
the making of distributions to organizations that qualify as
exempt oranizations under Section 501 (c) (3) of the Internal
Revenue Code.
The PCCS is dedicated to the success of students who have
not had their need met in a traditional educational setting.
PCCS is dedicated to providing the educational programs and
services necessary forthese students to receive a high school
diploma in order to procure satisfying employment as an
independent, responsible citizen.
16. Cyber charter schools operate in accordance with the Charter School Law, 24 P.S. �
17-1701-A (et seg.) as contained within the Public School Code of 1949. See, 24
P.S. § 11-110f�eTRq.)
a. The PIDE operates as the oversight entity for all charter schools, including
cyber charter schools.
17. Section 17-1715-A(12) of the Charter School Law classifies charter school
administrators as public officials under 65 Pa.C.S. Ch. 11.
a. "A person who serves as an administrator for a charter school shall be a
public official under 65 Pa.C.S. Ch. 11 (relating to ethics standards and
financial disclosure)." 24 P.S. § 17-1715-A.
18, Section 17-1715-A(12) of the Charter School Law also prohibits charter school
administrators from receiving compensation simultaneously from two charter
schools:
(12) A person who serves as an administrator for a charter
school shall not receive compensation from another
charter school or from a company that provides
management or other services to another charter
school. The term "administrator" shall include the chief
executive officer of a charter school and all other
employes of a charter school who by virtue of their
positions exercise management or operational oversight
responsibilities. A person who serves as an
administrator for a charter school shall be a public
official under 65 Pa.C.S. Ch. 11 (relating to ethics
standards and financial disclosure). A violation of this
clause shall constitute a violation of 65 Pa.C.S. §
11 03(a) (relating to restricted activities), and the violator
shall be sub'ecl to the penalties imposed under the
jurisdiction o� the State Ethics Commission,
24 P.S. § 17-1715-A(12),
Conti, 17-03
'Rage
19. As the CEO for PCCS, Conti was responsible for all areas of operation for the
PCCS, including, but not limited to, the school's finance, charter, and educational
programs (including special education).
a. The PCCS did not maintain a written job description for the position of CEO.
b. Althouggh no written job/position description existed, the Public School
Codet harter School Law defines the position of CEO as follows:
"Chief executive officer" shall mean an individual appointed by
the board of trustees to oversee and manage the operation of
the charter school, but who shall not be deemed a professional
staff member under this article. 24 P.S. § 17-1703-A.
20. Dr. Conti continued to serve as the PCCS CEO from January 20, 014, until July 18,
2016.
a. During an executive session of the PCCS Board of Trustees, held
immediately prior to the Board's scheduled July 18, 2016 meeting, Dr. Conti
was advised that he was going to be removed as the P6CS CEO.
1. Conti was not made aware that he was going to be removed as PCCS
CEO prior to July 18, 2016.
2. As the PCCS CEO, Dr. Conti never received any performance
evaluation(s).
3. As the PCCS CEO, Dr. Conti never received any written reprimand(s)
concerning his performance or execution of his duties.
b. Dr. Conti was informed that he would be offered a Separation Agreement in
lieu of termination, but that he was going to be removed regardless of his
acceptance of the agreement.
Dr. Conti chose to accept the Separation Agreement offered by the
Board of Trustees.
21. On July 18, 2016, the PCCS Board of Trustees and Dr. Conti executed a Separation
Agreement.
a. The terms of Conti's Separation Agreement with PCCS were, in part, as
follows;
PCCS will provide Employee with a severance benefit in the
form of the payment of 12 months of his current gross salary,
$ commencing as of July 1, 2016, subject to all
s aandar payroll schedule, paid up and through June 30, 2017,
and provided that Employee acknowledges having already
received salary covering the period through June 30, 2016,
June 30, 2016, shall be the date of Employee's resignation.
During the course of the one-year severance term, PCCS shall
also rant Empployee the right to share in PCCS' healthcare
benefit plan relating to health insurance and shall pay for said
pIan consistent with how PCCS pays for other employee's
health insurance benefit.
Conti, 17-039
P 7a -g—e 6,
In consideration for the severance benefit, Employee shall
assist and consult with PCCS in the transition of any new CEO
appointed by PCCS. In addition, Employee shall assist PCCS
and its counsel and/or any other PCCS advisors with respectto
any pending or future
litigation, investigative and/or
administrative matters arising out of Employee's tenure with
PCCS.
b Within the signed agreement, the space listing the amount of Dr. Conti's
gross salary was intentionally left blank.
At the time of Dr. Conti's separation, his annual salary was
approximately $154,500.00 a year.
22. Although specified within the Separation Agreement, PCCS did not require Dr. Conti
to assist and consult with PCCS in the transition of any new CEO appointed by
I PCCS" nor to assist PCCS and its counsel and/or any other advisors
with respect to an pending or future litigation, investigative and/or administrative
matters arising outof Employee's tenure with PCCS."
a. While Dr. Conti was receiving severance payments from the PCCS he was
j
not involved in any decisions regarding the operations of the PCCS,
23. When the Separation Agreement was executed on July 18, 2016, the PCCS Board
of Trustees made the decision to disburse Dr. Conti's compensation over the course
of one year, as opposed to a lump sum payment,
a. Dr. Conti was never provided the option of a lump sum payment.
b. Dr. Conti did not negotiate the option of a lump sum payment.
24. Following entry into the Se aration Agreement with the PCCS, Dr. Conti received a
gross amount of $6,628.7�, semi-monthly from the PCCS.
a. Deductions were not made for the Pennsylvania State Employees Retirement
System ("PSERS"), in light of Dr. Conti no longer being an employee of the
PCCS.
25. The PCCS, Board of Trustees provided a copy of the Separation Agreement to
officials with the PDE.
26. The Separation Agreement did not include any language that prevented or restricted
Dr. Conti from procuring subsequent employment with competing cyber charter
schools.
27. Following his separation as CEO of PCCS, Conti accepted employment in August
2016 as interim CEO of the Agora Cyber Charter School.
AGORA CYBER CHARTER SCHOOL:
28. The Agora Cyber Charter School ("Agora") has been in existence since
approximately 2005.
Conti 17-039
Tya—g—e 7
29. Articles of Incorporation for Agora were established January 10, 2005.
a. Agora was established as a cyber charter school to educate Pennsylvania
students enrolled in grades K - 12.
b . The identified incorporator was Dr. June Brown.
30. Agora's application to operate as a cyber charter school was approved by the PDE
on or around April 15, 2005.
31. Agora's stated mission was to provide an innovative, intense academic preparation
that inspires and educates students to achieve the highest levels of academic
knowledge and skills and develop proficiency in the design and use of new
computer technologies and scientific research,
32. Section 17-1716-A(a) of the Charter School Law identifies the powers of the board
of trustees, in part, as follows -
The board of trustees of a charter school shall have the
authority to decide matters related to the operation of the
school, including, but not limited to, budgeting, curriculum and
operatin rocedures, sub ect to the school's charter. The
board NJ have the Mity to employ, discharge and
contract with necessary professional an nonprofessional
employes subject to the school's charter and the provisions of
this article, 24 P.S. § 17-1716-A.
31 Article IV of the By -Laws for Agora details the Power and Authority of the Board of
Trustees, in part, as follows:
The Board of Trustees shall consist of not more than seven
members.
The Board of Trustees shall have full power to conduct,
manage ,�e and direct the business and affairs of the Corporation
and powers of the Corporation are hereby granted to and
vested in the Board of Trustees.
The Board of Trustees shall approve the employment and/or
appointment of the agents and Chief Executive Officer and
through him/her, the af propriate administrative officers, faculty,
staff and representatives to carry out the mission of the
Corporation and prescribe such duties as it deems necessary,
34. For the following reasons, PDE officials were concerned about Agora's stability
during/around calendar year 2016:
a. Agora experienced operating deficits in two of the last five years.
b. Agora lacked consistent leadership from the CEO, due to high turnover of the
position.
C. PDE officials were monitoring Agora's performance during the 2016 calendar
year.
35. From or around May 17, 2016, Agora employed Jon Marsh as Interim CEO.
Conti, 17-039
P—ag--e 8
36. The Agora Board of Trustees was interested in appointing Marsh as the Permanent
CEO but could not come to an agreement with Marsh as to salary for the permanent
position.
a. The Agora Board of Trustees wanted Marsh to continue serving as Interim
CEO until a permanent replacement could be made.
b. At this time, there had not been any discussions between officials from Agora
and Dr. Michael Conti.
37. In or around late July 2016, PDE officials instructed the Agora Board of Trustees to
appoint a Permanent CEO.
38. On or around July 25 2016 Jon Marsh declined to continue to serve as Interim
CEO while the Agora board of Trustees sought a permanent replacement.
a. Marsh informed Agora that he planned to resign as Interim CEO effective
August 1, 2016.
b. The Agora Board of Trustees decided to conduct a nationwide search for a
CEO.
39. After Jon Marsh announced his intentions to resign as Interim CEO for Agora
effective Auqust 1, 2016, efforts were made by the Agora Board of Trustees to
appoint a CEO in an expedited manner,
DR. CONTI'S APPOINTMENT As AGORA CYBER CHARTER SCHOOL CEO:
40. Following his separation from PCCS on July 18, 2016, Dr. Conti contacted various
friends and associates through social media sites to inform them of his departure
from the PCCS.
41. One of the individuals Dr. Conti contacted was Kevin McKenna, Esquire
McKenna") of the law firm Latsha, Davis & McKenna, P.C. ("the Firm and
("McKenna")
for Agora.
a. The Firm's legal practice includes concentration in the area of charter
schools and education law.
The Firm was serving as the Solicitor for Agora in 2016.
b. McKenna had performed various legal services on behalf of PCCS, soon
after the cyber charter school was first established in or around 2000.
C. Dr. Conti had known McKenna for approximately 20 years.
42. In or around late July 2016, after his termination from PCCS, Dr. Conti received a
telephone call from McKenna who inquired if Conti had any restrictions in his
Separation Agreement with PCCS that prevented him from being employed.
a. In a taped interview on
M% 23, 2018, conducted b� S ecial Investigator
Gregory Curran ofthe Investigative Division ofthe State Ethics Commission,
Dr. Michael
Conti provided the following account regarding being contacted
by McKenna, as the matter related to Agora:
GCS : Okay was there ever any discussions about openings at
1 GC: Gregory Curran
Conti, 17-039
Tra—ge 9
the Agora Cyber Charter School.
MC2: No at least not through that venue no. That came the
following week or the week after that. Again, the
timeline is kind of fuzzy to me I'm just not remembering
what that was. Again, it's summertime my wife and I
are sitting on the patio and my cellphone rings and it's
Mr. McKenna ancl he said, "Hey Dr. Conti, do you have
any restrictions in your separation agreement?" and I
said no he says, it so you can work?' .1 said yeah, I can
work. He says alright let me call you back and that's
how that process started, But I had no indication that
there was anything kind of brewing out there at all.
43. After speaking to Conti in late July 2016, McKenna advised Ag
ora
Board of Trustees
Member, Marilyn Magio ("Maggio"), as to Dr. Michael Conti being a possible
candidate for the position of Agora Cyber Charter School CEO.
a. Maggio served as a Member of the Agora Board of Trustees from
approximately July 2014 until October 2016.
b. Maggio was President of the A ora Board of Trustees from approximately
May g2iOl 6 through October 2016.
44. Mag V.contacted Dr. Conti on or around August 1, 2016, for the purpose of
L
con ucting a telephonic interview of Conti for Agora's CEO position.
a. Maggio discussed Conti's experience and qualifications to be CEO.
1. Maggio did not discuss with Conti how or why he left PCCS.
2. Maggio did not discuss, and Conti did not disclose, that he was
receiving a severance payment from PCCS, pursuant to a Separation
Agreement.
b. Maciaio determined Dr. Conti to be well qualified for the position of Agora
CEO.
45. Maggio's telephonic interview of Conti for the position of CEO occurred immediately
prior to the Agora Board of Trustees meeting on August 1, 2016.
a. Prior to Conti's communication and interview with Maggio or around August
1, 2016, Conti was not aware of the opening for the Agora CEO position, nor
was Conti considered a candidate for the position.
46. The Agora Board of Trustees approved an Interim CEO contract at its August 1,
2016, meeting.
a. The minutes of the meeting did not identify Dr. Michael Conti by name as
being appointed Interim CEO.
47. On or about August 4, 2016, Dr. Conti proceeded to the offices of Agora, located in
King of Prussia, Pennsylvania, to discuss the position of Agora CEO with Members
of the Agora Board of Trustees.
a. Minutes of the Agora Board of Trustees' meeting for August 24, 2016,
2119770,70 re. M,
Conti, 17-039
Page 10
reflected the introduction of Dr. Conti to the Board as the Interim CEO.
At the time Dr. Conti was appointed Interim CEO for Agora in August 2016,
the Agora Board of Trustees fully intended to appoint Dr. Conti as the
permanent Agora CEO.
48. Dr. Conti executed an Independent Contractor/Consultant Agreement drafted
between himself as the "Contractor" and Agora Cyber Charter School, which in part,
provided the following:
Contractor shall be contracted for the time period written above
and ending o later than June 30, 2017, unless terminated
earlier as permitted under the terms of this Agreement and as
outlined herein.
Contractor shall provide services to assist the Board of
Trustees in the administration of the affairs of the charter
School, including but not limited to programs, personnel, and
business management, in accordance with provisions of the
Charter School Law, the policies of the Charter School, and the
policies of the Board of trustees. The Board of Trustees shall
retain authority in all operations, hiring, discipline and
termination decision regarding the Charter School and its
personnel,
The Contractor shall make every effort to attend all regular and
special meetings of the Charter School Board of trustees and
all committee meetings thereof, excepting ,(at the option of the
Charter school) executive sessions unless invited to participate
by the Board of trustees. Contractor shall serve as advisor to
the Board and its committees in all matters affecting the
I Charter School, and he will inform the Charter school and
board of trustees as to administrative actions taken on its
behialf.
Contractor shall assist the Board with the daily operations of
the Charter School and assist with or anizing, supervising, and
coordinating the Charter School staff.
Contractor shall promptly advise the Board of trustees of any
such complaints that may expose the Charter School to any
potential legal liability or any legal action of any kind.
Contractor agrees to maintain, throughout the term of
Agreement valid and current certification, other le al
I
credentials, and all required background clearances and or
Conti, 17-039
P-a—ge 11
reports as may be required by applicable law and to present
the same to the charter school.
Contractor agrees to devote his time, skill, labor, and attention
to the Charter School during the term of this Agreement.
Contractor shall provide his expertise and effort to developing
and implementing the vision and mission of the School in
coordination with the Board of Trustees.
The school agrees to compensate Contractor, as Contractor's
sole and exclusive compensation, with a per them pay rate of
Seven Hundred Fifty Dollars ($750.00) per day (or work
performed pursuant to this Agreement.
a. The Independent Contractor/Consultant Agreement executed by Dr. Conti
was a "draft" and was never executed by representatives of Agora.
b. Although only a "draft," both Dr. Conti and Agora abided by the
terms/conditions of the Agreement.
49, At the Agora Board of Trustees meeting on September 12, 2016, Dr. Conti was
appointed as the Permanent CEO of Agora.
a, Contemporaneous with the Board's September 12, 2016, meeting, an
employment agreement was signed by Dr. Michael Conti.
I The Permanent CEO agreementwas fully executed on September 19,
2016.
2. Maggio, as President of the Agora Board of Trustees, signed the
agreement on September 19, 2016.
b. The agreement was to remain in effect from the date of execution until no
later than June 30, 2017.
C. Upon expiration, the option existed to renew the agreement for an additional
term of one year, at the Board's sole discretion and approval, at a salary to
be determined at the time of renewal.
50. As part of the employment agreement, Dr. Conti was to be compensated and
provided benefits as follows:
a, In recognition of the responsibilities of employee and subject to the
provisions set forth in the agreement, the Board agrees to compensate
Employee an annual salary of $175,000.00, less applicable taxes and
withholdings, pursuant to the terms of [the] agreement.
b. Life insurance coverage in the same manner as other charter school
employee and as permitted under the terms of any such plans.
C. Disability insurance benefits and group health insurance coverage in the
same manner as other charter school employee and as permitted under the
Conti, 17-039
Ty-a—ge 12
terms of any such plans.
d. The ability to opt -out of group health insurance coverage. If emplo ee wishes
to opt out of the insurance coverage, employee is entitled to two Ithousand]
($2,000 dollars in additional compensation. Except, if the employee is
covered the charter school's group health insurance plan through or under
c
the plan o a family member then employee shall not be eligible or this opt -
out compensation.
e. Relocation assistance in the amount of two thousand five hundred ($2,500)
dollars shall be provided to employee within thirty [(30)] days of execution of
[the] agreement by all parties ....
51. As the Permanent CEO for Agora, Dr. Conti was charged, in part, with the following
duties and responsibilities:
a. E= timely and accurate responses to all PDE requests, including the
Corrective Action Plan.
b. Dr. Conti was also to work closely with the Board of Trustees to:
1. Develop/prepare/submit timely required reports to PDE.
2. Ensure regular updates are provided to Board through regular
communication.
3. Create Board agenda and timely positing of notifications,
4. Ensure Board is kept apprised (timely) of all personnel changes.
5. Prepare regular communication postings to families and staff,
ensuring Board review prior to posting,
6. Attend executive session at the invitation of the Board, Board
meetings and other meetings as requested, which shall include PDE,
legal and/or other stakeholders.
7. Include Board on all correspondence to PDE, legal and other
communications of importance.
PDE INQUIRY.*
52. Steve Carney, Special Assistant to the Secretary of PDE, participated by speaker
phone during the September 12, 2016, meeting at which Dr. Conti was appointed
CEO.
a. Carney participated in the meetina due to PDE's monitoring of Agora
following the indictment of former CEO Dorothy June Brown.
53. In or around September 2016, Steve Carney also requested Conti's Separation
Agreement from PCCS officials.
a. Conti's Separation Agreement was sent by PCCS to PDE in or around
October 2016.
b. PCCS officials were never advised by PDE why the Separation Agreement
was requested.
Conti, 17-039
Page 13
54. Steve Carney subsequently sent an email to Conti and Maggio on October 6, 2016,
that included an attachment of a letter addressed to Dr. Conti from David Volkman,
PDE Executive Deputy Secretary, requesting various records and information
related to Conti's appointment.
a. A copy of Dr. Michael Conti's employment contract was included in
Volkman's letter.
b. Volkman's letter did not identify any concerns regarding Dr. Conti
simultaneously receiving compensation from two charter schools,
C. On or around October 14, 2016, a letter was sent via hand delivery to Steve
Carney
from Dr. Conti responding to the letter from Dr. David Volkman dated
October 6, 2016„ with attached records that were requested which included
Conti's employment contract with Agora.
55. On or around October 14, 2016, PDE officials confirmed that Dr. Conti was
simultaneously receiving severance payments from the PCCS and salary from
Agora.
a. Dr. Conti was never notified by PDE that there were any improprieties,
potential or otherwise, arising out of the severance agreement with PCCS
and his employment at Agora.
56. The Agora Board of Trustees had Dr. Conti's severance agreement but never
discussed that Dr. Conti was receiving severance payments from the PCCS.
57, In ajaped interview on May 23, 2018, with an Ethics Commission inves%ator,
inquiry was made of Dr. Conti as to the Charter School Law, 17-1715-A(l ), to
which he responded:
MC: Sure, Sure. I was aware of the provision,
GC: Okay.
MC: Basically because of Dorothy June Brown's situation
which is of course is as egregious as you can get so
obviously I knew the provision was there.
GC: Okay.
MC: But of course, I had, I still don't believe that I violated
that rovision. I don't believe I received compensation
and f', I say ... I'll speak for Guy (attorney) here and say I
don't believe that was compensation.
58. Conti has asserted the payments he received from the PCCS were severance
payments and payments to settle/compromise his legal dispute with PCCS, and not
compensation.
59. Payroll records of PCCS confirm the following payments were made to Dr. Conti
pursuant to the Separation Agreement of July 18, 2016:
Conti, 17-039
T55-g-e 14
Pay Date
Gross Amount
Net Amount
7/15/2016
$6,628.75
$4,106,50
7/29/2016
$6,628.75
$4,47935
8/15/2016
$6,628,75
$4,47936
8/31/2016
$6,62875
$4,479.37
9/15/2016
$6,628,75
$4,47936
9/30/2016
$6,628.75
$4,479.35
1011412016
$6,628.75
$4,798.75
10/31/2016
$6,628.75
$4,890.34
11/15/2016
$6,628.75
$4,890.34
1113012016
$6,628.75
$4,890.35
12/15/2016
$6,628.75
$4,890.34
12/30/2016
$6,628.75
$4,890.42
Total
$79,545,00
$55,753.83
1/15/2017
$6,628.75
$4,483.09
1/31/2017
$6,628.75
$4,483.09
2/15/2017
$6,628.75
$4,483.09
2/28/2017
$6,628.75
$4,483.09
3/16/2017
$6,628.75
$4,483.10
3/31/2017
$6,628.75
$4,483.08
4/14/2017
$6,628,75
$4,483.09
4/28/2017
$6,62875
$4,483.09
5/15/2017
$6,628.75
$4,483.10
5/31/2017
$6,628.75
$4,483.08
6115/2017
$6,628.75
$4,483.09
6/30/2017
$6,628.75
$4,483.10
Total
$79,545.00
$53,797.09
60. W-2 Wage and Tax Statements from PCCS evidence
Dr. Michael Conti receiving
the following compensation from PCCS during calendar
year 2016 and 2017:
Year
Amount
2016
$150,504.12
2017
$79,545.00
61. Dr. Conti was compensated o d' basis as Interim CEO of A � a per diem , f,,ora at the rate
of $750.00 per day for the period August 1, 2016, until September 2,2016.
a. Dr. Michael Conti was issued a 2016 Form 1099-MISC from Agora, while
serving as Interim CEO, that reflected nonemployee compensation in the
amount of $21,000.00.
62. After Dr. Conti was appointed Permanent CEO for Agora on September 12, 2016,
his compensation consisted of $7,375.00 paid on a semi-monthly basis.
Conti 17-039
75-g-e— 15
63. W-2 Wage and Tax Statements from Agora reflect the following compensation paid
to Dr. Michael Conti from Agora during calendar year 2016 and 2017:
ear Amount
2016 $49, 890.�42
$175M2.44 ...........
64. Section 17-1715-A(12) of the Charter School Law in part, provides that a person
who serves as an administrator for a charter schoof shall not receive compensation
from another charter school or from a company that provides management or other
services to another charter school.
65. From August 1, 2016, through June 30, 2017, Dr, Michael Conti served as a
compensated administrator for Agora while simultaneously receiving payments as
part of a Separation Agreement Dr. Conti executed with PCCS.
66. From August 1 2016 through June 30, 2017, Dr. Conti received payments from
PCCS totaling t145,832.50 and from Agora totaling $159,390.42.
2016 2017 Total
a. PCCS $66,287.50 $79,545.00 $145,832.50
b. Agora $70,890.42 $88,500.00 $159,390.42
C. Total $305,222.92
III. DISCUSSION:
In his capacity as the Chief Executive Officer ("CEO") of the Agora Cyber Charter
School,
Respondent Michael Conti, also referred to herein as "Conti," Dr. Michael Conti,"
"Dr.Conti,""Respondent," and "Respondent Conti," has been a public official subject to the
provisions of the Public Official and Employee Ethics Act ("Ethics Act"), 65 Pa.C.S. § 1101
�e! seg.
The allegations as set forth in the Investigative Complaint/Findings Report are that
Respondent Conti violated Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a),when,
as the CEO of the Agora Cyber Charter School (''Agora"),Conti simultaneously received
compensation from both Agora and another charter schoo namely the Pennsylvania Cyber
Charter School ("PCCS"), in violation of 24 P.S. § 17-171 5-A(l 2) of the Public School Code
of 1949. As detailed below, b y law, a violation of 24 P.S. § 17-1715-A(12) constitutes a
violation of Section 1103(a) o the Ethics Act, and the violator is subject to the penalties
imposed under the jurisdiction of this Commission.
Section 1103(a) of the Ethics Act provides as follows:
§ 1103. Restricted activities
(a) Conflict of interest. —No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
Confl, 17-039
P-a—ge 16
The following relevant terms are defined in the Ethics Act as follows:
§ 1102. Definitions
"Conflict!" or "conflict of interest." Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate family
or a business with which he or a member of his immediate
family is associated. The term does not include an action
having a de minimis economic impact or which affects to the
same degree a class consisting of the general public or a
subclass consisting of an industry, occupation or other group
which includes the public official or public employee, a member
of his immediate family or a business with which he or a
member of his immediate family is associated.
"Authority of office or employment." The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
65 PaC.S. § 1102,
Section 17-1715-A(12) of the Charter School Law provides that a person who serves
as an administrator for a charter school is a public official under the Ethics Act and shall not
receive compensation from another charter school or from a company that provides
management other services to another charter school:
(12) A person who serves as an administrator for a charter
school shall not receive compensation from another
charter school or from a company that provides
management or other services to another charter
school. The term "administrator" shall include the chief
executive officer of a charter school and all other
employes of a charter school who by virtue of their
positions exercise management or operational oversight
responsibilities. A person who serves as an
administrator for a charter school shall be a public
official under 65 Pa.C.S. Ch. 11 (relating to ethics
standards and financial disclosure). A violation of this
clause shall constitute a violation of 65 Pa,C,S. §
11 03(a) (relating to restricted activities), and the violator
shall be subject to the penalties imposed under the
jurisdiction of the State Ethics Commission.
24 P.S. § 17-1715-A(12).
The material facts may be summarized as follows.
During the time period from or about August 2000 to July 18, 2016, Respondent
Conti was employed in various roles with PCCS. On July 18, 2016, Conti, then CEO of
PCCS, entered into a Separation Agreement with the PCCS Board of Trustees. The
Separation Agreement provided, in part:
PCCS will provide Employee with a severance benefit in the
form of the payment of 12 months of his current gross salary,
Conti, 17-039
Page 17
$ commencing as of July 1, 2016, subject to all
standand payroll schedule, paid up and through June 30, 2017,
and provided that Employee acknowledges having already
received salary covering rhe period through June 0, 201
June 30, 2016, shall be the date of Employee's resignation.
During the course of the one- ear severance term, PCCS shall
also rant Ernfloyee the
Kt to share in PCCS' healthcare
E , to benefit plan re atin? health insurance and shall pay for said
, I
rlan consistent � h how PCCS pays for other employee's
ealth insurance benefit.
In consideration for the severance benefit, Employee shall
assist and consult with PCCS in the transition of any new CEO
appointed by PCCS. In addition, Employee shall assist PCCS
and its counsel and/or any other PCCS advisors with respect to
any pending or future litigation, investigative and/or
administrative matters arising out of Employee's tenure with
PCCS.
Stipulated Findina 21(a).
Pursuant tothe Separation Agreement with PCCS, Conti received a gross amount of
$6,628.75 semi-monthly rom PCCS. Conti was not provided the option of a lump sum
payment. Deductions were not made for the Pennsylvania State Employees Retirement
ystem ("PSERS") in light of the fact that Conti was no longer an employee of PCCS.
Although the Separation Agreement between Conti and PCCS required Conti to
assist/consult with PCCS in the transition of a new CEO and to assist PCCS, its counsel,
and/or its advisor(s) with respect to any pending or future litigation, investigative matters,
and/or administrative matters arising out of Conti's tenure with PCCS, Conti was never
called upon to do so. While Conti was receiving severance payments from PCCS, he was
not involved in any decisions regarding the operations of PCCS.
Commencing on or about August 1, 2016 Conti began serving as the compensated
Interim CEO of Agora. On September 12, 2016: Conti was appointed Permanent CEO of
Agora. From August 1, 2016, through June 30, 2017, Conti served as a compensated
administrator for Agora while simultaneously receiving payments pursuant to the
Separation Agreement Conti had executed with PCCS. Specifically, from August 1, 2016,
through June 30, 2017, Conti received payments from PCCS totaling $145,83T50 and from
Agora totaling $159,390.42.
In a taped interview with an Ethics Commission investilator on May 23 2018 Conti
acknowledged that he was aware of Section 17-1715-A(12) o) the Charter School Law but
indicated that he did not believe he had violated the provision. Conti has asserted that the
payments he received from PCCS were severance payments and payments to
settle/compromise his legal dispute with PCCS, and not compensation.
Having set forth the material facts, we must now determine whether Conti violated
Section 1103M� of the Ethics Act. The fundamental legal issue is whether the payments
(from rom PCCS following termination of employment with PCCS would constitute
"compensation" for purposes of the prohibition at Section 17-1715-A(12) of the Charter
School Law, 24 P.S. § 17-1715-A(1We note that neither the Charter School Law, 24
P.S. § 17-1703-A, nor the Statutory &nstruction Act, 1 Pa.C,S. § 1991, defines the term
Confi, 17'-039
Fra-g—e 1 '8
"compensation," and the term has various meanings when used in other laws. There do not
arpear to be an � gplicable Pennsylvania iudicial decisions definingthe term for purposes
o Section 17-1 1 -A(12) of the Charter Si School Law. Therefore, n our analysis further
below, we shall consider the common and approved usage of the term (see, I Pa.C.S, §
1903).
First, however, we shall summarize the arguments of the parties.
Conti has presented the following arguments:
• That Section 17-1715-A(12) of the Charter School Law, 24 P.S. § 17-1715-A(12), is
unenforceable and u nconstitutio nail vague, and as applied to Conti, would violate
Conti's due process rights to protect interest in employment;
• That the intent of Section 17-1715-A(12) of the Charter School Law is to prevent
CEOs from working at two different charter school entities at the same time, which
Conti did not do;
• That Conti did not render any service to PCCS after he was wrongfully discharged in
July of 2016 and he did not put himself in a conflict position related to loyalties
between PCCS and Agora or alleged duties/responsibilities to PCCS;
• That the payments Conti received pursuant to his Separation Agreementwith PCCS
were severance payments settling a disputed legal claim between Conti and PCCS
and were not compensation;
• That the Ethics Act treats severance payments differently from compensation (citing
65 Pa.C.S. § 1103(e));
• That this Commission has treated severance payments as distinguishable from
compensation (citing Keis!loig, Opinion 88-005), and to change course now would
work a profound preju-3—ce upon Conti;
• That in addition to the fact that there is no definition of the term "compensation"
within the Charter School Law, there is also no legislative history or udiGIal decision
providing guidance as to the meaning of that term within Section I 715-A(I 2) of
the Charter School Law;
• That with respect to other laws: (1) the definition of "compensation" in the Public
School Employees' Retirement Code does not apply to severance payments; (2)
any application of what constitutes taxable compensation under a 4ax code is
inapposite; and (3) if the General Assembly had intended for the Charter School
Law to define the term "compensation" as it is defined in the Unemployment
Compensation Law, the General Assembly Could have said so;
• That as early as September 2016, the Pennsylvania Department of Education,
PCCS Board, and Agora Board knew of the payment of severance to Conti, and
had any entity taken issue with these payments, Conti could have addressed the
issue then and would not now be subject to a forfeiture of the rights to a severance
which he received in July 2016; and
• That the finding of a violation or imposition of a financial penalty would not be
appropriate in this case where Conti acted with impartiality, honesty, and good faith,
the law is vague/unclear, and the burden of proof for establishing a violation of the
Ethics Act is not met.
Conti, 17-039
Page 19
The Investigative Division has presented the following arguments:
• That this Commission has jurisdiction to enforce Section 17-1715-A(12) of the
Charter School Law, 24 P.S. § 17-17154A(12);
• That through the execution of the Separation Agreement, Conti received wages in
return for services rendered, specifically, making himself available to assist in the
transition of the new CEO and any litigation that should arise from his time at PCCS;
• That because Conti was obligated to perform services outlined in the Separation
Agreement with PCCS if called upon to do so, the payments he received pursuant to
the Separation Agreement are compensation for pur oses of Section 17-1715-A(12)
of the Charter School Law, 24 P.S. § 17-1715-A(IT);
• That Conti did not receive a lump sum payment, but rather, a scheduled, extended
payment of Conti's normal, pre-seQaration salary in return for Conti's responsibility
to make himself available to PCCS;
• That the payments Conti received pursuant to his Separation A preementwith PCCS
o
would fall within the BLACK'S LAW DICTIONARY definition "compensation" as
"Irlemuneration and other benefits received in return for services rendered- esp
salary or wages" (citing BLACK'S LAW DICTIONARY, at342-343 (loth Edition, 2014) and
accompanying treatise segment);
• That with respect to other laws: (1) the payments Conti received would not be
excluded from the definition of "compensation" set forth within the Public School
Employees' Retirement Code (24 Pa.C.S. § 8102) because such payments were
based on Conti's standard salary schedule; (2) such payments would fall within the
definition of "compensation" in Pennsylvania s Tax Reform Code of 1971 (72 P.S. §
7301(d); and (3) the Unemployment Compensation Law appears to include
severance payments in the same category as compensation (chin? 43 P.S. § 753(f);
Kelly v, Workers' Cernp,-Appeal Bd. (US Airways Grp) 992 A. d 845, 853 (Pa.
• That PCCS and Agoraare competitors, and Conti's Separation Agreement with
PCCS could have required Conti to act in a manner that Would put 7iis duties and
responsibilities to both PCCS and Agora in direct conflict;
• That Conti was aware of the prohibitions of Section 17-1715-A(12) of the Charter
School Law, 24 P.S. § 17-1715-A(12), but accepted the aforesaid payments from
PCCS and Agora without seeking advice;
• That this Commission should find that Conti violated Section 11 03(a) of the Ethics
Act as alleged and impose an appropriate penalty/restitution of financial gain
obtained in violation of the Ethics Act; and
• That a violation without a financial penalty would neutralize the enforcement of this
law.
UP09 consideration of the stipulated facts and the parties' respective positions as set
forth in their briefs and arguments, we conclude that the payments Respondent Conti
received pursuant to his Separation Agreement with PCCS were at least partially
`(compensation" received contrary to Section 17-1715-A(12) of the Charter School Law, 24
P.S. 17-1715-A(12), because at least some portion of the payments was in exchange for
Conti s contractual obligation to provide specific services if called upon to do so. Conti's
Conti, 17-039
7—ag--e 20
receipt of com ensation from PCCS while serving as a paid administrator of Agora was
prohibited by Tection 17-1715-A(12) of the Charter School Law, 24 P.S. § 17-1715-A(12),
and therefore, by operation of law, violated Section 11 03(a) of the Ethics Act.
Our finding of a violation of Section 11 03(a) of the Ethics Act in this case should not
be misunderstood as reflecting negatively on Conti's character. Furthermore, we recognize
the difficult position that Conti found himself in when he was abruptly informed that PCCS
was terminating his emWloyment regardless of whether he accepted the proffered
Separation A reement. Nevertheless, Conti accepted the Separation Aqreeme, and the
terms of the geparation Agreement included payments to Conti in exchange for Conti's
contractual obligation to provide specific services if called u on to do so. The payments for
that contractual Fe obligation, in the nature of a retaining fee, all Squarely within the BLACK'S
Law DICTIONARY definition of "compensation" as "[r]emuneration and other benefits received
in return for services rendered; esp., salary or wages." BLACK'S Law DICTIONARY, at 342
(1 Oth Edition, 2014).3 As noted above, Conti's receipt of compensation from PCCS while
serving as; a paid administrator of Agora was prohibited by Section 17-1715-A(12) of the
Charter School Law, 24 P.S. § 17-17-1 5-A(l 2), and therefore, by operation of law, violated
Section 1103(a) of the Ethics Act.
Although this case involves a legal issue that is a matter of first impression, we are
constrained by statutory language and relevant definitions. We reject Conti's arguments to
the contrary.
With regard to Conti's arguments as to constitutionality, we note that it is not the
function of this Commission, as an administrative agency, to rule upon facial constitutional
challenges to enablin!? legislation, See, Lehman v. Pennsylvania State Police, 576 Pa.
365, 8AA.2d 265 (2( (03 ; Departm6_n_t6f` General Services v. Roard:oj�aim�S881 A.2d
14 (Pa. Crnwlth. 2005). Ireover, Section 17-1715-A(l 2) ot the Charter School , Law is not
unconstitutionally vague as applied to Conti. Section 17-1715-A(12) of the Charter School
Law provides fair notice that an administrator of a charter school may not simultaneously
receive payments from another charter school in exchange for contractual obligations to
make himself available to provide services.
As for the intent of Section 17-1715-A(I 2) of the Charter School Law, it is axiomatic
that "the plain language of a statute is the best indicator of its intent." Reuther v. De],
Count v Bureau of glections, 205 A.3d 302, 306 (Pa. 2019). The plain language o ec ion
17-1715-A(12of the darter School Law establishes its intent to, inter alia, prevent an
admini)strator of a charter school from simultaneous receiving compensati6_nfrom another
charter school entity, which is what Conti did, This simultaneously
does not have authority to
carve out exceptions that do not have a statutory basis. See, e pinion 0285
177�_s_� , Morford, Opinion
at 6 (and Opinions cited therein). It is for the Genera em ly to weigh any relevant
concerns and to promulgate legislation as it deems appropriate. Id.
Keislin , Opinion 88-005, cited by Respondent, did not involve the Charter School
Law, let a -one the meaning of the term "compensation" as set forth in Section 17-1715-
A(12) of the Charter School Law, and therefore that Opinion is not applicable to this case.
Nevertheless, our analysis in Keisling would not be inconsistent with our conclusion in the
instant matter that at least a portion of the post -employment PCCS payments to Conti
consisted of prohibited "compensation,"
Finally, it is irrelevant what the Pennsylvania Department of Education, PCCS Board,
or Agora Board knew or did not know, or did or did not do.
3 We note that the Commonwealth Court of Pennsylvania has cited with approval this same definition of
"compensation" which appeared in the Eighth Edition of BLACWs LAW DICTIONARY. See, Velazguez v. E.
district, —
Stroudsbur School trict, 949 A.2d 354, 359 (Pa. Cmwlth. 2008), alloc. Aenie�F
.q Area 6 a. 747, 964
A.2d 896 (2009).
Conti, 17-039
T—ag--e 21
We hold that Respondent Conti violated Section 1103(a) of the Ethics Act, 65
Pa.C.S. § 1103(a), when, while serving as the CEO of Agora, Conti simultaneously
received corn ensation from both Agora and PCCS, contrary to Section 17-1715-A(12) of
the Public School Code of 1949/Charter School Law, 24 P.S. § 17-1715-A(12).
In the instant matter, we shall exercise our discretion and refrain from imposing a
financial penalty upon Conti due to the lack of prior precedent.
IV. CONCLUSIONS OF LAW:
In his capacity as the Chief Executive Officer ("CEO"), of the Agora Cyber Charter
School ('Agora"), Respondent Michael Conti ("Conti) 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. Conti violated Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), when, while
serving as the CEO of Agora, Conti simultaneously received compensation from
both Agora and the Pennsylvania Cyber Charter School, contrary to Section 17-
1715-A�12� of the Public School Code of 1949/Charter School Law, 24 P.S.§ 17-
1715-A 12 .
3. No financial penalty will be imposed in this case due to the lack of prior precedent.
In Re- Michael Conti,
Respondent
File Docket: 17-039
Date Decided: 9/26/19
Date Mailed: 10110/19
ORDER NO. 1762
1 Michael Conti ("Conti") a public official in his capacity as the Chief Executive Officer
("CEO") of the Agora I ber Charter School ( ora"),violated Section 1103(a) of
the Public Official and, imployee Ethics Act ��Othics Act"),65 Pa.C.S. § 1103(a)
when, while serving as the CEO of Agora, Conti simultaneously received
compensation from both Agora and the Pennsylvania Cyber Charter School
�'PCCS"), contrary to Section 17-1715-A(12) of the Public School Code of
949/Charter School Law, 24 P.S. § 17-1715-A(12).
2. No financial penalty will be imposed in this case due to the lack of prior precedent,
BY THE COMMISSION,
P . a
Commissioner Michael A. Schwartz dissents as to the finding of a violation of Section
1103(a) of the Ethics Act but concurs in the decision not to impose a financial penalty on
Conti under the unique circumstances presented in this case. Commissioner Schwartz is of
the view that, while it is troubling that the Separation Agreement between Conti and PCCS
required Conti to agree to provide services if called upon, the unique facts and
circumstances show that no services were ever expected. Commissioner Schwartz would
find that the Investigative Division did not meet its burden of showing that Conti received
compensation from PCCS, as opposed to a severance payment, while also receiving
compensation from Agora.