noting that “use” of public office requires action by a public official that in some way facilitates his receipt of the pecuniary gain
How later courts described this case
- noting that “use” of public office requires action by a public official that in some way facilitates his receipt of the pecuniary gain
Written by the judges who cited it.
The opinion
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Dennis Bloom, :
Petitioner :
: No. 1539 C.D. 2017
v. :
: Argued: June 4, 2018
Pennsylvania State Ethics Commission, :
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE McCULLOUGH1 FILED: December 9, 2019
Dennis Bloom (Petitioner) petitions for review of the September 27, 2017
order of the Pennsylvania State Ethics Commission (Commission) finding that
Petitioner violated sections 1103(a) and 1105(b)(5), (8), and (9) of the Public Official
and Employee Ethics Act (Ethics Act), 65 Pa.C.S. §§1103(a), 1105(b)(5), (8)-(9),
regarding recommendations he made to the Pocono Mountain Charter School (PMCS)
Board of Trustees (hereinafter PMCS Board or Board) and by filing deficient
Statements of Financial Interests (SFIs) for the calendar years 2007, 2008, 2009, and
2010. Upon review, we affirm in part and reverse in part.
1
This matter was reassigned to the author on August 16, 2018.
Facts and Procedural History
The following facts are garnered from the Commission’s Final
Adjudication dated September 27, 2017 (Adjudication).
In late 2002, Petitioner formed and incorporated the Pocono Mountain
Learning Academy (PMLA) as a non-profit charter school with Petitioner as the sole
incorporator. Petitioner filed a charter school application with the Pocono Mountain
School District (the District) requesting that PMLA be granted status as a charter school
within the District. The application identified the address of PMLA as 16 Carriage
Square, Tobyhanna, Pennsylvania, the same address as Shawnee Tabernacle Church,
which was founded by Petitioner in 1995 and for which he served as Pastor. 2 The
application also identified the founding coalition of PMLA as consisting of Petitioner;
Gricel Bloom, Petitioner’s wife; James L. Shelton, a church elder; and Dr. Janet S.
Shelton, Elder Shelton’s wife.3 The District approved the application and granted
PMLA a charter on February 19, 2003.4 On March 6, 2003, Petitioner filed amended
articles of incorporation with the Pennsylvania Department of State reflecting a change
in the entity name from the PMLA to the PMCS. Shortly thereafter, on March 21,
2003, Elder Shelton signed the charter on behalf of PMCS. (Adjudication at 4-6.)
2
PMLA leased space from the church for its operations.
3
Prior to opening PMLA, Petitioner founded and operated a private school known as
Tobyhanna Christian Academy (TCA) from 1999 to 2002. Elder Shelton served as administrator of
TCA and Dr. Shelton served as its principal.
4
As a result of receiving a charter, PMLA became eligible for federal, state, and local funding.
PMLA’s revenues resulted primarily from reimbursements that it received from the District based on
enrollment numbers.
2
The charter school application submitted to the District stated that the
school’s Board would consist of five members appointed by the school’s founding
coalition, with two seats being reserved for representatives of the parents/guardians of
enrolled students. Elder Shelton served as the first president of the PMCS Board. The
record is not clear as to the names of the other original PMCS Board members.
Nevertheless, at its first meeting on May 30, 2003, the PMCS Board hired Petitioner to
serve as PMCS’s Chief Executive Officer (CEO). The PMCS Board further hired
Petitioner’s wife as Assistant CEO and Dr. Shelton as PMCS principal. 5 As CEO,
Petitioner was a non-voting member of PMCS’s Board of Trustees. (Adjudication at
5, 61.)
Petitioner acted as PMCS CEO from 2003 through December 10, 2010.
Although a non-voting PMCS Board member, the CEO position required Petitioner to
make recommendations to the Board regarding PMCS’s operations. More specifically,
as CEO, Petitioner was responsible for managing PMCS’s contracts, including leases
and employment contracts. As part of these latter duties, Petitioner was responsible to
make personnel recommendations to the PMCS Board with respect to employee hiring
and PMCS executive/administrator salaries and raises. (Adjudication at 6, 60.)
Sometime between March 2, 2006, and June 1, 2006, Petitioner, in his
capacity as PMCS CEO, submitted an undated memorandum to the PMCS Board with
recommendations for raises that would cover the last three-year period for which there
were no raises, for himself, the Assistant CEO of PMCS who was his wife, and John
Severs, then-principal of PMCS. (Adjudication at 17.)6
5
Elder Shelton was the original president of the PMCS Board.
During the Commission’s April 26, 2017 hearing, Severs testified that he prepared this
6
memorandum and forwarded the same to Petitioner requesting “a salary raise and contract” if he was
3
While Petitioner’s job duties as CEO included the management of payroll
and employment contracts, Petitioner did not participate in any Board discussion
regarding whether to give the raises, nor did he vote on the salary increases.
(Adjudication at 32.)7 After at least two additional meetings and much discussion,
which included review of comparative salaries of similar positions in other school
districts, the voting members of the PMCS Board approved the recommended salary
increases and Mrs. Bloom’s base salary increased from $60,000.00 to $69,457.50.
(Adjudication at 32-33.) The Commission concluded that this raise resulted in Mrs.
Bloom receiving increased compensation totaling $28,372.50 prior to her resignation
in 2009. (Adjudication at 64.)
Petitioner’s daughter, Priscilla Bloom, had been working at PMCS since
June 2006, and his son, Mitchell Bloom, had been working at PMCS since October
2006. Severs, and then-human resources director Naomi Laura, both testified that it
was Severs who had initially recommended that Priscilla and Mitchell be hired by
PMCS and that the Board would later ratify their employment. (R.R. at 852a-53a,
908a-09a.) Specifically, the Board approved the retroactive part-time employment of
Priscilla and Mitchell Bloom at a meeting on November 1, 2006, and later approved
the new hire of Mitchell Bloom as a technology assistant at a meeting on June 6, 2007.
Petitioner did not participate in any deliberations or vote on either of these
“going to stay” at the school. (Reproduced Record (R.R.) at 849a, 872a.) Severs stated that he also
included a request for a salary raise for Mrs. Bloom in this memorandum because he “needed her to
do a number of variety of things, and she was available when [Petitioner] wasn’t.” (R.R. at 849a.)
Severs explained that he “did the memo and . . . handed that to Mrs. Bloom because [Petitioner]
wasn’t there. That’s why it’s not an [sic] initialed.” (R.R. at 850a.)
7
There is testimony in the record from Michelle Thomas-Dezonie, president of the Board at
the time the raises were approved, that Petitioner was asked to leave the room after presenting his
memo and he complied.
4
recommendations. In his answer to the Commission’s investigative complaint,
Petitioner stated that he had recommended the hiring of his children.8 Priscilla Bloom
ultimately received wages totaling $18,039.60, and Mitchell Bloom received wages
totaling $9,108.13. (Adjudication at 18-20.)
As to the matter of the SFIs, per section 1105 of the Ethics Act, 65 Pa.C.S.
§1105, Petitioner was required to disclose all direct/indirect sources of income, his
office, directorship, or employment in any business for profit, and his financial interest
in any legal entity in business for profit. Since December 2006, Petitioner had been
the sole owner and CEO of Radium, Inc. (Radium), a general contractor that was paid
over $260,000.00 for subcontracting work performed during a 2007 PMCS building
expansion project. Petitioner did not disclose any ownership interest, office,
directorship, or employment with Radium on the 2007, 2008, 2009, or 2010 SFIs that
the Ethics Act required Petitioner to file as a public official. (Adjudication at 9, 24,
36.)
On January 4, 2011, the Investigative Division of the Commission
(Investigative Division) initiated a preliminary investigation into this matter after
receiving a sworn complaint alleging that Petitioner violated sections 1103(a) and
1105(b) of the Ethics Act by using the authority of his public position to secure
financial benefit for his immediate family and by failing to properly disclose his
business and financial interests on SFIs filed for the 2007, 2008, 2009, and 2010
calendar years. Thereafter, by letter dated March 2, 2011, the Investigative Division
informed Petitioner it was commencing a full investigation and outlined the nature of
the violations Petitioner was alleged to have committed. (Adjudication at 57.)
8
As will be discussed in further detail below, this admission by Petitioner constituted a
binding, judicial admission.
5
On February 7, 2012, the Investigative Division sent Petitioner a letter
informing him of amendments to the allegations previously contained in the March 2,
2011 letter, namely that Petitioner filed defective SFIs. Approximately three weeks
later, on February 24, 2012, the Investigative Division mailed Petitioner the
Investigative Complaint/Findings Report. Petitioner filed a timely Answer to
Investigative Complaint/Findings Report (Answer) that included a demand for hearing.
The Commission conducted a three-day evidentiary hearing on April 24-26, 2017.
(Adjudication at 1, 57; R.R. at 161a-1022a.)
On September 27, 2017, the Commission issued its Adjudication and
Order No. 1722 (Order), finding that Petitioner (1) violated section 1103(a) of the
Ethics Act by recommending that the PMCS Board increase his wife’s salary and hire
his children, and (2) violated section 1105(b)(5), (8), and (9) of the Ethics Act by filing
deficient SFIs for the calendar years 2007, 2008, 2009, and 2010. The Order further
required Petitioner to pay $55,520.23, the aggregate amount received by his immediate
family as a result of his alleged improper use of office. This appeal followed.9
Petitioner raises the following issues on appeal to this Court:
A. Whether the Commission properly relied on the judicial
admissions doctrine in reaching its decision?
9
This Court’s review of a final adjudication of the Commission determines whether
constitutional rights have been violated, whether an error of law was committed, or whether the
findings of the Commission are supported by substantial evidence. 2 Pa.C.S. §704. Additionally,
“[a]fter the facts are found to be supported by substantial evidence, this Court must then consider
whether all the facts found by the Commission are ‘clear and convincing proof’ that the public official
violated the Ethics Act.” Kraines v. State Ethics Commission, 805 A.2d 677, 680 (Pa. Cmwlth. 2002).
“Clear and convincing proof is evidence that is so clear, direct, weighty, and convincing that it enables
the trier of fact to come to a clear conviction, without hesitance, of the truth of the precise facts at
issue.” G.L. v. State Ethics Commission, 17 A.3d 445, 453 (Pa. Cmwlth. 2011).
6
B. Whether the Commission erred as a matter of law and
abused its discretion in determining that the Petitioner
violated Section 1103(a) of the Ethics Act[] in conjunction
with the Board of Trustees of the Pocono Mountain Charter
School granting a raise to the Petitioner’s wife, the Assistant
Chief Executive Officer?
C. Whether the Commission erred as a matter of law and
abused its discretion in determining that the Petitioner
violated Section 1103(a) of the Ethics Act in conjunction
with the hiring of his two children?
D. Whether the Commission abused its discretion in
determining that the Petitioner violated Section 1105(b) of
the Ethics Act by filing deficient statements of financial
interest for the years 2007, 2008, 2009 and 2010?
(Petitioner’s Brief at 5.)
Discussion
Reliance by Commission on Judicial Admissions
Initially, Petitioner claims that the Commission erred and abused its
discretion by applying the Judicial Admissions Doctrine to admissions contained in the
Answer filed in this matter. See Petitioner’s Brief at 15-19. Petitioner argues that by
holding a hearing and allowing testimony on the issues, the Commission, through its
hearing officer, allowed Petitioner to withdraw the admissions contained in the
Answer. Id. We disagree.
As this Court has noted:
[W]hen the term admission is used without any qualifying
adjective the customary meaning is an evidentiary admission,
that is, words in oral or written form or conduct of a party or
a representative offered in evidence against the party.
Evidentiary admissions are to be distinguished from judicial
admissions. Judicial admissions are not evidence at all.
Rather, they are formal concessions in the pleadings in the
case or stipulations by a party or its counsel that have the
7
effect of withdrawing a fact from issue and dispensing
wholly with the need for proof of the fact. Thus, the judicial
admission, unless allowed by the court to be withdrawn, is
conclusive in the case, whereas the evidentiary admission is
not conclusive but is always subject to contradiction or
explanation.
Judicial admissions may arise from a party’s statement in its
pleadings . . . [or] a party’s failure to respond as required by
the pleading rules . . . . An attorney’s admission during the
course of a trial is treated as a judicial admission. A party’s
statements in its brief or oral argument to the trial court are
treated as a judicial admission.
[J]udicial admissions are conclusive. A party may not offer
evidence to contradict the judicially admitted facts . . . .
Bartholomew v. State Ethics Commission, 795 A.2d 1073, 1078 (Pa. Cmwlth. 2002)
(quoting L. Packel and A. Poulin, Pennsylvania Evidence §127, at 30–31 (2d ed. 1999))
(determining statements in an answer to an investigative complaint from the
Commission are judicial admissions that are binding on parties and preclude the
Commission from making contrary findings of fact in a final adjudication). Otherwise
stated,
A judicial admission is an express waiver made in court or
preparatory to trial by a party or his attorney, conceding for
the purposes of trial, the truth of the admission, and may be
contained in pleadings, stipulations and other like
documents. . . . An important facet of such an admission is
that it has been made for the advantage of the admitting party
and once the admission has been made, the party making it is
not allowed to introduce evidence attempting to disprove it.
Lower Mount Bethel Twp. v. N. River Co., LLC, 41 A.3d 156, 162 (Pa. Cmwlth. 2012)
(internal quotation marks omitted).
The statements contained in Petitioner’s Answer are express statements
made in preparation for trial by Petitioner or his attorney that concede certain truths.
As a result, these statements must be construed as judicial admissions. See Lower
8
Mount Bethel; Bartholomew. By making those statements/admissions in pleadings or
like documents, Petitioner conceded the truth of the matters contained therein. Lower
Mount Bethel; Bartholomew. Petitioner cites no authority for the suggestion that the
process afforded him by the hearing officer in allowing testimony somehow negated
the judicial admissions contained in the Answer, which Petitioner never amended or
requested be withdrawn. Accordingly, the Commission did not err by relying on the
admissions contained in Petitioner’s Answer in drafting the Adjudication.10 But our
analysis does not end here.
Petitioner claims that since he only made a recommendation which was
pursuant to his duties as CEO and did not otherwise vote or attempt to influence the
Board, the Commission erred by concluding that his submission of an undated memo
to the PMCS Board recommending a salary increase for the Assistant CEO, his wife
(made simultaneously with his recommendation for a raise for himself and then-
principal, John Severs), as well as a subsequent recommendation to retroactively
formalize the part-time hire of his children at PMCS, amounted to conflicts of interest
in violation of section 1103 of the Ethics Act. See Petitioner’s Brief at 19-30.
Section 1103(a) of the Ethics Act specifically provides that “[n]o public
official or public employee shall engage in conduct that constitutes a conflict of
interest.” 65 Pa.C.S. §1103(a). Section 1102 of the Ethics Act defines a “conflict of
interest,” in relevant part, as follows:
“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
10
This question is somewhat academic, however, as the reasons behind our resolution of the
substantive claims of the instant appeal, discussed infra, apply regardless of whether this Court views
the statements contained in Petitioner’s Answer as judicial admissions.
9
immediate family or a business with which he or a member
of his immediate family is associated.
65 Pa.C.S. §1102. “The Commission bears the burden of proving a violation of the
Ethics Act.” G.L., 17 A.3d at 453. To prove a violation of section 1103, the
Commission must prove by clear and convincing evidence that there was a conflict of
interest such that, (1) a public official/public employee, (2) used the authority of his/her
office, (3) to acquire a private pecuniary benefit. Id.
Further, section 1102 of the Ethics Act defines the term “public official”
as follows:
Any person elected by the public or elected or appointed by
a governmental body or an appointed official in the
executive, legislative or judicial branch of this
Commonwealth or any political subdivision thereof,
provided that it shall not include members of advisory
boards that have no authority to expend public funds
other than reimbursement for personal expense or to
otherwise exercise the power of the State or any political
subdivision thereof.
65 Pa.C.S. §1102 (emphasis added). Additionally, Pennsylvania’s Charter School
Law11 defines a person who serves as an administrator of a charter school as a public
official for purposes of the Ethics Act. See Section 1715-A(12) of the Charter School
Law, 24 P.S. §17-1715-A(12).12 The Charter School Law expressly includes chief
11
Act of March 10, 1949, P.L. 30, as amended, added by the Act of June 19, 1997, P.L. 225,
24 P.S. §17-1701-A – 17-1751-A.
12
Section 1715-A(12) of the Charter School Law provides, in pertinent part:
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
10
executive officers in the definition of “administrator.” Id. Hence, Petitioner’s status
as a public official falls within the ambit of the Ethics Act. Indeed, no party challenges
the Commission’s determination that, as the CEO of a charter school in a public school
district, Petitioner was a public official. Accordingly, this element requires no further
discussion.
Conflict of Interest
We next turn to the question of whether Petitioner’s recommendation to
the PMCS Board that it increase the salary of the Assistant CEO, his wife, constituted
a conflict of interest under the Ethics Act.13
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. §1103(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).
13
We note that Petitioner argues that the salary increase for his wife as Assistant CEO “was
not financial gain other than compensation provided by law.” (Petitioner’s brief at 13.) In making
this argument, Petitioner appears to be referencing a prior version of the Ethics Act which prohibited
a public official from using his office “to obtain financial gain other than compensation provided by
law for himself, a member of his immediate family, or a business with which he is associated.”
Formerly Section 3(a) of the Ethics Act, Act of October 4, 1978, P.L. 883, repealed by the Act of
October 15, 1998, P.L. 729, formerly 65 P.S. §403(a). This language has since been replaced in
section 1103(a) of the Ethics Act, such that a public official is precluded from using his office “for
the private pecuniary benefit” of himself or an immediate family member. 65 Pa.C.S. §1103(a).
While Petitioner correctly notes that the “other than compensation provided by law” language remains
in section 1101.1(a) of the Ethics Act (declaring that “public office is a public trust and that any effort
to realize personal financial gain through public office other than compensation provided by law is a
11
To constitute a conflict of interest in violation of section 1103(a) of the
Ethics Act, the Board must prove that a public official used the authority of his or her
office for private pecuniary benefit. Kistler v. State Ethics Commission, 22 A.3d 223,
227 (Pa. 2011). In Kistler, our Supreme Court specifically noted that “[t]here is no
explicit intent element” in either section 1103(a) of the Ethics Act or the definition of
“conflict of interest” found in section 1102. Id. The court in Kistler observed that the
Ethics Act does not define “use,”14 reviewed the common meanings associated with
this term, and concluded that, under the Ethics Act, it must be construed as “an action
directed toward a purpose.” Id. (emphasis added). The court stressed that such an
interpretation was “strengthened” by the declared purpose of the Ethics Act, found in
section 1101.1(a), which states, in pertinent part, “The Legislature hereby declares that
public office is a public trust and that any effort to realize personal financial gain
through public office other than compensation provided by law is a violation of that
trust. . . .” 65 Pa.C.S. §1101.1(a) (emphasis added).15 The court explained:
The dictionary definition of the noun “use” is “the act of
using or putting to a purpose, e.g., the use of a car;”
analogously, the definition of the verb “use” is “1. to bring
or put into service or action: employ, e.g., use a pen or use
your imagination, or 2. to put to some purpose: avail oneself
of, e.g., use the bus to get to work.” Webster’s II New
College Dictionary, Houghton Mifflin Co., 1995, at 1215.
Thus, the common and approved usage of the word “use,”
violation of that trust”), 65 Pa.C.S. §1101.1, we cannot overlook the express language of section 1103
relating directly to a conflict of interest.
14
Likewise, the Ethics Act does not define the term “private pecuniary benefit.” However,
the legal meaning of “pecuniary benefit” is “[a] benefit capable of monetary valuation.” Black’s Law
Dictionary 167 (8th ed. 2004). Further, our Superior Court has referred to “private pecuniary benefit”
as “financially related personal gain.” Commonwealth v. Habay, 934 A.2d 732, 738 (Pa. Super.
2007).
15
Section 1101.1 of the Ethics Act was added by the Act of October 15, 1998, P.L. 729.
12
which must guide our inquiry, indicates an action directed
toward a purpose. Accordingly, to violate [S]ubsection
1103(a), a public official must act in such a way as to put his
office to the purpose of obtaining for himself a private
pecuniary benefit. Such directed action implies awareness
on the part of the public official of the potential pecuniary
benefit as well as the motivation to obtain that benefit for
himself.
That the General Assembly intended such an interpretation
of [S]ubsection 1103(a) is strengthened by a declaration in
the Ethics Act’s purpose provision: “The Legislature hereby
declares that public office is a public trust and that any effort
to realize personal financial gain through public office other
than compensation provided by law is a violation of that
trust.” 65 Pa.C.S. § 1101.1(a) Purpose (emphasis added).
The dictionary defines “effort” as “exertion of physical or
mental energy to do something.” Webster’s II New College
Dictionary at 360. In other words, an effort is an activity
directed toward a goal. Accordingly, pursuant to the Ethics
Act, violation of the public trust arises from activity directed
toward the goal of realizing personal financial gain through
public office. This is entirely consistent with the
understanding of the word “use” in the context of the
statutory definition of “conflict of interest” set forth above.
Kistler, 22 A.3d at 227-28 (brackets omitted) (emphasis added). See also Kraines v.
State Ethics Commission, 805 A.2d 677, 681 (Pa. Cmwlth. 2002) (noting that “use” of
public office requires action by a public official that in some way facilitates his receipt
of the pecuniary gain); Sivick v. State Ethics Commission, 202 A.3d 814, 823 (Pa.
Cmwlth. 2019), appeal granted in part, (Pa., No. 118 MAL 2019, filed August 6, 2019)
(holding that “[u]se of authority of office is more than the mere mechanics of voting
and encompasses all of the tasks needed to perform the functions of a given position.
13
Use of authority includes . . . discussing, conferring with others, and lobbying for a
particular result.”).16 The court in Kistler went on to hold as follows:
[W]e now hold that to violate the conflict of interest
provision in subsection 1103(a) of the Ethics Act, a public
official must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then
must take action in the form of one or more specific steps
to attain that benefit. As informed by the Commonwealth
Court decisions . . . this interpretation derives from the plain
meaning of the statutory definition of conflict of interest,
which requires that a public official use the authority of his
office for private pecuniary benefit.
Kistler, 22 A.3d at 231 (emphasis added).
In the present case, there is no dispute that Petitioner submitted a
memorandum to the PMCS Board which included, inter alia, a request for a raise for
his wife. (Adjudication at 17; Finding of Fact No. 75.) Specifically, Petitioner
requested that his wife’s salary be increased “from $60,000.00 to $69,457.50 minimum
due to that she was overlooked for the last three years regarding increases and at 5%
minimum for each year missed $69,457.50 would bring her up to at least a bare
minimum raise.”17 Id. The PMCS Board approved the raise for Petitioner’s wife in
16
In Sivick, we held that a township board chairman’s one-on-one discussions with the other
supervisors regarding the hiring of his son and essentially directing them to vote to remove the
nepotism policy from the employee handbook, constituted use of the authority of his office to obtain
a private pecuniary benefit, and, consequently, a conflict of interest in violation of section 3(a) of the
Ethics Act. We noted in Sivick that “[b]ecause [the chairman] acknowledge[d] evidence of his
conscious awareness of a private pecuniary gain, this Court must consider whether Sivick [took]
action in the form of one or more specific steps to attain that benefit.” 202 A.3d at 822.
17
The memorandum submitted by Petitioner was addressed “To: The Board of PMCS”,
“From: CEO”, regarding “Raises of personnel” and stated as follows:
I hereby recommend the following raises to be considered and executed
for the coming fiscal budget year of July 1, 2006.
14
2006 and she continued at the salary until her resignation in 2009, accumulating an
additional $28,372.50 during that time period. (Adjudication at 18, Findings of Fact
Nos. 77, 79.)
While Petitioner argues that the PMCS Board acted independently in
approving the raise for his wife, and that he did not vote on her raise or otherwise
attempt to influence the decision of the PMCS Board, the Commission concluded that
Petitioner “used the authority of his public position as CEO of PMCS when . . . he
submitted an undated memo to the PMCS Board” requesting a raise for his wife.
(Adjudication at 70.) The Commission found that when Petitioner presented this memo
to the PMCS Board, he advised that he and his wife “had worked for a few years
without a raise” and that the request represented a “bare minimum raise due to
[Petitioner’s wife] having been overlooked for the prior three years.” Id. The
Commission also found that Petitioner admitted that the PMCS Board approved the
raise based on his recommendation. (Adjudication at 63.) The Commission concluded
that the raise that Petitioner’s wife received, from $60,000.00 to $69,457.50, as
specifically requested by Petitioner in the memo, constituted a “resulting private
pecuniary benefit.” (Adjudication at 70.)
Mrs. Bloom to be brought up from $60,000.00 to $69,457.50 minimum
due to [sic] that she was overlooked for the last three years regarding
increases and that at [a] 5% minimum for each year missed $69,457.50
would bring her up to at least a bare minimum raise.
...
I ask the Board to consider these raises and confirm at least the bare
minimum. Any back pay not received because of the overlooking is up
to the Board to approve payment.
(Adjudication at 17; Finding of Fact No. 75).
15
Although Petitioner stressed that his job duties as CEO required him to
make personnel decisions, including recommending salaries, the Commission noted
these job duties also permitted Petitioner to “[d]elegate responsibility and authority to
carry out [organization management] programs to subordinates” and to delegate
communication regarding “actions of the Board relating to personnel matters.”
(Adjudication at 12; Finding of Fact No. 60.) Although the Commission did not
specifically address whether Petitioner could have avoided making a request for a
salary increase for his wife given his delegation powers and Severs testimony that he
was the person that drafted the memorandum, the Commission based its decision on
Petitioner’s action and admission that the PMCS Board approved the raise based on
his recommendation, which resulted in a private pecuniary benefit.
Based upon the Commission’s findings, and in light of the holding of
Kistler that a public official must be aware of a private pecuniary benefit for himself,
his family or his business, and then must take action in the form of one or more specific
steps to attain that benefit, the Commission did not err in concluding that Petitioner’s
actions constituted a use of his office for a private pecuniary benefit in violation of
section 1103 of the Ethics Act.
The dissent contends Dennis Bloom did not use an “actual power provided
by law,” i.e., “the authority of his office,” by asking the board of directors of the
Pocono Mountain Charter School to raise the compensation of school employees
because neither the Charter School Law nor the Nonprofit Corporation Law of 198818
empowered Bloom to grant himself or any school employee a raise. Rather, the
applicable statutes vested this power exclusively in the board of directors. We disagree.
The Ethics Act defines “authority of office or employment” as:
18
15 Pa.C.S. §§5101-6162.
16
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 Pa.C.S § 1102.
Part of Petitioner’s duties and responsibilities as CEO included making
recommendations for staff salaries. The memorandum Petitioner submitted to the other
members of the Board of Trustees recommending his wife’s raise was submitted in his
official capacity as CEO. However, the dissent suggests this was not an action within
the “authority of office” because the defining phrase “an actual power provided by
law” requires a power provided by law, not a mere duty.
The dissent’s narrow construction of the “authority of office” would
improperly serve to eliminate a plethora of public officials and public employees,
acting within their job descriptions, from the requirements of the conflict of interest
provisions of the Ethics Act, by virtue of the absence of an express description in the
law of their duties.
The dissent overlooks that the responsibility of the CEO to operate the
school is, in fact, provided by law. Specifically, the Public School Code of 1949 19
provides that “[t]he board of trustees of a charter school shall have the authority to
decide matters related to the operation of the school . . . .” 24 P.S. § 17-1716-A(a).
As CEO of the subject charter school, Petitioner was a nonvoting member
of the PMCS Board of Trustees; Answer at 12, ¶ 31b. Notably, the charter school
application submitted by Petitioner20 to the Pocono Mountain School District states
19
Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §§1-101 – 27-2702.
20
Petitioner was among the “Founding Coalition” of the charter school. Answer at 12, ¶ 30(c).
The charter school application submitted by Petitioner noted that: “[t]he initial members of the Board
17
that the “Board [] will assume the ultimate responsibility for the governance of the
[PMCS]” and the “Chief Administrative Officer (CAO)[21] will report directly to the
Board [] and assume the overall responsibility for the daily operation of the charter
school.” Answer at 12, ¶ 31a. The Board delegated to the CEO22 the power to control
the daily operations of the school, including the management of employment contracts.
Id.; Answer at 13, ¶ 34. This power of the CEO is directly derived from the Board’s
“actual power provided by law.” See Pa.C.S. § 1102. The power to handle the daily
operations of the school is “necessary to the performance” of the CEO’s duty to manage
employment contracts, which includes recommending salaries and salary
increases/raises and is, therefore, within the “authority of office” of the CEO as defined
by the Ethics Act. See id. Here, Petitioner’s job description, as CEO, enumerated the
power to delegate responsibility and authority to carry out organizational management
programs to subordinates and the power to delegate communication regarding “actions
of the Board relating to personnel matters[.]” (Finding of Fact No. 60.)
of Trustees will be appointed by the Founding Coalition.” Id. at 12, ¶ 31(b). Petitioner was among
the initial trustees. Id.
21
Within the application to the school district, the title Chief Administrative Officer is used
instead of Chief Executive Officer; however, it is apparent from the record that the CEO was, in fact,
the chief administrative officer of the PMCS. See Answer at 12, ¶ 31. There is no position at PMCS
titled CAO; however, there is a CEO, Petitioner, and an Assistant CEO, Mrs. Bloom. Petitioner was
PMCS’s chief administrative officer. See Answer at 7, ¶ 14.
22
Also, notably, the law governing charter school requirements specifically identifies the chief
executive officer as an “administrator” of the school subject to the Ethics Act and identifies the CEO
as among those who, “by virtue of their positions exercise management or operation oversight
responsibilities.” See Section 1715-A(12) of the Charter School Law, Act of March 10, 1949, P.L.
30, as amended, added by the Act of June 19, 1997, P.L. 225, 24 P.S. § 17-1715-A(12).
18
We now address the Commission’s determination that Petitioner violated
section 1103 when he made a recommendation to the Board that it formally hire his
children on a part-time basis.
The Ethic Act’s definition of “income” under section 1102 expressly
excludes “miscellaneous, incidental income of minor dependent children.” 65 Pa.C.S.
§1102.23 While Petitioner, relying on Dodaro v. State Ethics Commission, 594 A.2d
652 (Pa. 1991), argued before the Commission that said exclusion applied herein such
that the hiring of his children and their receipt of wages could not constitute a conflict
of interest violation, the Commission rejected this argument. The Commission first
stated that Dodaro was inapplicable because it was decided under a prior version of the
Ethics Act that utilized an obsolete standard, i.e., an exclusion from the financial gain
that a public official was prohibited from receiving for compensation paid as “provided
by law.” The Commission noted that Petitioner’s children received a combined income
over a three-year period in excess of $27,000.00. Additionally, the Commission noted
23
“Income” is defined, in full, as,
Any money or thing of value received or to be received as a claim on
future services or in recognition of services rendered in the past,
whether in the form of a payment, fee, salary, expense, allowance,
forbearance, forgiveness, interest, dividend, royalty, rent, capital gain,
reward, severance payment, proceeds from the sale of a financial
interest in a corporation, professional corporation, partnership or other
entity resulting from termination or withdrawal therefrom upon
assumption of public office or employment or any other form of
recompense or any combination thereof. The term refers to gross
income and includes prize winnings and tax- exempt income. The term
does not include gifts, governmentally mandated payments or
benefits, retirement, pension or annuity payments funded totally by
contributions of the public official or employee, or miscellaneous,
incidental income of minor dependent children.
65 Pa.C.S. §1102 (emphasis added).
19
that the “income” defined under section 1102 related solely to the reporting of income
on an SFI, and not to an alleged conflict of interest violation. The Commission cited
Snyder, wherein we noted that Dodaro was decided under an earlier version of the
Ethics Act and not under the private pecuniary gain standard that remains prohibited
under section 1103(a) of the Ethics Act. Snyder, 686 A.2d at 853 n.16.
In Dodaro, our Supreme Court reversed this Court’s decision that
affirmed an order of the Commission finding Frank Dodaro to be in violation of former
section 3(a) of the Ethics Act (relating to a conflict of interest) and directing him to
make restitution of nearly $5,000.00 for wages received by his minor son for summer
employment with a city water authority. Dodaro was a member of the board of
directors of his city water authority and participated in voting to hire high school
students for summer employment, including his minor son. In the case sub judice,
while the Commission is correct that Dodaro was decided under the prior version of
the Ethics Act and held that the wages received by the minor son did not constitute
financial gain other than compensation provided by law, a standard that is now
obsolete, our Supreme Court in that case recognized that “[a]lthough the subsequent
amendments to the Ethics Act in 1989 are not controlling for purposes of this appeal,
we note that the Legislature redefined ‘income’ to exclude miscellaneous, incidental
income of minor dependent children.” Dodaro, 594 A.2d at 655 n.3.
The Commission’s rejection of Petitioner’s Dodaro argument in this case
based on the contention that the “income” defined under section 1102 related solely to
the reporting of income on an SFI appears misplaced in light of the Supreme Court’s
aforementioned recognition in Dodaro, a case that involved a conflict of interest
violation. Moreover, nothing in the Ethics Act reflects the Commission’s purported
interpretation of the definition of “income.” To the contrary, as the Commission
recognized in a footnote in its Final Adjudication, disclosing sources of income of
20
immediate family members on SFI forms was required under the original version of
the Ethics Act, but was later found to be unconstitutional. (Final Adjudication at 72
n.1; R.R. at 1127a.) The fact that later versions of the Ethics Act continue to utilize the
exclusion for “miscellaneous, incidental income of minor dependent children” from the
definition of income certainly suggests that the General Assembly did not view this
exclusion as relating solely to SFIs.
Further, the Ethic Act’s definition of “conflict of interest” under section
1102 expressly excludes,
an action . . . which affects to the same degree a class
consisting of the general public or a subclass consisting of an
industry, occupation or other group which includes the
public official or public employee, a member of his
immediate family or a business with which he or a member
of his immediate family is associated.
65 Pa.C.S. §1102. While PMCS had no formal hiring process at the time of Petitioner’s
children’s hiring, PMCS was in the practice of hiring students for part-time work and,
further, other children did work at the school.24 (R.R. at 435a.) Pursuant to this
practice, the Board approved the children’s retroactive hiring. (R.R. at 376a-77a, 431a-
36a.) No evidence indicated that Petitioner’s children were hired via a process unique
to them, that they had different duties, or that they received benefits of any kind over
and above what other students working at the school received. Under the facts of this
case, Petitioner’s children were part of a subclass of part-time PMCS employees and
were hired and treated as such. Hence, the children’s hiring is excluded from the Ethics
Act’s definition of “conflict of interest.” 65 Pa.C.S. §1102.
Moreover, we applied this exception in Kraines, which is factually similar
to this case. In Kraines, we reversed the order of the Commission concluding that
24
In fact, the Board President’s child also worked part-time at PMCS. (R.R. at 435a.)
21
Judith Kraines, who was elected as county controller in Berks County in 1996, violated
section 1103(a) of the Ethics Act by obtaining a private pecuniary benefit for her
husband, a forensic pathologist who performed autopsies for the county coroner.
Kraines’ husband, Dr. Neil A. Hoffman, and other pathologists from the local hospital
had been performing autopsies for the county since 1979. The county and Dr. Hoffman
later entered into an exclusive retainer contract in 1989, which paid him an annual fee
for certain services and established a fee schedule for other services, including
autopsies. In 1995, at the request of Dr. Hoffman, the county coroner approved an
increase in the fee schedule, without amending the retainer contract and without the
approval of the county commissioners. In 1998, two years after Kraines’ election as
county controller, Dr. Hoffman again requested and was granted an increase in the fee
schedule by the county coroner. Kraines’ office issued checks to the pathologists based
on this increased fee schedule. The Commission thereafter initiated its investigation
and ultimately issued a final adjudication concluding that Kraines was in violation of
the Ethics Act by participating in the approval process of payments to her husband of
pathology fees in excess of the 1989 contract and fee schedule.
This Court reversed, noting that Kraines did not “use” her public office
for receipt by her husband of improper pecuniary benefits to which he was not entitled.
Rather, we indicated that Dr. Hoffman had been performing autopsies for the county
years before his wife was elected, Kraines had no involvement in the coroner’s decision
to utilize her husband’s services, and Kraines had no involvement in the amount her
husband and other pathologists were paid. With respect to the section 1103(a)
exception, we stated that Dr. Hoffman was part of a subclass in relation to work
performed and payments received from the county, that he received the same payments
as other pathologists in this subclass, even in light of his specific retainer contract, and
that the record was devoid of any preferential treatment Dr. Hoffman received.
22
In the present case, Petitioner’s children, who at the time were enrolled
students in PMCS, had been working at PMCS for several months before they were
officially hired. When this issue was brought to the Board’s attention by the human
resources department, the Board approved their hiring retroactively. Although
Petitioner recommended that his children be formally hired,25 there is no evidence that
he participated in any Board discussions relative to their hiring and/or their salaries.
The hiring of students was normal and part of a school policy; indeed, the daughter of
the Board President was also a student hire at PMCS. In other words, it was the school
policy, not Petitioner’s use of his office, that led to the employment of Petitioner’s
children. Petitioner did not participate in the hiring; rather, the principal of PMCS
handled the hiring along with the human resources department, with the ultimate
decision resting with the Board. Further, there was no evidence that Petitioner’s
children received preferential treatment or a salary not commensurate with the salary
of other children hired by PMCS.
Thus, no clear and convincing evidence exists to establish that Petitioner’s
suggestions that the Board hire his children actually constituted a step in the realization
of their employment at PMCS. Once again, the ultimate hiring decision rested with the
Board. Therefore, the evidence does not demonstrate, for purposes of a conflict of
interest violation under section 1103(a) of the Ethics Act, that Petitioner “used” the
authority of his office to realize his children’s employment and attendant private
pecuniary gain.
25
Petitioner contends that there was no evidence that he was involved in the hiring of his
children. However, the Board found in its Adjudication that Petitioner recommended the same,
relying on the minutes from a June 6, 2007 Board meeting (Adjudication at 18; R.R. at 1073a), as
well as his admission to the same in his Answer to the Investigative Division’s Complaint/Findings
Report, (R.R. at 87a).
23
Statements of Financial Interests
Lastly, Petitioner argues that the Commission erred by finding that he
violated section 1105(b) of the Ethics Act by filing deficient SFIs. See Petitioner’s
Brief at 36-39. We disagree.
The Ethics Act requires that public officials file annual SFIs. See 65
Pa.C.S. §1105. In pertinent part, section 1105 requires the following information:
Required information.--The statement shall include the
following information for the prior calendar year with regard
to the person required to file the statement:
...
(5) The name and address of any direct or
indirect source of income totaling in the
aggregate $1,300 or more. However, this
provision shall not be construed to require the
divulgence of confidential information
protected by statute or existing professional
codes of ethics or common law privileges.
...
(8) Any office, directorship or employment of
any nature whatsoever in any business entity.
(9) Any financial interest in any legal entity
engaged in business for profit.
65 Pa.C.S. §1105(b)(5), (8)-(9) (emphasis added).26
26
The Ethics Act further provides the following relevant definitions:
“Business.” Any corporation, partnership, sole proprietorship, firm,
enterprise, franchise, association, organization, self-employed
24
Here, Petitioner’s filed SFIs were admitted into evidence at the hearing.
The SFIs, among other shortcomings, did not disclose Petitioner’s position with or
ownership interest in Radium, of which Petitioner was the sole owner and which
received over $260,000.00 in fees related to PMCS’s 2007 building expansion project.
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.
...
“Financial interest.” Any financial interest in a legal entity engaged in
business for profit which comprises more than 5% of the equity of the
business or more than 5% of the assets of the economic interest in
indebtedness.
...
“Income.” Any money or thing of value received or to be received as a
claim on future services or in recognition of services rendered in the
past, whether in the form of a payment, fee, salary, expense, allowance,
forbearance, forgiveness, interest, dividend, royalty, rent, capital gain,
reward, severance payment, proceeds from the sale of a financial
interest in a corporation, professional corporation, partnership or other
entity resulting from termination or withdrawal therefrom upon
assumption of public office or employment or any other form of
recompense or any combination thereof. The term refers to gross
income and includes prize winnings and tax-exempt income. The term
does not include gifts, governmentally mandated payments or benefits,
retirement, pension or annuity payments funded totally by
contributions of the public official or employee, or miscellaneous,
incidental income of minor dependent children.
65 Pa.C.S. §1102.
25
The Commission detailed the deficiencies of Petitioner’s SFIs at length in the body of
the Adjudication and then summarized the deficiencies as follows:
The SFI forms on file with the PMCS for [Petitioner] for
calendar years 2007, 2008, 2009, and 2010 were deficient.
ID-33 is an SFI of [Petitioner] that purports to be for calendar
year 2008 that is dated 1/5/2007. This SFI is deficient in
blocks 3, 4, 5, 13, and 14. Block 13 did not list Radium, Inc.
as a business with which [Petitioner] had an office,
directorship, or employment. Blocks 3, 4, and 5 were not
completed. This SFI bears a date that is inconsistent with the
calendar year for which it purports to be filed.
[Petitioner’s] SFI for calendar year 2007, which is in
evidence as ID-34 is deficient in blocks 5, 8, 9, 10, 11, 12,
13, 14, and 15. Block 13 did not list Radium, Inc. as a
business with which [Petitioner] had an office, directorship,
or employment. Blocks 5, 8, 9, 10, 11, 12, 13, 14, and 15
were not completed.
[Petitioner’s] SFI in evidence as ID-35, which purports to be
for calendar year 200[8], is deficient in blocks 5 and 13.
Block 13 did not list Radium, Inc. as a business with which
[Petitioner] had an office, directorship, or employment.
Block 5 was not completed. Mr. Caruso[27] testified he
believes Block 14, pertaining to “Financial Interest in [A]ny
Legal Entity in Business for Profit,” is also deficient. This
SFI bears a date that is inconsistent with the calendar year for
which the form purports to be filed.
[Petitioner’s] SFI for calendar year 2009, which is in
evidence as ID-36, is deficient in block 13. Block 13 is
marked “none” and does not list Radium, Inc. as a business
with which [Petitioner] had an officer, directorship, or
employment. Mr. Caruso testified that he believes Radium,
Inc. should have been disclosed in Block 14, pertaining to
“Financial Interest in [A]ny Legal Entity in Business for
Profit,” as well.
27
Referring to Robert Caruso, the Commission’s Executive Director.
26
[Petitioner’s] SFI for calendar year 2010, which is in
evidence as ID-37, is deficient in block 13. Block 13 did not
list Radium, Inc. as a business with which [Petitioner] had an
office, directorship, or employment.
The Ethics Act has its own definition of the term “income”
that is used for purposes of filing SFIs pursuant to the Ethics
Act. 65 Pa.C.S. §1102.
The SFI forms that are in evidence as ID-34 and ID-37 do
not list any sources of income. However, W-2 wage and tax
statements on file with the PMCS detail the following annual
wages paid to [Petitioner] for tax/calendar years 2007
through 2010: (1) 2007: $147,472.26; (2) 2008: $143,230.70;
(3) 2009: $137,213.40; and (4) 2010: $146,828.45.
[Petitioner] received income from the TCA of $12,117.90 in
2007. TCA is listed as a source of income on ID-33 but not
ID-34.
In 2007 and 2008, [Petitioner] received monthly rental
payments in the amount of $1,800.00 from Donald and
Tarrence Lynch; however, [Petitioner] failed to disclose a
source of income as to such payments.
On his SFIs filed for the 2007 and 2008 calendar years,
[Petitioner] did not list Radium, Inc. as a source of income.
[Petitioner] avers that he did not receive income in excess of
$1,300 from Radium. Inc. (Answer, at 26, paragraph 73; see
Fact Finding 50) and to support this claim, Mrs. Bloom
testified that the joint tax returns [Petitioner] and Mrs. Bloom
filed for the years 2007 and 2008 do not reflect any income
from Radium, Inc.
(Adjudication at 68-69.)
Further, Petitioner’s filings concede that he filed deficient SFIs. See
Answer at 3; see also Petitioner’s Memorandum of Law Filed on Behalf of Respondent
Dennis Bloom at 34 (“It is clear, even from the most precursory review of these
statements, that they were in deplorable condition with glaring discrepancies . . . .”).
27
These admissions and the SFIs themselves provide clear and convincing evidence that
Petitioner violated section 1105(b) by filing insufficient SFIs.
Petitioner’s argument that the Commission failed to provide him warning
notices regarding the SFIs’ deficiencies pursuant to section 1107(5) of the Ethics Act28
is belied by the Amended Notices of Investigation the Commission sent to Petitioner
on February 7, 2012, and February 10, 2012. See Adjudication at 69-70.29
28
Section 1107, Powers and duties of commission, provides in pertinent part:
In addition to other powers and duties prescribed by law, the
commission shall:
...
(5) Inspect [SFIs] which have been filed in order to ascertain whether
any reporting person has failed to file such a statement or has filed a
deficient statement. If, upon inspection, it is determined that a reporting
person has failed to file a [SFI] or that any statement which has been
filed fails to conform with the requirements of section 1105 (relating to
[SFIs]), then the commission shall in writing notify the person. Such
notice shall state in detail the deficiency and the penalties for failure to
file or for filing a deficient [SFI].
65 Pa.C.S. §1107(5).
29
As the Commission explained:
The letters/Amended Notices of Investigation dated February 7, 2012,
and February 10, 2012, which are in evidence as ID-12 and ID-13,
notified [Petitioner] of deficient filings of Statements of Financial
Interests. Specifically, each letter/Amended Notice of Investigation
notified [Petitioner] of the allegation that [Petitioner] violated Sections
1105(b)(5), (8), and (9) of the Ethics Act “when he failed to disclose
on SFIs filed for the 2007, 2008, 2009 and 2010 calendar years all
direct/indirect sources of income, his office, directorship or
employment in any business for profit and financial interest in any legal
entity in business for profit.” ID-12, at 1, 3; ID-13, at 2-4.
(Adjudication at 69-70.)
28
Additionally, Petitioner’s argument that the Commission did not provide adequate time
to amend his SFIs is likewise unpersuasive. Between the Commission’s February 2012
Amended Notices and September 2017 Adjudication, Petitioner never filed any
amended SFIs.
The Commission did not err by determining that Petitioner violated
section 1105(b) of the Ethics Act with regard to the SFIs he filed for calendar years
2007, 2008, 2009, and 2010. The Commission’s determination is supported by
substantial evidence that clearly and convincingly proves Ethics Act violations and is
neither an error of law nor a violation of Petitioner’s constitutional rights.
Conclusion
As to Petitioner’s recommendations regarding his children, there is no
clear and convincing evidence establishing that Petitioner’s suggestions that the Board
hire his children actually constituted a step in the realization of their employment at
PMCS. Once again, the ultimate hiring decision rested with the Board. Therefore, the
evidence does not demonstrate, for purposes of a conflict of interest violation under
section 1103(a) of the Ethics Act, that Petitioner “used” the authority of his office to
realize his children’s employment and attendant private pecuniary gain. Accordingly,
we reverse the Commission’s September 27, 2017 order to the extent that it finds that
Petitioner violated section 1103(a) of the Ethics Act in relation to the hiring of his
children. However, because Petitioner’s issuance of a memorandum to the Board of
Trustees recommending a raise for his wife constituted a use of his office for a private
pecuniary benefit under Kistler, the Commission did not err as a matter of law or abuse
its discretion in concluding that such action by Petitioner resulted in a conflict of
interest violation under section 1103(a). Further, the record supports the Commission’s
determination that Petitioner filed deficient SFIs for the calendar years 2007, 2008,
29
2009, and 2010. Accordingly, we affirm the order to the extent it finds that Petitioner
violated section 1103(a) in relation to the request for a raise for his wife as well sections
1105(b)(5), (8), and (9) of the Ethics Act.
________________________________
PATRICIA A. McCULLOUGH, Judge
30
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Dennis Bloom, :
Petitioner :
: No. 1539 C.D. 2017
v. :
:
Pennsylvania State Ethics Commission, :
Respondent :
ORDER
AND NOW, this 9th day of December, 2019, the order of the
Pennsylvania State Ethics Commission, dated September 27, 2017, is REVERSED
in part with respect to the finding that Dennis Bloom (Petitioner) violated section
1103(a) of the Public Official and Employee Ethics Act (Ethics Act), 65 Pa.C.S.
§1103(a), in relation to the hiring of his children. The order is AFFIRMED in part
with respect to the finding that Petitioner violated section 1103(a) of the Ethics Act
in relation to the request for a raise for his wife as well as sections 1105(b)(5), (8),
and (9), 65 Pa.C.S. §1105(b)(5), (8)-(9), in relation to the filing of deficient
statements of financial interest for the calendar years 2007, 2008, 2009, and 2010.
________________________________
PATRICIA A. McCULLOUGH, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Dennis Bloom, :
Petitioner :
: No. 1539 C.D. 2017
v. : Argued: June 4, 2018
:
Pennsylvania State Ethics :
Commission, :
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION NOT REPORTED
CONCURRING AND DISSENTING OPINION
BY PRESIDENT JUDGE LEAVITT FILED: December 9, 2019
At issue is whether Dennis Bloom used an “actual power provided by
law,” i.e., “the authority of his office,” by asking the board of directors of the Pocono
Mountain Charter School to raise the compensation of school employees. Neither
the Charter School Law1 nor the Nonprofit Corporation Law of 19882 empowered
Bloom to grant himself or any school employee a raise. Rather, the applicable
statutes vested this power exclusively in the board of directors. Accordingly, I
respectfully dissent from the majority’s holding that Bloom used the authority of his
office by asking the board of directors to raise the salary of the school’s Assistant
Chief Executive Officer, his wife, to $69,457.50 per annum.
1
Act of March 10, 1949, P.L. 30, as amended, added by the Act of June 19, 1997, P.L. 225, 24
P.S. §§17-1701-A – 17-1751-A.
2
15 Pa. C.S. §§5101-6162.
The Public Official and Employee Ethics Act (Ethics Act) prohibits a
public employee from engaging in “conduct that constitutes a conflict of interest.”
65 Pa. C.S. §1103(a). A “conflict of interest” is defined as a public official’s use of
“the authority of his office or employment” for his private pecuniary benefit. 65 Pa.
C.S. §1102. The Ethics Act defines “authority of office or employment” as the
“actual power provided by law.” 65 Pa. C.S. §1102. The appropriate inquiry,
therefore, is what “actual” power was conferred upon Bloom “by law.”
Pocono Mountain Charter School was organized as a nonprofit
corporation and, thus, subject to the Nonprofit Corporation Law of 1988. This
statute vests ultimate authority for governance of a nonprofit corporation in its board
of directors. 15 Pa. C.S. §5721. Specifically, it gives the board of directors the
power “[t]o elect or appoint and remove officers, employees and agents of the
corporation, define their duties, [and] fix their reasonable compensation….” 15 Pa.
C.S. §5502(a)(16). Similarly, Section 1724-A(a) of the Charter School Law vests
the charter school’s board of directors with the exclusive power to determine “the
level of compensation and all terms and conditions of employment of staff[.]” 24
P.S. §17-1724-A(a).
As the Chief Executive Officer of Pocono Mountain Charter School,
Bloom was responsible for the School’s day-to-day operations, which included the
responsibility to submit employee compensation requests to the board of directors.3
Sometime between March 2006 and June 2006, Bloom submitted a written request
3
The majority emphasizes that a charter school CEO is responsible for the operations of the charter
school. However, this general authority is circumscribed by the specific provision in the Charter
School Law that only the board of trustees can “determine the level of compensation and all terms
and conditions of employment.” 24 P.S. §17-1724-A(a). In statutory construction, the specific
controls the general. Section 1933 of the Statutory Construction Act of 1972, 1 Pa. C.S. §1933.
MHL-2
to the board of directors for a pay raise for himself, his wife, and John Severs, who
was the School’s principal. As would be expected for any such request, Bloom
offered several reasons in support of the request, including salary comparisons.
Submitting this request to the board of directors with a recommendation was not an
exercise of “actual power provided by law” because only the board of directors had
the power to make compensation decisions.
Further, Bloom did not act in an untoward manner. He did not attend
the board of directors’ meeting on compensation and did not participate in the
board’s discussions. He did not, and could not, vote on compensation or on any
matter that required a board vote because he was only an ex officio member. At all
times, the board of directors had full control of employee compensation.
Unquestionably, the Ethics Act is a penal statute. It states that a public
official who engages in a conflict of interest “commits a felony and shall, upon
conviction, be sentenced to pay a fine of not more than $10,000 or to imprisonment
for not more than five years, or both.” 65 Pa. C.S. §1109(a). Section 1107(13) of
the Ethics Act authorizes the State Ethics Commission to impose civil penalties and
restitution. 65 Pa. C.S. §1107(13).4 Penal provisions, whether in a civil or criminal
statute, must be strictly construed. Brown v. Bureau of Professional and
Occupational Affairs, 18 A.3d 1256, 1259 (Pa. Cmwlth. 2011) (citing 1 Pa. C.S.
§1928). As we have explained:
Ambiguities should and will be construed against the
government. This principle has its foundation in the rule of lenity
that provides that any ambiguity in a criminal statute will be
construed in favor of the defendant. The rule of lenity requires a
“clear and unequivocal warning in language that people
4
Bloom has been ordered to pay a civil penalty of $55,000 for making the instant compensation
requests.
MHL-3
generally would understand, as to what actions would expose
them to liability for penalties and what the penalties would be.”
Id. (quoting Commonwealth v. Reaser, 851 A.2d 144, 149 (Pa. Super. 2004)). The
rule of lenity “gives validity to our laws” by requiring a “clear and unequivocal
warning” of what conduct creates liability. McGrath v. Bureau of Professional and
Occupational Affairs, State Board of Nursing, 146 A.3d 310, 316 (Pa. Cmwlth.
2016).
Section 1103(a) of the Ethics Act is subject to the rule of lenity and
must be strictly construed against the government. The statutory proscription against
using “actual power provided by law” does not include asking a board of directors
for a pay raise for oneself or for a family member employee. There needs to be a
“clear and unequivocal warning” in the Ethics Act before such a “request” can be
construed as the “use” of an “actual power provided by law.”
I would reverse that portion of the State Ethics Commission’s
adjudication holding that Bloom violated Section 1103(a) of the Ethics Act by asking
the board of directors for a raise for his wife. I would affirm those parts of the
adjudication holding Bloom liable for not filing a financial statement.
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MARY HANNAH LEAVITT, President Judge
MHL-4