The Pennsylvania Public Official and Employee Ethics Act has been in effect since 1979 and must be carefully followed by state and local officials and employees. Mainly, the Act requires that public officials file annual statements disclosing their financial interests, but it also prohibits activities that have been deemed a violation of the public’s trust. The Act is enforced by the State Ethics Commission, which is comprised of seven politically appointed commissioners assisted by a staff of investigators and prosecutors. Repercussions for violating the Act include administrative penalties, civil fines/restitution, and sometimes criminal prosecution.
The Act’s conflict of interest provision is particularly problematic. That provision prohibits public officials/employees from engaging in conduct that constitutes a conflict of interest. Section 1102 of the Act defines “conflict of interest” as:
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.
A violation of this provision constitutes a felony, punishable by up to $10,000 in fines and up to five years in prison.
Prosecutors and courts have applied this provision broadly, resulting in a handful of challenges to its constitutionality. In 2016, the Pennsylvania Supreme Court took a closer look at the provision in Commonwealth v. Veon.
Mike Veon is a former state representative from Beaver County who founded a non-profit organization known as the Beaver Initiative for Growth, or “BIG.” BIG received nearly all of its funding from public sources, including grants from the Pennsylvania Department of Community and Economic Development (“DCED”).
Veon received a budget of $20,000 per year from the House of Representatives to cover the cost of rent at his constituent offices. Although representatives could request an increase in that budget, few rarely did because the request might be viewed unfavorably as a gratuitous expense of taxpayer money. Public opinion supports representatives who operate their district offices at or below their budgeted allowance. To stay on budget while providing larger and presumably more convenient constituent offices, Veon co-located his constituent offices with his charity, BIG. BIG paid about half of the rent, but occupied considerably less space than the representative’s offices. This allowed Veon to stay at or below his allowance.
Veon’s activities were investigated and he was charged with various crimes, including theft of services, theft by deception, conspiracy, and conflict of interest. Although Veon was never alleged to have taken any funds for his personal use, the trial court instructed the jury that it could find that Veon had gained a “private pecuniary benefit” if he had received an “intangible political gain” by his activities. The jury found that he had received such an “intangible gain” in the form of positive political capital, and convicted Veon of conflict of interest, among other crimes. The court sentenced Veon to a prison term of twelve to forty-eight months, and ordered him to pay over $130,000 in restitution to DCED.
Veon appealed, and the case reached the Pennsylvania Supreme Court. In November 2016, the Supreme Court vacated Veon’s conviction and sentence, finding that the trial court’s instruction regarding “intangible political gain” impermissibly broadened the conflict of interest provision:
The trial court’s jury instruction here made of the statute a meat axe, finding (or creating) a conflict of interest on every dais, at each parade, and at every ribbon-cutting, given that the very nature of seeking to satisfy one’s constituents and secure re-election all but requires the taking of official action to secure intangible political gains. This criminalization of politics is a bridge too far.
The court determined that, to violate the conflict of interest provision, a public official’s conduct must produce a quantifiable monetary or financial gain.
While that may sound simple enough, a few problematic aspects of the conflict of interest standard were left standing after the Veon decision:
- Courts have found that an official can be the recipient of a “pecuniary gain” even if he/she does not keep that gain. For example, in Keller v. State Ethics Commission, a borough mayor was convicted of conflict of interest for soliciting funds for performing weddings, even though he donated those funds (approximately $16,000) to charity. The Veon decision left this precedent intact.
- The “pecuniary gain” need not necessarily be monetary, as long as it is something to which a monetary value can be assigned. The Veon court noted that, in one case, a township police officer was convicted of bribery based on receipt of sexual favors from prostitutes valued between $30 to $50.
- The “pecuniary gain” need not necessarily accrue to the public official – the statute criminalizes any gain realized by the official or his/her immediate family. This includes spouses, siblings, parents, and children.
- Abstaining from an official vote may be not sufficient. The Investigative Division of the Ethics Commission has taken the position that any involvement with a contract that benefits the public official or a family member is sufficient to invite prosecution under the Act.
In addition to potential prison time, a public official may be ordered to repay three-times the financial gain in restitution to the State.
Public officials can seek an advisory opinion from the Ethics Commission and it is best practice to do so if there is any question as to the propriety of one’s actions. This opinion is considered a complete defense against any prosecution by the Ethics Commission, and evidence of good faith in any other civil or criminal proceeding. However, it is important to seek an opinion from the Ethics Commission directly; reliance on the advice of private counsel or even the solicitor of a political subdivision is not likely to hold the same weight.
In sum, public officials must be keenly aware of the Ethics Act and its consequences and must tread carefully if any of their private activities cross paths with their official duties.