Annual Report September 2017 City of Philadelphia Board ... - Phila.gov

2 downloads 340 Views 2MB Size Report
Annual Report to the Mayor, City Council and the citizens of Philadelphia. ..... the Deputy Commissioner of Technical Se
City of Philadelphia Board of Ethics

Photo Credit: Bryan McHale

Annual Report  September 2017

Honesty

Integrity

Transparency

City of Philadelphia Board of Ethics Honesty, Integrity, Transparency Michael H. Reed, Esq. Chair Judge Phyllis W. Beck (Ret.) Vice-Chair Sanjuanita González, Esq. Brian J. McCormick, Jr., Esq. JoAnne A. Epps, Esq. Board Members Philadelphia’s Board of Ethics was created by an amendment to the Philadelphia Home Rule Charter that voters approved via a ballot question at the May 2006 primary election. The Board is charged with administering and enforcing all provisions of the Charter and City Code that pertain to ethical matters, and such additional duties as City Council may assign. The Board has jurisdiction over City laws pertaining to conflicts of interest, representation and postemployment restrictions, gifts and gratuities, financial disclosure, interests in certain City contracts, campaign finance, prohibited political activities, and lobbying. The Board renders advisory opinions, promulgates regulations, and offers trainings on how to comply with the laws within its jurisdiction. The Board also has the power to conduct investigations and enforce the laws over which it has jurisdiction.

Contact the Board: One Parkway Building, 18th Floor 1515 Arch Street Philadelphia, PA 19102 215-686-9450 (phone) 215-686-9453 (fax) www.phila.gov/ethicsboard/ Twitter: @PhillyEthicsBd

Annual Report

Page i

Table of Contents Page Message from the Chair

1

Current Board Members

2

Message from the Executive Director

4

Current Board of Ethics Staff Members

5

Training and Outreach

7

Advice

10

Lobbying in Philadelphia

12

Financial Disclosure

15

Enforcement

16

Litigation

20

FY17 Fiscal Report

21

Looking Ahead

23

Appendices Appendix I: FY17 Board and General Counsel Opinions

24

Annual Report

Page 1

Message from the Chair On behalf of the members of the Board of Ethics, I am proud to present this Fiscal Year 2017 Annual Report to the Mayor, City Council and the citizens of Philadelphia. This Report describes accomplishments during the past year to fulfill the Board’s Charter-mandated responsibility to administer and enforce “all provisions of . . . [the] Charter and ordinances pertaining to ethical matters.” These ethical matters, collectively known as the City’s Public Integrity Laws, include the Campaign Finance, Ethics, Lobbying, and Financial Disclosure Laws and the Charter’s political activity restrictions. This Report is also an opportunity to reaffirm the Board’s commitment to administer and promote the Public Integrity Laws because we believe that these efforts have, since the Board’s inception, enhanced public confidence in the integrity of City government. The daily work performed by the Board’s staff is as essential to promoting honesty, integrity and transparency in City government as is the Board’s investigative and enforcement activity. On any given day, if you were to visit the Board’s office, you would find staff members providing guidance by telephone, e-mail and in-person meetings and written advice to requestors on compliance with the Public Integrity Laws. Each day staff members assist the public with access to the campaign finance and lobbying databases located on the Board’s website, develop and provide ethics training for City officials and employees, help individuals to file campaign finance, lobbying, and financial disclosure reports, and perform investigative and enforcement activity. This Report summarizes and quantifies these activities during the past year and demonstrates that the name “Board of Ethics” does not adequately describe the breadth of the Board’s mandate or its accomplishments. What this Report cannot convey is the remarkable effort that goes into the Board’s deliberations and decision-making process. As Chair, I am always impressed by the Board’s thoughtful and careful deliberations and the caliber of their decisions. We and our staff often face difficult and complex issues whether they involve interpreting the Public Integrity Laws, giving advice on conflicts of interest, reviewing proposed regulations, making enforcement decisions or resolving disputes through the administrative process. Board members give of their time willingly and generously and their many voices and perspectives enhance their decisions. I cannot thank the Board enough for their dedication. This Report also gives the Board the opportunity to recognize and thank its staff for their superb work and infectious enthusiasm. The Board, Board staff, and I look forward to the challenges of the next year and pledge our continued service to Philadelphia and its citizens. Michael H. Reed, Esq., Chair Philadelphia Board of Ethics

Annual Report

Page 2

Current Board Members Michael H. Reed, Esq., Chair, is special counsel in the Philadelphia office of Pepper Hamilton LLP where he is a member of the firm's Corporate Restructuring and Bankruptcy Practice Group. He is a member of Temple University's Board of Trustees and of the Board of Trustees of the Academy of Natural Sciences of Drexel University. Mr. Reed is a 1969 graduate of Temple University (B.A. Pol. Sci) and received his J.D. from Yale Law School in 1972. He has been associated with the firm of Pepper Hamilton LLP since 1972. Mr. Reed is a past President of the Pennsylvania Bar Association and is the State Delegate for Pennsylvania in the ABA House of Delegates, having previously served on the ABA’s Board of Governors. Mr. Reed was previously a member of the Pennsylvania Judicial Inquiry and Review Board and chaired the Professional Guidance (Ethics) Committee of the Philadelphia Bar Association. Prior to being selected as Chair, Mr. Reed served as Vice-Chair of the Board of Ethics. His term runs until November 2020.

Judge Phyllis W. Beck (Ret.), Vice-Chair, served 25 years on the Superior Court of Pennsylvania. She was the first woman elected to that office. Before becoming a judge, she spent many years in private practice and she served as a vice dean of the University of Pennsylvania Law School. After retirement from the Superior Court, she was general counsel of The Barnes Foundation, served as a mediator for the Superior Court, and now serves as a mediator and arbitrator. Judge Beck is the Chair of the Independence Foundation, President of the Beck Institute for Cognitive Therapy, Chair of the Advisory Committee of Pennsylvanians for Modern Courts, and is a member of the Board of Directors for the Free Library of Philadelphia. Her term on the Board runs until November 2017. Sanjuanita González, Esq., practices in the areas of Immigration and Social Security Disability law at Sanjuanita González Law Firm, a Center City Philadelphia law firm. Ms. González is a former President of the Council of Spanish Speaking Organizations (Concilio), the oldest Latino community based organization in Pennsylvania. She previously served on the Board of Governors of the Philadelphia Bar Association. Ms. González is a member of the American Immigration Lawyers Association; the Philadelphia Bar Association; the Hispanic Bar Association; and the National Organization of Social Security Claimants’ Representatives. Ms. González's term on the Board runs until November 2018.

Annual Report

JoAnne A. Epps, Esq. is Executive Vice President and Provost of Temple University. A member of the faculty of Temple Law School since 1985, Ms. Epps served as Dean of Temple Law School from 2008-2016. In July 2016, Ms. Epps assumed the role of Executive Vice President and Provost. She is the author and co-author of several books and articles on Evidence and Trial Advocacy. Commemorating Black History Month in February 2015, U.S. Senator Robert P. Casey, Jr. honored Ms. Epps at the U.S. Senate. From March 2015 until January 2017, she was the chair of the Police Community Oversight Board created by Mayor Michael Nutter. In November 2016, Ms. Epps was honored by The Philadelphia Inquirer as one of the inaugural class members of the Philadelphia Business Hall of Fame. In 2017, she was the recipient of the Inaugural JoAnne Epps Award by the Barristers’ Association of Philadelphia and also was honored by The Legal Intelligencer as a Distinguished Leader in her field. A three-time honoree by Lawyers of Color Magazine as one of the 100 most influential black lawyers in the country, Ms. Epps was also named by National Jurist Magazine in 2013, 2014, 2015 and 2016 as one of the 25 most influential people in legal education. She serves on several non-profit Boards and is the courtappointed monitor of the settlement of the lawsuit challenging Philadelphia’s stop and frisk activity. A former Deputy City Attorney for the City of Los Angeles and Assistant United States Attorney for the Eastern District of Pennsylvania, Ms. Epps continues to keep teaching among her many activities. Her term on the Board runs until November 2019. Brian J. McCormick, Jr., Esq., is a trial lawyer at Ross Feller Casey, LLP in Philadelphia. He has a national practice that includes pharmaceutical injury and products liability mass tort litigation, as well as representing whistleblowers in qui tam and fraud actions involving the waste of government funds and resources. Mr. McCormick received his J.D. from Rutgers University School of Law and is a graduate of the University of Richmond. Before being appointed to the Board of Ethics, Mr. McCormick was selected by Philadelphia Mayor Michael Nutter to serve on the Mayor’s Task Force for Campaign Finance and Ethics Reform, which produced a final report in late 2009. A number of the recommendations in that report have been enacted in Philadelphia. Mr. McCormick formerly served as a member of The Committee of Seventy, the Philadelphia nonpartisan watchdog group. Before attending law school, Mr. McCormick served as an analyst with the FBI in its Philadelphia office, and also worked as a newspaper reporter in the Philadelphia area. Mr. McCormick’s term on the Board runs until November 2021. Swearing-in Ceremony on March 15, 2017 for Board Member McCormick. Pictured are (l-r): Board Member JoAnn A. Epps, Chair Michael H. Reed, Judge M. Teresa Sarmina, and Board Members Brian J. McCormick, and Sanjuanita Gonzalez.. Vice-Chair Phyllis Beck was not present.

Page 3

Annual Report

Page 4

Message from the Executive Director “To wipe out corruption, look to Philadelphia.” That’s the title of an article in the September 2017 issue of Governing Magazine, which observed that the City went almost a decade without a single corruption scandal, and asks the question “what’s its secret?” The article notes that former District Attorney Seth Williams is the first City official convicted or even charged with a crime since 2008. The Ethics Board fined Williams $62,000 in early 2017 for gift and disclosure violations related to his subsequent criminal indictment and mid-trial plea agreement in June. Governing Magazine suggests that the near-decade without City corruption scandals may be more revealing than the fact that Williams got caught – noting that under any system, rules are going to be broken – and attributes the change in local culture, where most people now know the rules and have been staying out of trouble, to the creation of an ethics board with teeth, and a strengthened city inspector general’s office. This Report details the Board’s continuing efforts to build and maintain what is now a thriving ethics program that has received national attention. In FY 2017, Board staff responded to 1,865 informal guidance requests and provided ethics training to almost 1,450 City officers and employees in 56 training sessions. This represents a 24 percent increase over the 45 training sessions in FY 2016 and a 20 percent increase in attendees. In addition to the 56 ethics training sessions for City officers and employees, Board staff conducted 26 training sessions for board and commission members. In addition to the advice and training, the Board also issued five advisory opinions, conducted two administrative adjudications and approved 17 settlement agreements, in which parties agreed to pay the City a total of $99,800 in penalties, disgorge to the City $3,840 in prohibited gifts and take remedial action ranging from terminating conflicted employment to filing or amending disclosure reports and attending training sessions. In FY 2017, the Board also implemented a new process for resolving violations for filing late campaign finance reports without a formal settlement agreement. The Board collected $6,900 from eight late filers with this new streamlined process. Details about these late filer penalties are available on the Board’s website. As the Board enters its twelfth year of operation, our principal challenge continues to be managing increasing demand with stagnant funding and resources. Although the Board has seen major new responsibilities assigned to it and has experienced significant increases in its workload over the years, the Board’s budget is only seven percent more than it was in FY 2008. Nevertheless, even with the stagnant funding and resources that it has, the Board will continue to strive to fulfill its broad mandates with diligence and fairness. J. Shane Creamer, Jr., Esq. Executive Director Philadelphia Board of Ethics

Annual Report

Page 5

Current Board of Ethics Staff Members J. Shane Creamer, Jr. has been Executive Director to the Philadelphia Board of Ethics since it was reconstituted in November 2006. Previously, he served as the Executive Director of the City’s advisory Board of Ethics, and was Assistant Secretary of Education and Assistant Managing Director for the City of Philadelphia. Before joining City government, he was a partner with Duane, Morris & Heckscher. Mr. Creamer served as a member of the Steering Committee of the Council on Governmental Ethics Laws (COGEL). A Philadelphia native, Mr. Creamer is a graduate of Gettysburg College and Villanova University School of Law. Tina Formica Simone has been a member of the Board's staff since March 2007. She serves as the Board’s Legal Support Services Coordinator. A Philadelphia native, she graduated from St. Hubert’s High School and has worked in City government since 1997 with the Law Department, Mayor’s Office, and City Council. Nedda Gold Massar is Deputy Executive Director of the Board of Ethics. Prior to her appointment to that position in November 2007, for more than 21 years she was a staff member of the New Jersey Election Law Enforcement Commission (ELEC) where she served ELEC as a staff attorney, the Director of the Gubernatorial Public Financing Program, Deputy Legal Director, and Legal Director. Ms. Massar is a past president of the Council on Governmental Ethics Laws (COGEL). She is a graduate of the University of Pennsylvania and Rutgers Camden School of Law. Maya Nayak was appointed as the Board’s General Counsel in 2013. She had served as the Board’s Associate General Counsel since 2008. Previously, Ms. Nayak was a litigation associate with Hangley Aronchick Segal & Pudlin and was a law clerk to the Honorable Berle M. Schiller in the U.S. District Court for the Eastern District of Pennsylvania. She holds undergraduate and law degrees from Yale University. Michael J. Cooke, Director of Enforcement, joined the Board in April of 2008. Mr. Cooke was formerly an associate at the Philadelphia firm Burke O’Neil LLC and a Staff Attorney at the Pennsylvania Institutional Law Project. Mr. Cooke graduated from Northeastern University School of Law in 2002. Hortencia Vasquez joined the Board in 2008 and is the Board’s Legal Services Clerk. A native of the Virgin Islands, she came to Philadelphia 11 years ago and attended Cite Business School, taking computer-related courses. Before joining the Board, she was an intern with the Police Advisory Commission. She is bilingual in Spanish and English. Bryan McHale joined the Board in September 2012 as a Public Integrity Compliance Specialist. He is currently the Board’s Public Integrity Compliance Services Supervisor. A Philadelphia native, he holds a bachelor’s degree in political science from Temple University. He has worked for the U.S. Census Bureau and the Internal Revenue Service and prior to joining the Board was a facilitator at public meetings for the Penn Project for Civic Engagement.

Annual Report

Jordan E. Segall joined the Board in July 2014 as a Staff Attorney. Before joining the Board, Mr. Segall served as a Senior Investigator for the Office of the Inspector General for the City of Philadelphia. He is a native of Baltimore, MD and a graduate of the American University in Washington, D.C. and the University of Pittsburgh School of Law. Diana Lin, Associate General Counsel, joined the Board’s staff in June 2015. Diana was formerly an associate at Cozen O’Connor in the commercial litigation department. She is a graduate of Temple University Beasley School of Law, Harvard Graduate School of Education and Yale University. Thomas E. Klemm joined the Board in November 2015 as a Staff Attorney. Before joining the Board’s staff, Mr. Klemm was a litigation associate at White and Williams, LLP specializing in reinsurance and insurance-related disputes. He is a native of the Washington, D.C. metropolitan area and is a graduate of St. Mary’s College of Maryland and the George Washington University Law School. Eileen Donnelly joined the Board of Ethics in June 2016 as an Administrative Technical Trainee and now serves the Board as Public Integrity Compliance Specialist. A Philadelphia native, she holds a bachelor's degree in Business/Organizational Management from Gwynned Mercy University. She has worked for the City of Philadelphia since August 1997 in various administrative roles. Prior to joining the Board of Ethics, Eileen was an Executive Secretary to the Deputy Commissioner of Technical Services in the Philadelphia Fire Department.

Page 6

Annual Report

Page 7

Training and Outreach Early in its existence the Board recognized that training about all Public Integrity Laws, not just the ethics rules, is the most effective way to achieve honesty and integrity in City government. When City officers, employees, and the regulated community know how the Public Integrity Laws apply to them, and when they know that they can receive Board advice to comply with those laws, they will be able to avoid violations of the laws. The Board therefore continues to look for every opportunity and method available to expand its training and outreach. The number of classes offered and attendance at training during a year presents an incomplete picture of staff participation in training and outreach. In addition to conducting training and outreach sessions, other staff members review and update training materials and improve the information posted on the Board’s website. Another important, but less visible, component of the Board’s training and outreach efforts is the assistance that staff members provide to members of the public who wish to locate materials on the Board’s website or to search the complex online campaign finance and lobbying databases. Campaign Finance Training and Outreach Because the offices of District Attorney and Controller were on the May 2017 Primary Election ballot, the Board offered six Campaign Finance training sessions from December 2016 through March 2017. The classes, presented with a representative of the Office of the City Commissioners, covered not only the requirements for candidates and political committees under the Pennsylvania Election Code and Philadelphia’s Campaign Finance Law, but also the “nuts and bolts” of the City’s mandatory electronic filing process. Email alerts on important issues and frequent email reminders of filing dates and requirements were used in addition to the in-person classes to provide maximum notice to candidates, treasurers and committees about campaign finance filing obligations. On-going Ethics Training Are there ethics rules to guide City elected officials and employees in the decisions they make on-the-job? How do elected officials and employees learn these rules that apply to their daily activity? For example, is a City official or employee permitted to hire a relative? Does it make a difference whether the relative is the employee’s brother or nephew? Are there restrictions on political activity that apply to City employees? These are among many questions discussed during ethics training classes that are mandated by the City Code and provided by the Board of Ethics to elected City officials and City employees. The citizens of Philadelphia are entitled to have confidence in the decisions made by elected officials and employees, and the ethics rules are intended to ensure the fairness and independence of those decisions. In addition to the ethics training for City officials and

Annual Report

Page 8

employees, Board staff also conducts mandatory ethics training for the members of City boards and commissions. The number and variety of ethics training classes presented by the Board continues to expand. Between July 2016 and June 2017, Board staff members conducted 56 ethics training classes that were attended by almost 1,450 City officers and employees. This training activity represents a 24 percent increase over the 45 classes in 2016 and a 20 percent increase in the number of attendees. In addition, twenty-six classes were conducted for members of City boards and commissions. This volume of training activity requires the attention of several Board of Ethics staff members who schedule, design, revise and present the in-person ethics training sessions. Training for new employees differs from refresher training for current employees, and the content of each class is reviewed and made as specific as possible to the needs of the attendees. Examples of ethical issues are “ripped from the headlines” and discussed to make each training real and relevant. In addition to regular monthly ethics classes for new and existing employees, the Board joined the new Employee Onboarding project of the City’s Office of Chief Administrative Officer. Onboarding is a two-day event for new employees of major City departments which introduces them to topics as diverse as employee benefits and on-the-job safety. A Board staff member now conducts a full ethics training class as a component of each two-day Onboarding session. The benefit of ethics training during Onboarding is that new City employees are introduced to the ethics rules at the very start of their City jobs. In very large City departments such as the Police and Fire Departments whose employees are on multiple shifts or at remote locations, ethics training for new employees is conducted by embedded departmental trainers. The Board of Ethics therefore prepares, updates, and supplies training materials and conducts train-the-trainer sessions for the embedded trainers. Board staff members are always available as a resource for the embedded trainers. Training Progress In its last Annual Report, the Board noted that it had begun to participate in a City trainingrelated initiative to implement a Learning Management System (LMS) to organize, present and track all types of City training activity. As we described last year, many City departments conduct a wide variety of training programs for City employees. Some classes are mandatory, like ethics training for all City employees, and others are voluntary. Some classes are open to employees in all departments and some are limited to employees in a specific department or unit. Finally, some training is required of individuals who are not City employees, like ethics training for City board and commission members. In the past, records of ethics training attendance were maintained in multiple places including the Board, City departments, and Central Human Resources.

Annual Report

Page 9

In a major step, Board of Ethics staff members are now actively using the LMS, deployed by the City’s Office of the Chief Administrative Officer, to manage and track mandatory ethics training registration and attendance. The immediate benefits of the LMS to the Board will be unified training records, maintenance of class registration and waiting lists, and the ability to send reminder emails to those attending the Board’s schedule of in-person, instructor-led ethics training classes. In a later phase, Board staff expects to design and offer online ethics, lobbying, and campaign finance training options. Because the Board has a small staff, the LMS project is important because it maximizes staff resources and will, in the future, allow the Board to reach a larger number of individuals with training.

Board of Ethics staff participate in 2016 Integrity Week outreach program regarding the City and State Conflicts of Interest laws. Pictured are (l-r) Board of Ethics General Counsel Maya Nayak and PA State Ethics Commission Chief Counsel Robin Hittie.

Annual Report

Page 10

Advice The Board’s advice function is frequently used. People seek advice from the Board every day, and over the course of a year, the Board fields hundreds of requests for guidance. Requestors include current and former City officers and employees, candidates for City elective office, campaign contributors, political committees, lobbyists, principals, and gift givers. The steady, high demand for advice is reflected in the 1,865 informal guidance contacts that Board staff logged in FY2017. Informal guidance numbers remained relatively constant between FY2016 and FY2017. Board staff endeavors to deliver informal guidance as quickly as possible and in an accessible manner. Informal guidance is available by phone, by email, and in person. The first chart on the next page demonstrates the consistent demand for the Board’s advice and compares the amounts of guidance provided by category in FY2016 and FY2017. In terms of trends, conflicts of interest guidance was the only category to show a significant increase in the number of recorded contacts. Post-employment and campaign finance inquiries decreased as compared to the prior fiscal year, which is to be expected because a change in administrations and large number of City covered elections had occurred in FY2016. The number of lobbying and financial disclosure questions also decreased. The second chart on the next page shows informal guidance contacts on a monthly basis in FY2016 and FY2017. The pattern of total monthly inquiries over the course of two years is displayed in this chart. Although the vast majority of questions are addressed through informal guidance, the Board also provides advice to the regulated community via advisory opinions. Advisory opinions are written opinions that offer a detailed analysis of the application of public integrity laws to specific facts provided by a requestor regarding prospective behavior that the requestor is contemplating. The process for seeking an advisory opinion is detailed in Board Regulation 4. Requestors are entitled to act in reasonable reliance on advisory opinions issued to them and not be subject to penalties under the laws within the Board’s jurisdiction as long as they have not omitted or misstated material facts. Requestors can choose to receive a non-public advisory opinion, which in its published form is redacted to conceal facts that are reasonably likely to identify a requestor. The five advisory opinions issued from July 2016 through June 2017 are described in detail in this annual report at Appendix I. Of these, one was a Board Opinion, which is an advisory opinion that is approved and issued directly by the Board. In contrast to General Counsel Opinions, Board Opinions generally provide advice on novel questions that have not been previously addressed. All advisory opinions are available on the Board’s website.

Annual Report

Page 11

* The high volume of financial disclosure assistance provided during these months does not map to the scale of the chart, which extends only to a maximum of 200 guidance contacts. In March and April 2016, there were a total of 355 and 909 informal guidance contacts, respectively. In April 2017, there were 1,013 total informal guidance contacts.

Annual Report

Page 12

Lobbying in Philadelphia The City’s Lobbying Law, City Code Section 20-1200, provides the public with a view into the lobbying activities by various entities directed toward government officials and employees in order to shape administrative or legislative decisions. In 2017, the Board entered its fourth calendar year with the online Philadelphia Lobbying Information System (PLIS) in place for filing lobbying information by lobbyists, lobbying firms, and principals as mandated by the Philadelphia Lobbying Law. PLIS is also the portal through which the public may search for information concerning lobbying activity in the City. Amendments to Regulation No. 9, Lobbying Based on its experience with administration of the Lobbying Law, Board staff undertook a complete review of Regulation No. 9 on Lobbying during the past year. Proposed amendments to the Regulation were presented to the Board at its October 19, 2016 meeting. The amendments aimed to condense, clarify, and streamline the Regulation as well as to increase the lobbying registration fee from $100 to $200 per year. A hearing was held on November 16, 2016 to receive public comment on the proposed changes. At its December 21, 2016 meeting, the Board approved the proposed amendments with modifications, and the amendments to Regulation No. 9 became effective on January 3, 2017. Lobbying Registrations Lobbying registration in Philadelphia is conducted on an annual basis. Therefore the number of registered lobbyists, firms and principals can change from year-to-year depending on what issues or projects are being considered for legislative or administrative action at that time. Through the first two quarters of 2017 there have been 218 registrations filed by lobbyists, lobbying firms, and principals. The number of total registrations per year has been consistent at around 230 through the first four years of the online system. (See Figure 1) Lobbying Communications There are two types of lobbying communications that are reported each quarter, those for Direct Communications and those for Indirect Communications. Direct lobbying communications include, but are not limited to, written, in-person, telephone, and email contacts between a lobbyist or principal and a City official or employee to affect legislative action or administrative action. Indirect lobbying communications occur when a lobbying entity makes an effort to encourage others, including the general public, to take action that is intended to directly influence legislative action or administrative action. Examples of indirect lobbying methods include letter-writing campaigns, mailings, telephone banks, print and electronic media advertising, billboards, publications and educational campaigns on public issues.

Annual Report

The impact of high-profile City-wide issues on lobbying activity was highly visible in the first two quarters of 2016 and continues to be seen in lobbying spending in the first two quarters of 2017. In the first two quarters of both years, reported lobbying expenditures on indirect communications exceeded $1,000,000, primarily due to the use of electronic ad campaigns by advocates for and against the soda tax. (See Figure 2) Information disclosed in quarterly expense reports filed by principals is available on the Board’s website in a searchable database. Among other things, members of the public can use the database to search for amounts spent on Philadelphia lobbying by principals, to identify City officials who were contacted by lobbyists and the subjects of those contacts, and to determine whether gifts were given to elected and appointed City officials. Board staff members are always available by telephone or in-person to assist interested individuals who want to search and sort the information in the searchable PLIS database. Figure 1

Figure 1 compares the number of registrations filed in PLIS from the system’s launch in January of 2014 through the end of the second quarter 2017. (*) Lobbying registration is on an annual basis, and new and renewed registrations may be submitted throughout the course of a calendar year.

Page 13

Annual Report

Figure 2

Figure 2 shows total reported expenditures by quarter on direct and indirect communications between January 1, 2014 and June 30, 2017. (*) Note that the total expenditures for the second quarter of 2016 were $12,402, 807. Due to the high total, the second quarter of 2016 does not map to the scale of the chart, which extends only to a maximum of $3 million.

Page 14

Annual Report

Page 15

Financial Disclosure To promote transparency in City government and to ensure that no conflict exists between an individual’s City responsibilities and his or her personal financial interests, thousands of City officers and employees and the members of City boards and commissions are required to file one or more of three annual financial disclosure statements. While there are differences among the three forms, filers generally disclose sources of income and other financial interests. The deadline for filing financial disclosure was May 1, 2017. Whether an individual City officer, employee or board or commission member files the City Form (required by the City Ethics Code), the Mayor’s Form (required by Mayoral executive order), or the State Form (required by the State Ethics Act) depends upon that person’s position and job responsibilities or specific board or commission membership. All financial disclosure statements are required to be filed with the City Records Department, which maintains the City’s online financial disclosure electronic filing system. City officers, employees and board and commission members are encouraged to use the online filing system rather than filing paper reports. This year 92 percent of the almost 4,600 financial disclosure statements filed were filed electronically. Electronically-filed reports save paper and reduce the time necessary to process the information. The Financial Disclosure process is successful because of the cooperation among the Records and Human Resources Departments and the Board of Ethics. From January through May of each year, as many as five of the Board’s eleven staff members are involved on any given day in the tasks necessary to implement the financial disclosure process. These tasks include assisting filers by phone, email and in-person with technical and reporting questions. Board staff members work hand-in-glove with the City Records Department to upgrade and improve the online financial disclosure system and with the City’s Human Resource Managers who work directly with City employees who are required to file financial disclosure statements. The Office of Human Resources again assisted the financial disclosure process by issuing email filing reminders to thousands of current City officers and employees subject to the disclosure requirement. Board staff issued email reminders to hundreds of members of City boards and commissions and mailed letters to more than 600 employees who left City government during the past year, but still have to file one last time. Each set of reminders triggers phone calls to our office with two consistent themes: callers wanted to know why they had to file and how to use the online system. The Board again wishes to thank the Records Department for providing financial and staff resources for an in-person Financial Disclosure Filer Support Center which provided invaluable technical assistance to individuals who needed help to file reports using the online system.

Annual Report

Page 16

Enforcement 2007-FY 2017 Enforcement Overview The Board of Ethics is responsible for enforcing the City’s Public Integrity Laws and is required to include information concerning its enforcement activities in its Annual Report. The Board’s Executive Director can initiate an investigation either upon receipt of a complaint or a referral or if he determines that a potential violation of a law within the Board’s jurisdiction has occurred. Upon completion of the investigation, if the Executive Director finds probable cause to believe a violation has occurred, he can initiate an enforcement action. If, after conducting an investigation, the Executive Director does not find probable cause, he will terminate the investigation. Similarly, the Executive Director will reject a complaint that does not state a potential violation of a law within the Board’s jurisdiction. At any point, the Executive Director can seek to resolve a matter through a settlement agreement. In a settlement agreement, subjects of enforcement admit to violations and, in most cases, agree to pay a civil monetary penalty. The table below summarizes the Board’s investigation and enforcement activity since 2007: Investigations Opened Total FY 2017 FY 2016 FY 2015

202 21 30 32

Investigations terminated, no probable cause 108 5 19 8

FY 2014

13

2012/ FY2013 2011 2010

Complaints Complaints accepted rejected

Enforcement actions initiated

Settlements

36* 6 8 5

100 16** 14 14

22 1 2 2

120 16 41 13

8

6

7

0

4

13

7

3

5

0

13

54 0

26 24

8 0

12 12

11 1

15 2

2009

25

6

*

11

3

10

2008

14

5

*

9

1

3

2007

N/A

N/A

*

N/A

1

3

*Board enforcement staff only began tracking complaints accepted starting with FY 2010. ** In FY 2017, Board enforcement staff received nine anonymous complaints and four referrals from other governmental entities that it did not pursue because they did not state potential violations of the City’s Public Integrity Laws.

Annual Report

Page 17

The chart below depicts the 382 violations that have been resolved through the settlement agreements the Board has approved since the Board’s inception, which has resulted in $465,099 in civil monetary penalties:

FY 2017 Enforcement Activity Administrative Adjudications The Board is authorized by the Philadelphia Home Rule Charter and the Philadelphia Ethics Code to conduct hearings to adjudicate alleged violations of the City’s Public Integrity Laws. The administrative enforcement process is confidential until there is a final determination issued by the Board, at which point, the final determination is made public. In FY 2017, the Board issued its second and third Final Determinations and Orders in administrative adjudications.

Annual Report

Page 18

In the matter of J. Shane Creamer, Jr. v. Marnie Aument Loughrey for Change et. al, the Board found two violations of the City’s Campaign Finance Law by the Respondents and ordered them to pay a total civil monetary penalty of $13,000. The violations resulted from the fact that the candidate political committee Marnie Aument Loughrey for Change failed to timely file two campaign finance reports with the Board in 2015. A copy of the Final Determination and Order, along with the filings and transcript of the administrative enforcement proceeding, is available on the Board’s website. In the matter of J. Shane Creamer, Jr. v. Liran Ben Shoshan the Board found the Respondent violated the gift restriction in the City’s Ethics Code at Section 20-604(2) and ordered him to pay a civil monetary penalty of $2,000. The violation resulted from the fact that the Respondent knowingly offered a prohibited gift of cash to a Hearing Master at the City’s Bureau of Administrative Adjudication. A copy of the Final Determination and Order, along with the filings and transcript of the administrative enforcement proceeding, is available on the Board’s website. Settlement Agreements In FY 2017, the Board approved 17 settlement agreements, as follows:  One agreement involved the failure to disclose required gifts and sources of income on statements of financial interests as required by the City’s Ethics Code. This agreement also resolved violations of the Ethics Code’s restrictions on accepting gifts.  Two other settlement agreements also resolved violations of the Ethics Code’s gift restrictions.  Two settlement agreements resolved violations of the conflict of interest restrictions in the Ethics Code.  Three agreements resolved the failure of lobbying principals and lobbyists to register and file expense reports as required by the City’s Lobbying Law.  Three agreements resolved violations of the Home Rule Charter’s restrictions on political fundraising and political activity.  Six agreements resolved violations of the City’s Campaign Finance Law. In FY 2017, parties to settlement agreements agreed to (i) pay to the City a total of $99,800 in civil monetary penalties; (ii) disgorge to the City $3,840 in prohibited gifts; (iii) take remedial action such as terminating conflicted employment relationships, attending ethics trainings, and filing and amending campaign finance, lobbying, and financial disclosure reports with the Board. All of the Board’s settlement agreements are available on the Board’s website. Terminated Investigations In FY 2017, Board enforcement staff terminated 5 investigations after determining that probable cause did not exist to believe a violation had occurred. Of those investigations, three involved potential violations of the City’s Campaign Finance Law and two involved potential violations of the Charter’s restrictions on political fundraising and political activity.

Annual Report

Page 19

2017 Campaign Finance Compliance In FY 2017, the Board implemented procedures to efficiently resolve violations arising from the late filing of campaign finance reports with the Board. The procedures expedite and simplify the assessment of penalties for the late filing of campaign finance reports except in certain delineated cases. Descriptions of the procedures can be found on the Board’s website. In FY 2017, Board enforcement staff collected $6,900 from eight filers that did not timely file campaign finance reports with the Board. Board staff routinely update the penalties list on the Board’s website as payments are collected for the City.

Annual Report

Page 20

Litigation During FY 2017, the Board was involved in two litigation matters. Liran Ben Shoshan v. Philadelphia Board of Ethics On December 20, 2016, Liran Ben Shoshan filed an appeal in the Philadelphia Court of Common Pleas from the Board’s Final Determination and Order finding that Mr. Shoshan had violated the Ethics Code’s gift restriction when he knowingly offered a cash gift to a Hearing Master at the City’s Bureau of Administrative Adjudication. The Board imposed a $2,000 civil monetary penalty on Mr. Shoshan. Because, Mr. Shoshan did not submit a brief in support his appeal, on May 25, 2017, Board Enforcement Staff filed a motion to quash the appeal. On June 19, 2017, the Court granted the motion and quashed, dismissed, and terminated Mr. Shoshan’s appeal with prejudice. Philadelphia Board of Ethics v. Citizens Organizing for Pennsylvania’s Security PAC, et. al On June 7, 2017, the Board filed a petition in the Philadelphia Court of Common Pleas against the political committee Citizens Organizing for Pennsylvania’s Security and its treasurer Kevin Price. The petition alleges that the Respondents failed to file two campaign finance reports with the Board in 2015, despite spending tens of thousands of dollars to influence the City’s Primary Elections. The failure to timely file a required campaign finance report with the Board is subject to a maximum civil monetary penalty of $2,000 for the first thirty days the report is not filed, plus an additional maximum penalty of $1,000 for each additional thirty day period or part thereof the report remains unfiled. The Board’s petition sought the maximum civil monetary penalty for the late filings as well as an order directing Respondents to promptly electronically file the late reports. To date, Respondents have not filed an answer to the Board’s petition. Judge Abbe Fletman has scheduled a hearing for October 12, 2017.

Annual Report

Page 21

FY17 Fiscal Report In addition to filing an annual report of its activities, the Board is required by Home Rule Charter Section 3-806(k) to provide an annual accounting of its expenditures. As reported below, the Board spent a total of $951,956 between July 1, 2016 and June 30, 2017. Class

FY 2017 Appropriation

FY 2017 Total Spent

100 – Salaries

$962,566

$921,892*

200 – Purchase of Services

$96,000

$22,089

300/400 – Materials, Supplies & Equipment Total:

$14,000

$7,975

$1,072,956

$951,956

*adjusted for rounding

Two major factors contributed to spending below the Board’s FY 2017 total appropriation. 1. The amount spent in Class 100 funds during FY 2017 was less than the appropriated amount because the Board was unable to modify a vacant entry level position and to fill that position as a Staff Attorney position. The Board considered the Staff Attorney position to be essential to its administration of the City’s Public Integrity Laws through tasks such as preparing and conducting training and preparing educational materials. Further, the additional Staff Attorney would increase the Board’s capacity to enact new regulations that offer clear rules in plain language for compliance with the Public Integrity Laws. The Board requested, but did not receive for either FY2016 or FY2017, additional Class 100 funding that, among other purposes, would have been used to convert the existing vacant entry level position to the Staff Attorney position. The Board notes that the change in this position would not have increased the Board’s number of budgeted positions (12). The Board will continue to seek additional Class 100 funds to fill the vacant position because the Staff Attorney would significantly advance its ability to meet its statutory responsibilities. 2. The Board’s Class 200 spending in FY 2017 was less than the appropriated amount. The Board is responsible for administration, implementation and enforcement of the City’s Public Integrity Laws, which include the laws governing Ethics, Campaign Finance, Lobbying, and Financial Disclosure. Months before the start of a fiscal year, the Board must predict its need for Class 200 funds to purchase two types of professional services directly related to its responsibilities: for accounting, computer and other forensic professional services related to complex investigative matters, and for professional information technology services that are outside the scope of the maintenance contract for the statutorily-mandated online lobbying registration and reporting system. The need for these services did not arise in FY 2017. The Board remains aware, however, that while it did not spend all of the Class 200 funds appropriated in FY 2017, it is foreseeable that costs of a major investigative matter or the need to

Annual Report

Page 22

adapt the lobbying software to a change in the law might require the entire Class 200 appropriation in a future fiscal year. The Board therefore continues to budget for these contingencies in order to meet its statutory responsibilities. Between July 1, 2016 and June 30, 2017, the Board spent $951,956, as follows: Class 100 – Personal Services Class 101 101 101 101 101 101 101 101 101 101 101

Name Cooke, Michael Creamer, Jr., J. Shane Donnelly, Eileen Simone, Tina Klemm, Thomas Lin, Diana McHale, Bryan Massar, Nedda Nayak, Maya Segall, Jordan Vasquez, Hortencia Total Class 100

Title Director of Enforcement Executive Director Administrative Technical Trainee/Compliance Specialist Legal Support Services Coordinator Staff Attorney Associate General Counsel Compliance Services Supervisor Deputy Executive Director General Counsel Staff Attorney Legal Services Clerk

FY17 113,848 142,741 45,205 59,284 61,988 89,993 50,814 126,571 121,365 69,008 41,075 $921,892*

*adjusted for rounding

Class 200 – Purchase of Services Class 209 210 211 255 256 258 260 285

Class Description Telephone Postal Services Transportation Dues Seminar & Training Sessions Court Reporting Repairs & Maintenance Lease Total Class 200

Description of Services Staff Cell Service Delivery Service & Postage Travel & Transportation Professional Membership Dues Seminars, Training & Continuing Legal Education Court Reporting Services Copier Maintenance & Fees Copier

Amount Paid 882 1,022 6,194 2,100 4,640 573 3,510 3,168 $22,089

Class 300 & 400 – Materials, Supplies & Equipment Class 304 320 427 430

Class Description Books & Other Publications Office Materials & Supplies Computer Equipment & Peripherals Furniture Total Class 300/400

Total FY17 Expenses = $951,956

Description of Purchase Books Office Materials, Supplies & Paper Desktop Computers & Printers Office Furniture

Amount Paid 2,215 2,979 2,111 670 $7,975

Annual Report

Page 23

Looking Ahead In his message at the beginning of this Annual Report, Board Chair Michael H. Reed explained that this Report summarizes and quantifies the Board’s work during the past year, but that the name Board of Ethics “does not adequately describe the breadth of the Board’s mandate or its accomplishments.” The Board believes that the increasing demand for its guidance, advice, training, disclosure and enforcement activities is proof that the culture in Philadelphia's government is changing for the better. To further promote this positive movement, the Board will continue to accept the challenge of promoting honesty, integrity and transparency in City government.

Annual Report

Page 24

Appendix I: FY17 Board and General Counsel Opinions

Annual Report

Page 25

FY17 Index of Board Formal Opinions Key Words Advisory Opinion No.

Date Issued

Brief Description Citations

2016-002

Public Advisory Opinion

07/26/16

Advised the Philadelphia Land Bank regarding application of City ethics and lobbying laws to the Land Bank, its board members, and staff. The requirements and prohibitions of the City Lobbying Law apply to efforts by lobbyists and principals to lobby the Land Bank. Ethics Code provisions apply to Land Bank board members in the same manner they apply to members of a City board or commission. Ethics Code provisions apply to Land Bank staff members in the same manner they apply to City employees. The Opinion also addressed six specific questions regarding: (1) board members’ conflicts of interest with respect to former employers; (2) post-service restrictions for board members; (3) whether decisions made under an established policy are official action subject to conflict of interest disqualification; (4) permissibility of blanket disclosure and disqualification letters for board members; (5) obligations of board members who work for City Council; and (6) obligations of board members who are members of an outside agency or organization.

LAND BANK; UNCOMPENSATED BOARD MEMBER; LOBBYING; FINANCIAL DISCLOSURE; CONFLICT OF INTEREST; PRESERVICE EMPLOYMENT RELATIONSHIP; POSTEMPLOYMENT; OFFICIAL ACTION; BLANKET DISCLOSURE AND DISQUALIFICATION LETTER; REPRESENTATION RESTRICTION; MEMBERSHIP IN OUTSIDE AGENCY OR ORGANIZATION; DISCRETIONARY DECISION; MINISTERIAL; CITY COUNCIL STAFFMEMBER; TRANSACTION INVOLVING THE LAND BANK

Code Chapter 16-700 (Land Bank Ordinance), 20-1200 (Lobbying Code); Code §§ 20-601 (17), 20-602; 20-607(a)& (c), 20-608, 20-609; Regulation 9

Annual Report

Page 26

FY17 Index of General Counsel Opinions

Key Words Advisory Opinion No.

Date Issued

Brief Description Citations

2017-501

Non-public Advisory Opinion

02/21/17

Advised City employee on the application of the Philadelphia Home Rule Charter political activity restrictions to an invitation received from a candidate’s political campaign for the employee to interact with campaign advisors regarding potential policy positions or to otherwise contribute to the formulation of policy positions and the drafting of policy papers of the candidate. The Opinion advised that the Charter political activity restrictions prohibit the employee from assisting the campaign of a candidate because such assistance qualifies as activity directed toward the success of the candidate and for the purpose of obtaining the candidate’s election to public elective office. The proposed behavior of volunteering to assist a candidate’s campaign constitutes prohibited participation in the candidate’s campaign as well as prohibited political activity performed in concert and coordination with a candidate.

POLITICAL ACTIVITY; VOLUNTEERING; OFF DUTY; CAMPAIGN; INTERACT WITH CAMPAIGN ADVISORS; FORMULATING POLICY POSITIONS; DRAFTING POLICY PAPERS; ACTING IN CONCERT OR COORDINATION WITH A CANDIDATE

Charter § 10-107; Regulation 8; Board Opinion 2009-005, 2016-001

Annual Report

Page 27

Key Words Advisory Opinion No.

Date Issued

Brief Description Citations

2017-502 Non-public Advisory Opinion

03/07/17

Advised City employee on the application of the City ethics laws to the employee’s proposed participation in an investment opportunity in which the Philadelphia Industrial Development Corporation (“PIDC”), a non-profit with close ties to the City, is one of several other potential co-investors. The employee’s participation in the investment opportunity is not prohibited by the Charter prohibition on interests in certain City contracts or other City ethics restrictions. The investment opportunity in which PIDC will be a co-investor does not result in a financial obligation of the City to the employee or cause any money to flow from the City treasury to the employee through City contracts. Rather, the employee, PIDC, and other co-investors would be contributing money into the same investment opportunity.

PROHIBITED INTERESTS IN CERTAIN CITY CONTRACTS; FLOW OF MONEY FROM THE CITY TREASURY; PIDC; INVESTMENT OPPORTUNITY; COINVESTOR; CONFLICT OF INTEREST; FINANCIAL INTEREST; CITY-RELATED NON-PROFIT; POTENTIAL OWNERSHIP INTEREST

Code §§ 20-607, 20-608, 20-609; Charter §§ 10100, 10-102; Board Opinion 2009-003, 2012-001, 2013-005, 2014-001; General Counsel Opinion 2015-501

Annual Report

Page 28

Key Words Advisory Opinion No.

Date Issued

Brief Description Citations

2017-503 Non-public Advisory Opinion

03/31/17

Advised City employee regarding the application of the Charter political activity restrictions to employee’s proposed participation in the activities of a group called Tuesdays with Toomey in a personal capacity while off duty during the employee’s lunch break. The City employee’s proposed participation in the group is not prohibited by the Charter’s political activity restrictions and would not violate the prohibition on City employees engaging in political activity in coordination with a political party, candidate, or partisan political group. The activities of the group are not directed toward the success or failure of a political party or candidate and focus on constituents raising their concerns regarding various social, economic, and policy issues with Senator Toomey in his capacity as their representative and as a government official. Furthermore, Tuesdays with Toomey does not coordinate or have an affiliation with any political party, candidate, or partisan political group. Advised that if relevant facts change as the activities, affiliations, or purpose of Tuesdays with Toomey further evolves, the application of the Charter political activity restrictions may also change, and the requestor should seek updated advice.

POLITICAL ACTIVITY RESTRICTIONS; TUESDAYS WITH TOOMEY; POLITICAL ACTIVITY; PARTISAN POLITICAL GROUP; PERSONAL CAPACITY; OFF DUTY; ON DUTY; LUNCH BREAK; INCUMBENT GOVERNMENT OFFICIAL; CONSTITUENT CONCERNS; MATTERS OF PUBLIC INTEREST; POLICY ISSUES; SOCIAL ISSUES; ECONOMIC ISSUES; ADVOCACY; GRASSROOTS CITIZEN ADVOCACY GROUP; CANDIDATE; POLITICAL CAMPAIGN

Charter § 10-107; Regulation 8; Board Opinion 2012-002; General Counsel Opinion 2017-501

Annual Report

Page 29

Key Words Advisory Opinion No.

Date Issued

Brief Description Citations

2017-504 Non-public Advisory Opinion

06/06/17

Advised former City employee regarding the application of post-employment restrictions to proposed employment in a position at a local, private entity that has a contract and interacts with the requestor’s former City department. The requestor had helped the former City department implement a new service delivery model that involved a rate change uniformly reducing payment amounts to all thirty or more providers in a category of providers that included the potential new employer. The Opinion advised that, based on these specific facts, any financial interest the requestor may acquire in this rate change by virtue of becoming an employee of the new employer would be too attenuated to cause an issue under the Code’s two-year post-employment restriction on becoming financially interested in official action the requestor took while employed by the City. Additionally, although the requestor’s former City department has a current contract with the new employer, the requestor did not take official action as a City employee with respect to the current contract.

POST-EMPLOYMENT; ACQUIRING FINANCIAL INTEREST IN OFFICIAL ACTION; LARGE CLASS; REMOTE OR ATTENUATED FINANCIAL INTEREST; CITY CONTRACT; IMPLEMENTING RATE CHANGES; TRANSACTION INVOLVING THE CITY; REPRESENTATION

Code §§ 20-603 & 20607(c); Board Opinions 2009-003, 2012 -001 & 2016-002; General Counsel Opinion 2015-501; 65 Pa. C.S. § 1103(g)