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In re Nominating Petition of Williams

April 15, 2009

IN RE: NOMINATING PETITION OF R. SETH WILLIAMS, CANDIDATE FOR PHILADELPHIA DISTRICT ATTORNEY IN THE MAY 2009 DEMOCRATIC PRIMARY
APPEAL OF: R. SETH WILLIAMS



The opinion of the court was delivered by: Judge Smith-ribner

Argued: April 8, 2009

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE DORIS A. SMITH-RIBNER, Judge, HONORABLE JOHNNY J. BUTLER, Judge.

OPINION

R. Seth Williams, a candidate for the Office of Philadelphia District Attorney in the May 2009 Democratic Primary Election, has appealed to this Court from the March 27, 2009 order of the Court of Common Pleas of Philadelphia County that granted objections filed by John O'Rourke and Jason Stein (Objectors) to Williams' nominating petition and ordered the Philadelphia County Board of Elections not to place Williams' name on the primary ballot. After oral argument in this matter, the Court entered a per curiam order on April 8, 2009 sustaining the appeal of Williams and directing that his name be placed on the primary ballot. This opinion is filed in support of the order, and it resolves the question of whether a candidate must report reimbursed campaign expenses as "Income" in Box 10 of his or her Statement of Financial Interests (SFI) filed pursuant to Section 1104 of the Public Official and Employee Ethics Act (Ethics Act), 65 Pa. C.S. §1104.*fn1

Williams first questions whether the trial court committed an error of law or abuse of discretion in finding that Williams' SFI was defective and in not accepting or allowing an amendment thereto, particularly when there was no allegation of bad faith and the Pennsylvania Supreme Court's holding in In re Paulmier, 594 Pa. 433, 937 A.2d 364 (2007), allows amendment where there is no bad faith. His second stated question is whether the trial court erred in holding that the definition of "Income" under Sections 1102 through 1105 of the Ethics Act, 65 Pa. C.S. §§1102 - 1105, included a requirement to report reimbursed campaign expenses as income and in holding that failure to do so was fatal error. Finally, he questions whether the trial court erred in stating that he did not list the receipt of money in excess of $10,000 from his campaign committee as a receipt of expenses.

I.

Williams filed his nomination petition on March 10, 2009, and he also filed his SFI pursuant to Section 1104 of the Ethics Act. Section 1105(b)(5) requires the SFI to include: "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." On March 17, 2009, Objectors filed their petition to set aside the nomination petition of Williams for failure to disclose material information on the SFI. The petition to set aside alleged that candidates are required to disclose various categories of financial information including for example, real estate interests, the names of creditors, gifts and direct sources of income and in ¶8 that failure to disclose such financial information is a "fatal defect" under Section 1104(b)(3), which provides: "Failure to file the statement in accordance with the provisions of this chapter shall, in addition to any other penalties provided, be a fatal defect to a petition to appear on the ballot." Williams listed five direct and indirect sources of income on his SFI, including two law firms, the United States Army Reserves, the City of Philadelphia and Neumann College. He also listed a federal tax refund and noted that there are two pensions that he is not currently entitled to receive.

The petition to set aside alleged that in addition to the income sources disclosed Williams also received substantial income in 2008 from his campaign committee. Specifically, Objectors alleged in ¶13 that Williams received: "$9,762 in unspecified 'reimbursements'; $1,900 in 'petty cash payments'; and $561.38 to American Express as an 'unspecified reimbursement[.]' " They also alleged that he could not provide documentation to show that these were reimbursements related to his campaign and, therefore, that they were direct or indirect sources of income required to be disclosed as income. Objectors asserted that the failure to disclose was a fatal defect that cannot be cured by amendment because the information omitted could not be ascertained from the information disclosed. Hearings were held before the Honorable Allan L. Tereshko, Jr. on March 20 and March 23, 2009.

Objectors acknowledged at the outset of the hearing that they had the burden of proof. They called Williams as on cross-examination in their case in chief. His original SFI was admitted as Challenger Ex. C-1-A, and the Campaign Finance Cycle 7 - Year 2008 Report submitted by the campaign committee to the Philadelphia Department of Records was admitted as Exhibit C-2-A. Among the list of payments of "Expenses" in the Campaign Finance Cycle 7 Report, beginning on page 26, were payments to Williams' wife Sonita Williams between April 24 and December 4, 2008 described as Reimbursement and one payment to Williams described as Expense Reimbursement, totaling $10,082.05. Also listed on pages 18 and 19 were entries for Petty Cash or Petty Cash & ATM Fee between May 6 and December 10, 2008, totaling $1916.25.

Williams introduced as Ex. R-1 the Campaign Finance Report, a 17-page report detailing contributions and receipts and detailing expenditures of $10,114.90. After a lunch recess on March 20, 2009, Williams introduced Ex. R-2, an amended SFI proposed to be filed the same day that included as an attachment a statement amending Boxes 1, 9, 10 and 13 of the SFI and a copy of the Campaign Finance Cycle 7 Report; he also introduced R-3, containing copies of receipts for expenses paid for from petty cash. At the continued hearing on March 23, 2009, Williams introduced Ex. R-4, which was a copy of the amended SFI filed on March 20, 2009. Ex. R-4 included as attachments Exhibit A (24-page Statement of Expenditures previously admitted as Ex. C-2-B); Exhibit B (Campaign Finance Report); and Exhibit C (copy of a money order made payable to the campaign committee for $561.38).

Box 10 of the SFI is headed: "DIRECT OR INDIRECT SOURCES OF INCOME including (but not limited to) all employment. (See instructions on pg. 2)[.]" Ex. C-1-A. The trial court first addressed the definition of income proffered by Williams, quoting from his March 20, 2009 amended SFI. Williams stated that he did not believe that reimbursements from the campaign count as income under the Ethics Act, which requires reporting of "[a]ny 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." Nevertheless, in an abundance of caution, Williams declared that he and his family were reimbursed for campaign expenditures that he made, and he attached supporting documents as noted above.

The trial court then quoted the definition of "income" in Section 1102 of the Ethics Act, as amended, 65 Pa. C.S. §1102 (as quoted in In re Benninghoff, 578 Pa. 402, 408 n5, 852 A.2d 1182, 1185 n5 (2004)):

"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.

The trial court quoted from the Instructions for the SFI, which stated in part: "List the name and address of each source of $1,300 or more of gross income regardless of whether such income is received solely by you or jointly by ...


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