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InRe: MatthewSchwenk, : FileDocket: 13-008Respondent : X-ref: OrderNo. 1641
DateDecided: 6/16/14DateMailed: 7/10/14
Before: JohnJ. Bolger, ChairNicholasA. Colafella, ViceChairRaquelK. BergenMarkR. CorriganRogerNickKathrynStreeterLewisMariaFeeley
ThisisafinaladjudicationoftheStateEthicsCommission.
Procedurally, theInvestigativeDivisionoftheStateEthicsCommissionconductedaninvestigationregardingpossibleviolation(s) ofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S. § 1101etseq., bytheabove-namedRespondent. Atthecommencementofitsinvestigation, theInvestigativeDivisionserveduponRespondentwrittennoticeofthespecificallegations. Uponcompletionofitsinvestigation, theInvestigativeDivisionissuedandserveduponRespondentaFindingsReportidentifiedasan “InvestigativeComplaint.” AStipulationofFindingsandaConsentAgreementweresubsequentlysubmittedbythepartiestotheCommissionforconsideration. TheStipulatedFindingsaresetforthastheFindingsinthisOrder. TheConsentAgreementhasbeenapproved.
I. ALLEGATIONS:
ThatMatthewSchwenk, apublicofficial/publicemployeeinhiscapacityasDirectorofProductSelectionforthePennsylvaniaLiquorControlBoard (“PLCB”) violatedSections1103(a) and1105(b) oftheStateEthicsAct (Act93of1998), 65Pa.C.S. §§ 1103(a) and1105(b), whenheusedtheauthorityofhispublicpositionfor \[the\] privatepecuniarybenefitofhimselfbysolicitingand/oracceptingitemsofvaluefromvendorsofthePLCBatatimewhenhewasresponsiblefor, andparticipatedin, PLCBdecisionstoplacevendorproductsinPLCBliquorstores; whenhesolicitedand/oracceptedtravel/hospitality/lodgingfromCommonwealthvendors; andwhenhefailedtodiscloseonStatementsofFinancialInterestshisreceiptofgifts, transportation, lodgingandhospitalityforcalendaryears2010through2012.
II. FINDINGS:
1. MatthewSchwenkservedastheDirectorofProductSelectionforthePLCBfromapproximatelyJuly2010untilJanuary2013.
a. SchwenkbeganemploymentwiththePLCBin2004, asafull-timeclerktypist.
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1. SchwenkbeganemploymentwiththeCommonwealthwiththeDepartmentofLabor & Industryasatemporaryclericalpoolemployee.
b. SchwenkheldmultiplepositionsduringhistenurewiththePLCBincludingClerk, ManagementAnalyst, MerchandisingandPricingCoordinator, andChiefofCategoryManagement.
1. SchwenkreceivedmultiplepromotionsthroughouthistenurewiththePLCB.
2. Schwenk’sjobdescriptionforthepositionofDirectorofProductSelectionforthePLCBincludedthefollowingresponsibilitiesandduties:
a. Planning, developing, directing, andcoordinatingthePLCB’scomprehensivestatewidemarketingandmerchandisingprograms/functions;
1. Inthiscapacity, SchwenkreporteddirectlytoJamesShort, PLCBDirectorofMarketingandMerchandising.
b. Development, implementation, andevaluationofpoliciesandoperationalprocedurestoensuretheefficientmarketingofregularlylistedandluxurywineandspiritsproductsmadeavailableinWineandSpiritsstores;
c. Directionofacentralizedmarketingandmerchandisingprogramtosatisfycustomerandlicenseedemand, promoteproductselectionwhileenhancingprofit, andensurecompetitivepricing;
d. Advisingonproposedpolic\[y\] changesneededforimprovedcustomerserviceandagencyprofitability; and
e. Performanceofworkwithconsiderableindependencewithintheframeworkofapplicablelaws, regulations, andpolicieswithconsiderabledirectionexercisedinmakingadministrativeandprogramdecisionsunderthegeneraldirectionofanexecutivesupervisorwithworkreviewedthroughconferences, reports, andevaluationofresultsobtained.
f. Directionofthesupervisionoftheluxuryandcategorymanagementstaffintheestablishmentofmarketingprograms;
g. Oversightofspecialpricinganddisplayprogramsandcoordinateswithluxuryandcategorymanagementstaffintheimplementationofmarketingandmerchandisingplans;
h. Directionandapprovalofthedevelopmentofstandardsforpromotionalcampaigndisplaysandoversightofthepreparationofdocumentationfordistributionto, andtrainingof, fieldpersonnel;
i. Directionoftheplanningandimplementationofspaceprioritizationandlayoutofvariedproductsandbrandsfordisplayandpromotion;
j. Directionandevaluationofprofitabilityandmarginanalysiswithappropriaterecommendations;
k. PresentsanalysisofsupplierproposalstoaddproductsandmakesrecommendationstotheDirectorofMarketingforprospectivenewproductintroductionortrial, orrecommendationsfordiscontinuationofcurrently
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offeredproducts;
l. Leadsnegotiationswithvendorsonproductpromotionproposalsinvolvingdiscounts, rebates, incentives, luxuryitems, orone-timebuys; and
m. Directsluxurywineandcategorymanagementstaffinthereviewandanalysisofspecialproductpromotions, includingthepricing, floorpositioning, advertising, andmarketingoftheseitems.
3. ThePLCBwascreatedbystatelawonNovember29, 1933, followingtheendofprohibition.
a. ProhibitionwasrepealedonDecember5, 1933, withtheratificationofthest21 AmendmenttotheU.S. Constitution.
b. Pennsylvaniaisoneofeighteen (18) statesandtwo (2) Marylandcountiesthatactivelyparticipateinthedistributionprocesstocontrolthesaleofalcohol.
4. ThePLCBisgovernedbyathree (3) MemberBoard, appointedbytheGovernorandconfirmedbytwo-thirdsoftheStateSenate.
a. TheBoardappointsaChiefExecutiveOfficer.
5. ThePLCBisresponsibleforregulatingthesaleofalcohol, educatingconsumersontheresponsibleuseofalcohol, andworkingtopreventunderageuseofalcoholicbeverages.
6. ThePLCBaccomplishesitsresponsibilitiesthroughmarketingandmerchandisingaretailoperationofapproximately608storeswithsalesofapproximately $2.1billionin2011-2012.
7. OnApril12, 1951, thePennsylvaniaGeneralAssemblycombinedexistingbeerandliquorlawsintoonestatute, entitledthe “LiquorCode.”
8. OnJuly1, 1987, thePennsylvaniaGeneralAssemblyreenactedtheLiquorCodeandcreatedtheBureauofLiquorControlEnforcement (“BLCE”), withinthePennsylvaniaStatePolice, whichisresponsibleforenforcingtheLiquorCodeandtheBoard’sregulations; andtheOfficeofAdministrativeLawJudge, anautonomousofficewithinthePLCB, whichisresponsibleforpresidingovercitationandenforcementhearings.
9. ThePLCBprovidesproductsandservicesthroughseven (7) dedicateddepartmentsdesignedtomeetthespecificneedsofPLCBcustomersandlicensees.
a. Eachoftheseven (7) dedicatedofficeshasspecificdeputieswhohaveoversightresponsibility.
b. Dedicatedofficesare: Finance, SupplyChain, Marketing & Merchandising, RetailOperations, Administration, RegulatorAffairs, andExternalAffairs.
10. ThePLCBisahighvolumepurchaserofwineandspiritsintheUnitedStates.
a. ThePLCBcurrentlyoperatesapproximately608stores, whichareleasedfromprivatelandlords.
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b. ThePLCBoutsourceswarehousingservicesforthree (3) distributioncentersinPennsylvania.
c. Therecurrentlyareapproximately25,595beveragealcohollicensesandpermitsthroughoutPennsylvaniaand5,391registeredmaltandbrewedbeveragebrandsgrantedbythePLCB.
11. ProductsthataresoldbythePLCBarecategorizedaseitherregularitems, luxuryitems, orspecialorderitems.
a. Regularitemsareproductsthatareroutinelystockedinthedistributioncenters.
b. Luxuryitemsareproductsthatarepurchasedintermittentlyorasone-timepurchases.
c. SpecialorderproductsareitemsthatarenotstockedinthePLCBdistributioncentersbutmaybespecialorderedbyeitherlicenseesorbyconsumers.
d. OnoraboutFebruary4, 2004, thePLCBbegantheChairman’sSelectionProgram, whichofferswineatpremiumcollectionstores.
12. Inorabout2006, apolicywasdevelopedbythePLCBknownasthe “brightline.”
a. ThepolicywasdevelopedduringthetimewhenJosephMartzwasservingasPLCBDirectorofAdministration.
1. In2006, MartzsimultaneouslyservedasSecretaryoftheCommonwealthandPLCBDirectorofAdministration.
b. ThebrightlinewasapolicythatadvisedemployeestheyweretoacceptnothingfromPLCBvendors.
c. Wheninitiallyimplemented, thepolicywasapplicabletoemployeesoftheAdministrativeDivisionofthePLCB.
1. EmployeessignedthepolicyagreeingnottoacceptanythingfromPLCBvendors.
d. JonathanNewmanwasPLCBChairmanatthetimethepolicywasimplementedforadministrativestaff.
13. In2006, theDirectorofAdministrationhadnosupervisoryauthorityoveremployeesinthePurchasingDivision.
a. RequestsweremadetoJamesShort, PLCBDirectorofMarketing, toimplementthepolicyinthePurchasingDepartment.
b. Shortneverimplementedthepolicy.
14. AsaControlState, thePLCBistheonlyretailsellerofwine/spiritsintheCommonwealth.
a. ThePLCBmaygrantlicensestoentities/establishmentsforthesaleofalcoholicbeveragesforon-siteconsumptionaswellasforvendorswhosellproductsforoff-siteconsumption.
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b. InorderforanalcoholicbeveragetobesoldinPennsylvania, itmustbeauthorizedforsalebythePLCB.
1. Ifaproductis “listed” itisauthorizedforsaleandstockedasaproductinPLCBretailstores.
15. InordertohaveaproductsoldbythePLCB, amanufacturer/supplierofalcoholicbeverageproductsmayemployseveral differentmethodstohaveits productrepresentedwithintheCommonwealthofPennsylvania.
a. Amanufacturer/suppliermaymarketitsproductdirectlytothePLCBforthelisting/delistingprocessaswellasforsalesanddistribution.
b. Amanufacturer/suppliermaymarketitsproductthroughavendor.
1. Forallsales/distribution, avendorofrecordmustbeidentifiedwiththePLCB.
2. Amanufacturer/suppliermayalsobeavendor/vendorofrecord.
c. Amanufacturer/suppliermayenlisttheservicesofabroker, whotheninturnrepresentsthemanufacturer/supplieranditsproductsbeforethePLCB.
1. Anybrokermayrepresentmultiplemanufacturers/suppliersand/ormultipleproductsbeforethePLCB.
2. Abrokermayalsoserveasavendor/vendorofrecord.
16. ThePLCBperiodicallyreviewsallproductscurrentlysoldinPLCBretailstorestoevaluatetheirprofitability, andat/oraboutthesametimeconsidersnewproductsforplacementinPLCBretailstoresthroughaprocessknownas “listing” anddelisting.” a. Listing/delistingoccurstwiceayear, usuallyinthefallandspringofeach
year.
b. Thegoaloflisting/delistingistoachievea1:1ratio, whenforeachproductlisted, oneproductisdelisted, duetothelimitedamountofshelfspaceavailableateachPLCBretailstore.
17. TheprocesstopresentanewproductforlistingisregulatedthroughthePLCB.
a. Oncetheappropriateapplicationhasbeensubmitted, aspecificdate/timewillbescheduledforavendor/brokertopresentnewproductstoMembersofthePLCB.
b. Generallytwo (2) bottlesofaproductareprovidedforsampling.
1. One (1) bottlefortastingandanotherforlabelreviewaresubmitted.
c. PLCB \[staff\] membersusuallyresponsibleforevaluatingnewproductare:
DirectorofMarketingandMerchandising
ChiefProductManagementandPricingDivision
MerchandisingPricingCoordinator(s)
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d. Onceanewproductpresentationhasbeenmade, arecommendationwillbemadeastowhetherthenewproductshouldbelisted (soldinPLCBretailstores).
1. AreportofproductstobelistedisforwardedtotheCommissionersforapproval.
2. TheCommissionersdonotparticipateinthenewproductreviewprocess.
3. Commissionersvoteontheentirerecommendednewproductlist, withoutanyindependentreviewoftheproduct/supportdata.
4. TheDirectorofMarketingandMerchandisingalongwiththeChiefoftheProductManagementandPricingDivisionmakethefinalrecommendationtotheCommissionastowhatproduct(s) shouldbelistedforsale.
5. Luxurywinesandone-timebuys, includingtheChairman’sSelectionProgram, arenotsubjecttothelisting/delistingprocess.
18. Delistingoccurssimultaneouslywiththelistingprocess.
a. Thedelistingprocessisformallytermed “categorymanagement,” butiscommonlydescribedas “bucketing” or “filtration” process.
b. Ifaproductistobedelisted, thevendorisnotifiedandprovidedanopportunitytoavoidadelisting.
1. Actionssuchasanadvertisingcampaign, discounts, andproductsamplingareusedtopromotesalesandpossiblyavoidadelisting.
c. Recommendationsfordelistingaresimilartolistings, wheretheDirectorofMarketingandMerchandisingalongwiththeChiefoftheProductManagementandPricingDivisionmakethefinalrecommendationtotheCommissionastowhatproduct(s) shouldbedelisted.
19. ThePLCBreliesprimarilyonrecommendationsmadebyJamesShort, theDirectorofMarketingandMerchandising, andhissubordinates, includingSchwenkastheDirectorofProductSelection, whenmakinglisting/delistingdecisions.
a. TheBoardconductsnoindependentreviewofproductsandreliesonstaffrecommendations.
b. Itisestimatedthat5% oftherecommendationstolist/delistarenotacceptedbytheBoard.
20. TheprimaryvendorsprovidingproductstothePLCBare:
SouthernWineandSpiritsCapitalWineandSpirits (AllianceBrands, WhiteRockDistilleries) AlliedBeverage (Majestic) Thesevendorsrepresentatleast31% oftotalPLCBsales/inventory.
21. SouthernWineandSpiritsofAmerica, Inc. (“Southern”) \[claims\] tobethenation’slargestwineandspiritsdistributor.
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a. Sinceitscreation/formationin1968, SouthernhasmaintaineditscorporateofficeinMiami, Florida.
b. Currently, Southernrepresentsclientsinnolessthanthirty-five (35) statesincluding “ControlStates” and “OpenStates.”
1. An “OpenState” referstoastate/jurisdictionwherewine, spirits, andbeersalesareconductedthroughanindependentbeveragedistributor/retailer.
2. A “ControlState” iswhereastateorcounty “controls” orregulatesthedistributionand/orthesaleofwine, spirits, and/orbeer.
3. PennsylvaniaisthelargestControlStateoperationintheUnitedStates.
22. SouthernWine & SpiritsofPennsylvaniaoperatesasalicensedwineandspiritsbroker/marketer.
a. SouthernexpandeditsoperationsintoPennsylvaniain1995.
b. Southernemploysapproximatelytwo-hundredtwenty-five (225) salesandsupportstaffstatewideinPennsylvania.
c. Southernmaintainstwo (2) officeswithinPennsylvania, oneintheKingofPrussiaarea, andtheotherintheGreaterPittsburghgeographicarea.
1. Theseemployeesareresponsibleformarketingandmerchandisingalcoholicbeveragestothemorethansix-hundred (600) PLCBstatestores, aswellasPennsylvania’s14,500on-premiseaccounts.
2. ThePLCBisSouthern’sonlyoff-premisecustomer.
23. BradM. Waxman (“Waxman”) istheExecutiveVicePresident, GeneralManagerofSouthernWine & SpiritsofPennsylvania.
a. InJanuary1999, WaxmaninitiatedhisemploymentwithSouthern.
1. In2002, WaxmanwasnamedExecutiveVicePresident/GeneralSalesManagerofSouthern’sPennsylvaniaoperations.
b. MarkSweeney (“Sweeney”) istheVicePresidentandGeneralManagerofNorthAmericanWineandSpirits, adivisionofSouthernWineandSpirits.
1. SweeneyalsomakessalescallstoPLCBofficialsandemployees.
2. In2008, WaxmanwaspromotedtothepositionofExecutiveVicePresident/GeneralManagerofSouthern’sPennsylvaniaoperations.
24. Southernisabrokerandvendor/vendorofrecordforanumberofwinesand/orspiritssoldtothePLCB.
a. WaxmanservesasabrokerforanumberoftheproductsbeforethePLCB.
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b. ProductsforwhichSouthernservesasbrokerand/orvendor/vendorofrecordaccountforbetweenapproximately6.43% to6.85% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years (2007-2012).
1. SalestoPLCBforyears2007through2012totaledbetween62,051,980.00and $77,641,059.78.
25. CapitalWine & Spirits, LLC (“Capital”) claimstobeoneofthelargestwholesalers/brokersofwineandspiritsinPennsylvania.
a. CapitalisamemberoftheCharmerSunbeltGroup, anationwidedistributorofwine, spirits, beer, andotherbeverages.
b. TheCharmerSunbeltGroupisacollectionofprivatelyheldcompaniesandoperatesdistributor/brokeragehousesinnolessthanfifteen (15) states, includingPennsylvania.
c. Capitalemploysmorethantwo-hundred (200) employeesandreportstosellinexcessoffourmillioncasesofwineandspirits throughouttheCommonwealth.
d. Thereportedfourmillioncasesofwine/spiritsalesincludesalestothePLCB.
26. Capitalisabrokerandvendor/vendorofrecordforanumberofwinesand/orspiritssoldtothePLCB.
a. ProductsbrokeredbyCapitalaccountforatotalofbetweenapproximately19.11% to22.03% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years.
b. SalestothePLCBforyears2007through2012totaledbetween198,712,993.38and $221,606,618.99.
27. Inanefforttocondensemarketingeffortsandmaximizesalesandproductexposure, severalmanufacturers/producersofwines, spiritsandmalt/brewedbeverageshaveformedpartnershipsformarketingpurposes; onesuchpartnershipis “TheAlliance.”
a. TheAllianceiscomprisedofwine/spiritsuppliers: BacardiUSA (“Bacardi”); Brown-Forman; andRemyCointreau (“Remy”).
b. TheAlliancewasestablishedbyBacardi, Brown-Forman, andRemyto “re- shape” theirroutetomarketinordertoprovidegreaterserviceandaccesstotheconsumer.
c. ThegoalofTheAlliancewas/istocreateawayforBacardi, Brown-Forman, andRemytoleveragetheirscaleandprofitabilityinordertosecurededicatedresources.
28. TheAllianceisaUnitedStatesprogramandisfocusedondistributionandacombinedportfolioinanefforttocompetewithothersuppliers.
a. TheAlliancecoverstwenty-six (26) markets, whichinclude thestateofPennsylvania.
b. WithinPennsylvania, TheAllianceisrepresentedbyCapitalWine & Spirits/CharmerSunbeltGroup.
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29. CapitalWineandSpirits/AllianceBrandsrepresentativesinteractingmostoftenwithPLCBofficialsincludethefollowing:
MarkLittles, President, CapitalWineandSpiritsChristinaDesmond, DirectorofMarketingandBusinessAnalyticsRobSirota, GeneralManager, AllianceDivisionofCapitalWineandSpiritsKevinMcCarty, Vice-PresidentofComplianceandAdministrationofCapitalWineandSpiritsTimKilcullen, Vice-PresidentofWineandEducation, CapitalWineandSpiritsDavidFranke (Brown-Forman)
30. AlliedBeverageGroup, LLC (“Allied”) wascreatedbythemergersofTheBaxterGroup, Inc., F&ADistributingCompanyandTheJaydorCorporation.
a. AlliedreportstobeNewJersey’slargestandmostcomprehensivewineandspiritsdistributorandranksamongthetenlargestdistributorsintheUnitedStates.
b. AlliedalsooperatessubsidiaryMajesticWine & Spirits, USA, LLCMajestic”), whichisaPennsylvaniabrokerageandvendor/vendorofrecord
forproductssoldtothePLCB.
1. Asabroker/vendor, Majesticprovidesmerchandisingandpromotionalservicesforseveralmajorsuppliersofalcoholicbeverages.
2. MajesticreportstobethePLCB’shighestvolumedistributorofspecialliquororders.”
31. Asabrokerandvendor/vendorofrecordforproductssoldtothePLCB, Alliedand/orMajestic’ssalesaccountforbetweenapproximately1.51% to2.18% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years.
a. SalestoPLCBforyears2007through2012totaledbetween $15,267,768.10and $25,000,032.79.
32. Majestic’ sprimarycontactswithPLCBofficialsandemployeesareChrisPaparielloandEdwardMurray.
a. PaparielloisExecutiveVice-PresidentofMajestic.
b. MurrayservesasMajestic’sEasternRegionalManager.
33. ExecutivesandmarketingrepresentativesfromvendorssupplyingproductstothePLCBmetwithPLCBemployeestomarketproducts.
a. Themarketstrategiesoftheserepresentativesincludedofferinggifts, transportation, lodging, andhospitalitytoPLCBemployees.
b. Theseitemsincludinggolfevents, meals, alcoholicbeverages, andgiftcardswereofferedyearroundincludingwhenlisting/delistingofproductswasoccurring.
c. ItemsofvaluewereroutinelyprovidedtoPLCBofficialswhowereindecisionmakingpositionsregardingproductselectionandplacement.
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34. RepresentativesofthenumerousPLCBvendorsfrequentlycontactedSchwenkandvariousotherPLCBrepresentativestomarketnewandexistingproducts.
a. Someoftheseproductsweresubjecttothelisting/delistingprocess.
b. Otherproductswereluxuryproductswhicharenotsubjecttolisting/delistingprocedures.
c. Schwenk’sjobduties, attimes, includedmakingdeterminationswhereproductswouldbelocatedinstateliquorstores.
THEFOLLOWINGFINDINGSRELATETOSCHWENK’SRECEIPTOFGIFTSANDHOSPITALITYTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.
35. RobertSirotaisemployedastheGeneralManager, AllianceDivision, forCapitalWineandSpirits.
a. Inhisposition, SirotaservesasthedirectliaisonbetweentheAlliancesuppliersandCapitalWineandSpirits.
b. SirotareportsdirectlytoMarkLittles, President, CapitalWineandSpirits.
36. Inorabout2009, theconceptforanAllianceGolfOpenwasconceivedas acollaborativeeffortbetweenSirotaandmembersoftheAlliance.
a. ThegolfoutingwasorganizedasameansbywhichCapitalWineandSpiritsandtheAlliancesupplierscouldstrengthentheirrelationshipwiththePLCBandtoallowvariousAllianceseniormanagementofficialstohave “facetime” withPLCBofficials.
37. SirotaservedastheCapitalWineandSpiritslead/pointofcontactinrelationtoorganizationoftheevent.
a. AlthoughSirotaservedastheeventlead, PLCBindividualstobeinvitedtotheeventweredeterminedasaresultofcollaborationbetweenSirota, Littles, ChristineDesmond (DirectorofMarketingandBusinessAnalytics, CapitalWineandSpirits), and/ortheAlliancesuppliers.
b. ActualinvitationstoPLCBofficialsfortheeventweremadebyLittlesand/orDesmond.
38. AllianceGolfOpeneventswereheldin2009, 2010, and2011.
a. SirotaservedastheCapitalWineandSpiritsleadfortheeventorganizationeachyear.
b. Inviteestotheeventweredeterminedinthesamemannerforeachyear.
c. Actualinvitationsfortheeventswerepresentedbythesameindividualsforeachyear.
39. AnAllianceGolfOpenwasinitiallyplannedforthe2012calendaryearbutultimatelywasnotheld.
a. The2012AllianceGolfOpenwascancelledasaresultoftheCommissioninvestigationinthismatterandpublishedmediaaccountsofthereceiptof
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itemsofvaluebyPLCBemployeesfromPLCBvendors.
b. ThedecisiontocanceltheeventwasmadejointlyamongLittles, Desmond, andSirota.
40. The2009, 2010, and2011AllianceOpenswereone-dayeventsconsistingofmorningtravel (ifnecessary), awarmupsession, lunch, aroundofgolf (eighteenholes), anddinnerintheevening.
a. SirotadevelopedtheitineraryforeachrespectiveAllianceOpen.
b. NospecifictimeslotwasdesignatedforanyspecificbusinesspresentationbyCapitalWineandSpiritsand/ortheAlliancesuppliers.
c. NospecificbusinesspresentationsweremadebyCapitalWineandSpiritsand/ortheAlliancesuppliersattheevents.
d. Theeventwasprimarilysocialinnaturewithnospecificbusinessagenda.
41. Thecostsassociatedwiththe2009, 2010, and2011AllianceGolfOpenwerebornebytheAlliancesuppliersandCapitalWineandSpirits.
a. ThetotalcostsoftheeventsweredividedintofourequalamountstobepaidbyCapitalWineandSpirits, Bacardi, Brown-Forman, andRemy.
42. The2009AllianceGolfOpenwasheldattheWestShoreCountyClub, 100BrentwaterRoad, CampHill, PA17011, onWednesday, August19, 2009.
a. InadditiontoSchwenk, PLCBattendeeswereShortandCEOJoeConti.
b. SchwenkreporteddirectlytoJamesShort.
1. ShortisasubordinatetoPLCBCEOJoeConti.
c. Althoughtheeventwassocialinnature, Schwenkdidnotutilizeleaveofanykind (annualorpersonal) inassociationwithhisparticipationatthe2009AllianceOpen.
1. SchwenkattendedthiseventatthedirectionofhisSupervisor, JamesShort.
2. Schwenkbelievedtheeventwas “workrelated” ashewasadvisedtoattendbyShortandthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial.
d. Allexpensesassociatedwiththeevent, includingcocktailsanddinneraftertheevent, werepaidforbyCapitalWineandSpiritsand/ormembersoftheAlliance.
43. SirotareceivedabanquetinvoicefromtheWestShoreCountryClubfortheAugust19, 2009, AllianceGolfOpenintheamountof $1,324.06.
a. Theinvoicedidnotdocumentadateorinvoicenumber.
b. Theinvoicedocumentedtheclient/organizationasCapitalWineandSpirits.
c. Theinvoicedocumentedabreakdownofgolfchargesintheamountof
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1,136.80andfoodandbeveragechargesintheamountof $187.261,324.06total).
d. ThecostoftheeventtoCapitalWineandSpiritsandeachAlliancesupplierwasapproximately $331.00 ($1,324.00 ÷ 4).
44. Additionalpurchasestotalingapproximately $147.17weremadebySirotaandDesmondforrefreshmentsinassociationwiththe2009AllianceOpen.
a. Sirota’sexpensereportdocumentedapurchaseintheamountof $67.17forthegolfouting.
b. Desmond’sexpensereportdocumentedapurchaseof $80.00forthegolfouting.
45. Expensesassociatedwiththe2009AllianceGolfOpentotaledatleast $1,471.23.
a. Thevalueofthegolfoutingbasedonamaximumofsixteenindividualsinattendancetotaledapproximately $105.09perindividual.
1. Greensfeescostsforthetwo (2) WSCCmembersarenotincludedastheywerenotassessedfees.
46. The2010AllianceGolfOpenwasheldattheRiverCrestGolfClub, 100GolfClubDrive, Phoenixville, PA19460onJuly15, 2010.
a. Theeventwasmoreinclusivethanthe2009eventbyprovidinglunch, cocktailsanddinner.
1. Fifteen (15) individualsparticipatedinthe2010AllianceOpen, includingthree (3) PLCBofficials/employees.
b. PLCBattendeesattheeventincludedSchwenk, Short, andP.J. StapletonPLCBChairmanatthattime.)
1 NeitherSchwenknorShortutilizedleaveofanykind (annualorpersonal) inassociationwiththeirrespectiveattendanceatthe2010AllianceOpen.
2. SchwenkwasdirectedtoattendthiseventbyhisSupervisor, JamesShort.
3. Schwenkbelievedtheeventwas “workrelated” ashewasdirectedtoattendbyShort, andthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial.
4. Allexpensesassociatedwiththeevent, includingcocktailsanddinneraftertheevent, werepaidforbyCapitalWineandSpiritsand/ormembersoftheAlliance.
47. SchwenksubmittedCommonwealthTravelExpenseVoucher (TEV) MS07152010datedJuly26, 2010, intheamountof $195.24fortravelandovernightexpensesfromHarrisburgtoSkippack, Pennsylvania, andNewHope, Pennsylvania, onJuly15, 2010, andfromSkippack, Pennsylvania, toHarrisburg, Pennsylvania, onJuly16, 2010.
a. SchwenksubmittedtheTEVatthedirectionofShort.
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48. RecordsofCapitalWineandSpiritsinreferencetotheJuly15, 2010, AllianceGolfOpendocumentedexpensesincurredintheapproximateamountof $7,363.00.
a. ThedocumentmemorializingthecostoftheeventwasupdatedonJuly16, 2010.
b. Theinvoicedocumentedtheexpensebreakdownas:
Description CostsFood & Beverage $ 4,263.00Golf $ 1,280.00GolfSwagBags $ 1,600.00Forecaddies $ 220.00Total $ 7,363.00
c. ThecostoftheeventtoCapitalWineandSpiritsandeachAlliancesupplierwasapproximately $1,840.75 ($7,363.00 ÷ 4).
49. Thevalueofthegolfoutingbasedonamaximumoffifteen (15) individualsinattendancetotaledapproximately $490.87perindividual.
50. The2011AllianceGolfOpenwasheldatthePhiladelphiaCountryClub, 1601SpringMillRoad, Gladwyne, PA19035onJuly14, 2011.
a. PLCBattendeesattheeventincludedSchwenk, Short, Conti, Stapleton, andDougHitz, PLCBBureauDirectorforPlanningandProcurement.
b. Althoughtheeventwassocialinnature, neitherSchwenknoranyotherPLCBemployeesutilizedleaveofanykind (annualorpersonal) inassociationwiththeirrespectiveattendanceatthe2011AllianceOpen.
c. SchwenkwasauthorizedtoattendthiseventbyhisSupervisor, JamesShort.
d. Schwenkbelievedtheeventwas “workrelated” andthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial.
e. Allexpensesassociatedwiththeevent, includingcocktailsanddinneraftertheeventaswellasgolfshirts, hats, andgiftbags, werepaidforbyCapitalWineandSpiritsand/ormembersoftheAlliance.
51. SchwenksubmittedCommonwealthTravelExpenseVoucher (TEV) MS071511datedJuly20, 2011, intheamountof $130.20fortravelandovernightexpensestoPhiladelphia, Pennsylvania, onJuly14, 2011, returningtoHarrisburg, Pennsylvania, onJuly15, 2011.
a. TEVNo. MS071511wassubmittedandcompletedasdirectedbyShortonJuly20, 2011.
52. CapitalWineandSpiritsrecordsinreferencetotheJuly14, 2011, AllianceGolfOpendocumentedexpensesincurredatthePhiladelphiaCountryClubintheapproximateamountof $9,487.96.
a. ThebanquetinvoicegeneratedbythePhiladelphiaCountryClub (BookingNo. 017299) documentedabillingdateofJuly14, 2011.
Schwenk, 13-008Page14
b. Theinvoicedocumentedtheexpensebreakdownas:
Recap & Total CostsServices $ 2,691.55Resources $ 6,037.00ServiceChg $ 592.14SalesTax $ 167.27Total $ 9,487.96
1. Includedwithintheeventcostweregolfhats, shirts, andgolfgiftbagswithmiscellaneousitemsfortheparticipants.
c. ThecostoftheeventtoCapitalWineandSpiritsandeachAlliancesupplierwasapproximately $2,371.99 ($9,487.96 ÷ 4).
d. Thevalueofthegolfoutingbasedonamaximumoftwenty (20) individualsinattendancetotaledapproximately $474.40perindividual.
THEFOLLOWINGFINDINGSRELATETOSCHWENK’SRECEIPTOFGOLFTRIPSTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.
53. ChristopherPaparielloiscurrentlyemployedastheExecutiveVice-PresidentofMajesticWineandSpirits (“Majestic”).
a. MajesticisownedbyAlliedBeverageGroup.
b. MajesticprovidesmerchandisingandpromotionalservicesasthebrokerrepresentativeofseveralmajorsuppliersincludingW.J. DeutschandSonsW.J. Deutsch”).
1. W.J. Deutschwasfoundedin1981tomarketwineandspiritsproducedfrommajorwineandspiritsregionsoftheworld.
54. BeauClarkisemployedwithW. J. DeutschasaPennsylvaniaDistrictManager.
a. AsthePennsylvaniaDistrictManagerforW. J. Deutsch, ClarkwasresponsiblefordevelopmentofthePennsylvaniamarketforbothonandoffpremisesales.
55. InoraboutAugust2010ClarkandPaparielloorganizedagolftriptoPebbleBeach, California.
a. ClarkandPappariellodiscussedPLCBemployeeJamesShortaccompanyingthemonthegolftrip.
b. W.J. Deutschwastocovertheexpensesassociatedwiththetrip.
c. ShortreceivedhisinvitationforthetripdirectlyfromPapariello.
d. SchwenkwasinformedbyShortthathewastoattend.
56. AtnotimedidPaparielloprovideanyinformationastothecostofthetriporwhetheranypaymentwasrequiredregardingexpensesassociatedwiththetrip.
a. BothSchwenkandShortwereinformedthatW.J. Deutschhadbudgetedfundstocoverthecostsassociatedwiththetrip.
Schwenk, 13-008Page15
b. Costsassociatedwiththetripincludedairfare, lodging, greensfees, subsistence, andentertainment.
57. ThedatesestablishedforthegolftriptoPebbleBeachcalledforSchwenkandShorttoarriveinCaliforniaonAugust26, 2010, anddepartCaliforniaonAugust28, 2010.
a. August26, 2010, (aThursday) andAugust27, 2010, (aFriday) wereregularlyscheduledworkdaysforCommonwealthemployees.
b. Schwenkutilizedatotaloffifteen (15) hoursofannualleavetoaccountforhisabsencefromworkonAugust26, 2010andAugust27, 2010.
58. LodgingaccommodationsaswellasgolfreservationsforthetripweremadebyClark.
a. Schwenk, Short, Papariello, andClarkstayedatTheLodgeatPebbleBeachlocatedat170017-MileDrive, PebbleBeach, California, onthenightsofAugust26, 2010, andAugust27, 2010.
b. Schwenk, Short, Papariello, andClarkplayedtwo (2) roundsofgolfatPebbleBeachGolfLinksandoneroundofgolfatSpyGlassGolfCourseduringthethreedaytrip.
c. ThetripwassubmittedasabusinessexpensebyClarkandPaparielloandwasconsideredamarketingevent.
59. NeitherSchwenknorShortmadeanypaymenttoeitherPaparielloorClarkforexpensesassociatedwiththethreedaygolftriptoPebbleBeach, California, eitherpriorto, during, orafterthetrip.
a. Theinitialminimumcostforthetripofatleast $6,497.46postedtoandwaspaidviaPapariello’scorporateAmericanExpressCreditCard.
1. ExpensesincurredbyMajesticrepresentativesviauseofcorporatecreditcardsarepaiddirectlybythecompany.
b. Approximately $6,000.00oftheminimum $6,497.46expenseforthegolftripwasultimatelyexpensedbacktoW.J. DeutschbyMajestic.
1. W.J. DeutschultimatelyprovidedDocumentNumber76845datedAugust31, 2011, toMajesticdocumentingtheissuanceofacredittoMajesticintheamountof $6,000.00forexpensesassociatedwiththetrip.
60. Expensesforthegolftriptotalingaminimumofapproximately $6,497.46postedtoPapariello’scorporateAmericanExpressCreditCardonAugust28, 2010, andAugust29, 2010, regardingallaccommodations/activitiesorganizedthroughTheLodgeatPebbleBeach.
a. Thevalueofthetripperindividualwasapproximately $1,624.37notincludingairfare ($6,497.46 ÷ 4).
62. Currentairfareforoneround-tripticketfromPhiladelphiaInternationalAirporttoSanJoseInternationalAirportwithonestopisapproximately $347.50.
Schwenk, 13-008Page16
a. NeitherPapariellonorhisemployerprovidedrecordsofairfareexpensesincurredforSchwenk.
63. BothShortandSchwenkacceptedthetravel, lodging, andhospitalityassociatedwiththegolftriptoPebbleBeach, California, fromentitiesconductingbusinesswiththePLCBatthetimeofthetrip.
64. Schwenkrealizedaprivatepecuniarygainofnolessthan $1,971.87inassociationwithhisacceptanceofanall-expensepaidthree (3) daygolftriptoPebbleBeachprovidedbyMajesticWineandSpirits/W. J. DeutschandSonsatatimewhenMajesticWineandSpiritsandW. J. DeutschandSonshadongoingbusinessdealingswiththePLCB.
a. Allexpensesassociatedwiththeeventincludingairfare, lodging, greensfees, subsistence, andentertainment, werepaidforbyMajesticWineandSpiritsand/orW.J. Deutsch.
THEFOLLOWINGFINDINGSRELATETOGOLFOUTINGSFORSCHWENKARRANGEDBYWHITEROCKDISTILLERIESREPRESENTATIVES.
65. TriciaBrungoandPaulDoranarecurrentlyemployedbyWesternSpiritsBeverageCompany (“WesternSpirits”) inthepositionsofControlledStatesManagerandRegionalSalesManagerrespectively.
a. CapitalWineandSpiritsservesasthedistributor/vendorforWesternSpiritsintheCommonwealthofPennsylvania.
66. PriortotheiremploymentwithWesternSpirits, BrungoandDoranwereemployedbyWhiteRockDistilleries (“WhiteRock”) inthepositionsofControlStateManagerandRegionalSalesManagerrespectively.
a. CapitalWineandSpiritsservedasthedistributor/vendorforWhiteRockintheCommonwealthofPennsylvania.
b. In2010, WhiteRockwasmarketingproductstothePLCBincludingThreeOlivesvodka.
1. BrungoandDoranmarketedproductstoPLCBofficialsincludingSchwenk.
67. WhiteRockisnotcurrentlyoperational.
a. WhiteRocksoldtherightstoallofitsbrandsandceasedoperationsasofJune1, 2012.
b. PaulCoulombewas/servedastheowner/ChiefExecutiveOfficerofWhiteRockpriortoitsclosing.
68. DuringoraboutFebruary2010, CoulombeinvitedJamesShort, BrungoandDoranWhiteRockrepresentatives), andDesmond (CapitalWineandSpirits
representative) tohisresidencenearNaples, Florida, foraweekendgolfoutingtooccuratBonitaBayEast.
a. Nomarketingorbusinesspurposeexistedforthetrip.
1. AllexpensesincurredbyBrungoandotherWhiteRockofficialswerereimbursedbyWhiteRock.
Schwenk, 13-008Page17
b. ThepurposeofthetripwasnotrelatedtoanyofficialPLCBpurpose.
c. ShortdirectedSchwenktoaccompanyhimonthetrip.
d. LodgingforSchwenkandShortwasprovidedbyCoulombeathispersonalresidencenearNaples, Florida.
69. ThedatesestablishedforthegolftriptoBonitaBaycalledforSchwenk, Short, andtheremaininginviteestoarriveinFloridaonThursday, February11, 2010, anddepartonSaturday, February13, 2010.
a. Thursday, February11, 2010, andFriday, February12, 2010, wereregularlyscheduledworkdaysforCommonwealthemployees.
70. SchwenkandShorttraveledtoFloridaonFebruary11, 2010, andplayedatleastoneroundofgolf (eighteenholes) withCoulombe, Brungo, Doran, andDesmondatBonitaBayduringthethree (3) daytrip.
a. Nospecificbusinessmeetingswereheldduringthethreedaytimeframe.
71. AllofSchwenk’sandShort’sexpensesassociatedwiththetrip (i.e. airfare, greensfees, meals, entertainment, etc.) werepaidforbyCoulombeand/orWhiteRockrepresentatives.
72. TotalexpensesforthegolftripsponsoredbyCoulombe/WhiteRockcouldnotbespecificallydeterminedduetothelackofrecordsprovidedbyWhiteRockregardingairfares, meals, greensfeesandentertainmentpaidforonbehalfofSchwenkandShort.
a. NospecificrecordscouldbelocateddetailingthecostsassociatedwiththetripwiththeexceptionoftwoentriesonBrungo’sexpensesummaryreportforFebruary13, 2010.
1. Brungo’sexpensereportforFebruary13, 2010, documentedcocktailspurchasedatTrulucksandVerginasfor $84.26and $88.30respectivelyforentertainmentregardingSchwenkandShort.
73. Currentairfareforoneround-tripticketfromPhiladelphiaInternationalAirporttoSouthwestFloridaInternationalAirport (a/k/aFortMeyersAirport) withonestopisapproximately $330.20.
a. AirtravelwasarrangedbyCoulombe.
74. SchwenkdidnotutilizeCommonwealthleaveofanytype (annualorpersonal) toaccountforthefifteen (15) hourabsencefromhisnormalworkinghoursonFebruary11, 2010, andFebruary12, 2010.
a. SchwenkwasinformedbyShortnottoutilizeleave.
b. Schwenkwentonthetripatthedirectionofhisimmediatesupervisor.
75. DuringoraboutNovember2011, CoulombeagaininvitedShort (PLCBrepresentatives), BrungoandDoran (WhiteRockrepresentatives), andDesmondCapitalWineandSpiritsrepresentative) tohisresidencenearNaples, Florida, foraweekendgolfoutingtooccuratBonitaBayEast.
Schwenk, 13-008Page18
a. NoPLCBbusinesspurposeexistedforthetrip.
1. AllexpensesrelatedtothetripwerepaidbyWhiteRock.
b. ShortinformedSchwenkthathewastoaccompanyhim.
76. ThedatesestablishedforthegolftriptoBonitaBaycalledforSchwenk, Short, andtheremaininginviteestoarriveinFloridaonThursday, December1, 2011, anddepartonSaturday, December3, 2011.
a. Thursday, December1, 2011, andFriday, December2, 2011, wereregularlyscheduledworkdaysforCommonwealthemployees.
b. Schwenkutilizedatotaloffifteen (15) hoursofannualleavetoaccountforhisabsencefromworkonDecember1, 2011, andDecember2, 2011.
77. LodgingaccommodationsweremadeonbehalfofSchwenkandShortattheHyattCoconutPointResortandSpalocatedat5001CoconutRoad, BonitaSprings, Florida, forthenightsofDecember1, 2011, andDecember2, 2011.
a. ThecostassociatedwithonenightoflodgingattheHyattCoconutPointResortandSpatotaledapproximately $354.31includingtaxesandfees.
b. ExpensesassociatedwithSchwenk’stwonightsoflodgingattheHyattCoconutPointResortandSpatotaledapproximately $708.62.
78. SchwenkandShorttraveledtoFloridaonDecember1, 2011, andfollowedthescheduleditineraryasdetailedbelow:
a. December1, 2011:
1. ArrivalatFortMeyersonDeltaAirlines: 11:36a.m. 2. Freetimetorelaxatthepoolorenjoyspaservice: 12:00-4:00p.m. 3. MeetinlobbyfortransfertoCoulombe’shouseforcocktails: 5:00p.m. 4. DinneratCapitalGrill: 7:00p.m.
b. December2, 2011:
1. MeetinlobbytodepartforlunchatBonitaBayEast: 10:15a.m. 2. GolfatBonitaBayEast: 12:30p.m. 3. Meetinlobbyfortransfertodinner: 6:30p.m. 4. DinneratHandsomeHarry’s: 7:00p.m.
c. December3, 2011:
1. DepartairportonDeltaAirlines: 11:06a.m.
d. NoPLCBbusinessmeetingswereheldduringthethreedaytimeframe.
79. AllofSchwenk’sandShort’sexpensesassociatedwiththetrip (e.g., airfare, greensfees, meals, entertainment, etc.) werepaidforbyCoulombeand/orWhiteRockrepresentatives.
80. TotalexpensesforthegolftripsponsoredbyCoulombe/WhiteRockcouldnotbefullydetermined, particularlyairfare, greensfeesandmealsandentertainment.
Schwenk, 13-008Page19
a. NospecificrecordswereprovidedbyWhiteRockdetailingthecostsassociatedwiththetrip, withtheexceptionofthreeentriesonBrungo’sexpensesummaryreportforDecember2, 2011.
1. Brungo’sexpensereportforDecember2, 2011, documentedmealspurchasedattheHyattintheamountof $405.73anddrinkspurchasedatHandsomeHarry’sintheamountof $69.80respectivelyforentertainmentregardingShort, Schwenk, Doran, andDesmond.
aa. Theapproximatecostwas $95.10perperson.
2. Brungo’sexpensereportfortheweekendingDecember2, 2011, documentlodgingfeestotaling $3,543.12inregardtolodginginBonitaSprings, Florida.
aa. BrungopaidforindividualroomsforSchwenk, Short, Desmond, Doran, andherselffortwonights ($354.31x5x2 = 3,543.10).
81. Currentairfareforoneround-tripticketfromPhiladelphiaInternationalAirporttoSouthwestFloridaInternationalAirport (a/k/aFortMeyersAirport) withonestopisapproximately $330.20.
a. WhiteRockrepresentativesconfirmed, inswornstatementstoCommissionInvestigators, payingforSchwenk’sairfarebutdidnotproviderecordsconfirmingtheexpenses.
82. SchwenkandShortacceptedthetravel, lodging, andhospitalityassociatedwiththegolftriptoBonitaBay, Florida, fromCoulombeatatimewhenWhiteRockandCapitalWineandSpiritswerethenconductingbusinesswiththePLCB.
83. ThetotalcostofSchwenk’sattendanceatthegolftripsisatleastasfollows:
2010: 2011: Drinks: $ 34.51 Room: $ 708.62Airfare: $ 330.20 Drinks: $ 95.11Wages: $ 409.80 Airfare: $ 330.20
Total: $ 774.51 Total: $ 1,133.93
a. Theseamountsdonotincludeallmeals, greens fees, andothertransportation.
b. Allexpensesassociatedwiththeevent, includingairfare, lodging, greensfees, subsistence, andentertainment, werepaidforbyWhiteRockDistilleriesrepresentatives.
84. InadditiontothegolftripstoBonitaBay, Schwenkwasprovidedwithmeals/hospitalityfromBrungoand/orDoranwhileSchwenkwasemployedasDirectorofProductSelection.
a. MostoftheseoffersweremadeinconjunctiontosimilaroffersmadetoJamesShort.
b. AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityfromBrungoand/orDoran, WhiteRockDistilleriesrepresentatives.
Schwenk, 13-008Page20
1. Thetotalspecificvalueofallthemeals/hospitalityreceivedbySchwenkfromBrungoand/orDorancouldnotbedetermined.
THEFOLLOWINGFINDINGSRELATETOSCHWENK’SGENERALRECEIPTOFGIFTSANDHOSPITALITYTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.
85. VendorrepresentativesmakeregularappearancesatthePLCBofficeslocatedintheNorthwestOfficeBuilding, Harrisburg, Pennsylvania.
a. Primaryvendorsand/orsupplierswhomarketedproductstothePLCBwithwhomSchwenkinteractedonaregularbasisincludedCapitalWineandSpirits; SouthernWineandSpirits; MajesticWineandSpirits; WhiteRockDistilleries; BeamGlobalSpiritsandWine; andDiageo, amongothers.
1. SpecificrepresentativesSchwenkdealtwithfromtheprimaryvendorsincluded, inpart, thefollowing:
aa. CapitalWineandSpirits:
1. MarkLittles, President
2. ChristinaDesmond, DirectorofMarketingandBusinessAnalytics
bb. SouthernWineandSpirits:
1. BradWaxman, ExecutiveVicePresident, GeneralManager, SouthernWineandSpiritsofPA
cc. MajesticWineandSpirits:
1. ChristopherPapariello, ExecutiveVicePresident
dd. WhiteRockDistilleries:
1. TriciaBrungo, ControlStatesManager
2. PaulDoran, RegionalSalesManager
ee. BeamGlobalSpiritsandWine:
1. Erin (a/k/aRed) Schiller, PennsylvaniaStateAccountManager.
86. Aspartofthemarketingprocess, vendorrepresentativesroutinelyofferedandprovidedPLCBemployeeswithitemsofvalue, includingbutnotlimitedtothefollowing:
AlcoholMeals, includinglunchesanddinnersGolfoutingsOutofstategolftripsGiftcards/certificates
Schwenk, 13-008Page21
a. Schwenkacceptedgifts, hospitality, and/orotheritemsofeconomicvalueonaregularbasisfrommultiplevendorrepresentatives, includingbutnotlimitedto, Littles, Desmond, Waxman, Brungo, Doran, andSchiller.
b. Schwenkwasofferedmealsandgiftsbyvendorsduetohisposition(s) withthePLCB.
c. Schwenkwasprovideditemsbyvendorsinhisofficialcapacityaspartofthemarketingofproductsbyvendors.
87. SchwenkreceiveddirectionfromJamesShorttoacceptitems, includingalcohol, giftscards, golftrips, etc.
a. Schwenkwasawarethatemployeeswhodidnotacceptitemsofvalueprovidedbyvendorsweresubjecttoretaliationandthreatsofdismissal.
88. Schwenk, Short, andStevePollack, ChiefofthePLCBChairmanSelectProgram, maderegulartripstoCaliforniatopurchasewinefortheChairmanSelectProgram.
a. Priorto2010, thetripswouldincludetastingatvariouswineriesintheregion.
1. ThePLCBemployeeswouldbeaccompaniedbyPLCBvendormarketingrepresentativesfromCapital, MajesticandSouthern.
b. Inorabout2010, thetastingswerescheduledforahotelconferenceroom.
1. Vendorswouldarrangewineriestomakepresentationsoverthecourseofthree (3) days.
c. Followingadayoftesting, vendorrepresentativeswouldprovidedinnerforSchwenk, Short, andPollack.
1. TheprimaryvendorrepresentativesprovidingdinnerwerefromCapitalandMajestic.
d. Schwenkaccepteddinnersanddrinksannuallybetween2010and2012fromthesevendorswhowereattemptingtogetproductsselectedfortheChairman’sSelectProgram.
1. SchwenkwasadvisedbyShortthedinnerswerepartofPLCBbusiness.
89. WhileservinginthepositionofPLCBChiefofCategoryManagementandlaterastheDirectorofProductSelection, Schwenkreceivedandacceptedmeals/hospitalityand/orgifts duringChairmanSelectbuyingtripsfromLittlesand/orDesmond, representativesofCapitalWineandSpirits.
a. Littles’ expensesummariesidentifySchwenkasbeingpresentwhenmeals/hospitalitywereofferedtoPLCBemployees.
1. SpecificexpensescouldnotbedirectlyattributedtoSchwenk.
90. Desmond’sexpensesummariesdocumentmeals/hospitalityand/orgiftsprovidedtoSchwenk, asaPLCBemployee, asdetailedbelow:
Activity Net Description AdditionalTextDate Amount
Schwenk, 13-008Page22
Activity Net Description AdditionalTextDate Amount
11/03/2010 $ 75.00 Nordstromgiftforbuyer None
11/28/2011 $ 325.00 BumbleBeeHollow: giftfor Nonebuyer
02/15/2012 $ 200.00 Nordstrom: giftforbuyer None
a. SchwenkdoesnotrecallreceiptoftheNordstromgiftsanddeniesreceiptofsame.
91. Schwenkacceptedthemeals/hospitalityand/orgiftsfromLittlesand/orDesmondatatimewhenSchwenkwasresponsibleformakingrecommendationstothePLCBBoardregardingproductpurchasing, aswellaslistinganddelisting, ofproductsfromsuppliersrepresentedbyCapitalWineandSpirits.
a. AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityand/orgiftsfromLittlesand/orDesmond, PLCBvendorrepresentatives.
THEFOLLOWINGFINDINGSRELATETOALLEGATIONSTHATSCHWENKFAILEDTODISCLOSEHISRECEIPTOFGIFTS, TRANSPORTATION, LODGING, AND/ORHOSPITALITYONSTATEMENTSOFFINANCIALINTERESTSFILEDFORTHE2010THROUGH2011CALENDARYEARS.
92. StatementofFinancialInterests (“SFI”) filingrequirementsforpublicofficialsandpublicemployeesaremandatedbySection1104oftheStateEthicsAct, whichstrequiresapublicofficial/employeetofileanSFInolaterthanMay1 ofeachyearthathe/sheholdssuchapositionandtheyearafterleavingsuchaposition.
st93. SchwenkwasrequiredtofileStatementsofFinancialInterestsbyMay1 annuallyinhispositionasaPLCBMerchandisingandPricingCoordinator, PLCBChiefofCategoryManagement, andPLCBDirectorofMarketingandMerchandising.
94. InformationtobedisclosedonStatementsofFinancialInterestsfiledbypublicofficialsandpublicemployeesismandatedbySection1105oftheStateEthicsAct.
a. Section1105(b), Subsections1-10identifyspecificinformationtobedisclosed, aswellasexceptionstodisclosurerequirements, whenapplicable.
1. Section1105(b)(6) mandatesdisclosureofthefollowingonStatementsofFinancialinterestsfiled:
Thenameandaddressofthesourceandtheamountofanygiftorgiftsvaluedintheaggregateat $250ormoreandthecircumstancesofeachgift. Thisparagraphshallnotapplytoagiftorgiftsreceivedfromaspouse, parent, parentbymarriage, sibling, child, grandchild, otherfamilymemberorfriendwhenthecircumstancesmakeitclearthatthemotivationfortheactionwasapersonalorfamilyrelationship. However, forthepurposesofthisparagraph, thetermfriend” shallnotincludearegisteredlobbyistoranemployeeofa
registeredlobbyist.”
Schwenk, 13-008Page23
2. Section1105(b)(7) mandatesdisclosureofthefollowingonStatementsofFinancialinterestsfiled:
Thenameandaddressofthesourceandtheamountofanypaymentfororreimbursementofactualexpensesfortransportationandlodgingorhospitalityreceivedinconnectionwithpublicofficeoremploymentwheresuchactualexpensesfortransportationandlodgingorhospitalityexceed $650inanaggregateamountperyear. Thisparagraphshallnotapplytoexpensesreimbursedbyagovernmentalbodyortoexpensesreimbursedbyanorganizationorassociationofpublicofficialsoremployeesofpoliticalsubdivisionswhichthepublicofficialoremployeeservesinanofficialcapacity.”
95. SchwenkfiledStatementsofFinancialInterestsforcalendaryears2008through2012incompliancewithSection1104oftheStateEthicsActasfollows:
DateFiled CalendarYear03/04/2009 200804/01/2010 200903/01/2011 201003/05/2012 201103/31/2013 2012
a. Schwenkclaimedtohavereceivednogiftsvaluedatover $250.00intheaggregateforcalendaryears2008through2012inhispositionasthePLCBDirectorofMarketingandMerchandising.
1. Schwenk’scalendaryear2008through2012StatementsofFinancialInterestsalldocumented “none” inrelationtogiftsreceived.
b. Schwenkdisclosedtransportation, lodging, andhospitalityreceivedfromtheItalianWine & FoodInstitute (valueof $2,781.00) andtheSt. CroixRumCouncil (valuedat $4,000.00) onhis2009and2011calendaryearSFIsrespectively.
1. Noadditionalreceiptoftransportation, lodging, andhospitalitywasdisclosedonSchwenk’s2009and2011calendaryearSFIs.
2. Schwenk’s2008, 2010, and2012calendaryearStatements ofFinancialInterestsdocumented “none” inrelationtotransportation, lodging, andhospitalityreceived.
c. Schwenk’ssignatureispresentoneachStatementofFinancialInterestsfiled, signifyingthattheinformationprovidedontheformistrueandcorrecttothebestofhisknowledge, information, andbeliefsubjecttopenaltiesprescribedby18Pa.C.S. § 4904 (unswornfalsificationtoauthorities) andthePublicOfficialandEmployeeEthicsAct, 65Pa.C.S. § 1109(b).
96. Schwenkfailedtodisclosethenameandaddressofthesourceandtheamountofgiftsreceivedvaluedintheaggregateat $250ormorefromvendorsdoingbusinesswiththePLCBandthecircumstancesofeachgiftonhisStatementsofFinancialInterestsfiledforcalendaryear2011.
a. SchwenkfailedtodisclosegiftsreceivedfromChristineDesmond, CapitalWine & Spiritsrepresentative, inthetotalamountof $325.00in2011.
97. Schwenkfailedtodisclosethenameandaddressof \[sic\] anypaymentforor
Schwenk, 13-008Page24
reimbursementofactualexpensesfortransportationandlodgingorhospitalityreceivedinexcessof $650.00 intheaggregateperyearfromvendorsdoingbusinesswiththePLCBonhisStatementsofFinancialInterestsfiledforcalendaryears2010and2011asdocumentedbelow:
Year Source Description MinimumValue
2010 PaulCoulombe, WhiteRock ThreedaygolftriptoBonita Bay, $ 650.00+ Florida/Naples, Floridaareaplusroundtripairfare
2010 BeauClark, W.J. Duetsch ThreedaygolftriptoPebbleBeach, CA, $1,971.87allexpensespaid
2011 PaulCoulombe, WhiteRock ThreedaygolftriptoBonitaBay, $1,133.93Florida/Naples, Floridaarea, allexpensespaid
a. Nospecificexpensedocumentswereprovidedbythevendorforthe2010golftriptotheBonitaBay/Naplesarea.
1. Additionaltransportation/lodging/hospitalityassociatedwiththetripincludedlodgingatCoulombe’shomeforthreedaysandtwonights, allmeals, greensfeesforeighteenholesofgolf, andentertainmentexpenses.
Schwenk, 13-008Page25
III. DISCUSSION:
AstheDirectorofProductSelectionforthePennsylvaniaLiquorControlBoardPLCB”) fromapproximatelyJuly2010untilJanuary2013, RespondentMatthewSchwenk,
hereinafteralsoreferredtoas “Respondent,” “RespondentSchwenk,” and “Schwenk,” hasbeenapublicofficial/publicemployeesubjecttotheprovisionsofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S. § 1101etseq.
TheallegationsarethatSchwenkviolatedSections1103(a) and1105(b) oftheEthicsAct, 65Pa.C.S. §§ 1103(a) and1105(b): (1) whenheusedtheauthorityofhispublicpositionfortheprivatepecuniarybenefitofhimselfbysolicitingand/oracceptingitemsofvaluefromvendorsofthePLCBatatimewhenhewasresponsiblefor, andparticipatedin, PLCBdecisionstoplacevendorproductsinPLCBliquorstores; (2) whenhesolicitedand/oracceptedtravel/hospitality/lodgingfromCommonwealthvendors; and3) whenhefailedtodiscloseonStatementsofFinancialInterests (“SFIs”) hisreceiptof
gifts, transportation, lodgingandhospitalityforcalendaryears2010through2012.
PursuanttoSection1103(a) oftheEthicsAct, apublicofficial/publicemployeeisprohibitedfromengaginginconductthatconstitutesaconflictofinterest:
1103. Restrictedactivities
a) Conflictofinterest.— Nopublicofficialorpublicemployeeshallengageinconductthatconstitutesaconflictofinterest.
65Pa.C.S. § 1103(a).
Theterm "conflictofinterest" isdefinedintheEthicsActasfollows:
1102. Definitions
Conflict" or "conflictofinterest." Usebyapublicofficialorpublicemployeeoftheauthorityofhisofficeoremploymentoranyconfidentialinformationreceivedthroughhisholdingpublicofficeoremploymentfortheprivatepecuniarybenefitofhimself, amemberofhisimmediatefamilyorabusinesswithwhichheoramemberofhisimmediatefamilyisassociated. Thetermdoesnotincludeanactionhavingademinimiseconomicimpactorwhichaffectstothesamedegreeaclassconsistingofthegeneralpublicorasubclassconsistingofanindustry, occupationorothergroupwhichincludesthepublicofficialorpublicemployee, amemberofhisimmediatefamilyorabusinesswithwhichheoramemberofhisimmediatefamilyisassociated.
65Pa.C.S. § 1102.
Section1103(a) oftheEthicsActprohibitsapublicofficial/publicemployeefromusingtheauthorityofpublicoffice/employmentorconfidentialinformationreceivedbyholdingsuchapublicpositionfortheprivatepecuniarybenefitofthepublicofficial/publicemployeehimself, anymemberofhisimmediatefamily, orabusinesswithwhichheoramemberofhisimmediatefamilyisassociated.
Section1105(a) oftheEthicsActprovidesthattheStatementofFinancialInterestsshallbefiledontheformprescribedbythisCommission; thatallinformationrequestedon
Schwenk, 13-008Page26
theformshallbeprovidedtothebestoftheknowledge, informationandbeliefofthefiler; andthattheformshallbesignedunderoathorequivalentaffirmation.
Section1105(b) oftheEthicsActanditssubsectionsdetailthefinancialdisclosurethatapersonrequiredtofiletheStatementofFinancialInterestsformmustprovide.
Subjecttocertainstatutoryexceptionsnotapplicabletothismatter, Section1105(b)(6) oftheEthicsActrequiresthefilertodiscloseontheStatementofFinancialIntereststhenameandaddressofthesourceandtheamountofanygiftorgiftsvaluedintheaggregateat $250ormoreandthecircumstancesofeachgift.
Subjecttocertainstatutoryexceptionsnotapplicabletothismatter, Section1105(b)(7) oftheEthicsActrequiresthefilertodiscloseontheStatementofFinancialIntereststhenameandaddressofthesourceandtheamountofanypaymentfororreimbursementofactualexpensesfortransportationandlodgingorhospitalityreceivedinconnectionwithpublicofficeoremploymentwheresuchactualexpensesexceed $650inanaggregateamountperyear.
Asnotedabove, thepartieshavesubmittedaConsentAgreementandStipulationofFindings. Theparties' StipulatedFindingsaresetforthaboveastheFindingsofthisCommission. Weshallnowsummarizetherelevantfactsascontainedtherein.
RespondentSchwenkheldmultiplepositionsduringhistenurewiththePLCBincludingClerk, ManagementAnalyst, MerchandisingandPricingCoordinator, andChiefofCategoryManagement. SchwenkservedastheDirectorofProductSelectionforthePLCBfromapproximatelyJuly2010untilJanuary2013. Inthiscapacity, SchwenkreporteddirectlytoJamesShort (“Short”), PLCBDirectorofMarketingandMerchandising.
Schwenk’sjobdescriptionforthepositionofDirectorofProductSelectionforthePLCBincluded, inter alia, thefollowingresponsibilitiesandduties: (1) planning, developing, directing, andcoordinatingthePLCB’scomprehensivestatewidemarketingandmerchandisingprograms/functions; (2) developing, implementing, andevaluatingpoliciesandoperationalprocedurestoensuretheefficientmarketingofregularlylistedandluxurywineandspiritsproducts; (3) directingacentralizedmarketingandmerchandisingprogram; (4) advisingonproposedpolicychangesforimprovedagencyprofitability; (5) presentinganalysisofsupplierproposalstoaddproductsandmakingrecommendationstotheDirectorofMarketingforprospectivenewproductintroductionortrial, orrecommendationsfordiscontinuationofcurrentlyofferedproducts; and (6) leadingnegotiationswithvendorsonproductpromotionproposalsinvolvingdiscounts, rebates, incentives, luxuryitems, orone-timebuys.
ThePLCBisgovernedbyathree-MemberBoard. ThePLCBregulatesthesaleofalcoholinPennsylvania. InorderforanalcoholicbeveragetobesoldinPennsylvania, itmustbeauthorizedforsalebythePLCB. ThePLCBistheonlyretailsellerofwine/spiritsintheCommonwealth.
ThePLCBaddsandremovesproductssoldinPLCBretailstoresthroughaprocessknownas “listing” and “delisting.” ThepartieshavestipulatedthatthePLCBDirectorofMarketingandMerchandising, ChiefoftheProductManagementandPricingDivision, andMerchandisingPricingCoordinator(s) areusuallyresponsibleforevaluatingnewproducts. TheDirectorofMarketingandMerchandisingandtheChiefoftheProductManagementandPricingDivisionmakethefinalrecommendationtothePLCBBoardMembersastowhatproduct(s) shouldbelistedordelisted. ThePLCBrelied primarilyonrecommendationsmadebyShort, theDirectorofMarketingandMerchandising, andhissubordinates, includingSchwenkastheDirectorofProductSelection, whenmaking
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listing/delistingdecisions. TheBoardconductednoindependentreviewofproductsandreliedonstaffrecommendations.
Amanufacturer/supplierofalcoholicbeverageproductsmaymarketitsproductstothePLCBdirectlyorthroughavendororbroker. TheprimaryvendorsprovidingproductstothePLCBare: (1) SouthernWineandSpirits (“Southern”); (2) CapitalWineandSpirits
Capital”); and (3) AlliedBeverageGroup, LLC (“Allied”), whichhasasubsidiarynamedMajesticWine & Spirits, USA, LLC” (“Majestic”).
ProductsforwhichSouthernservesasbrokerand/orvendor/vendorofrecordaccountforapproximately6.43% to6.85% ofthePLCBtotalCostofGoodsSoldduringthelastfive (5) years.
Capitalisamemberofthe “CharmerSunbeltGroup,” anationwidedistributorofwine, spirits, beer, andotherbeverages. ProductsbrokeredbyCapitalaccountforatotalofapproximately19.11% to22.03% ofthePLCBtotalCostofGoodsSoldduringthelastfive (5) years. InPennsylvania, Capital/CharmerSunbeltGrouprepresentsamarketingpartnershipnamed “theAlliance,” whichiscomprisedofwine/spiritsuppliersBacardiUSA
Bacardi”), Brown-Forman, andRemyCointreau (“Remy”). Capitalalsopreviouslyrepresented WhiteRockDistilleries, aformersupplierofalcohol/spiritstotheCommonwealthofPennsylvania.
AlliedwascreatedbythemergersofTheBaxterGroup, Inc., F&ADistributingCompanyandTheJaydorCorporation. AlliedranksamongthetenlargestwineandspiritsdistributorsintheUnitedStates. AlliedsubsidiaryMajesticisaPennsylvaniabrokerageandvendor/vendorofrecordforproductssoldtothePLCB. Allied’sand/orMajestic’ssalesaccountforapproximately1.51% to2.18% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years.
ExecutivesandmarketingrepresentativesfromvendorssupplyingproductstothePLCBwouldmeetwithPLCBemployeestomarketproducts. ThoserepresentativesofferedgiftsandhospitalitytoPLCBrepresentatives. Theseitemswereofferedwhenlisting/delistingofproductswasoccurring. ItemsofvaluewereroutinelyprovidedtoPLCBofficialsindecisionmakingpositionsregardingproductselectionandplacement.
RepresentativesofthenumerousPLCBvendorsfrequentlycontactedSchwenkandvariousotherPLCBrepresentativestomarketnewandexistingproducts. Someoftheseproductsweresubjecttothelisting/delistingprocess. Otherproductswereluxuryproductswhicharenotsubjecttolisting/delistingprocedures.
Primaryvendorsand/orsupplierswhomarketedproductstothePLCBwithwhomSchwenkinteractedonaregularbasisincludedCapital, Southern, Majestic, WhiteRockDistilleries (“WhiteRock”); BeamGlobalSpiritsandWine (“Beam”); andDiageo. SpecificrepresentativeswithwhomSchwenkdealtincludedthefollowing: MarkLittles (“Littles”), PresidentofCapital; CristinaDesmond (“Desmond”), DirectorofMarketingandBusinessAnalyticsforCapital; BradM. Waxman (“Waxman”), ExecutiveVicePresident, GeneralManagerofSouthern WineandSpiritsofPA; ChristopherPapariello (“Papariello”), ExecutiveVice-PresidentofMajestic; TriciaBrungo (“Brungo”), ControlStatesManagerofWhiteRock; PaulDoran (“Doran”), RegionalSalesManagerofWhiteRock; andErin (a/k/aRed”) Schiller, PennsylvaniaStateAccountManagerofBeam.
In2009, 2010, and2011, Capital/Allianceheld golfoutingsreferredtoastheAllianceGolfOpen,” whichincludedofficialsandmanagementemployeesofthePLCB.
TheAllianceGolfOpenwasorganizedasameansbywhichCapitalandtheAlliancesupplierscouldstrengthentheirrelationshipwiththePLCBandtoallowvariousAllianceseniormanagementofficialstohave “facetime” withPLCBofficials. Theseeventswereprimarilysocialinnature. NospecificbusinesspresentationsweremadebyCapitaland/or
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theAlliancesuppliersattheevents. Thecostsassociatedwiththe2009, 2010, and2011AllianceGolfOpenweredividedintofourequalamountspaidbyCapital, Bacardi, Brown- Forman, andRemy. Schwenkattendedallthreeevents.
The2009AllianceGolfOpenwasheldattheWestShoreCountyClubinCampHill, Pennsylvania, onAugust19, 2009. PLCBattendeesattheeventincludedPLCBCEOJoeConti (“Conti”), Short, andSchwenk. SchwenkattendedthiseventatthedirectionofShort. Schwenkbelievedtheeventwas “workrelated” ashewasadvisedtoattendbyShortandthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial. Thevalueofthegolfoutingtotaledapproximately105.09perindividual.
The2010AllianceGolfOpenwasheldattheRiverCrestGolfClubinPhoenixville, Pennsylvania, onJuly15, 2010. PLCBattendeesattheeventincludedShort, SchwenkandPLCBChairmanP.J. Stapleton. SchwenkattendedthiseventatthedirectionofShort. Schwenkbelievedtheeventwas “workrelated” ashewasdirectedtoattendbyShortandthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial. Thevalueofthegolfoutingtotaledapproximately $490.87perindividual. Additionally, atShort’sdirection, SchwenksubmittedaCommonwealthTravelExpenseVoucher (“TEV”) claimingreimbursementfromtheCommonwealthforpurportedbusinessexpensestotaling $195.24forthistrip.
The2011 AllianceGolfOpenwasheld atthePhiladelphiaCountryClubinGladwyne, Pennsylvania, onJuly14, 2011. PLCBattendeesattheeventincludedShort, Conti, Schwenk, Stapleton, andDougHitz, PLCBBureauDirectorforPlanningandProcurement. SchwenkwasauthorizedtoattendthiseventbyShort. Schwenkbelievedtheeventwas “workrelated” andthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial. Theexpensesofthegolfoutingtotaledapproximately $474.40perattendee. Additionally, atShort’sdirection, SchwenksubmittedaTEVclaimingreimbursementfromtheCommonwealthforpurportedbusinessexpensestotaling $130.20forthistrip.
MajesticisthebrokerrepresentativeofsupplierW.J. DeutschandSons (“W.J. Deutsch”). InAugust2010, ShortandSchwenkattendedanall-expensepaidthreedaygolftriptoPebbleBeach, California, providedbyMajestic/W. J. Deutsch, avendordoingbusinesswiththePLCB. SchwenkwasinformedbyShortthathewastoattend. Short, Schwenk, Papariello, andBeauClark (“Clark”), thePennsylvaniaDistrictManagerforW. J. Deutsch, participatedintheevent. ThetripwassubmittedasabusinessexpensebyClarkandPapariello. Costsassociatedwiththetripincludedairfare, lodging, greensfees, subsistence, andentertainment. ThepartieshavestipulatedthatSchwenkrealizedaprivatepecuniarygainofatleast $1,971.87inassociationwithhisacceptanceoftheall- expensepaidthreedaygolftriptoPebbleBeachprovidedbyMajestic/W. J. DeutschatatimewhenMajestic/W.J. DeutschandSonshadongoingbusinessdealingswiththePLCB.
In2010and2011, ShortandSchwenkattendedtwoall-expensepaidthreedaygolftripstoBonitaBayEast, Florida, attheinvitationofPaulCoulombe (“Coulombe”), thentheowner/CEOofWhiteRock. ShortdirectedorinformedSchwenkthatSchwenkwastoaccompanyShortonthesetrips. NoPLCBbusinesspurposeexistedforthesetrips, andnoPLCBbusinessmeetingswereheldaspartofeitherofthesetrips. SchwenkwasinformedbyShortnottoutilizeleaveforthe2010trip. Schwenkutilizedatotaloffifteen15) hoursofannualleavetoaccountforhisabsencefromworkduringthe2011trip. Allof
Short’sandSchwenk’sexpensesassociatedwiththesetrips (airfare, greensfees, meals, entertainment, andthelike) werepaidforbyCoulombe, WhiteRockand/orWhiteRockrepresentatives. ThepartieshavestipulatedthatthecostofSchwenk’sattendanceattheaforesaidtwoall-expensepaid, threedaygolftripstoBonitaBaywasatleast $774.51forthe2010tripandatleast $1,133.93forthe2011trip.
Schwenk, 13-008Page29
InadditiontothegolftripstoBonitaBay, Schwenkwasprovidedwithmeals/hospitalityfromthenWhiteRockrepresentativesBrungo and/orDoran whileSchwenkwasemployedasDirectorofProductSelection. MostoftheseoffersweremadeinconjunctiontosimilaroffersmadetoShort. AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityfromBrungoand/orDoran, WhiteRockrepresentatives. Thetotalspecificvalueofallthemeals/hospitalityreceivedbySchwenkfromBrungoand/orDorancouldnotbedetermined.
VendorrepresentativesmakeregularappearancesatthePLCBofficeslocatedintheNorthwestOfficeBuilding, Harrisburg, Pennsylvania. Aspartofthemarketingprocess, vendorrepresentativesroutinelyofferedandprovidedPLCBemployeeswithitems ofvalue, includingbutnotlimitedtoalcohol, meals, golfoutings, outofstategolftripsandgiftcards/certificates. Schwenkacceptedgifts, hospitality, and/orotheritemsofeconomicvalueonaregularbasisfrommultiplevendorrepresentatives, includingbutnotlimitedto, Littles, Desmond, Waxman, Brungo, Doran, andSchiller. Schwenkwasofferedmealsandgiftsbyvendorsduetohisposition(s) withthePLCB. Schwenkwasprovideditemsbyvendorsinhisofficialcapacityaspartofthemarketingofproductsbyvendors.
SchwenkreceiveddirectionfromShorttoacceptitems, includingalcohol, giftscards, golftrips, andthelike. Schwenkwasawarethatemployeeswhodidnotacceptitemsofvalueprovidedbyvendorsweresubjecttoretaliationandthreatsofdismissal.
Schwenk, Short, andStevePollack, ChiefofthePLCBChairmanSelectProgram, maderegulartripstoCaliforniatopurchasewinefortheChairmanSelectProgram.
Between2010and2012, Schwenk accepteddinnersanddrinksfromvendorsduringtripstoCaliforniatopurchasewineforthePLCB’sChairmanSelectProgram. ThesevendorswereattemptingtogetproductsselectedfortheChairman’sSelectProgram. SchwenkwasadvisedbyShortthedinnerswerepartofPLCBbusiness.
Littles’ expensesummariesidentifySchwenkasbeingpresentwhenmeals/hospitalitywereofferedtoPLCBemployees. SpecificexpensescouldnotbedirectlyattributedtoSchwenk.
Desmond’sexpensesummariesdocumentthefollowingitemsprovidedtoSchwenk, asaPLCBemployee:
Activity Net DescriptionDate Amount
11/03/2010 $ 75.00 Nordstromgiftforbuyer
11/28/2011 $ 325.00 BumbleBeeHollow: giftforbuyer
02/15/2012 $ 200.00 Nordstrom: giftforbuyer
SchwenkdoesnotrecallreceiptoftheNordstromgiftsanddeniesreceiptofsame.
Schwenkacceptedthemeals/hospitalityand/orgiftsfromLittlesand/orDesmondatatimewhenSchwenkwasresponsibleformakingrecommendationstothePLCBBoardregardingproductpurchasing, aswellaslistinganddelistingofproductsfromsuppliersrepresentedbyCapital.
AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityand/orgiftsfromLittlesand/orDesmond, PLCBvendorrepresentatives.
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Duringtherelevanttimeperiod, SchwenkwasrequiredtoannuallyfileanSFIbystMay1. SchwenkfiledSFIsforcalendaryears2008through2012. Schwenkclaimedtohavereceivednogiftsvaluedatover $250.00intheaggregateforCalendarYears2008through2012inhispositionasthePLCBDirectorofMarketingandMerchandising. Schwenkfailedtodisclosethenameandaddressofthesourceandtheamountofgiftsreceivedvaluedintheaggregateat $250ormorefromvendorsdoingbusinesswiththePLCBandthecircumstancesofeachgiftonhisStatementsofFinancialInterestsfiledforcalendaryear2011. SchwenkfailedtodisclosegiftsreceivedfromDesmondinthetotalamountof $325.00in2011.
SchwenkfailedtodiscloseonhisSFIsfiledforcalendaryears2010and2011requiredinformationastoreportabletransportationandlodgingorhospitalityhereceivedfromPLCBvendorsasdetailedbelow:
Year Source Description MinimumValue
2010 PaulCoulombe, WhiteRock ThreedaygolftriptoBonitaBay, $650.00+ Florida/Naples, Floridaareaplusroundtripairfare
2010 BeauClark, W.J. Duetsch ThreedaygolftriptoPebbleBeach, CA, $1,971.87allexpensespaid
2011 PaulCoulombe, WhiteRock ThreedaygolftriptoBonitaBay, $1,133.93Florida/Naples, Floridaarea, allexpensespaid
HavinghighlightedtheStipulatedFindingsandissuesbeforeus, weshallnowapplytheEthicsActtodeterminetheproperdispositionofthiscase.
Theparties' ConsentAgreementsetsforthaproposedresolutionoftheallegationsasfollows:
3. TheInvestigativeDivisionwillrecommendthefollowinginrelationtotheaboveallegations:
a. That, aspartofanegotiatedsettlementagreement, noviolationofSection1103(a) ofthePublicOfficialandEmployeeEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB; and
b. ThataviolationofSection1105(b) ofthePublicOfficialandEmployeeEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationto Schwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponStatementsofFinancialInterestsfiledforthe2010through2011calendaryears.
1. Noreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b).
4. Schwenkagreestomakepaymentintheamountof $500.00insettlementofthismatterpayabletotheCommonwealthofPennsylvaniaandforwardedtothePennsylvaniaStateEthics
Schwenk, 13-008Page31
Commissionwithinthirty (30) daysoftheissuanceofthefinaladjudicationinthismatter.
5. SchwenkagreestofilecompleteandaccurateamendedStatementsofFinancialInterestswiththePennsylvaniaLiquorControlBoardthroughthePennsylvaniaStateEthicsCommission, for2010and2011calendaryearswithinthirty30) daysoftheissuanceofthefinaladjudicationinthis
matter.
6. Schwenkagreestonotacceptanyreimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.
7. TheInvestigativeDivisionwillrecommendthattheStateEthicsCommissiontakenofurtheractioninthismatter; andmakenospecificrecommendationstoanylawenforcementorotherauthoritytotakeactioninthismatter. Such, however, doesnotprohibittheCommissionfrominitiatingappropriateenforcementactionsintheeventofRespondent'sfailuretocomplywiththisagreementortheCommission'sorderorcooperatingwithanyotherauthoritywhomaysochoosetoreviewthismatterfurther.
ConsentAgreement, at1-2.
Aspartofanegotiatedsettlementagreement, thepartieshaverecommendedthatthisCommissionfindthatnoviolationofSection1103(a) oftheEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB. ItisclearthatSchwenk’sreceiptofsuchitemsoccurredatthedirectionorwiththeauthorizationofhisimmediatesupervisor, Short. Schwenkattendedthe2009, 2010and2011AllianceGolfOpen, theAugust2010golftriptoPebbleBeach, California, andthe2010and2011golftripstoBonitaBayEast, Florida, atthedirectionorwiththeauthorizationofShort. Schwenkacceptedgifts, hospitality, and/orotheritemsofeconomicvalueonaregularbasisfrommultiplevendorrepresentatives. ThepartieshavestipulatedthatSchwenkreceiveddirectionfromShorttoacceptitems, includingalcohol, giftscards, golftrips, andthelike, andthatSchwenkwasawarethatemployeeswhodidnotacceptitemsofvalueprovidedbyvendorsweresubjecttoretaliationandthreatsofdismissal.
OneoftheelementsforestablishingaviolationofSection1103(a) oftheEthicsActisuseoftheauthorityofthepublicposition. Inthiscase, Schwenk’sacceptanceofgifts, hospitality, and/orotheritemsofeconomicvaluefromPLCBvendorsoccurredatthedirectionandwiththeauthorizationofhisimmediatesupervisor, Short.
BasedupontheStipulatedFindingsandConsentAgreement, weaccepttherecommendationoftheparties, andweholdthatperthenegotiatedsettlementagreementoftheparties, noviolationofSection1103(a) oftheEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB.
Thepartieshaveagreed, andwehold, thataviolationofSection1105(b) oftheEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationtoSchwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponSFIsfiledforthe2010through2011calendaryears.
Schwenk, 13-008Page32
Weaccepttheparties’ recommendationandweholdthatnoreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b), 65Pa.C.S. § 1105(b).
AspartoftheConsentAgreement, Schwenkhasagreedtomakepaymentintheamountof $500.00insettlementofthismatterpayabletotheCommonwealthofPennsylvaniaandforwardedtothisCommissionwithinthirty (30) daysoftheissuanceofthefinaladjudicationinthismatter.
Schwenkhasagreedtonotacceptanyreimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.
SchwenkhasagreedtofilecompleteandaccurateamendedSFIswiththePLCBthroughthisCommissionforthe2010and2011calendaryearswithinthirty (30) daysoftheissuanceofthefinaladjudicationinthismatter.
WedeterminethattheConsentAgreementsubmittedbythepartiessetsforthaproperdispositionforthiscase, baseduponourreviewasreflectedintheaboveanalysisandthetotalityofthefactsandcircumstances.
Accordingly, pertheConsentAgreementoftheparties, Schwenkisdirectedtomakepaymentintheamountof $500.00payabletotheCommonwealthofPennsylvaniathandforwardedtothisCommissionbynolaterthanthethirtieth (30) dayafterthemailingdateofthisadjudicationandOrder.
PertheConsentAgreementoftheparties, Schwenkisdirectedtonotacceptanyreimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.
Totheextenthehasnotalreadydoneso, SchwenkisdirectedtofilecompleteandaccurateamendedSFIsforthe2010and2011calendaryearswiththePLCB, throughthisthCommission, bynolaterthanthethirtieth (30) dayafterthemailingdateofthisadjudicationandOrder.
CompliancewiththeforegoingwillresultintheclosingofthiscasewithnofurtheractionbythisCommission. Noncompliancewillresultintheinstitutionofanorderenforcementaction.
IV. CONCLUSIONSOFLAW:
1. AstheDirectorofProductSelectionforthePennsylvaniaLiquorControlBoardPLCB”) fromapproximatelyJuly2010untilJanuary2013, RespondentMatthew
Schwenk (“Schwenk”) hasbeenapublicofficial/publicemployeesubjecttotheprovisionsofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S.
1101etseq.
2. Perthenegotiatedsettlementagreementoftheparties, noviolationofSection1103(a) oftheEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB.
A3. violationofSection1105(b) oftheEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationtoSchwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponStatementsofFinancialInterestsfiledforthe2010through2011calendaryears.
Schwenk, 13-008Page33
4. Noreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b), 65Pa.C.S. § 1105(b).
InRe: MatthewSchwenk, : FileDocket: 13-008Respondent : DateDecided: 6/16/14
DateMailed: 7/10/14
ORDERNO. 1641
1. Perthenegotiatedsettlementagreementoftheparties, MatthewSchwenkSchwenk”)--apublicofficial/publicemployeeinhiscapacityastheDirectorof
ProductSelectionforthePennsylvaniaLiquorControlBoard (“PLCB”) fromapproximatelyJuly2010untilJanuary2013--didnotviolateSection1103(a) ofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S. § 1103(a), inrelationtohisreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB.
A2. violationofSection1105(b) oftheEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationtoSchwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponStatementsofFinancialInterestsfiledforthe2010through2011calendaryears.
3. Noreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b), 65Pa.C.S. § 1105(b).
PertheConsentAgreementoftheparties, Schwenkisdirectedtomakepaymentin4. theamountof $500.00payabletotheCommonwealthofPennsylvania andforwardedtothePennsylvaniaStateEthicsCommissionbynolaterthantheththirtieth (30) dayafterthemailingdateofthisOrder.
PertheConsentAgreementoftheparties, Schwenkisdirectedtonotacceptany5. reimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.
Totheextenthehasnotalreadydoneso, Schwenkisdirectedtofilecompleteand6. accurateamendedStatementsofFinancialInterestsforthe2010and2011calendaryearswiththePLCB, throughthePennsylvaniaStateEthicsCommission, thbynolaterthanthethirtieth (30) dayafterthemailingdateofthisOrder.
Compliancewithparagraphs4, 5, and6ofthisOrderwillresultintheclosingofthis7. casewithnofurtheractionbythisCommission.
a. Non-compliancewillresultintheinstitutionofanorderenforcementaction.
BYTHECOMMISSION,
JohnJ. Bolger, Chair