Photo Credit: Bryan McHale

City of Philadelphia Board of Ethics

Annual Report September 2019

Honesty | Integrity | Transparency

City of Philadelphia Board of Ethics

Honesty, Integrity, Transparency

Michael H. Reed, Esq. Chair

Judge Phyllis W. Beck (Ret.), Vice Chair

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 post-employment 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/

Philadelphia Board of Ethics FY 2019 Annual Report

Table of Contents

Message from the Chair . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1

Members of the Board of Ethics . . . . . . . . . . . . . . . . . . . . . . p. 2

Message from the Executive Director . . . . . . . . . . . . . . . . . . p. 4

Board of Ethics Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 5

Training Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 7

Campaign Finance Training and New Filing Software . . . . . p. 8

Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 9

Lobbying in Philadelphia . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 11

Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 15

Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 16

FY 2019 Fiscal Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 21

COGEL Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 23

Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 25

Message from the Chair On behalf of the members of the Board of Ethics, I am proud to submit this report of the Board’s Fiscal Year 2019 accomplishments. The energy level and enthusiasm of the Board’s small staff and the quality of their work again enabled the Board to tackle its challenging mandate to administer and enforce the City’s Public Integrity Laws. These laws include the Ethics, Campaign Finance, Lobbying, and Financial Disclosure Laws, as well as the Charter restrictions on political activity by City employees. This Annual Report will describe our accomplishments in detail, but I wish to note here several projects during the past year of which the Board is especially proud. Our staff members simultaneously participated in the design and management of three major on-going software development projects: two projects involved replacement of the legacy Campaign Finance and Financial Disclosure online filing systems and the other enhanced the existing Lobbying online filing system. Board staff has assumed responsibility for managing all three online filing systems going forward. At the same time, staff administered the City’s Campaign Finance Law in the 2019 Primary Election and provided compliance assistance to the largest number of candidates in a City election since the Board’s inception. Staff focused its efforts on timely filing by candidates of their reports of contributions and expenditures so that the public had pre-election access to this information. Staff will continue this important task for the November 2019 General Election. In December 2018, the Board of Ethics was in the national spotlight when it served as the co-host of the 40th Annual Conference of the Council on Governmental Ethics Laws (COGEL) here in Philadelphia. COGEL members, who come from the United States, Canada, and several other countries, are primarily local, state, and national government officials who regulate ethics, campaign finance, lobbying, freedom of information, and election administration laws. Our staff not only organized and managed the Conference schedule and arrangements for more than 400 attendees, but also served as moderators and panelists on many of the more than 50 different sessions that were organized and run by the all-volunteer Conference Program Committee. The Board emphasizes that these major projects occurred while staff continued to provide uninterrupted day-to-day services such as: providing guidance on the Public Integrity Laws; assisting the public with access to online campaign finance and lobbying data; developing and presenting training; helping individuals and entities with filing campaign finance, lobbying, and financial disclosure reports; and performing investigative and enforcement activity. With FY 2019 as our standard, my fellow Board members, our staff, and I pledge to continue our service to Philadelphia and the public and look forward to the challenges of the next year. Michael H. Reed, Esq., Chair Philadelphia Board of Ethics

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Members of the Board of Ethics

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 1971. Mr. Reed is a past President of the Pennsylvania Bar Association and previously served on the Board of Governors of the American Bar Association and as the State Delegate for Pennsylvania in the

ABA’s House of Delegates. He currently chairs the ABA’s Standing Committee on Constitution and Bylaws. 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. She is the appeals judge for the Chester Housing Authority. Judge Beck currently serves as Chair of the Independence Foundation, President of the Beck Institute for Cognitive Therapy, member of the State Board of

Pennsylvanians for Modern Courts, and member of the Board of the Foundation of the Free Library of Philadelphia. Her term on the Board of Ethics runs until November 2022.

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 2023.

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JoAnne A. Epps, Esq., JoAnne A. Epps, Esq., became Executive Vice President and Provost of Temple University in July 2016. Prior to assuming that role, she was a member of the faculty of Temple Law School since 1985 and served as Dean of Temple Law School from 2008-2016. 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 a Police Community Oversight Board created by Mayor Michael Nutter. In June 2017, Ms. Epps was honored by

The Legal Intelligencer as a Distinguished Leader in her field. In May 2017, she received the Consular Award on Italian National Day by the Consulate General of Italy and was also the recipient of the Inaugural JoAnne Epps Award by the Barristers’ Association of Philadelphia. 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 2015, the National Association of Women Lawyers presented her with the M. Ashley Dickerson Award for her work toward diversity in the legal profession. In 2014, Ms. Epps was awarded the Justice Sonia Sotomayor Diversity Award by the Philadelphia Bar Association and in 2009 received the Association’s Sandra Day O’Connor Award for her efforts to advance women in the profession and the community. A three-time honoree by Lawyers of Color Magazine as one of the 100 most influential black lawyers in the country, Ms. Epps was named by National Jurist Magazine in 2013, 2014, 2015 and 2016 as one of the 25 most influential people in legal education. In February 2018, Ms. Epps became an independent trustee for PREIT and will serve as a member of the Nominating and Governance Committee. She serves on several non-profit Boards, is a Director for the American Bar Association Retirement Funds, a member of the Philadelphia Board of Ethics, and was the court-appointed monitor of the settlement of the lawsuit challenging Philadelphia’s stop and frisk activity until July 2019. Ms. Epps is a former Deputy City Attorney for the City of Los Angeles and Assistant United States Attorney for the Eastern District of Pennsylvania. Her term on the Board runs until November 2019.

Brian J. McCormick, Jr., Esq., is a partner with the law firm of Ross Feller Casey, LLP in Philadelphia. He has a national practice that includes representing whistleblowers in qui tam and fraud actions involving the waste of government funds and resources, as well as representing plaintiffs in products liability and mass tort litigation. 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.

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Message from the Executive Director

“An overlooked story in a city cursed over a hundred years ago as ‘corrupt and contented’ by the journalist Lincoln Steffens is that our public integrity laws and enforcement have in the last few years become a model for many cities.” That’s a quote from an op-ed for the Philadelphia Inquirer by David Thornburgh, President and CEO of the Committee of Seventy, which was published on December 13, 2018. Mr. Thornburgh is right. Philadelphia’s ethics program has indeed become a model for other cities around the country, especially in the area of campaign finance regulation, which continues to evolve since the U.S. Supreme Court’s Citizens United vs. FEC decision in 2010.

Last December, the Philadelphia Board of Ethics, together with the Pennsylvania Ethics Commission, co-hosted the 40th Annual Conference of the Council on Government Ethics Laws (COGEL), an international organization whose members administer and enforce ethics, campaign finance, lobbying, elections and freedom of information laws at federal, state and local levels of government. Co-hosting the Conference in Philadelphia was a significant landmark for the Board, and demonstrates how far we’ve come as an agency in 13 years. I remember attending my first COGEL Conference in 2005, while legislation that would lead to the creation of the Board was pending in City Council. While I felt like an imposter at that Conference, compared to other attendees who had years and years of experience in agencies across the country and in Canada, everyone wanted to know what was happening in Philadelphia. During the Ethics update session attended by nearly two hundred people, the program moderator asked: “is anyone here from Philadelphia?” After I (reluctantly) held up my hand, I was asked to stand up and explain what was happening in Philadelphia. Since then, I served a four-year term on COGEL’s Steering Committee, and I’ve spent three years on the Program Committee, which plans over 50 sessions for each annual conference. Several others in our office have served on the Program Committee over the years, and all of us who go to the COGEL Conferences (including some Board members) have participated on session panels or spoken in some capacity. We also stay in touch with our COGEL colleagues throughout the year to stay on top of developments in public integrity laws and agencies throughout the country. I’m extremely proud of what we have accomplished over the years, but our largest challenge remains a lack of sufficient funding. In last year’s Message, I described the Board’s stagnant funding over its first 12 years. That hasn’t changed. In fact, we’ve been forced to shift money within our budget this year in order to hire another staff attorney. As I said last year, this is not sustainable. The Board needs adequate funding to support its increased mandate and responsibilities. Until that happens, we will continue to fulfill the Board’s mission with diligence and fairness. J. Shane Creamer, Jr., Esq. Executive Director Philadelphia Board of Ethics

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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. 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. Michael J. Cooke, has served as the Board's Acting General Counsel since April of 2019. From April of 2008 to April of 2019, he was the Board's Director of Enforcement. 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 has served as the Board's Legal Support Services Coordinator since April of 2018. From August of 2008 to April of 2018, she was the Board's Legal Services Clerk. A native of the Virgin Islands, she came to Philadelphia 14 years ago and attended Cite Business School, taking computer-related courses. Before joining the Board, she was an intern with the Police Advisory Commission. Ms. Vasquez 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. Mr. McHale 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. Jordan E. Segall is a Senior Staff Attorney with the Board. He 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.

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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. She is serving as a Board of Ethics Public Integrity Compliance Specialist. A Philadelphia native, she holds a bachelor's degree in business/organizational management from Gwynedd 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. Jordana Greenwald, Associate General Counsel, joined the Board's staff in March of 2019. Ms. Greenwald was previously a trial attorney with the U.S. Department of Labor. Prior to her time at Labor, Ms. Greenwald was an associate at Ballard Spahr and served as law clerk to the Honorable J. Curtis Joyner in the Eastern District of Pennsylvania. She is a graduate of Temple University Beasley School of Law and the University of Pittsburgh.

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Training Activity

Training activity was again a FY 2019 Board priority. Since its inception, the Board has operated with the belief that training about the City’s 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 have the tools to avoid violations of the laws. The Board therefore continues to look for every opportunity and method available to expand its training and outreach. Each year, the Board reports on the number of training classes it has conducted, but the number of classes is an incomplete picture of the extent of staff participation in training and outreach. During FY 2019, Board staff members presented 57 ethics training classes and eight campaign finance classes. Other staff members revised and updated the training materials, scheduled classes, registered attendees, created new plain language summaries of the laws, and updated and improved the information posted on the Board’s website. On a daily basis, Board staff members provided assistance to members of the public who wished to locate materials on the Board’s website or to search the complex online campaign finance and lobbying databases. Training is therefore a constant and on-going activity involving the entire Board staff.

Ethics Training Mandate

Are there rules about the gifts that a City employee may accept from a member of the public who is grateful for the assistance he or she received? May a City employee have a second job with a company that has a contract with the City? While these might appear to be simple questions, the answers are often complex. Therefore, the Board’s ethics training are designed to help City officials, employees, and board and commission members recognize when they are dealing with an ethics issue and to remember that they should contact the Board of Ethics for guidance. Between July 2018 and June 2019, Board staff members conducted 57 ethics training classes. There are several types of ethics classes, including ethics training for new City employees, “refresher” ethics classes for current City employees, and ethics classes 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. The content of each class is reviewed in advance and made as specific as possible to the needs of the attendees who are always encouraged to ask questions. Because it places such importance on its training mandate, the Board remains frustrated by a shortage of staff which prevents it from expanding its training and outreach. The Board has stressed in prior reports that it needs additional funding to hire a new staff member who will assist with in-person training and design online ethics, lobbying, and campaign finance training options. The Board has therefore taken steps in its FY 2020 budget preparation to reallocate funds so that it can hire another staff attorney to fill the training gap. The Board is aware that this reallocation of funds may delay other projects managed by the Board, but believes it should no longer wait to remedy the staff shortage.

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Campaign Finance Training and New Filing Software The Office of Mayor, all City Council seats, and the offices of the City Commissioners and Sheriff were on the May 2019 Primary Election ballot. In March of 2019, Philadelphia’s new Campaign Finance Filing System launched to accept 2019 Cycle 1 Campaign Finance reports. The launch was the culmination of a year of work to design and implement a modern application to replace the old filing system called SmartClient, which was itself developed when the Campaign Finance Law first became effective in 2006. SmartClient was an outdated legacy application housed in the Records Department which required filers to load software onto their stand-alone computers to use and required significant manual processes by support staff on the backend to make electronic campaign finance reports accessible to the public. The new Campaign Finance Filing System, developed by the City’s Office of Innovation and Technology and Board staff, is a web-based application that allows filer access from any device. The system publishes submitted campaign finance reports directly to the Board’s publicly searchable database, removing the inefficiency of needing to manually format reports or push out data. Additionally, the upgrade to a new system came at a time when the Office of the City Commissioners was considering a pilot program to allow for electronic filing of required campaign finance reports with the County Board of Elections. This timing allowed the requirements of the City Commissioners to be incorporated into the system build. The Campaign Finance Filing System now allows for simultaneous electronic filing of campaign finance reports with both the Board of Ethics and the Philadelphia County Board of Elections (in the Office of the City Commissioners). The new Filing System has consolidated the management of the Campaign Finance data completely within the Board of Ethics. Board staff are now the primary filing support for users and the Campaign Finance Filer Support Center has migrated from the Records Department filing center to the Board’s office. Board staff also sends email alerts and reminders of filing dates and requirements to candidates, committees, and filers. To ensure compliance with the Campaign Finance Law and awareness of the new system, the Board offered a total of eight in-person Campaign Finance training classes before the Primary Election. Four classes were held in November and December 2018 and four more were held in February and March 2019. The Board, with the assistance of the City Commissioners, also held four Saturday classes at high schools throughout the City to demonstrate use of the new system and ensure that candidates and committees were able to access the system. Two factors made these classes especially important in FY 2019. First, there were an unusually high number of candidates on the 2019 Primary Election ballot, and many of the candidates and political committees had never before participated in an election. Second, because all candidates and committees are required by the City’s Campaign Finance law to file campaign finance reports electronically, outreach and education on the new system was critical. The Board will offer a full program of Campaign Finance classes and offer a Filing Support Center before the November General Election.

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Advice People seek advice from the Board every day. Over the course of a year, we field hundreds of requests for guidance from a wide variety of individuals, including current and former City officers and employees, candidates for City elective office, campaign contributors, political committees, lobbyists, principals, and gift givers. The Board and staff provide guidance both through formal, written opinions and through informal guidance, which can be provided over the telephone, in person, or via email. In FY 2019, Board staff logged 2,518 informal guidance contacts. The figures on the next page display informal guidance contacts by subject matter and on a monthly basis in FY 2018 and FY 2019. Formal, written opinions issued by the Board or the General Counsel provide detailed analysis of the application of the Public Integrity Laws to specific facts provided by a requestor. 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 following table lists the six advisory opinions issued in FY 2019.

1. Opinion 2019-001: Application of Charter Resign-to-Run Restriction to a City Employee on Leave to Serve as a Full-Time Elected Union Officer

2. Opinion 2019-001-R: Request for Reconsideration of Non-Public Board Opinion 2019-001

3. Opinion 2019-002: Application of Ethics Code Conflict of Interest Restriction to Official Action on Legislation Affecting Parking Facility Regulation and the Real Estate Tax Abatement Program

4. GC 2019-501: Government Official Exemption of City Lobbying Law as Applied to Charter School Employees

5. GC 2019-502: Application of Ethics Code Conflict of Interest Restriction to Official Action On Legislation Affecting Real Estate Tax Abatement

6. GC 2019-503: Application of Ethics Code Conflicts of Interest Restriction to Outside Business Opportunity with Agency Client

Advisory opinions from prior years can be found on the Board’s website (www.phila.gov/ethicsboard). In addition to offering guidance in response to specific questions, the Board also publishes a number of educational documents that provide answers to common questions. In FY 2019, the Board issued updated versions of its Lobbying FAQs and Campaign Finance FAQs. These documents, along with all other prior educational documents issued by the Board, can be found on the Board’s website (www.phila.gov/ethicsboard).

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Figure 1: Informal Guidance Contacts by Topic (FY 2018 & FY 2019)

Figure 2: Informal Guidance Contacts by Month (FY 2018 & FY 2019)

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Lobbying in Philadelphia

The City’s Lobbying Law 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. The City’s Lobbying Law is found at Chapter 20-1200 of the Philadelphia Code and Board Regulation No. 9, which provides a detailed interpretation of Chapter 20-1200. Lobbyists, lobbying firms, and principals mandated to file by the Lobbying Law do so through the online Philadelphia Lobbying Information System (PLIS). PLIS is also the portal through which the public may search for information concerning lobbying activity in the City. Beginning in April 2018, Board staff worked with the software vendor for the Philadelphia Lobbying Information System to undertake a series of enhancements four years after the launch of electronic filing. The upgrades were undertaken to improve several workflow issues for both filers and administrators incorporating our experiences with the system since its launch and feedback from our filers of the most prevalent points of difficulty in using the system. Since the deployment of the upgrades in October 2018, Board staff have been able to more easily assist filers without additional technical support.

Lobbying Registration The City Lobbying Law divides disclosure into two processes. The first is Lobbying Registration which provides information on whom the entities are lobbying City officials and employees and the relationships of the registered entities to each other. Lobbyists, lobbying firms, and principals in Philadelphia are required to register in PLIS after lobbying activity has commenced and they have crossed financial and time thresholds laid out in the Lobbying Law:

• Principals are required to register after they have spent $2500 for lobbying activity in a quarter.

• Lobbying firms and lobbyists are required to register after they have received $2500 for lobbying activity in a quarter. However, if a lobbyist is an employee of the principal on whose behalf he or she is lobbying, the lobbyist has an additional threshold of 20 hours spent on lobbying activity in a quarter before registration is required.

Registration is on an annual basis and entities are not required to renew registrations until they have crossed the thresholds for that year. 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. Some entities may register or renew in January, actively lobbying throughout the year. Others may not register until later in the year when some legislative or administrative action becomes relevant for them to engage on. Finally, there are entities that may not renew for several years after their registration expires. From 2014 through 2016, the number of registrations filed (whether new or renewed) remained consistent at approximately 230. 2017 saw a 9% increase from the average of registrations filed to 250 and 2018 saw an increase of 34% over 2017 to 335. Through the first two quarters of 2019 there have already been 312 registrations filed by lobbyists, lobbying firms, and principals indicating another year over year surge. (See Figure 3)

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Figure 3

Figure 3 compares the number of registrations filed in PLIS from the system’s launch in January of 2014 through the end of the second quarter 2019. (*) Lobbying registration is on an annual basis, and new and renewed registrations may be submitted throughout the course of a calendar year.

Lobbying Expense Reports The second disclosure process in the City’s Lobbying Law is the Lobbying Expense Report. The expense report is filed by the principal and captures the detail of the lobbying activity in that quarter. This includes the amount of expenditures, the detail of communications, and any gifts, hospitality, or transportation provided to City officials and employees. There are two types of lobbying communications reported each quarter: Direct Communications and 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. Total expenditures on communications can fluctuate from quarter to quarter and year to year depending upon the topics of interest to the public and the agendas of City Council and City agencies (Figures 4 & 5). For instance, 2016 saw the fewest number of registered entities recorded but the highest annual total of expenditures for communications, largely due to the

0 25 50 75

100 125 150 175 200 225 250 275 300 325 350

2014 2015 2016 2017 2018 2019*

Registrations by Filer Type: 2014 - Present

Lobbying Firms

Lobbyists

Principals

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focus on the soda tax. Information disclosed in quarterly expense reports filed by principals is available on the Board’s website in a searchable database. Figure 4

Figure 4 shows total reported expenditures annually on lobbying communications between January 1, 2014 and June 30, 2019.

Lobbying Disclosure

The City Lobbying Law is a disclosure law. Its purpose is not to prevent communication but to gather the information necessary for the public to be aware of who is spending money to advocate for City policy. Information disclosed by the filers in the lobbying community may be explored through the online lobbying system. Members of the public can use the database to search for, among other things, 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. The public can search through the individual registrations and expense reports or may use several pre-set options to generate reports from the database. 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. A sample of information from the PLIS reports shows the highest principal spending annually over the last five years (Table 1).

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Figure 5

Figure 5 shows total reported expenditures by quarter on direct and indirect communications between January 1, 2014 and June 30, 2018. (*) The total expenditures for Q2 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.

Table 1

Highest Principal Spending Annually - 2015-2019

2015: American Airlines: $328,893.00 Comcast Cable Communications: $218,637.09 Pennsylvania Real Estate Investment Trust: $186,000.00

2016: American Beverage Association: $11,112,814.00 Philadelphians for a Fair Future: $2,185,944.62 American Heart Association: $334,217.90

2017: American Beverage Association: $3,964,143.66 Philadelphians for a Fair Future: $305,941.05 American Airlines: $109,953.00

2018: American Beverage Association: $1,519,941.38 Philadelphians for a Fair Future: $1,082,012.65 SugarHouse Casino $150,000.00 2019*: American Beverage Association: $2,528,586.81 Philadelphians for a Fair Future: $143,005.61 Lyft: $66,870.00 *2019 amounts only include through June 30, 2019.

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Financial Disclosure Annual financial disclosure requirements help promote transparency in City government and ensure that City officers and employees are not acting on conflicts of interest they may have between their City responsibilities and their personal financial interests. Each year, thousands of City officers, employees, and members of City boards and commissions may have to file one or more of three annual financial disclosure statements. The three forms are the State Form (required by the State Ethics Act), the City Form (required by the City Ethics Code), and the Mayor’s Form (required by Mayoral executive order). While there are differences between the forms, all of them capture information related to the sources of income, business interests, directorships, gifts, and other financial interests which could give rise to a conflict of interest. The preparations for financial disclosure season begin months before the May 1 deadline. The electronic filing system is updated for a new filing year, employee data is reviewed and uploaded, and communication and outreach plans are developed. In 2019, the financial disclosure season began even earlier due to the need to assist candidates for City elective office in completing financial disclosure forms to submit as part of their nomination petition packets. Board staff has continued to work with the City’s Office of Innovation and Technology and the Records Department to develop the specifications for a replacement Financial Disclosure System (FDS). The current system, which is now more than 12 years old, was extended for yet another year to complete the 2019 filing season, involving significant data entry by Board staff to complete preparations. We expect that the replacement system will completed in late 2019 to allow for appropriate testing and training of HR managers and other users before releasing the system to filers for the 2020 filing season.

FY 2019 Annual Report Page 16

Enforcement

FY 2019 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. All settlement agreements must be approved by the Board.

FY 2019 Enforcement Activity and Litigation

The Board is authorized by the Philadelphia Home Rule Charter and the Philadelphia Ethics Code to pursue enforcement of alleged violations of the City’s Public Integrity Laws either in the Court of Common Pleas or through an administrative adjudication. On May 23, 2018, Board Enforcement Staff initiated an administrative enforcement proceeding against Friends of the 57th Ward Democrats and Ken Cunningham for the failure to file 2017 thirty day post primary election (cycle 3) and 2017 thirty day post general election (cycle 6) campaign finance reports with the Board. Subsequently, on July 24, 2018, the Friends of the 57th Ward Democrats and Ken Cunningham filed the required campaign finance reports with the Board. Thereafter, on September 12, 2018, the Board approved a settlement agreement with the Friends of the 57th Ward Democrats and Ken Cunningham to resolve the late filing of the campaign finance reports with the Board. Friends of the 57th Ward Democrats and Ken Cunningham agreed to pay an aggregate civil monetary penalty of $14,000 for the late filings with the Board.

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Table 2 below summarizes the Board’s investigation and enforcement activity since 2007: Table 2

Investigations

Opened

Investigations terminated, no probable

cause

Complaints

accepted

Complaints

rejected

Enforcement

actions initiated

Settlements

Total 245 127 44* 145 24 146

FY 2019 20 10 4 23 1 19

FY 2018 23 9 4 22 1 7 FY 2017 21 5 6 16 1 16 FY 2016 30 19 8 14 2 41 FY 2015 32 8 5 14 2 13 FY 2014 13 8 6 7 0 4

2012/FY 2013 13 7 3 5 0 13 2011 54 26 8 12 11 15 2010 0 24 0 12 1 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.

FY 2019 Annual Report Page 18

Figure 6

Interest in City Contract (1)

Conflict (9)

Gifts (15)

Financial Disclosure (38)

Political Activity (58)

Lobbying (30)

Representation (3)

Other (3) Campaign Finance -

Disclosure (181)

Campaign Finance - Use of Committee &

Account (29)

Campaign Finance - Contribution Limits

(72)

Settled Penalties by Violation: 2007 - Present

FY 2019 Annual Report Page 19

FY 2019 Enforcement Activity

Settlement Agreements

In FY 2019, the Board approved 19 settlement agreements. 10 of the agreements addressed violations of the City’s Campaign Finance Law, including the failure to file campaign finance reports, material misstatements and omissions in campaign finance reports filed with the Board, and excess campaign contributions. Three of the agreements related to violations of the City’s Lobbying Law for failing to register and file expense reports with the Board or material misstatements and omissions in lobbying reports filed with the Board. Three of the agreements resolved violations of the City’s Ethics Code, including prohibited conflicts of interests and prohibited representation before the City. Two of the agreements settled violations of the Home Rule Charter’s political fundraising restrictions. Lastly, one agreement resolved a violation of the Home Rule Charter’s prohibition on interests in certain City contracts. In FY 2019, parties to settlement agreements agreed to pay a total of $81,450 in civil monetary penalties. In addition, in FY 2019, parties to settlement agreements agreed to disgorge to the City $57,907.25. Of this amount, $32,496.08 were excess contributions accepted by candidates for City elective office and $25,411.17 were City monies that were personally received or used by City employees in contravention of the City’s Public Integrity Laws. Lastly, in FY 2019, parties to settlement agreements also agreed to take remedial action such as attending ethics training, amending campaign finance reports filed with the Board, paying lobbying registration fees to the City, and enhanced monitoring by Board Enforcement Staff. All of the Board’s settlement agreements are available on the Board’s website.

Terminated Investigations

In FY 2019, Board Enforcement Staff terminated 10 investigations after determining that probable cause did not exist to believe a violation had occurred. Of those investigations, four involved potential violations of the City’s Campaign Finance Law and three involved potential violations of the Charter’s restrictions on political fundraising and political activity. Additionally, two involved potential violations of the City’s Ethics Code, including prohibited gifts and conflicts of interests. Lastly, one involved potential violations of the Home Rule Charter’s prohibition on interests in certain City contracts.

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2019 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 2019, Board Enforcement Staff used these procedures to collect $2,550 for the City from 4 filers that did not timely file campaign finance reports with the Board. All of these filers had previously submitted campaign finance reports to the Board in 2019 using the City’s new campaign finance database. Board staff routinely updates the penalties list on the Board’s website, which includes late filers from FY 2017-FY 2019. Notably, throughout the 2019 Municipal Primary Election, Board Enforcement Staff saw robust and timely compliance from candidates, candidate committees, and political committees with the City Campaign Finance Law’s reporting requirements. Board Enforcement Staff were able to bring most of the remaining percentage of non-filers into compliance without a civil monetary penalty by assisting filers with reporting in the City’s new campaign finance database. Prior to the 2019 Municipal Primary Election, Enforcement Staff identified 21 political action committees, which hadn’t filed campaign finance reports on time, and persuaded all of them to file their reports within 30 days. No penalties were assessed because they filed within the time frame offered to them after they were identified by Board Enforcement Staff. In addition, Enforcement Staff worked to bring several candidate committees into compliance with the filing requirements without imposing a late filing penalty. Lastly, Enforcement Staff helped bring 30 candidates into compliance with filing relatively small candidate reports or statements, also without a late filing penalty. After the 2019 Municipal Primary Election, Enforcement Staff had full compliance from almost all candidates and candidate committees within a day of the filing deadline. They then worked to help outliers file their reports within a week of the filing deadline. Enforcement Staff also worked with candidate committees to file 24 hour contribution reports with the Board without a late filing penalty. They also worked with candidate committees to amend 24 hour reports or cycle 3 reports to disclose one or two small omitted contributions without a penalty. Several of these committees filed numerous 24 hour contribution reports with the Board before the election, but did not make the same disclosure in their cycle 3 campaign finance report, which they are required to do after the election. Other candidate committees omitted one or two small donations in their 24 hour reports, but disclosed them in their cycle 3 reports. For political committees, Enforcement Staff helped one political committee file a campaign finance report within a day of the filing deadline without a late filing penalty. Enforcement Staff identified an additional 20 political committees and 14 wards, which hadn’t filed cycle 3 reports on time, and persuaded all of them to file their reports within 30 days. No penalties were assessed because they filed within the time frame offered to them after they were identified by Enforcement Staff. In addition, three political committees worked with Enforcement Staff to file required 24 hour expenditure reports to disclose pre-election independent expenditures for electioneering communications. The expenditures were already disclosed in campaign finance reports filed with the Board before the election, which are required due to recent amendments to the City’s Campaign Finance Law related to the disclosure of electioneering communications.

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Board of Ethics FY 2019 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 $926,585 between July 1, 2018 and June 30, 2019.

Class FY 2019 Target Budget Appropriation

FY 2019 Total Spent*

100 – Salaries $988,971 $875,981 200 – Purchase of Services $96,000 $43,538

300/400 – Materials, Supplies & Equipment

$7,000 $7,066

Total: $1,098,971 $926,585 *includes rounding Two major factors contributed to spending below the Board’s FY 2019 total appropriation. ■ The amount spent in Class 100 funds during FY 2019 was less than the appropriated amount for two reasons. First, as a result of resignations, there were vacancies of varying length in two senior staff positions. Second, the Board was unable to modify a vacant entry level position and to fill that position as a Staff Attorney position. The Board considers 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 amount spent in Class 200, Purchase of Services, during FY 2019 was less than the amount appropriated for FY 2019. This is primarily because the Board cannot know with any certainty during the budget process how much Class 200 funding will be needed in the next fiscal year to purchase professional services for accounting, computer and other forensic professional services related to complex investigative matters, and for professional information technology services. The $96,000 Class 200 appropriation was therefore more than the $43,538 actually spent in FY 2019. It should be noted that the Board has similarly spent well below its Class 200 allocation in all fiscal years prior to FY 2019. With this in mind and with the need for another Staff Attorney still unmet, Board staff consulted with the Budget Office and has taken steps in the FY 2020 budget that will make it possible to hire an additional staff attorney. The Board requested and the Budget Office approved moving $50,000 from Class 200 to Class 100, Salaries, in FY 2020 so that the Board can fill a Staff Attorney position. The Board will therefore closely monitor its Class 200 spending in FY 2020 to make sure that sufficient funds remain available to meet the costs of a major investigative matter or to resolve software issues. The situation will be reevaluated before the FY 2021 Budget is prepared.

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Between July 1, 2018 and June 30, 2019, Board spending included the following:

Class 100 – Personal Services

Class Name Title Amount Paid FY 2019*

100 Cooke, Michael Director of Enforcement/Acting General Counsel 117,738 100 Creamer, Jr., J. Shane Executive Director 146,865 100 Donnelly, Eileen Election/Public Integrity Compliance Specialist 53,997 100 Greenwald, Jordana Associate General Counsel 28,885 100 Klemm, Thomas Staff Attorney 63,785 100 Lin, Diana Associate General Counsel (resigned) 38,611 100 McHale, Bryan Compliance Services Supervisor 63,404 100 Massar, Nedda Deputy Executive Director 130,237 100 Nayak, Maya General Counsel (resigned) 113,183 100 Segall, Jordan Senior Staff Attorney 71,368 100 Vasquez, Hortencia Legal Services Clerk 47,908 100 Total Class 100 $875,981

*Includes rounding, amounts for flex payments, separation payments for past employees, & payment for out-of-class work.

Class 200 – Purchase of Services

Class Class Description Description of Services Amount Paid 210 Postal Services Delivery Service & Postage 437 211 Transportation Travel & Transportation 659 216 Off-the-Shelf Software Adobe Professional Software 906 250 Professional Services Professional Dues, Seminars,

Training & Continuing Legal Education, Court Reporting Services

35,410

285 Lease/Rents Copiers 6,126 Total Class 200 $43,538

Class 300 & 400 – Materials, Supplies & Equipment

Class Class Description Description of Purchase Amount Paid 304 Books & Other Publications Books 2,234 320 Office Materials & Supplies Binders, Office Materials, Supplies &

Paper 3,266

324/325 Paper & Printing Stationery & brochures 1,286 420 Office Equipment Printer 280

Total Class 300/400 $7,066

Total FY 2019 Expenses = $926,585

FY 2019 Annual Report Page 23

BOE Chair Michael H. Reed (Far right) discussing the role of commissioners and Board Members with other attendees at a breakfast table topic. (photo credit: Thomas Klemm)

BOE Board Member Brian J. McCormick welcomes COGEL attendees to Philadelphia at the Welcome Reception. (photo credit: Bryan McHale)

COGEL Conference The Board had a unique opportunity in December 2018 when it served as the co-sponsor, with the Pennsylvania State Ethics Commission, of the 40th Annual Conference in Philadelphia of the Council on Governmental Ethics Laws (COGEL). COGEL is a volunteer organization whose members come from the United States, Canada, and several other countries, and represent primarily government officials who regulate ethics, campaign finance, lobbying, freedom of information, and election administration laws. Many business entities and organizations are also COGEL members. The Board’s interaction with COGEL began even before its first Board members were sworn in. Representatives of the Board visited COGEL member organizations in other municipalities, including Chicago, Los Angeles, and New York City, for guidance about operating a municipal ethics agency. Assistance from these sister agencies was instrumental to the Board’s growth and success. To this day, Board staff members frequently contact our fellow COGEL members to benefit from their experience, and COGEL members have on several

occasions traveled to Philadelphia or made themselves available via Skype to testify in support of legislation being advanced by the Board. The Philadelphia Board of Ethics is now well-positioned to help new agencies who can benefit from our experience. Board staff members have since 2007 been panelists, moderators, and Program Committee members for COGEL Conferences. The Board and its staff thoroughly enjoyed being hosts of the Conference and introducing more than 400 attendees to our City. Among the more than 50 sessions on the four-day program schedule were the annual update sessions on ethics, campaign finance, lobbying, freedom of information, and enforcement. Each of the updates provides an extremely useful and helpful overview of recent developments in these disciplines. Other sessions focused on new technology and computer systems being used by COGEL members. Board of Ethics members not only attended the Conference, but also participated as speakers and moderators.

FY 2019 Annual Report Page 24

BOE General Counsel Michael Cooke (Far Right) moderated “Making Your Case,” a two part skills workshop exploring techniques in direct and cross examination at hearings or trial. (photo credit: Jordan Segall)

Among the speakers at the Conference was John Dean, an author, former White House counsel to President Richard Nixon, and witness at the Watergate Committee hearings. He was the Opening Plenary Speaker for this year’s Conference and traced how post-Watergate reforms affected campaign finance, ethics, and government transparency laws. The Board is extremely proud of its role in the successful 2018 COGEL Conference and looks forward to participating in future conferences.

BOE Executive Director Shane Creamer (Far Left) moderating “Speaking a Reporter’s Language – Working Constructively with Reporters Without Crossing Lines,” a panel with three experienced reporters sharing their insight on how government agencies can work constructively with investigative reports. (photo credit: Bryan McHale)

FY 2019 Annual Report Page 25

Looking Ahead Board Chair Michael H. Reed stated in his message at the beginning of this Report that he is proud to report the Board’s FY 2019 accomplishments. He acknowledged that “the hard work and dedication” of his fellow Board members and the “energy level and enthusiasm” of the Board’s staff enabled the Board to again take on its mandate to administer and enforce the City’s Public Integrity Laws. The Board pledges to expand and improve upon its FY 2019 achievements. It will therefore continue to provide training and guidance, to design and seek new technology to solve problems, to make data accessible to the public, and to enforce the Public Integrity Laws when necessary. All of these tasks further the Board’s vision to promote honesty, integrity, and transparency throughout City government. In its first Annual Report, dated March 2008, the Board said that it had been an honor for the Board members and its staff to serve the City of Philadelphia during its first year. This FY 2019 Annual Report is evidence that it remains an honor for Board members and staff to this day.

Swearing In Ceremony on March 20, 2019 for Board Member González. Pictured are (l – r): Board Member Brian J.

McCormick, Judge Idee C. Fox, Board Member Sanjuanita González, Board Vice-Chair Phillis W. Beck, and Board Chair Michael H. Reed. (photo credit: Bryan McHale)