Shawnee Tabernacle Church, Petitioner
v.
Pennsylvania State Ethics Commission, Respondent
Dennis Bloom, Petitioner
v.
Pennsylvania State Ethics Commission, Respondent
No. 1082 C.D. 2012
No. 1170 C.D. 2012
COMMONWEALTH COURT OF PENNSYLVANIA
Argued: February 12, 2013
FILED: September 24, 2013
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
OPINION BY JUDGE BROBSON1
Shawnee Tabernacle Church (Church) and Dennis Bloom (Bloom) (collectively, Petitioners) petition for review of the May 11, 2012 order of the Pennsylvania State Ethics Commission (Commission). In that order, the Commission denied the Church's petition to intervene in an administrative proceeding initiated by the Commission against Bloom under the Public Official and Employee Ethics Act, 65 Pa. C.S. §§ 1101-1113 (Ethics Act). Because the Commission did not abuse its discretion, we affirm the Commission's order.
Page 2
On or about November 10, 2010, the Pocono Mountain School District (School District) filed a formal complaint with the Commission. (Reproduced Record (R.R.) 4a-10a.) In its complaint, the School District contended that Bloom, in his capacity as Chief Executive Officer (CEO) of the Pocono Mountain Charter School (Charter School), violated the Ethics Act. The School District contended that Bloom engaged in a series of self-dealing and conflicts of interest stemming from his role as CEO of the Charter School and his simultaneous role as Senior Pastor of the Church, which happens to be the Charter School's landlord. More specifically, the School District alleged the following:
[D]uring his tenure as Senior Pastor of the Landlord-Church and CEO of the Tenant-Charter School, [Bloom] authorized over $900,000.00 in public taxpayer funds, to be spent on installing a parking lot on the church-owned land, as well as installing an elevator, gymnasium floor, lockers, etc., without obtaining any off-set credit against the annual rent that the Charter School pays to the Church. The Charter School pays an annual rent of $920,000.00 to its Landlord, the . . . Church, for use of a building that shares a common entranceway with the Church and whose exterior has a sign stating, "Shawnee Tabernacle", with the Church logo. The . . . Charter School spent approximately $39,000.00 to install an electronic message board that contained the name "Shawnee Tabernacle Church" in the most prominent location of the sign, and [the] Charter School continues to promote the Church to run messages on the sign, with no charge, pursuant to an unwritten agreement. [Bloom] and his wife drew salaries from the School that approximated $200,000.00 per year. [Bloom] authorized the Charter School to pay for the gymnasium floor and include the words "Shawnee Tabernacle", on said floor.
(R.R. 6a.) The School District noted in its complaint that on October 6, 2010, its Board of Directors (School Board) voted, after a hearing, to revoke the Charter
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School's charter based on what the School District characterized as an "entanglement that exists between the Church and the publicly-funded Charter School." The School District asked the Commission to investigate, stating:
A full blown investigation is required so that the mandates of the . . . Ethics Act are upheld and so that . . . Bloom is held accountable for using taxpayer monies for his own pecuniary benefit and/or for his church's benefit, at the cost of the taxpayers.
(Id.)
On or about February 24, 2012, the Investigative Division of the Commission (Investigative Division) filed an Investigative Complaint/Findings Report (Complaint) against Bloom. (R.R. 11a-94a.) In that Complaint, the Investigative Division notes that it received the School District's complaint and initiated a preliminary inquiry, which it concluded in 60 days. Thereafter, it determined that a full investigation was warranted. Based on that full investigation, the Investigative Division filed the Complaint.
The Investigative Division alleges that Bloom served as CEO of the Charter School from its creation in or about 2003 until December 10, 2010—i.e., the period at or around which the School District raised its concerns about Bloom's conflicts of interest and sought to revoke the Charter School's charter. Bloom and his wife formed the Church on or about February 9, 1995. Since that time, Bloom has served as the Founder and Pastor of the Church. On or about June 28, 1999, according to the Complaint, the Church purchased approximately 10.5 acres of land in Monroe County, which would become the future home of the Church and the Charter School (Tobyhanna Property). Bloom incorporated the Church in 2001 by filing appropriate papers with the Pennsylvania Department of State, identifying himself as President.
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Between 1999 and 2002, Bloom operated the Tobyhanna Christian Academy (TCA), a private school which ceased operations due to a lack of financial resources. At or around the same time that TCA ceased operations, Bloom began the process of creating a charter school to be operated on the Church's property. He formed another corporate entity, the Pocono Mountain Learning Academy (PMLA), which the Investigative Division alleges is the successor to TCA. The corporate purpose of the PMLA was "to provide charter school educational instruction as an alternative to public school." Bloom later amended the corporate charter to rename the entity as the Charter School.
Bloom filed an application for a charter for the Charter School with the School District, proposing a start date of August 25, 2003, and identifying the proposed location of the school as the Tobyhanna Property. The application disclosed, inter alia, that the Charter School would rent space from the Church and that an addition to the building on the property is under construction to accommodate the students. The School Board approved the application on February 19, 2003.
In his simultaneous capacity as CEO of the Charter School and Founder/President of the Church, Bloom participated in the process that led to the lease agreements between the Charter School and the Church. Indeed, according to the Complaint, Bloom was the point of contact on the leases for both the Charter School, as tenant, and the Church, as landlord. Bloom actively negotiated the leases for 2003, 2004, and 2005, which the Charter School's Board of Trustees approved. The Investigative Division alleges that in 2006, when the charter came up for renewal, questions were raised about Bloom's role, presumably with the Church and the Charter School. From then on, the Investigative Division alleges, Bloom concealed his involvement by having members of the Charter School Board of Trustees sign documents.
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The gist of the Investigative Division's Complaint is that Bloom acted for both the Church (landlord) and the Charter School (tenant) from 2003 through 2010 with respect to lease terms and negotiations between the Church and the Charter School. During this time, the leased area increased and the amount of rent paid by the Charter School to the Church increased. In addition, according to the Complaint, in 2006, the Charter School and the Church executed a lease amendment that called for the Charter School to pay 100% of the debt service on the Church's mortgage loan of $2.2 million, incurred from the development and expansion of the facilities on the Tobyhanna Property (Expansion Project).
The Investigative Division also details allegations relating to how Bloom, by using his official capacities with the Church and the Charter School, personally profited from the operations of the Church and the Charter School. Bloom, as CEO of the Charter School, directed the Charter School's business manager to make rent and expense payments to the Church, which were deposited into a business checking account at First National Bank of Palmerton. Bloom and his wife both had signature authority on that account. According to the Complaint, without those lease and expense payments, the Church had difficulty maintaining a positive balance in that checking account. In addition, Bloom, in his capacity as Pastor of the Church, either made payments to himself or directed Church staff to make payments to him out of that same checking account. Indeed, the Investigative Division alleges five specific instances where either on the same day or within one day of the Charter School depositing money in the bank account, a check was issued out of that account to Bloom, ranging from $12,000 to $45,000 (a total of $146,500). The Investigative Division further alleges that while these payments were characterized as loan payments, there is no record substantiating a loan of this size by Bloom to the Church.
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The Investigative Division also alleges that Bloom used his position as CEO of the Charter School to hire his son and daughter as part-time employees of the Charter School, for which the Charter School paid them $15,651.88 and $18,039.60, respectively.
With respect to the Expansion Project, the Investigative Division alleges that Bloom served as the point man for both the Church and the Charter School on the project and that he secured the financing for the project. It alleges that the financing would not have been possible if not for the lease terms that essentially had the...
