Posted on Mon, Jul. 13, 2009

An ethical question for leading Pa. Democrat

By John Sullivan and Mario F. Cattabiani

Inquirer Staff Writers

HARRISBURG - Taxpayers have spent more than $200,000 for the state's top Senate Democrat, Robert J. Mellow, to rent an office in a building partly owned by his wife - and later himself - in a business she said was largely a mystery to her.

For seven years, the state rented the office in Mellow's hometown of Peckville, Lackawanna County, from a company called Brad Inc. Diane Mellow owned 50 percent of the company from 2001 to 2006, when Mellow took over her share in a divorce that ended their nearly four-decade marriage.

The 1978 state ethics law says it is a conflict for a public official to use his office "for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated." In 1990, the State Ethics Commission specifically ruled that it was a conflict for lawmakers to rent from themselves.

Violating the ethics act carries civil and criminal penalties including a felony charge with up to five years in prison, a fine of up to $10,000, or both.

Mellow says a Senate resolution he introduced trumps state law and permitted the rental payments, which amounted to $2,400 a month.

"I don't and do not believe that I have done anything wrong," said Mellow. "In fact, I think I honored the ethics - which I always will."

Mellow said he was not required to reveal the rental arrangement in his state financial-disclosure reports until he took a direct interest in the company. He disclosed it in 2008.

Robert M. Stern, the former president of the Association of State Ethics Administrators, faulted the deal.

"I can't tell you that it's illegal, but clearly he's been engaging in self-dealing and enriching himself at state expense," said Stern.

The story of the building is a tale that unfolds over 20 years, featuring a longtime Mellow staffer who was once the senator's landlord, a real estate company whose origins remain murky, and a contentious divorce that brought the unique rental agreement to light.

Leader of the Democrats

Mellow, 66, has represented the largely blue-collar Scranton region since 1971, making him the longest sitting state senator. He's been the leader of the Democrats in the upper chamber for 20 years.

For most of those two decades he has located his district office on the main street of Peckville, a village of about 5,000 people just outside Scranton.

In 1990, Mellow picked as his office a two-story brown-and-yellow former television and radio repair shop a short walk from his family's home.

That was just a few months after the building was purchased for $90,000 by a longtime Mellow aide, Gabriel J. Giordano, and his wife, Celestine P. Giordano, land records show. Giordano was a full-time employee on Mellow's Senate staff from 1973 to 2004, earning $26,265 in his final year, Senate records show.

The building would become the home of Mellow's campaign office, his brother's accounting firm, and an insurance company named Giordano & Associates, owned by Gabriel Giordano, records show. Mellow has reported holding a financial interest in that business, according to the senator's disclosure forms.

In 2001, the Giordanos transferred ownership of the building and a parcel next door to a newly formed corporation, Brad Inc., according to land records. The company acquired the property for $1, according to the real estate transfer tax document, which listed its fair market value at $82,331.

Corporation records filed with the state do not list the owners of the new company, but interviews and documents filed by Mellow show that Diane Mellow owned half. Celestine Giordano owned the other half, Diane Mellow said. Property transfer records list Mrs. Giordano as the company's vice president, secretary, and treasurer.

The circumstances under which Diane Mellow became an owner are somewhat unclear - even to the senator and his ex-wife.

In an interview, Sen. Mellow said that his recollection of the deal was "fuzzy" and that he could not recall many details.