Date:  May 7, 1980

 

DECISION AND ORDER

 

Appearances:  Robert J. Cordy, Esq., Associate General Counsel, State Ethics Commission

                      Frank L. Bridges, Esq., Counsel to the Respondent

 

Commissioners:  Vorenberg, Ch., Kistler, Brickman, Bernstein, McLaughlin


I.  Procedural History


On August 13, 1979, the Petitioner, the State Ethics Commission by its Associate General Counsel, filed an Order to Show Cause alleging that the Respondent, John R. Buckley, had violated section 5(g) of the Financial Disclosure Law, General Laws Chapter 268B, by intentionally omitting certain information from his Statement of Financial Interests (SFI) and failing to correct the deficiencies or file a complete SFI within 10 days of having received notice to do so from the Commission.[1]  Mr. Buckley admits the allegations but denies that he violated the law.  He contends, inter alia, that the Financial Disclosure Law, General Laws Chapter 268B, and the SFI's issued thereunder violate the right of privacy of the members of his immediate family in contravention of the state and federal constitutions and that the Commission has exceeded its authority by requiring disclosure on information not required by law to be revealed.  He also contends that the Commission failed to conduct appropriate proceedings as required by section 4 of Chapter 268B prior to initiating 


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this proceeding and therefore is without jurisdiction to hear and decide this matter.
 

The hearing was held on January 25, 1980 before James Vorenberg, Chairman of the Commission.  See G.L. c. 268B, s.4(c).[2]  Post-hearing briefs were filed by Counsel.  Each Commissioner received a copy of the transcript of the proceeding and the exhibits, together with a copy of the briefs.  Oral argument before four members of the Commission occurred on March 24, 1980.  In rendering this decision and order, each of the participating Commissioners has heard and/ or read the evidence and arguments presented by the parties.


II.  Findings of Fact


1.On April 90, 1979, Mr. Buckley filed his Statement of Financial Interests (SFI) with the State Ethics Commission.[3]
 

2. Section C. 1 of the Statement of Financial Interests for calendar year 1978 (SFI) requires disclosure of the business associations of the filer and the members of his immediate family, including the name of the person having the association and the position held by that person.  Section C. 1 of the statement filed by Mr. Buckley contained the following statement:

Information omitted; privilege based on privacy under applicable State and Federal Laws. None as to filer.

3. Section J. 1 of the SFI requires disclosure of real property located in Massachusetts with an assessed valuation in excess of $1,000 in which the filer or a member of his immediate family held a direct or indirect financial interest, including the identity of the person holding the interest; section K. 1 requires disclosure of certain liabilities in excess of $1,000 owed by the filer or a family member, including the identity of the debtor.  Sections J. I and K. 1. of the SFI filed by Mr. Buckley contained the statement:

Information omitted; privilege based on privacy under applicable State and Federal Laws.


Mr. Buckley also stated that members of his family had declined to disclose to him information required in Section C.1,J.1 and K.1.

4. On June 27,1979, the Executive Director of the Commission sent Mr. Buckley a Notice of Delinquency which advised him that his SFI was deficient because he had not fully answered questions C.1, J.1 and K.1.  The notice further advised Mr. Buckley that unless he amended his Statement to conform to the requirements of the law within 10 days, he would be in violation of the law and subject to adjudicatory proceedings and penalties including a civil fine of up to $1,000.

5. Mr. Buckley did not amend his Statement or file a new Statement within 10 days.  Rather, on July 10, 1979, he sent a letter to the Executive Director advising him that he had chosen not to amend his Statement.  He also informed the Executive Director that he had retained an attorney to represent him and he requested a hearing "to respond to the Notice of Delinquency sent by the State Ethics Commission."

6. On August 7, 1979, these facts were presented to the Ethics Commission in Executive Session.  On that date, the Commission voted to commence a preliminary inquiry.  The Commission reviewed the staffs report and recommendation.  Since the facts in the matter were not disputed and the only issues presented were ones of law, the Commission, on the same date, also found reasonable cause to believe that a violation of section 5(g) of Chapter 268B had occurred and authorized the General Counsel to initiate an adjudicatory proceeding against Mr. Buckley.
 

7. On August 13, 1979, the Commission filed the Order to Show Cause which charged Mr. Buckley with having violated section 5(g) of Chapter 268B by filing a deficient SFl and failing to correct his SFI within 10 days of having received notice to do so.  On this same date, the Commission sent notice to Mr. Buckley of the Commission's action, and notified the Attorney General hat it had initiated a preliminary inquiry in this matter.
 

8. Mr. Buckley is married and, during calendar year 1978, was the father of 4 dependent children.  Mr. Buckley testified that during 1978 his sole employment was as Secretary of Administration and Finance for the Commonwealth; he

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did not own, by himself, any real property in Massachusetts with assessed valuation in excess of $1,000 nor did he owe, by himself, any liabilities in excess of $1,000 required to be reported on the SFI.

9. At the time he prepared his SFI, Mr. Buckley was aware that some of his children had been employed during 1978 and, although he was aware of the names of some but not all of the businesses by which they had been employed, he intentionally omitted disclosing in section C. 1 all information within his knowledge regarding their business associations.

10. At the time he prepared his statement, Mr. Buckley was aware that in 1978 he had a financial interest, jointly or otherwise, with a member of his immediate family in real property located in Massachusetts with an assessed value in excess of $1,000 and that he had a reportable liability in excess of $1,000 which he owed Jointly with a member of his immediate family.  Mr. Buckley intentionally omitted disclosing information in sections J.1 regarding the real property and section K. I regarding this liability.
 

11. Mr. Buckley testified that at the time he prepared his statement he did not know whether his children owned any real property in this state with an assessed value in excess of $1,000, nor did he know of any reportable liability in excess of $1,000 owed by his wife or any of his children as of December 31,1978.
 

12. Mr. Buckley and his family followed the legislative progress of the financial disclosure law.  They had many discussions regarding protecting to the degree possible the privacy of the family members of public officials. His wife and children objected strenuously to any public disclosure of information regarding their activities since such disclosure, in their judgment, was not necessary to insure the integrity of his activities as a public employee.  Mr. Buckley respected their wishes when preparing his Statement in order not to "exacerbate" the family situation.


III.  Conclusions of Law


Three questions are raised in this case: 1) does the Commission have jurisdiction to hear and decide this matter; 2) does the financial disclosure law constitute an unconstitutional invasion into the privacy of the members of the immediate family of public officials, and 3) has the Commission exceeded the scope of its authority by requiring the disclosure of information not required by law to be revealed?


A.  Jurisdiction


Mr. Buckley contends that the Commission lacks jurisdiction to conduct this proceeding because it failed to comply with the "jurisdictional prerequisites" mandated by section 4.  Specifically, he seeks dismissal of the charges on the grounds that the Commission failed to conduct a sufficient preliminary inquiry and failed to send notice to the Attorney General of the initiation of the preliminary inquiry "at the beginning" thereof as is required by section 4(a).  In essence, Mr. Buckley challenges the fact that the Commission authorized the preliminary inquiry and made the reasonable cause determination at the same time and on the same set of facts without affording him an opportunity for an "amicable resolution" of the dispute prior to entering into the public phase of the proceeding.  He argues that the Commission should have coordinated its activities with the Attorney General.  Furthermore, Mr. Buckley contends that the Commission did not have sufficient evidence to warrant the conclusion that there was "reasonable cause for belief" that a violation of the law had occurred.[4]
 

By enacting Chapter 210 of the Acts of 1978, the Legislature required certain public officials and employees to disclose publicly certain of their financial interests as a means of assuring the citizens' of this Commonwealth of the "impartiality and honesty of public officials. ."  Opinion of the Justices, Mass. Adv. Sh. (1978) 1116, 1131, 376 N.E.2d 810,819(1978).

Simultaneously, the Legislature created the State Ethics Commission, St. 1978, c. 210, s.20(2).  The Commission was and is authorized to implement, administer and enforce the financial disclosure law. St. 1978, c. 210, s. 20, s.s. 2, 3, 4, 5.  Authority to render advisory opinions interpreting the conflict of interest law, General Laws, Chapter 268A, was transferred from the Attorney General to the Commission, St. 1978, c. 210, s.s.10, 20(3)(g).

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In addition, the Commission was constituted as the primary civil enforcement agency for violations of the conflict of interest law, as well as the Financial Disclosure Law, St. 1978, c. 210, s.s. 12, 18, 20, s.s. 3(i), 4, 5.  In this regard, the Commission is authorized to investigate allegations, initiate accusations, adjudicate violations and impose sanctions, St. 1978, c. 210, s. 20(4).

Pursuant to its enabling legislation, codified in General Laws Chapter 268B, the Commission is required to prescribe and publish rules and regulations to carry out the purposes of Chapter 268B, s. 3(a), and to prepare forms for Statements of Financial Interest for use by reporting persons, s. 3(b).  Section 5(g) outlines the financial information which must be disclosed by a filer with respect to himself and his immediate family.  A filer must disclose, among other things, information regarding business associations, s. 5(g)(1), property located in Massachusetts with an assessed value in excess of $1,000, s. 5(g)(6), and certain liabilities in excess of $1,000, s. 5(g)(3).[5]  Upon receipt of a Statement of Financial Interest, the Commission must inspect the filing "in order to ascertain whether any reporting person has failed to file such a Statement or has filed a deficient Statement" and if it is ascertained that the SFI fails to conform with the requirements of the law, the Commission must send written notice to the delinquent filer detailing the alleged deficiency and the penalties for failure to file an SFI, s. 3(f).  Section 5(g) provides that the failure of a reporting person to file an SFI within 10 days of having received notice to do so, or the filing of an incomplete statement after receipt of such notice, is a violation of the chapter for which the Commission may initiate appropriate proceedings pursuant to section 4 of the law.

Section 4 governs the investigations and "appropriate proceedings" conducted by the Commission, and establishes the scope of the Commissions remedial and punitive powers.  Section 4(a) provides that upon receipt of a sworn complaint or evidence "deemed sufficient", the Commission shall initiate a confidential preliminary inquiry into any alleged violation of the law.  That section further provides that the General Counsel shall notify the Attorney General "at the beginning" of any preliminary inquiry and shall, within 30 days, send notice of the preliminary inquiry and the general nature of the alleged inquiry to the subject thereof.  If the preliminary inquiry indicates "reasonable cause for belief" that there has been a violation of the laws, the Commission may vote to initiate a full investigation and appropriate adjudicatory proceedings, s. 4(c).[6]  If the Commission determines that a violation has occurred, it may order the violator to (1) cease and desist, (2) file any report, statement or other information required by Chapters 268A or 268B, and/or (3) pay a civil penalty of not more than $1,000 per violation, s. 4(d).
 

While it is open to a Respondent to show that the Commission failed to make the finding of reasonable cause required by the statute, the factual basis for making such a finding is not subject to challenge.  Standard Oil Co. of California v. F.T.C., 596 F. 2d 1981(9th Cir. 1979), cert. granted 40 U.S.L.W. 3554 (February 25, 1980); Hills Broll. v. F.T.C., 9 F. 2d 481 (9th Cir. 1926), cert. den. 270 U.S. 662 (1926). See also Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594,70 S. Ct. 870 (1950).  As stated in Standard Oil Co. of California v. F.T.C., supra at 1986,


Because FTC complaints should not issue other than as prescribed in 14 USC s.46(b), SOCAL's claims should be reviewed.  However, we emphasize that review is limited.  It cannot extend to an assessment by the District Court of what constitutes 'reason to believe' but simply whether the FTC disregarded the mandate and restrictions of 15 USC s.45(b) by not even making the 'reason to believe' determination at all.

If the district court finds as a fact that the FTC made the 'reason to believe' determination albeit with outside pressures, then it can be concluded that the FTC has complied with 45 USC s.45(b) and further review would be foreclosed.  If on the other hand the district court finds that the complaint was issued solely because of outside pressure or with complete absence of a 'reason to believe' determination, that the FTC has not complied with the act.
 

The Commission has discretion to determine whether sufficient cause exists to warrant action

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under section 4, see McKenney v. Commission on Judicial Conduct, Mass. Adv. Sh. (1979) 1006, 388 N.E. 2d 666, 672 (1979).  The purpose of the preliminary investigation "is to discover and procure evidence, not to prove a pending charge or complaint, but upon which to make one if, in the [agency's] judgment, the facts thus discovered should justify doing so."  Oklahoma Press Publishing Co. v. WaIling, 327 U.S. 186, 201, 66 S. Ct. 494, 501 (1946).[7]  The nature and duration of the investigation must, of obvious necessity, depend on the circumstances of each case.  See, generally, McKenney v. Commission on Judicial Conduct, Mass. Adv. Sh. (1980) 833.  The law gives and agency "great discretion in deciding when to move from an investigative to adjudicative stage", Standard Oil Co. v. F.T.C., 475 F. Supp. 1261, 1270 (N.D. Ind. 1979), or whether to make such a move at all.  Compare Binns v. Board of Bar Overseers, 369 Mass. 851, 343 N.E. 2d 868 (1976) (no appeal available from decision of the Board not to institute proceedings); Vaca v. Sipes. 368 U.S. 171, 87 S. Ct. 903 (1967) (discretion vested in General Counsel of the National Labor Relations Board to refuse to issue a complaint is unreviewable).

An administrative agency's investigations and probable cause determinations are analogous to grand jury proceedings, United States v. Morton Salt Co., 338 U.S. 632, 642-3, 70 S. Ct. 357, 364 (1950); Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594, 599,70 S. Ct. 870, 873 (1950).  Thus, just as it is clearly inappropriate to challenge an indictment which is valid on its face on the ground that the grand jury acted on the basis of inadequate or incompetent evidence since the adequacy of the evidence can be tested at trial, United States v. Calandra, 414 U.S. 338, 344-5,94 S. Ct. 613,618 (1974); Commonwealth v. Robinson, Mass. Adv. Sh. (1977) 2273, 368 N.E. 2.d 1210 (1977), an Order to Show Cause, valid on its face, will not be set aside on the ground that the evidence presented to the agency was inadequate or insufficient, since the adequacy and sufficiently of the evidence can and must be tested, in the first instance, at the administrative hearing.
 

Furthermore, no authority has been cited, or found, which suggests it was error for the Commission to authorize the preliminary inquiry, deliberate on the evidence presented, and make the reasonable cause determination at the same meeting of the Commission.

Accordingly, since the determinations required as conditions precedent to bringing this action were clearly made as required by section 4 of G.L. c. 268B, the Commission has jurisdiction to hear and decide the case.[8]

Mr. Buckley also challenges the failure of the Commission to send notice of the initiation of the preliminary inquiry to the Attorney General "at the beginning" thereof as required by section 4(a).  He notes that such notice serves the valid purpose of enabling criminal investigations and prosecutions to be coordinated between the various law enforcement agencies without damaging or hampering the rights of the state or the accused.  Notice was sent to the Attorney General as required by section 4(a).  While it is true that the notice was sent on the same day that the Order to Show Cause was filed, there is no evidence that Mr. Buckley was harmed in any way by the five (5) day delay in sending the notice.  The harm, if there has been any, would have accrued to the Attorney General and he has not complained of the procedure followed in this case.  Accordingly, the notice requirement of section 4(a) was satisfied.



B.  Right of Privacy



Chapter 210 of the Acts of 1978, including the financial disclosure law, started as an initiative petition filed with the General Court under the provisions of Art. 48 of the Constitution of the Commonwealth.  The Senate requested an opinion of the Justices of the Supreme Judicial Court as to whether the law would violate the constitutional rights of privacy of the persons required to file and the members of their immediate families.  On April 27, 1978, the Justices upheld the financial disclosure provisions of the

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proposed law.  Opinion of the Justices, Mass. Adv. Sh. (1978) 1116, 1124-1134, 376 N.E. 2d 810,816-820.  The Court noted that the filing of Statements of Financial Interests by public officials, employees and candidates provides a means "which the Legislature or the people could believe to be rationally related to the achievement of the legitimate goal of assuring the people of 'impartiality and honesty of public officials (s.1 of the proposed new G.L. c. 268B)." Opinion of the Justices, Mass. Adv. Sh. (1978) 1116, 1131, 376 N.E. 2d 810,819.  While the Court held that the test to be applied in evaluating the statute against a right to privacy claim was whether the law was rationally related to a legitimate state purpose, it advised that, in its opinion, the law would be constitutional even under the more stringent "strict scrutiny" test.  Opinion of the Justices, supra.  Accordingly, the Court concluded that the financial disclosure law does not violate the rights of privacy of filers or the members of their immediate families in contravention of the Fourteenth Amendment to the United States Constitution or Articles 1, 14 or 16 of the Massachusetts Declaration of Rights.

The rationale underlying disclosure of the financial interests of family members are apparent:  

... [such disclosure] provisions are reasonably necessary to promote the act's underlying purposes, for otherwise an official could defeat the disclosure provisions by the simple means of transferring record title to his spouse or dependent children.  

Finally, even as to property in which the official has no beneficial interest whatever (such as his spouse's separate property), the act serves the legitimate purpose of assuring that the official disclose the fact that his spouse or dependent children own property which might be materially affected by his official actions.  Common sense tells us that although an official may have no economic interest in such property, nevertheless, he may react favorably, or without total objectivity, to a proposal which could materially enhance the value of that property.  Disclosure might substantially inhibit such sympathetic reaction, thereby promoting the act's goals of honesty and impartiality in government.  County of Nevada v. MacMillen, 11 Cal. 3d 662, 522 P. 2d 1345, 1353 (1974).

In view of the strong public interest in assuring the honesty, integrity and impartiality of public officials and employees, the overwhelming weight of authority holds that financial disclosure laws do not violate the rights of privacy of public officials and employees or their immediate families.  See O'Brien v. DiGrazia, 544, F. 2d 543, 545-46 (1st Cir. 1976), cert. denied sub. nom., O'Brien v. Jordan, 431 U.S. 914 (1977); County of Nevada v. MacMillen, 11 Cal. 9d 662, 676, 522 P.2d 1945, 1959-4 (1974); rn~ v, Groton, 83 Wash. 2d 272, 517 P. 2d 911, 923 (1974), app. dismissed 417 U.S. 902 (1974); Stein v. Howlett, 52 Ill. 2d 570, 289 N.E. 2d 409, 413, app. dismissed 412 U.S. 925(1973); Illinois State Employees' Association v. Walker, 57 Ill. 2d 512, 315 N.W.2d 9,17, cert. denied sub. nom.; Troopers No. 41 v. Walker, 419 U.S. 1058 (1974).  See also Flante v. Gonzalez, 575 F. 2d 1119, 1123-4, 1127-37 (5th Cir. 1978), cert. denied 439 U.S. 1129 (1979) and cases cited therein.


In City of Carmel-by-the-Sea v. Young, 2 Cal.3d 259,466 P.2d 225 (1970), relied upon by Mr. Buckley, the California Supreme Court, employing the strict scrutiny test, invalidated a requirement that public employees disclose all investments exceeding $10,000 since those disclosures were unrelated to the narrow provisions of the state's conflict of interest law and therefore intruded into irrelevant private financial matters.  The California Supreme Court subsequently upheld the modified financial disclosure law, enacted in response to the Carmel decision, stating, "[a]lthough the. . . act may to some extent invade the privacy of the official's spouse or dependent children, we think the public's interest in an honest and impartial government outweighs the interest of such persons in maintaining complete privacy in their financial affairs."  County of Nevada v. MacMillen, 11 Cal.3d 662, 676, 522 P.2d 1345, 1353 (1974) (n.10).

The Supreme Judicial Court of Massachusetts, while clearly rejecting the strict scrutiny analysis applied in Carmel, supra, specifically indicated that our financial disclosure law would be constitutional even under the more stringent test.  Opinion of the Justices, Mass. Adv. Sh. (1978) 116, 1130-31, 376 N.E.2d 810, 818.  Moreover, in California, "[n]o effort [was] made to relate the disclosure to financial dealings or assets 


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which might be expected to give rise to a conflict of interest."  City of Carmel-by-the-Sea v. Young, 2 Cal.3d 259, 466 P.2d 225, 232 (1970).  That is not the case in Massachusetts.

The Massachusetts financial disclosure law, unlike the California statute, complements the provisions of the Massachusetts conflict of interest law, General Laws Chapter 268B and the forms issued pursuant thereto by the Ethics Commission require a filer to disclose his own and his family's business associations,[9] interests in real property with an assessed valuation in excess of $1,000[10] and certain liabilities in excess of $1,000.[11]  These disclosures complement the provisions of the conflict of interest law which prohibit state employees from receiving "anything of value" from private sources in certain situations[12] or from participating, except in limited circumstances, in any particular matter in which the state employee, a member of his immediate family or certain business associates, has a financial interest."[13]  Public financial disclosure identifies actual or potential violations of the conflict of interest law.  The disclosures identify situations in which a public official cannot both maintain a private interest and exercise official authority; they also seek to prevent filers from circumventing the prohibitions of the conflict of interest law by transferring assets, income or liabilities to members of their immediate families.  See County of Nevada v. MacMillen, 11 Cal.3d 662, 676, 522 P.2d 1345, 1353 (1974).  The right of citizens to know that public office is not used for private financial gain in violation of the public trust justifies this limited intrusion into family financial matters.  Therefore, the provisions of the financial disclosure law and the SFI's issued thereunder do not violate the rights of privacy of the family members of public officials and employees, Opinion of the Justices, Mass. Adv. Sh. (1978) 1116, 1124-34; 376 N.E.2d 810, 816-210 (1978).


C.  Authority of the Commission


Finally, Mr. Buckley contends that the Commission has exceeded its authority by requiring disclosure of information not required by law to be revealed.  Specifically, he challenges the obligation to report interests in real property or certain liabilities valued in excess of $1,000 in which a member of his immediate family has a financial Interest and the requirement to disclose the identity of the family member who has the business association, owns the property or owes the liability.
 

While an agency may not exceed or extend its statutory authority or adopt a regulation which conflicts with its enabling legislation, Bureau of Old Age Assistance of Natick v. Commissioner of Public Welfare, 326 Mass. 121, 124, 93 N.E.2d 267, 269 (1950), its powers are shaped by its enabling statute taken as a whole, and need not necessarily be traced to specific words in the law, Commonwealth v. Cerveny, 373 Mass. 345, 354, 367 N.E.2d
802, 808 (1977), and cases cited therein.  When an agency has a broad grant of authority to implement a program of reform or social welfare, it has a "wide range of discretion in establishing the parameters of its authority" and should construe its enabling legislation broadly to further purposes of such reform, Levy v. Board of Reg. & Discipline in Medicine, Mass. Adv.Sh. (1979) 1857, 1865, 393 N.E.2d 1036, 1040, and to enable it to fill in the details of the law in accordance with the legislative policy.  Commonwealth v, Racine, 372 Mass. 631, 635, 363 N.E.2d 500, 503(1977); Harborview Res. Comm., Inc. v. Quincy Housing Authority, 368 Mass, 425, 332 N.E.2d 891, 895 (1975); Commonwealth v. Diaz, 326 Mass. 525, 527, 95 N.E.2d 666, 668 (1950).  This authority includes adopting regulations which are reasonably related to the purposes of the enabling legislation.  Consolidated Cigar Corp. v. Department of Public Health, 372 Mass. 844, 850-58, 364 N.E.2d 1202, 1207-11 (1977); Town Tab Inc., v. Police Commissioner of Boston, Mass. Adv. Sh. (1979) 738, 387 N.E.2d 129, 135, Levy v. Board of Reg. & Discipline in Medicine, supra and cases cited therein.

The legislation mandating public disclosure of the financial interests of public officials and employees and their immediate families is a reform measure designed to assure the citizenry of the honesty and integrity of its officials and employees.  The Ethics Commission, created as a part of this reform measure, is the primary civil enforcement agency for this law, G.L. c. 268B, 


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s. 3(i); it is authorized to "prescribe and publish... rules and regulations to carry out the purpose" of the new law, G.L. c. 268B, s. 3(a), and to "prescribe and publish . . , forms,, for the statements [of financial interests].. ., G.L. c. 268B, s.3(b).


The information required by law to be disclosed is set forth in section 5(g) of G.L. c. 268B.  That section provides in relevant part:

Reporting persons shall disclose, to the best of their knowledge, the following information for the preceding calendar year or as of the last day of said year with respect to the information required by clauses... 3, and 6 below; such persons shall also disclose the same information with respect to their immediate family,[14] provided, however, that no amount need be given for such information with regard to the reporting person's immediate family; 
 

(1) the name and address of, the nature of the association with, the share of equity in, if applicable, and the amount of income if greater than one thousand dollars derived from each business with which he is associated;[15]

(3) the name and address of [certain creditors] to whom more than one thousand dollars was owed...; and

(6) the description, as appearing on the most recent tax bill, and the amount of assessed value of all real property located within the commonwealth, in which a direct or indirect financial interest was held, which has an assessed value greater than one thousand dollars;...

 

The form Statement of Financial Interests for Calendar Year 1978, and the Instruction Manual promulgated by the Commission pursuant to section 3(b), require disclosure in section C. 1 of the business associations of the reporting persons and the members of his immediate family, including the name of the person having the association and the position which they held.  Section J.1 requires disclosure of real property located in Massachusetts with an valuation in excess of $ 1,000 including the identity of the person holding the interest, and section K. 1 requires disclosure of the reportable liabilities in excess of $1,000 and the identity of the debtor.  The form and the instructions clearly indicate that amounts need not be reported with respect to family members.
 

Mr. Buckley claims that by requiring disclosures of real property valued in excess of $1,000 and liabilities in excess of $1,000 the forms and instructions, and the statute itself, require disclosure regarding the "amounts" of the assets or liabilities of family members in contravention of the introductory paragraph of section 5(g), supra.  This argument overlooks the fact that the term "amount", when used in this statute, is defined as "a category of value, rather than an exact dollar figure. . . "[16]  The $1,000 minimum valuation figure is the threshold chosen by the legislature to trigger the obligation to report a particular asset or liability held, owned or owed by a filer and/or his immediate family, and disclosing that one is over the minimum is not disclosing an "amount" as that word is defined in the statute.

The legislature has limited the extent of the state's intrusion into the privacy of the filer and his family by requiring disclosure only of financial interests which, in its judgment, are of sufficient magnitude to potentially affect the filer in the
discharge of his official responsibilities.  The legislature has further limited the extent of the state's intrusion into the family member's personal privacy by providing that the filer need not reveal the "category of value" of the separate property or liabilities of a family member so long as he reveals the identity of the financial interests which might potentially be affected by his official action.  The filer must, however, identify and list of the "category of value" for any property or liabilities which he owns or owes jointly with a family member; this limited intrusion into the family member's privacy is necessary to prevent

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a filer from avoiding disclosure of the "category of value" of his assets and liabilities simply by sharing them with a member of his family and thereby serves to assure the public that he has not benefitted financially from his public position.

Mr. Buckley also questions the requirement to disclose the identity of the family member who has the business association (and the position held), owns the real property or owes the liability.  Section 5(g), supra, requires a filer to disclose "the same information" with regard to the members of his family which he discloses as to himself.  Since the filer must disclose his assets, liabilities and the nature of his business associations, he must also disclose "the same information" for his immediate family; the most effective way to insure compliance with this mandate is to require disclosure of the identity of the individual having the interest.  This information is also required in order to insure that
reporting persons do not evade the requirements of the law by transferring these assets or liabilities to their spouse or dependents.  Finally, this disclosure facilitates the Commission's ability to review the form and, if necessary, compare reported information with that information disclosed on previous SFI's or brought to the Commission's attention by some other means.  Accordingly, the disclosure of "amount" and "identity" information is reasonable and rationally related to the Commission's obligation to implement, administer and enforce the statute and is proper.

Finally, Mr. Buckley contends that he did not violate section 5(g) because he did not fail to file an SFI after having received notice to do so. Section 3(g) requires the Commission to inspect SFI's and, if it is ascertained that an SFI fails to conform to the law, the Commission must send the filer notice detailing the alleged deficiencies and the penalties for failing to file an SFI, s.3(f).  Such a letter was sent in this case on June 20, 1979.  Section 5(g) provides that the failure to file and SFI within 10 days of the receipt of notice or the filing of an incomplete statement after receipt of such notice is a violation of the statute. Mr. Buckley argues that the statute does not require a filer to amend a previously filed SFI after receiving notice under section 9(f), nor does it make the failure to amend a violation of chapter 268B.  The financial disclosure law was enacted to require public officials to disclose certain of their financial interests and to provide sanctions in the event persons failed to comply with those requirements after having received detailed notice of the alleged deficiencies from the Commission.  It is implicit in the statutory scheme that the failure to amend a deficient statement constitutes a violation subjecting the violator to appropriate proceedings under section 4; certainly the legislature could not have intended to insulate from sanctioning an individual who files a deficient SFI and then fails to respond when the Commission points out the deficiency.  Accordingly, Mr. Buckley's failure to amend his Statement after having received the appropriate notice, constitutes a violation of section 5(g).

Based on the foregoing, we conclude that John R. Buckley violated section 5(g) of General Laws Chapter 268B by knowingly and intentionally failing to disclose information on his 1978 Statement of Financial Interests which is required by law to be disclosed, and failing to correct the deficiencies within 10 days of having received notice to do so.  The record reflects that Mr. Buckley's actions with respect to filing the SFI resulted from and were prompted by his concern for his family and were taken in good faith without any apparent attempt to mislead or deceive the Commission or the public with regard to his financial interests.  On the other hand, we cannot condone the filing of deficient Statements or the refusal to list information known by a filer which is required by law to be disclosed.  Accordingly, the Respondent, John R. Buckley, is hereby ordered to:


1. File a Statement of Financial Interests for 1978 which conforms to the requirements of the law, or amend his previously filed Statement within seven (7) days of receipt of this opinion;


2. Pay a civil penalty of $250.00 (two hundred fifty dollars) within 30 days of receipt of this opinion; and


3. Cease and desist from refusing to complete sections C.1, J.1, and K.1 to the best of his knowledge.


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[1] M.G.L. c. 268B, s.5(g) provides, in pertinent part "failure of a reporting person to file a Statement of Financial Interest within ten days after receiving notice to do so as provided in clause (f) of section 3 of this chapter, or the filing of an incomplete Statement of Financial Interests after receipt of such a notice, this is a violation of this chapter and the commission may initiate appropriate proceedings pursuant to the provisions of section 4 of
this chapter."


[2] G.L. c. 268B, s.4(c)(paragraph 3) provides: any member of the commission may administer oaths and any member of the commission may hear testimony or receive other evidence in any proceeding before the commission."


[3] The State Ethics Commission, created in 1978, is authorized and required to implement and enforce, the provisions of the Financial Disclosure Law. Chapter 268B of the General Laws of Massachusetts, which is applicable to certain state and county officials.  In furtherance of this objective, the commission is required to prepare and publish forms to be used by all persons required to file a Statement of Financial Interests.


[4] Mr. Buckley concedes that the Commission has apparently unlimited power to commence a preliminary inquiry under section 4(a).  Resp. Brief at 13.  He contends, however, that while the contents of his SFI may have been sufficient to warrant the preliminary inquiry, they were not sufficient to warrant the reasonable cause determination.  Furthermore, he suggests that there were no facts presented to the commission to show that reportable information had actually been omitted from the SFI and, therefore, there was no reason to believe that the law had, in fact, been violated.  Resp. Brief at 15.


[5] See infra, page [9].


[6] If, however, the preliminary inquiry fails to indicate "reasonable cause for belief" that a violation has occurred, the Commission must immediately terminate the inquiry and send notice thereof to the subject and the complainant. s.4(b).


[7] "An investigation discovers and produces evidence; an adjudication tests such evidence upon a record in an adversary proceeding . . . to determine whether it sustains whatever charges are based upon it."  General Parts Co.". F.T.C., 445. F.2d 1382, 1388 (5th 1971).


[8] Furthermore, it should be noted that, on August 7, 1979, the Commission was advised that Mr. Buckley admitted on his SFI that he had omitted reporting information and that he had failed to correct the alleged deficiencies after having received the appropriate notice to do so.  His admitted refusal to disclose reportable information under these circumstances constituted "reasonable cause for belief" that the law had been violated; further investigation to determine exactly what he had refused to disclose was unnecessary and could only have unduly delayed a resolution of the matter.  In fact, the Commission still does not know exactly what information Mr. Buckley has failed to disclose since he objected to the introduction of such evidence at the hearing, preferring instead simply to admit that he has refused to disclose information requested on the form.


[9] M.G.L. c. 268B. s.5(g)(1); section C.1 of the SFI,See infra.


[10] M.G.L. c. 268B, s.5(g)(6); section J.1 of the SFI, see infra.


[11] M.G.L. c. 268B, s.6(g)(2): section H1 of the SFI, see infra.


[12] M.G.L. c. 268A, s.s. 2, 3 and 4.


[13] M.G.L. c. 268A. s. 6.


[14] "Immediate Family" is defined in section 1(i) as the spouse and any dependent children residing in the reporting person's household.


[15] M.G.L. c. 268B. s. 1(c) defines "business with which he is associated" as any business in which the reporting person or a member of his immediate family is a general partner, proprietor, officer or other employee, including one who is self-employed, or serves as a director, trustee or in any similar managerial capacity; and any business more than one percent of any class of the outstanding equity of which is beneficially owned in the aggregate by the reporting person and members of his immediate family.


[16]
"Amount" is defined in Section 1(a) of G.L. c. 268B as "a category of value, rather than an exact dollar figure as follows:

greater than $1,000 but not more than $2,500; greater than $2,500 but not more than $5,000; greater than $5,000 but not more than $10,000; greater than $10,000 but not more than $25,000; greater than $25,000 but not more than $50,000; greater than $50,000 but not more than $100,000; greater than $100,000.

 

End Of Decision