Case No.: 108
Doc. Type: Agreements
Parties: IN THE MATTER OF JOHN R. BUCKLEY
Appearing: 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
Date: May 7, 1980
DESISION AND ORDER
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
vtolated 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
Page 3
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.I. 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
Page 4
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.I
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).
Page 5
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)(l), 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 soley 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
Page 6
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, int he [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.
Boara 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.
III. 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
Page 7
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, spura. 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 Kights.
The rationale underlying disclosure of the financial interests
of family members are apIparent:
... [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 (19?7); 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
Page 8
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).
IV. 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 honestry 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,
Page 9
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.l 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 threshhold 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
Page 10
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.
---------------
[1] M.G.C. c. 268B, s.5(g) provides, in pertinant 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
Massachussetts, 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 lnterests.
[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,
tbere 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.C. 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 H.I 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; greather 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