Docket No. 371

In the Matter of John P. O'Brien

September 6, 1989

Disposition Agreement




Page 418

This Disposition Agreement (Agreement) is entered into between
the State Ethics Commission (Commission) and John P. O'Brien (Mr.
O'Brien) pursuant to Section 11 of the Commission's Enforcement
Procedures. This Agreement constitutes a consented to final
Commission order enforceable in the Superior Court pursuant to G.L.
c. 268B, s.4(j).

On January 11, 1989, the Commission initiated a preliminary
inquiry into possible violations of the Financial Disclosure Law,
G.L. c. 268B, by Mr. O'Brien.[1] The Commission concluded its
inquiry and, on June 19, 1989, found reasonable cause to believe
that Mr. O'Brien violated G.L. c. 268B, s.7 by falling to disclose
certain real estate transactions and loans on his 1986 and 1987
Statements of Financial Interests (SFIs).

The parties now agree to the following findings of fact and
conclusions of law:

1. Mr. O'Brien is the elected Hampden County Register of
Probate. As such, he is a state employee as that term is defined
in G.L. c. 268A, s.1(q) and is required to file an annual Statement
of Financial Interests (SFI) pursuant to G.L. c. 268B, s.5.

2. Mr. O'Brien has conducted a real estate business under the
name of O'Brien Real Estate for 28 years. Up until 1986, he was
engaged through O'Brien Real Estate in the listing and selling of
real estate.

In 1987 Mr. O'Brien joined with Audrey O'Connor in the business
of O'Brien & O'Connor Real Estate, which conducted a real estate
brokering business at 42 Harkness Street, East Longmeadow,
Massachusetts. During the reporting period that followed, O'Brien
Real Estate concentrated in renovating dilapidated homes.

3. On April 15, 1987, Mr. O'Brien timely filed his 1986 SFI.[2]
He failed to identity the following transactions:

(A) his purchase (with James A. O'Connor) of 72 and 86 Lancaster
Street in Springfield from Charlotte A. Carlson, Executrix of the
Estate of Emma Carlson, and the assessed values by category of
these properties. This information was reportable under s.K.2
(Investment and Rental Properties) and s.K.3 (Real Property
Transfers);

(B) six loans with values ranging from $1,000 to $10,000.
Information pertaining to these loans was reportable under s.L.
(Other Creditor Information).

4. On March 15, 1988, Mr. O'Brien timely filed his 1987 SFI.

Mr. O'Brien failed to report:

(A) his ownership ad resale of 72 and 86 Lancaster Street;

(B) his son's purchase of 64 Carnavon Circle from Robert
Bonetti, Executor of the Estate of Mary Bransfield.[3]

(C) his son's purchase of 37 Pennsylvania Avenue from Benedict
Nowakowski, Executor of the Estate of Jane Haggerty;

(D) his purchase of 160-162 Alden Street from David Burgess;

(E) two 90-day notes from the Chicopee Cooperative Bank, each
valued in Category F, ($60,000 - $100,000). This information was
reportable under s.K.4 (Mortgage Loan Information) which requires
identification of each mortgage loan, including second mortgage
loans and home equity loans, greater than $1,000 outstanding on
December 31, 1987 for which the filer or a family member was
obligated.

(F) four loans secured by various life insurance policies, three
with values in Category A ($1,001 - $5,000), and one valued in
Category B ($5,001 - $10,000). This information was reportable
under s.L. (Other Creditor Information), which requires that filers
report each debt, loan or other liability greater than $1,000 owed
by the filer or a family member on December 31, 1987. The filer
must report the original amount of the loan, the amount owed as of
the end of the reporting year, the loan collateral, and terms of
repayment.

5. Mr. O'Brien did not prepare his 1986 and 1987 SFIs
personally, but delegated this task to his executive assistant.
Mr. O'Brien instructed the assistant to use the previous year's SFI
in preparing

Page 419

the current SFI. Mr. O'Brien, however, did not provide the
assistant with the documents or other information necessary to
fully complete the 1986 and 1987 SFIs.

6. On December 29, 1988, Mr. O'Brien amended his 1986 SFi and
reported his purchase of 72 ad 86 Lancaster Street from the Estate
of Emma Carlson. He reported himself and James P. O'Connor as the
Record Owner(s) of these properties and their respective assessed
values by category.[4] Under s.L. (Other Creditor Information),
Mr. O'Brien reported a 90-day loan from the Chicopee Cooperative
Bank valued in Category A ($1,001 - $5,000). This loan was
outstanding as of December 31, 1986 and was, therefore, reportable
under s.L. as a "debt, loan or other liability in excess of $1,000
owed by you or any FAMILY MEMBER" on December 31st of the reporting
year.

7. Mr. O'Brien also amended his 1987 SFI on December 29, 1988.
He reported his purchase of 160-162 Alden Street from David
Burgess. He also reported his son's purchases of 37 Pennsylvania
Avenue and 64 Carnavon Circle and identified the Estate of Jane
Haggerty and the Estate of Mary Bransfield as the sellers of these
respective properties. He also reported two 90-day notes from the
Chicopee Cooperative Bank with values in Category F ($60,001 -
$100,000). These loans were used to finance John Peter's purchases
of 37 Pennsylvania Avenue and 64 Carnavon Circle.

8. On May 9, 1989, Mr. O'Brien filed supplemental amendments
to his 1986 and 1987 SFIs which disclosed certain loans with values
in the smaller categories (i.e., Category A ($1,001 - $5,000) and
Category B ($5,001 - $10,000), which were not identified by the
prior amendments. By this amendment, Mr. O'Brien corrected each
nondisclosure identified above.

9. General Laws, chapter 268B, s.7 prohibits the filing of a
false SFI. A false Filing need not be willul nor intentional to
violate G.L. c. 268B, s.7. The statute requires commitment to a
reasonable degree of care and diligence in filing SFIs. See In the
Matter of Louis Logan, 1981 SEC 40, 49. The question of whether
a filer has exercised a reasonable degree of care and diligence
must be decided on the facts of each case.

10. In a private compliance letter issued to former Senator
Martin Rellly by the Commission on or about July 20, 1987,[5] the
Commission stated its intent to impose public sanctions for
negligent SFi filings.

A memorandum accompanied the 1987 SFI instructions which states,

"FILERS ARE RESPONSIBLE FOR EXERCISING CARE AND DILIGENCE TO ENSURE THAT THE INFORMATION PROVIDED IN THEIR SFIs IS COMPLETE AND ACCURATE. SIGNIFICANT OMISSIONS AND/OR INCORRECT INFORMATION CAN RESULT IN THE IMPOSITION OF BOTH CIVIL AND CRIMINAL PENALTIES."

This memorandum accompanies all SFI forms and instructions when the
Commission mails them each year.

11. Certain omissions are minor and, as such, are best handled
through the amendment process without any sanction. In effect, the
public suffers little or no harm from the absence of this
information on the form. Thus, for example, if a mortgage loan is
identified, including the creditor, amount owed, and the terms of
repayment, but the filer neglects to also indicate the original
amount owed, that is a minor oversight which should be dealt with
by an amendment. The Commission is satisfied to have these dealt
with through the amendment process.[6]

12. Omissions which will be deemed to reflect a lack of
reasonable care and ordinary diligence, and thus, warrant a public
sanction, are omissions which (1) involve a party or transaction
over which the filer could exercise official responsibilities as
a public employee; (2) are total omissions in that there is no way
to identity the transaction from the information appearing on the
SFI form; or (3) in number and amount, are material to the filer's
overall real estate holdings. Reilly Compliance Letter, July 20,
1987.[7]

13. The omissions of reportable information relating to Mr.
O'Brien's purchases of 72 and 86 Lancaster Street and 160-162 Alden
Street and his son's purchases of 37 Pennsylvania Avenue and 64
Carnavon Circle were material because (1) each involved a purchase
from a probate estate pending in Hampden County, over which Mr.
O'Brien was in a position to exercise official responsibilities,[8]
(2) the omissions were total in that there was no way to identity
these transactions from other information on the SFI forms, (3) the
number and amount of these omissions are material to Mr. O'Brien's
overall real estate holdings. Thus, the omissions establish
negligence in the filing of Mr. O'Brien's 1986 and 1987

14. Mr. O'Brien's delegating the task of preparing his SFIs to
an assistant, without giving that assistant the means to properly
prepare them nor the full and complete information required to be
reported on the

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SFIs, is further evidence of his failure to exercise a reasonable
degree of care and diligence in filing his 1986 and 1987 SFIs.[10]
Moreover, in reviewing and signing the SFIs, Mr. O'Brien failed to
identify the omissions.

15. The Commission has found no evidence that Mr. O'Brien
intentionally violated the Financial Disclosure Law. Mr. O'Brien
cooperated fully with the Commission's preliminary inquiry.

Based upon the foregoing facts, the Commission has determined
that the public interest would be served by the disposition of this
matter without turther enforcement proceedings on the basis of the
following terms agreed to by Mr. O'Brien:

1. that he pay to the Commission the amount of five hundred
dollars ($500.00) as a civil penalty for violating G.L c 268B
s.7 by negligently filing his 1987 SFI,[11] and

2. that he waive all rights to contest the findings of fact,
conclusions of law, and terms and conditions proposed under this
agreement in this or any related administrative or judicial
civil proceeding in which the Commission is or may be a party.

---------------

[1] The Commission did not initiate a preliminary inquiry into
alleged violations of G.L. c. 268A, the Conflict of Interest Law,
because insufficient facts were reported in support of the
allegations. Compare, In the Matter of Fred Langone, P.E.L. 84-1,
1985 SEC 187.

[2] Elected officials must file their SFIs for the previous year
by May 31st.

[3] The 51,1 form and instructions require that filers report the
investment and rental properties, and real property transfers of
"family members," which include, among others, "dependent children"
who reside in the filer's household and receive more than half of
their support from the filer. Where Mr. O'Brien's son, John Peter,
was identified as a dependent child on Mr. O'Brien's 1987 51,1, all
real estate transfers and mvestments in John Peter's name were
reportable. See footnote 10, ,nfra.

[4] The SFI form requires filers to report categories of value for
their income and investments, and does not require specific dollar
values to be identified. Thus, Mr. O'Brien reported the assessed
value of 72 Lancaster Street as Category B ($5,001 - $10,000) and
the assessed value of 86 Lancaster Street in Category E ($40,001 -
$60,000).

[5] While compliance letters are private resolutions, under the
Commission's regulations, "should the subject make a public
disclosure concerning the disposition of an inquiry or staff review
by the Commission, the Commission, may confirm the existence of the
inquiry or staff review and, in its discretion, make public any
documents which were issued to the subject or which stated the
resolution of the matter." 930 CMR 3.01(7). Numerous newspaper
reports of the Commission's action in the Reilly case indicate that
Mr. Reiliy held a press conference publiciring the results of the
Commission's investigation on July 21, 1987. See Springfield Union
News, July 22, 1987, August 6, 1987; Jewish Weekly News, July 30,
1987; Transcript Telegram, July 22, 1987. Accordingly, the
Commission will treat the confidentiality accorded to the Reilly
Compliance Letter as having been waived.

[6] Thus, Mr. O'Brien had reported partially his purchases of
138,139 and 140 Marsden Street when be ftrst filed his 1987 SFI,
and was contacted by the Commission's Financial Control Analyst in
July, 1988 and asked to amend the 1987 SFI to identify the name and
address of the transferor of these properties. As the transaction
was partially reported, the omission of the identity of the seller
was minor, and remedied through the amendment process without
sanction.

[7] None of these factors standing alone is necessarily
dispositive. The Commission considers the cumulative effect
produced by the extent of each factor's applicability to a given
situation, analyring each factor in light of the purpose of the
Financial Disclosure Law.

[8] The Financial Disclosure Law complements the Conflict of
Interest Law in that it is the purpose of the former to identity
potential violations of the latter. In the Matter of John R,
Buckley, 1982 SEC 2. Toward that end, an SFI omission may be deemed
material if the information is potentially indicative of a c. 268A
violation, even if the Conflict of Interest Law has not, in fact,
been violated. Neither the original allegations, nor the evidence
adduced during this inquiry, establish a violation of the Conflict
Law.

[9] The total omissions of smaller loans from s.L. (Other Creditor
Information) are further evidence of negligence.

[10] During the course of this preliminary inquiry,


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Mr. O'Brien argued that his son's transactions were not reportable
on his 1987 SFI because John Peter filed tax returns as a non-
dependent for tax year 1987, and Mr. O'Brien did not claim a
deduction for John Peter for that tax year.

This issue should have been raised before Mr. O'Brien filed his
1987 SFI. It is the filer's responsibility to ensure that the SFI
is complete and accurate and to raise any questions concerning
whether certain information is reportable before filing the SFI.
The Commission's Chief Financial Officer and the members of the
Commission's Legal Division are available to advise filers on any
questions they may have regarding their SFIs.

The evidence adduced during this inquiry indicated that John
Peter resided with Mr. O'Brien and did not pay room or board during
the relevant time period, and that Mr. O'Brien financed the
real estate transactions John Peter engaged in. However, in 1987, John
Peter was employed and filed tax returns as an independent. The
Commission staff routinely advises filers that they need only
report the transactions of family members who are claimed as
dependents on the filer's tax returns. Where the evidence in this
case raises a question as to whether that test is appropriate under
all circumstances, the Commission will issue regulations or
clarifying instructions addressing this question in the future.
Thus, the Commission declines to impose a sanction for Mr.
O'Brien's failure to report John Peter's transactions. It is
unnecessary to determine whether John Peter was a dependent.

[11] Where Mr. O'Brien filed his 1986 SFI before the Commission
issued the Reilly Compliance Letter, the Commission declines to
impose a fine for the 1986 omissions.