Docket No. 548

In the Matter of Associated Industries of Massachusetts

Date: March 28, 1996


Disposition Agreement


This Disposition Agreement ("Agreement") is entered into
between the State Ethics Commission ("Commission") and the
Associated Industries of Massachusetts ("AIM") pursuant to s.5 of
the Commission's Enforcement Procedures. This Agreement
constitutes a consented to final order enforceable in the Superior
Court, pursuant to G.L. c. 268B, s.4(j).

On March 22, 1996, the Commission voted to find reasonable
cause to believe that AIM violated G.L. c. 268A, s.3(a). The
Commission and AIM now agree to the following findings of fact and
conclusions of law:

1. AIM is an association of over 3,000 Massachusetts
businesses. One of the purposes of AIM is to lobby the Legislature
on behalf of the interests of its members, the business community
at large, and for economic growth and jobs. During 1990-1991, AIM
lobbied the Legislature on numerous bills, including bills dealing
with taxation, labor/employee law, environmental, energy and health
care issues.

2. During the period here relevant, Mark Doran ("Doran") was
an employee of and registered legislative agent for AIM. As part
of his duties, Doran was to track, monitor and oppose, promote or
otherwise seek to influence legislation on behalf of AIM. In 1991
and 1992, Doran also had private clients for whom he lobbied in
addition to and separate from his work for AIM.

3. Charles F. Flaherty, Jr. ("Flaherty") has served in the
House of Representatives ("House") of the Massachusetts State
Legislature ("Legislature") from January 1965 to the present.
During that time, Flaherty served as the chairman of the Committee
on Counties (1971-1982); chairman of the Committee on Taxation
(1983); and Majority Leader (1985-1990). In 1991, Flaherty was
elected Speaker of the House and he is currently serving his third
term in that office.

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4. As a state representative and as Speaker, Flaherty
participates, by speech and debate, by voting and by other means,
in the process by which laws are enacted in the Commonwealth. As
Speaker, Flaherty presides over the House, manages and administers
the business organization of the House and recommends to the
Democratic caucus for their ratification all majority party
leadership and committee assignments. Thus, as Speaker, Flaherty
has and exercises considerable influence and control over the
House, both as to legislative and administrative matters.

5. During 1990 and 1991, Doran participated along with others
not associated with AIM in organizing multiple day July 4th holiday
events for Flaherty and others in Kennebunkport, Maine. AIM paid
$500 and $1,123 in 1990 and 1991, respectively, to subsidize the
expenses of these holidays.[1]

6. Approximately 18 to 25 people attended each of these July
4th holidays at Kennebunkport. The majority of these people knew
each other and were close friends of Flaherty, including
Massachusetts lobbyists and legislators.

7. The funds from AIM were used by Doran to pay a portion of
the cost of certain clambakes and other meals and entertainment for
some of the guests, including Flaherty and his guests.

8. Flaherty has acknowledged that the total value of his
share of the Kennebunkport July 4th expenditures for 1990 and 1991
combined was at least $1,300.[2]

9. It is unclear as to how much of this $1,300 in gratuities
came to Flaherty from AIM through Doran as opposed to from other
sources. AIM acknowledges, however, that its employee Doran
provided at least $50 of the gratuities that went to Flaherty at
each of the 1990 and 1991 Kennebunkport July 4th holidays.

10. Section 3(a) of G.L. c. 268A, the conflict of interest
law, prohibits anyone from giving to a state employee,
directly or indirectly, anything of substantial value for or because
of an official act performed or to be performed by the state employee.

11. Massachusetts legislators are state employees.

12. Anything worth $50 or more is of substantial value for
G.L. c. 268A, s.3 purposes.[3]

13. As a business organization, AIM acts through and is
responsible for, the conduct of its employees and agents.

14. By, in 1990 and in 1991, giving Flaherty gratuities
valued at $50 or more, while Flaherty was, recently had been, or
soon would be in a position to take official actions on matters
affecting the interests of AIM, Doran gave items of substantial
value to Flaherty for or because of official acts performed or to
be performed by Flaherty.[4] Because it is responsible for the
conduct of its legislative agent Doran, AIM violated G.L. c. 268A,
s.3(a).[5]

15. The Commission is aware of no evidence that AIM sought or
requested Flaherty to take any official action concerning any
proposed legislation in return for the gratuities as described
above.[6] However, even if the gratuities were intended only to
foster official goodwill and access, they were still
impermissible.[7]

In view of the foregoing violations of G.L. c. 268A, the
Commission has determined that the public interest would best be
served by the disposition of this matter without further
enforcement proceedings on the basis of the following terms and
conditions agreed to by AIM:

(1) that AIM pay to the Commission the total sum of $2,000 for
violating G.L. c. 268A, s.3(a), and

(2) that AIM waive all rights to contest the findings of fact,
conclusions of law and terms and conditions contained in this
agreement and in any related administrative or judicial
proceedings to which the Commission is or may be a party.

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[1] The $500 in 1990 was used to subsidize the costs of
various types of entertainment. The $1,123 in 1991 was for one
dinner attended by Flaherty, his guests, and numerous other people.

[2] July, 1990, $500 and July, 1991, $800.

[3] See Commonwealth v. Famigletti, 4 Mass. App. Ct. 584 , 587
(1976); EC-COI-93-14.

[4] There is evidence to indicate that, in providing
gratuities to Flaherty, Doran was motivated in part by personal
friendship with Flaherty. The evidence also indicates, however,
that Doran gave the gratuities in substantial part for or because
of actions Flaherty could take as a legislator or speaker.
Therefore, friendship is not a defense to the s.3 violations. See
In re Flaherty, 1991 SEC 498. For friendship to be a defense to a
s.3 violation, it must be the only motive for the gratuity. That
was not the case here.

[5] In determining whether the items of substantial value have
been given for or because of official acts or for acts within one's
official responsibility, it is unnecessary to prove that the
gratuities given were generated by some specific identifiable act
performed or to be performed. As the Commission explained in
Commission Advisory No. 8: Free Passes (issued May 14, 1985):


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Even in the absence of any specifically identifiable matter
that was, is or soon will be pending before the official, s.3
may apply. Thus, where there is no prior social or business
relationship between the giver and the recipient, and the
recipient is a public official who is in a position to use
[his] authority in a manner which could affect the giver, an
inference can be drawn that the giver was seeking the goodwill
of the official because of a perception by the giver that the
public official's influence could benefit the giver. In such
a case, the gratuity is given for his yet unidentifiable "acts
to be performed.

[6] As discussed in footnote 5, s.3 of G.L. c. 268A, is
violated even where there is no evidence of an understanding that
the gratuity is being given in exchange for a specific act
performed or to be performed. Indeed, any such quid pro quo
understanding would raise extremely serious concerns under the
bribery section of the conflict of interest law, G.L. c. 268A, s.2.
Section 2 is not applicable in this case, however, as there was no
evidence of such a quid pro quo between AIM's employee and
Flaherty.

[7] Section s.3 applies to generalized goodwill-engendering
entertainment of legislators by private parties, even where no
specific legislation is discussed. In re Massachusetts Candy and
Tobacco Distributors, Inc., 1992 SEC 609 (company representing
distributors violates s.3 by providing a free day's outing (a
barbecue lunch, golf or tennis, a cocktail hour and a clam bake
dinner), worth over $100 per person, to over 50 legislators, their
staffers and family members, with the intent of enhancing the
distributors' image with the Legislature and where the legislators
were in a position to benefit the distributors).

Page 792

End of Decision