Docket No. 550

In the Matter of Robert Cataldo

Date: March 28, 1996

Disposition Agreement


This Disposition Agreement ("Agreement") is entered into
between the State Ethics Commission ("Commission") and Robert
Cataldo ("Cataldo") 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 27, 1996, the Commission voted to find reasonable
cause to believe that Cataldo violated G.L. c. 268A, s.3(a).

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

1. During the period here relevant, Cataldo was a
Massachusetts business consultant.

2. In 1991-1992, Abraham Gosman ("Gosman") was the
controlling shareholder, a member of the board of directors and
chief executive officer of the Mediplex Group, Inc. ("Mediplex"),
a company that operates nursing homes and other medical treatment
facilities in Massachusetts and elsewhere. Mediplex's business is
regulated by the Commonwealth of Massachusetts, and Mediplex was
subject to the acts of the Massachusetts State Legislature
("Legislature"), at the times here relevant.

3. During the period here relevant, Gosman was also
personally involved in real estate development projects in
Massachusetts. During 1992, Gosman attempted to purchase and
renovate the former Sears Building in the Fenway area of Boston.
Gosman planned to convert the Sears Building into a multi-use
medical building and rent space to nearby hospitals. The Sears
Building project had an estimated cost of more than $120 million.
Gosman withdrew from the Sears Building project in late 1992 and it
was not completed.

4. To complete the Sears Building project, Gosman required a
variety of favorable actions from federal, state and municipal
agencies. Gosman needed approvals and permits from Boston, state
and federal agencies for issues relating to the environment,
regulation of health care facilities, transportation, zoning and
taxes. Gosman also considered financing the project with bonds
issued by the Massachusetts Industrial Finance Agency.

5. During 1991 and 1992, the Legislature considered a variety
of bills that affected Gosman's business interests. On a
continuing basis, the Legislature acted on general legislation that
affected the rates, taxes, worker's compensation obligations and
insurance eligibility of health care facilities in the
Commonwealth, including but not limited to Mediplex's facilities.
In addition, in 1992, legislation pending before the House ("The
Rivers Bill") would have regulated development near rivers and
streams, and would have potentially affected the Sears Building
Project. The Rivers Bill was never enacted.

6. Beginning in 1993, Cataldo was also a member of the board
of directors of Mediplex. From time to time, Cataldo contacted
public officials, including Massachusetts legislators, on behalf of
his own and Gosman's business interests. In 1992, Gosman asked
Cataldo to participate in the leasing and permitting for the Sears
Building project. Gosman promised Cataldo some share of the
profits if that project were successful.

7. Charles F. Flaherty, Jr. ("Flaherty") has served in the
House of Representatives ("House") of the 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.

8. 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.

9. During the period here relevant, Gosman owned a luxury,
top floor, five bedroom condominium in Newport, Rhode Island.
Gosman from time to time allowed some of his family members,
employees and

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friends to use the Newport condominium without charge.

10. In or about April 1991, Cataldo offered Flaherty use of
Gosman's Newport condominium. In or about April 1991, Cataldo
informed Gosman that he had invited Flaherty to stay at the Newport
condominium.

11. Cataldo and Flaherty were friendly, but were not close
personal friends.

12. There is evidence to indicate that Cataldo provided
Flaherty and his personal guests with the use of the Newport
condominium a total of five times, on the following dates:

a. April 12-14, 1991;
b. July 8-9, 1991;
c. December 8-9, 1991;
d. February 22-23, 1992; and
e. July 17-26, 1992.

13. Neither Gosman nor Cataldo was present when Flaherty used
the Newport condominium. The only people present at the Gosman
condominium were Flaherty's guests.

14. The value of Flaherty's and his guests' use of the Gosman
Newport condominium was approximately $7,000. Flaherty did not pay
anything for the use of the Gosman condominium.

15. 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 any
official act performed or to be performed by him.

16. Massachusetts legislators are state employees.

17. Anything worth $50 or more is of substantial value for
G.L. c. 268A, s.3 purposes.[1]

18. By providing Flaherty with the use of the Newport
condominium on five occasions in 1991 and 1992 valued at $7,000,
while Flaherty had been, was or soon would be in a position as
Speaker to take official actions on matters affecting his own and
Gosman's business interests, Cataldo gave items of substantial
value to Flaherty for or because of an official act or acts
performed or to be performed by Flaherty. In doing so, Cataldo
violated s.3(a).[2]

19. The Commission is aware of no evidence that Flaherty was
ever asked to take or took any official action concerning any
proposed legislation which would affect the financial interests of
Gosman or Cataldo or their businesses in return for the gratuities
as described above.[3] However, even if the gratuities were
intended only to foster official goodwill and access, they were
still impermissible.[4]

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 Cataldo:

(1) that Cataldo pay to the Commission the total sum of seven
thousand five hundred dollars ($7,500) as a civil penalty for
violating G.L. c. 268A, s.3(a), and

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

[2] In determining whether the items of substantial value have
been given for or because of official acts or 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):

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."

[3] As discussed in footnote 2, 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 Cataldo and Flaherty.

[4] Section 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,

Page 795

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). This rule of law was clearly stated in
Flaherty's 1990 Disposition Agreement with the Commission. In re
Flaherty, 1991 SEC 498.

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End of Decision