Docket No. 547
In the Matter of Charles F. Flaherty, Jr.
Date: March 27, 1996
This Disposition Agreement ("Agreement") is entered into
between the State Ethics Commission ("Commission") and Charles F.
Flaherty, Jr. ("Flaherty") 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.
On February 14, 1996, the United States Attorney's Office and
Flaherty brought to the Commission's attention information
indicating that he had violated the conflict of interest law, G.L.
c. 268A, and the financial disclosure law, G.L. c. 268B. The
Commission has reviewed the facts, and on March 22, 1996, voted to
find reasonable cause to believe that Flaherty violated G.L. c.
268A, s.3(b) and s.23 and G. L. c. 268B, s.6.
The Commission and Flaherty now agree to the following
findings of fact and conclusions of law:
1. 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.
2. 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.
3. On November 16, 1988, Flaherty violated G.L. c. 268A,
s.3(b) by accepting five free skybox tickets to a Boston Celtics
game from a lobbyist and an officer of Ackerley Communications of
Massachusetts, Inc. ("Ackerley"), a billboard company with business
interests before the Legislature.
4. On December 10, 1990, Flaherty signed a Disposition
Agreement with the Commission admitting that his receipt of the
Celtics tickets from Ackerley violated G.L. c. 268A, s.3(b).
The 1990 Disposition Agreement included a promise by Flaherty that
he would refrain from any further conduct in violation of G.L. c.
268A, s.3(b). During the period here relevant, Flaherty was aware
that his receipt of gratuities, of the type and under the
circumstances described herein below, would violate G.L. c. 268A,
5. From July 1990 to August 1992, notwithstanding Flaherty's
knowledge of the conflict law and despite the 1990 Disposition
Agreement, Flaherty accepted and received gratuities from
lobbyists, lobbying groups and individuals with business interests
before the Legislature, including the use of vacation homes on 13
separate occasions (totaling more than 62 days) for himself and his
guests, with a total value of approximately $13,175, as
described herein below.
II. The Newport Condominium
6. In 1991-1992, Abraham Gosman ("Gosman") was a 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 Legislature, at the times here relevant.
7. During the period here relevant, Gosman was also 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.
8. As part of the Sears Building project, Gosman sought 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. 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.
9. During the period 1991-1992, 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.
10. Robert Cataldo ("Cataldo") has been associated with
Gosman's business interests from approximately 1985 to the present.
Although he was not a registered legislative agent in
Massachusetts, Cataldo contacted public officials, including
Massachusetts legislators, on behalf of Gosman's business
interests. In 1992, Gosman asked Cataldo to participate in the
leasing and permitting for the Sears Building project. Beginning
in 1993, Cataldo became a member of the board of directors of
11. 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 friends to use the Newport condominium without
12. 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
13. Flaherty and his personal guests used 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 18-26, 1992.
14. Neither Gosman nor Cataldo was present when Flaherty used
the Newport condominium. The only people present at the Newport
condominium were Flaherty and his guests.
15. When Flaherty used the Newport condominium, he knew it
was owned by Gosman and knew that Cataldo was then involved in
promoting Gosman's various business interests, which interests
involved state legislation and/or regulatory matters as to which
legislators had influence.
16. The value of Flaherty's and his guests' use of the
Newport condominium was approximately $7,000. Flaherty did not pay
anything for the use of the Newport condominium.
III. The Cotuit House
17. During the period here relevant, Richard Goldberg
("Goldberg") was one of four partners in the Bremen Company, Ltd.
("Bremen Ltd."). Bremen Ltd. and a related trust owned and
operated a parking lot in East Boston known as Park 'n Fly.
Park 'n Fly was an off-airport parking facility used by travelers at
Logan who were parking their cars for one or more days. Goldberg
also operated the Goldberg Family Limited Partnership d/b/a Logan
Communications ("Logan Communications"), which Goldberg and his
family owned and controlled. Logan Communications owned billboards
on property near Bremen Ltd.'s parking lot and leased the
billboards to advertisers. The business activities of both Bremen
Ltd. and Logan Communications were subject to state regulation and
affected by the acts of the Legislature.
18. During the 1980's, the Commonwealth began planning to
construct a traffic tunnel from Boston, under Boston Harbor, to
East Boston. This construction project was known as the Central
Artery-Third Harbor Tunnel Project. By the late 1980's, the
Commonwealth had indicated that it intended to take all or part of
Bremen Ltd.'s parking lot and Logan Communication's billboards by
eminent domain as part of the construction of the Central Artery-
Third Harbor Tunnel. Goldberg organized his partners' opposition
to these eminent domain takings, and, by May 1990, they had
retained John E. Murphy ("Murphy"), who was known to have close
ties to Flaherty, to lobby the Legislature on behalf of Bremen Ltd.
and Logan Communications. Murphy and Goldberg lobbied the
Legislature in the Spring of 1990 to amend a revenue bill with a
provision that would have prohibited the Commonwealth from taking
Logan Communications' and Bremen Ltd.'s property by eminent domain.
The Legislature approved the bill with the amendment sought by
Goldberg and Murphy as House Bill No. 5858.
19. In July 1990, Governor Dukakis vetoed the amendment to
House Bill No. 5858. In his veto message on July 18, 1990, the
Governor indicated that another solution to the issue of the taking
of Logan Communications' and Bremen Ltd.'s land should be sought.
20. In late July 1990, Murphy signed a lease to rent a large
and luxurious vacation house in Cotuit, Massachusetts ("Cotuit
house") for the period of August 1, 1990 to September 4, 1990.
Murphy and Goldberg shared the $11,645 cost of this vacation home.
Murphy paid $2,000 rent plus $645 for the use of the telephone.
Goldberg paid $9,000 rent.
21. In August and early September 1990, Murphy and Goldberg
made the Cotuit house available for use by Flaherty, Flaherty's
guests and others.
22. Flaherty stayed at the Cotuit house four out of the five
weekends of the rental period, plus many weekdays. Murphy and
Goldberg and their guests also used the house. In all, Flaherty
stayed at the Cotuit house a total of approximately 21-25 calendar
days, a benefit worth at least $2,775 for which Flaherty paid
23. During the time that he was staying at the Cotuit house,
Flaherty knew that: (a) Goldberg was seeking legislative action to
help Bremen Ltd. and Logan Communications resist the eminent domain
takings; (b) Murphy was lobbying the Legislature on behalf of
Goldberg and several other clients; and (c) Murphy and Goldberg
were paying for the Cotuit house, although, according to Flaherty,
he did not know that Goldberg was paying more than Murphy.
24. During 1990-1992, Murphy lobbied the Legislature on
behalf of such clients as racetracks, solid waste incinerators,
hospitals, a billboard company, an electric utility, and an entity
seeking compensation for an eminent domain taking.
IV. The Kennebunkport Holidays
25. The Associated Industries of Massachusetts ("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 and of the business community at large.
During 1990-1992, AIM lobbied the Legislature on numerous bills,
including environmental/packaging legislation, reform of the
Worker's Compensation System, and taxation.
26. During the period here relevant, Mark Doran ("Doran") was
an employee of and a lobbyist for AIM. In the years 1991 and 1992,
Doran also had private clients for whom he lobbied.
27. The Choate Group is a private business retained by other
entities and businesses to lobby the Legislature. During 1990-
1992, the Choate Group lobbied the Legislature on behalf of various
28. During 1990-1992, Edward E. O'Sullivan ("O'Sullivan") was
an employee of and a lobbyist for the Choate Group. O'Sullivan was
also the Choate Group's vice-president.
29. During 1990, 1991 and 1992, Doran and O'Sullivan
organized multiple day July 4th holiday events for Flaherty and
others in Kennebunkport, Maine, where Doran's in-laws had a house.
AIM and the Choate Group paid a substantial portion of the expenses
of these holidays.
30. Approximately 18 to 25 people attended each of these July
4th holiday events at Kennebunkport. The majority of these people
knew each other and were close friends of Flaherty, including
Massachusetts lobbyists and legislators. Doran had his friends and
family members present.
31. The funds from the Choate Group, AIM and Doran were used
to pay for boat rentals, clambakes and other meals, entertainment,
and hotel rooms for some of the guests.
32. Flaherty was aware that AIM and the Choate Group had
interests in legislation. Flaherty was also aware that AIM and the
Choate Group, respectively, employed Doran and O'Sullivan as
lobbyists and gave them expense accounts which, among other things,
were used to entertain legislators. Although neither Doran nor
O'Sullivan informed Flaherty that any lobbying entity subsidized
the event, Flaherty nevertheless accepted benefits from Doran and
O'Sullivan, did not determine the amounts paid by AIM and the
Choate Group, and did not pay his proportionate share, thus
accepting a benefit of approximately $2,000.
V. The Mashpee House
33. Doran also arranged for Flaherty to spend two weekends
during 1991 at a vacation home in Mashpee, Massachusetts, owned by
a friend of Doran's. The first time Flaherty stayed at the Mashpee
house was during Memorial Day weekend, from May 23, 1991 to May 27,
1991. Flaherty invited three friends to accompany him on this
visit. The second time that Flaherty stayed at the Mashpee house
was with Doran and his wife from June 21, 1991 to June 23, 1991.
Flaherty invited a guest. The value of these two visits to Mashpee
was approximately $700. Flaherty knew on each of these occasions
that Doran had made the arrangements. Flaherty did not pay
anything for these two weekend stays in Mashpee.
VI. The Martha's Vineyard Townhouse
34. From 1974 to 1994, Jay Cashman ("Cashman") was a 50%
owner of a construction business in Massachusetts known as JM
Cashman, Inc. From 1985 to 1994, JM Cashman, Inc. had over $100
million in contracts with the Commonwealth. Among such projects,
the company repaired bridges and waterfront facilities, and
participated in some of the largest construction projects in
the Third Harbor Tunnel and Massachusetts Water Resource Authority
Treatment Plant at Deer Island.
35. J.M. Cashman, Inc. is also a member of a construction
industry group known as the Construction Industries of
Massachusetts ("CIM"). Among its activities, CIM lobbies the
Massachusetts Legislature on behalf of the interests of the
construction industry. Cashman has held various offices in CIM,
including serving as its chairman in 1993-1994, its vice-chairman
in 1992-1993, and as a board member from 1986-1992.
36. On an annual basis, the Legislature must vote to
authorize the Commonwealth to issue bonds to finance construction
projects. During the period here relevant, Cashman lobbied
Flaherty several times on behalf of CIM to secure passage of
bonding authorization for construction projects. Jay Cashman and
another CIM member also met with Flaherty to discuss CIM's position
on an initiative petition which sought to repeal a
constitutional amendment Flaherty had previously sponsored.
37. At the time here relevant, Edward Carroll ("Carroll") was
a friend of the Cashman family.
38. Cashman and other members of his family controlled a
limited partnership that owned a two-bedroom townhouse condominium
on Martha's Vineyard in an area known as Tashmoo Woods.
39. In 1991, Carroll arranged for Flaherty to use the Cashman
vacation townhouse on two occasions: March 22-24, 1991 and July
30, 1992 to August 2, 1992. Flaherty brought personal guests to
the Cashman townhouse on both occasions and no member of the
Cashman family was present during either visit.
40. When Flaherty used the Martha's Vineyard townhouse, he
knew it was Cashman's and knew of Cashman's interest in
legislation. It was also Flaherty's understanding that Cashman had
approved Flaherty's use of the Martha's Vineyard townhouse.
41. The total value of Flaherty's use of the Cashman
townhouse was $700. Flaherty did not pay Cashman anything for the
use of the Cashman townhouse.
VII. The Conflict of Interest Law
42. Section 3(b) of G.L. c. 268A, the conflict of interest
law, prohibits a state employee from, directly or indirectly,
receiving anything of substantial value for or because of any
official act or act within his official responsibility performed or
to be performed by him.
43. Massachusetts legislators are state employees.
44. Anything worth $50 or more is of substantial value for
G.L. c. 268A, s.3 purposes.
A. The Newport Condominium
45. By, in 1991 and 1992, accepting the use of the Gosman
Newport condominium on four occasions, valued at $7,000, while
Flaherty was, recently had been, or soon would be in a position to
take official actions which could affect Cataldo and/or Gosman,
Flaherty accepted items of substantial value for or because of
official acts or acts within his official responsibility performed
or to be performed by him. In doing so, Flaherty violated
B. The Cotuit House
46. By, in 1990, accepting the use of the Cotuit house from
Murphy and Goldberg, which use was valued at no less than $2,775,
while Flaherty was, recently had been, or soon would be in a
position to take official actions which could affect Goldberg
and/or other Murphy clients, Flaherty accepted items of substantial
value for or because of official acts or acts within his official
responsibility performed or to be performed by him. In doing so,
Flaherty violated s.3(b).
C. The Kennebunkport Holidays
47. By accepting the 1990, 1991 and 1992 Kennebunkport July
4th holidays, valued at no less than $2,000, while Flaherty was,
recently had been, or soon would be in a position to take official
actions which could affect Doran, O'Sullivan, AIM and/or The Choate
Group, Flaherty accepted items of substantial value for or because
of official acts or acts within his official responsibility
performed or to be performed by him. In doing so, Flaherty
D. The Mashpee House
48. By, in 1991, accepting the use of the Mashpee house from
Doran on two occasions, valued at $700, while Flaherty was,
recently had been, or soon would be in a position to take official
actions which could affect Doran, Flaherty accepted items of
substantial value for or because of official acts or acts within
his official responsibility performed or to be performed by him.
In doing so, Flaherty violated s.3(b).
E. The Martha's Vineyard Condominium
49. By, in 1991, accepting the use of the Cashman Martha's
Vineyard condominium, valued at $700, while Flaherty was, recently
had been, or soon would be in a position to take official actions
which could affect Cashman, Flaherty accepted items of substantial
value for or because of official acts or acts within his official
responsibility performed or to be performed by him. In doing so,
Flaherty violated s.3(b).
Friendship is not a defense regarding any of the foregoing
gratuities. The existence of a friendship between a public
employee and the giver of a gratuity is not a defense to a G.L. c.
268A, s.3 violation unless the friendship was the only motive for
the gratuity. In re Flaherty, 1991 SEC 498. That was not the case
here. Flaherty acknowledges that he had no social relationship
with Gosman. Although Flaherty was close personal friends with
Murphy and Doran and friendly to varying lesser degrees with the
other givers, he nevertheless acknowledges that, in each instance
described above, he knew that the givers were in considerable part
seeking his official goodwill on behalf of themselves or others who
had or would have business interests before the House. This
conduct violates G.L. c. 268A, s.3(b).
The Commission is aware of no evidence that Flaherty took or
promised to take any official action concerning any proposed
legislation which would affect any of the registered Massachusetts
legislative agents or other specific individuals in return for the
gratuities as described above. However, even if the gratuities
were intended only to foster official goodwill and access, they
were still impermissible.
In view of the foregoing violations of G.L. c. 268A, as well
as the fact that Flaherty was sanctioned by the Commission in 1990
for receiving unlawful gratuities in violation of G.L. c. 268A,
s.3(b), 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 Flaherty:
(1) that Flaherty pay to the Commission the total sum of
twenty-six thousand dollars ($26,000) as a civil penalty for
violating G.L. c. 268A, s.3(b), and
(2) that Flaherty waive all rights to contest the findings of
fact, conclusions of law and terms and conditions contained in
this agreement in any related administrative or judicial
proceedings to which the Commission is or may be a party.
 The Commission first became aware that Flaherty may have
violated G.L. c. 268A and G.L. c. 268B in 1993; however, the
Commission chose to defer any investigation of these matters
pending an inquiry by the U.S. Attorney's Office, which inquiry is
 In re Flaherty, 1991 SEC 498 ($500 fine and $150
 One of these occasions arises from Flaherty's staying at
a vacation home in Cotuit, Massachusetts during a five-week period
that a lobbyist and his client rented this home. Although Flaherty
made multiple visits to this home, and stayed approximately 21-25
days in August and September, 1990, these visits are here
collectively treated as one of the 13 occasions. Although Flaherty
and/or his guests stayed at these vacation homes on 62 calendar
days, not all such stays involved his remaining overnight.
 Beginning in or about May 1990, Goldberg and Bremen Ltd.
paid a $2,000 per month retainer for Murphy's lobbying services.
 As noted above, not all of these days involved overnight
 The Commission is not aware of any evidence that Murphy
lobbied Flaherty regarding Goldberg matters between 1990 and 1992.
Murphy did, however, lobby Flaherty regarding some of his other
clients' matters during 1991 and 1992.
 July, 1990, $500; July, 1991, $800; and July, 1992, $700.
 See Commonwealth v. Famigletti, 4 Mass. App. Ct. 584 , 587
 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."
 This same conduct also violated G.L. c. 268A, s.23(b)(3)
which prohibits a public employee from acting in a manner which
would cause a reasonable person to conclude that anyone can
improperly influence the public employee or unduly enjoy his favor
in the performance of his official duty.
 This conduct also violated G.L. c. 268A, s.23(b)(3). In
addition, where the gratuities were provided by a legislative agent
and exceeded $100 in a calendar year, their receipt also violated
G.L. c. 268B, s.6, which prohibits a public employee from knowingly
and willfully accepting from a legislative agent gifts with an
aggregate value or $100 or more in a calendar year.
 Flaherty has stated that he was unaware that AIM and The
Choate Group subsidized the entertainment during the July 4th
gatherings. Nothing in s.3 requires that the public official know
the ultimate source of an illegal gratuity. All that is required
is that the public official know that he is receiving the gratuity
for or because of official acts or acts within his official
responsibility. On the foregoing facts, that could be inferred
even if Flaherty did not know the specific identity of the all
donors. In any event, here Flaherty knew that the intermediate
sources, Doran and O'Sullivan, were prohibited sources, themselves
 This same conduct also violated G.L. c. 268A, 23(b)(3).
 This conduct also violated G.L. c. 268A, s.23(b)(3) and
G.L. c. 268B, s.6.
 This conduct also violated G.L. c. 268A, s.s.23(b)(3).
 As discussed in footnote 9, 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 the donors and Flaherty.
 Flaherty has stated that no legislation was discussed
during any of the events at issue in the instant Agreement.
However, 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). This rule of law
was clearly stated in Flaherty's 1990 Disposition Agreement with
 Because the c. 268A, s.23 and c. 268B, s.6 violations are
based on the same facts as the s.3 violations, no additional fine
is imposed for those violations.
End of Decision