Docket No. 454


In the Matter of Massachusetts Candy & Tobacco Distributors, Inc.

October 14, 1992

Disposition Agreement


This Disposition Agreement (Agreement) is entered into
between the State Ethics Commission (Commission) and
Massachusetts Candy & Tobacco Distributors, Inc. (MCTD) pursuant
to Section 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 April 13, 1992, the Commission initiated, pursuant to
G.L. c. 268B, s.4(a), a preliminary inquiry into possible
violations of the conflict of interest law, G.L. c. 268A, by
MCTD. The Commission has concluded its inquiry and, on June 16,
1992, by a majority vote, found reasonable cause to believe that
MCTD violated G.L. c. 268A, s.3.

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

1. MCTD is a Massachusetts non-profit corporation
incorporated under G.L. c. 180 to foster and advance the best
interests of those engaged in the wholesale distribution of
cigars, cigarettes, candy, tobacco and smokers' requisites and
sundries by promoting and maintaining high standards on the part
of such distributors. Twenty-one Massachusetts companies and one
New York company engaged in the distributing business comprise
MCTD's membership.

2. In 1991, MCTD paid a lobbyist $12,000 to monitor
legislative developments in Massachusetts. MCTD is opposed to any
legislative measure that would increase the cost of doing
business in its industry, such as increased unemployment
insurance premiums or cigarette tax hikes. MCTD paid the lobbyist
an additional $ 10,500 in 1991 to actively promote an amendment
to G.L. c. 64C, s.13(c).[1]

3. On August 13, 1991, MCTD hosted its third annual Sweet
Charity Golf and Tennis Invitational (Invitational) at the Ocean
Edge Resort in Brewster, Massachusetts.

4. The Invitational included a barbecue lunch, an afternoon
of golf or tennis, a cocktail hour, a clambake dinner and a
post-dinner raffle to benefit the Jimmy Fund.

5. Attendance at the event was by invitation only. MCTD
extended invitations to its members, representatives of their
wholesale suppliers and approximately 180 members of the state
Legislature. Roughly 160 individuals attended the invitational,
including over 50 state legislators, staffers and members of
their families.

6. Attendance at the Invitational was free.[2] MCTD spent
just over $29,000 in hosting the event. Attendees who
participated in all the day's events received an estimated
$141-$152 on average each in free food, alcohol, golf and
entertainment. Many attendees participated in the Jimmy Fund
raffle, which raised $6,338.27, and thus "paid" in some fashion
for a portion of their attendance costs by contributing on
average $35.

7. The Invitational served a variety of purposes. MCTD used
the Invitational as a way to bring together its members for an
enjoyable social gathering. MCTD also employed the event as a
means by which its industry could enhance its image with the
Legislature. Finally, the MCTD utilized the Invitational to raise
money for charity.

8. Section 3(a) of G.L. c. 268A prohibits, other than as
provided by law, the giving of anything of substantial value to
any state employee for or because of any official act performed
or to be performed by such employee.[3]

9. The Commission has held that private parties violate s.3
when in an effort to generate good will they entertain government
officials who are in a position to benefit them. See, e.g., In re
State Street Bank, 1992 SEC 580; In re Stone and Webster, 1991
SEC 522; In re Rockland Trust, 1989 SEC 416; see also Commission
Fact Sheet: Business and Entertainment Expenses for Public
Officials (following the U.S. Trust Public Enforcement Letter,
P.E.L. 89-1, the Commission included the payment of fees for
recreational activities such as golf as a prohibited activity).

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10. By providing a free day's outing to over 50 legislators,
staffers and family members with an intent[5] of enhancing their
industry image with the Legislature when the legislators were in
a position to benefit it, MCTD violated s.3(a).

11. MCTD asserts that its primary purposes for hosting the
Invitational were to provide a social event for its employees and
raise money for charity. The Commission will not consider a gift
to have been given "for or because of an official act" where a
subject establishes that a legitimate purpose was the motive for
the gift. In re Ackerley Communications, 1991 SEC 518, 520 n. 5.
Where a legitimate purpose only partially motivates a gift, the
gift is prohibited if the giver is also motivated by a desire to
create official good will, as MCTD concedes was the situation in
the instant case.[5]

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

1. that MCTD pay to the Commission the sum of two thousand
dollars ($2,000.00) as a civil penalty for violating G.L. c.
268A, s.3; and

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

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

[1] General Laws c. 64C prohibits predatory cigarette
pricing. The amendment sought to refine the definition of
cigarettes' "cost to wholesalers." The amendment was inserted as
an outside section of the FY 1992 general appropriations act,
which was approved by both chambers of the legislature and then
signed into law by the Governor on July 10, 1991. Mass. St. 1991,
c. 138, s.377. Due to a language error, however, the amendment to
G.L. c. 64C, s.13(c) was rendered ineffective.

[2] MCTD paid for the Invitational by soliciting donations
from its wholesale suppliers.

[3] In the past, the Commission has considered entertainment
expenses totalling $50 or more to constitute "substantial value."
Public Enforcement Letter 88-1. See, Commission Advisory No. 8
issued May 14, 1985. Furthermore, for s.3 purposes it is
unnecessary to prove that any gratuities given were generated by
some specific identifiable act performed or to be performed. In
other words, no specific quid pro quo or corrupt intent need be
shown. Rather, the gift may simply be an attempt to foster
goodwill. It is sufficient that a public official, who was in a
position to use his authority in a manner which would affect the
giver, received a gratuity to which he was not legally entitled,
regardless of whether or not that public official ever actually
exercised his authority in a manner that benefitted the gift
giver. See Commission Advisory No. $ See also United States v.
Standefer, 452 F. Sup. 1178, (W.D.P.A. 1978), aff'd other
grounds, 447 U.S. 10 (1980); United States v. Evans, 572 F.2d
455, 479-482 (5th Cir. 1978).

[4] While MCTD intended to enhance its image with the
Legislature, the Commission found no evidence that it intended to
violate the conflict of interest law. Ignorance of the law,
however, is no defense to a violation of the conflict law. See,
e.g., Scola v. Scola, 318 Mass. 1, 7 (1945); In re Burgess, 1992
SEC 570; In re Doyle, 1980 SEC 11, 13.

[5] MCTD also points to the law applicable to federal
legislators, which does not consider the waiver of fees and
payment of travel expenses a gift where a member of congress
plays as a "celebrity" in a golf tournament and provides
substantial services to the sponsor to help attract a maximum
amount of paying customers. H.R. Report 95-1837, p.9; Ethics
Manual for Members, Officers, Employees of the U.S. House of
Representatives, pp.37-8. MCTD asserts that the state legislators
it invited likewise provided a celebrity-draw service. The
Commission, however, does not share MCTD's view. Whatever
celebrity service the legislators provided, it cannot be
considered substantial since they gave no speeches on behalf of
the Jimmy Fund, sold no tickets at the raffle and their
participation was not even noted in the event's invitations or
programs. Moreover, the Invitational was not designed strictly as
a fundraiser to maximize the amount of money raised for charity
as MCTD knew from prior invitationals that their "take" from the
raffle would not cover the costs of allowing participants to
attend the event for free.

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