Docket No.: 519

IN THE MATTER OF PETRUZZI & FORRESTER, INC.

Appearances:

Karen Gray, Esq.
Counsel for the Petitioner

John Petruzzi and William Forrester
Pro se for the Respondent

Commissioners: Brown, Ch., Burnes, Gleason, Larkin and McDonough
Presiding Officer: Commissioner Herbert P. Gleason, Esq.

Date: January 17, 1996


DECISION AND ORDER


I. Procedural History

The Petitioner initiated these adjudicatory proceedings on
April 6, 1995 by issuing an Order to Show Cause ("OTSC") pursuant
to the Commission's Rules of Practice and Procedure. 930 CMR
1.01(5)(a). The OTSC alleged that Petruzzi & Forrester, Inc.,
("Petruzzi & Forrester") violated G.L. c. 268A, s.3(a) by providing
certain gratuities to Massachusetts Turnpike Authority ("MTA")
employee James Flanagan ("Flanagan"). Specifically, the Petitioner
alleged that Petruzzi & Forrester violated s.3(a): by giving to
Flanagan a "free car"; and/or by giving to Flanagan a seven month
$2,000 interest-free loan; and/or by forgiving Flanagan's $2,000
debt (owed for the car); and/or by giving Flanagan a discount of
$50 or more on the fair market value of the car.


Petruzzi & Forrester filed its answer on May 30, 1995,
admitting that it had transferred a vehicle to Flanagan. Pre-
hearing conferences were held in this

Page 765

matter and in re James Flanagan (Docket No. 518) on May 8, 1995,
August 18, 1995, August 29, 1995, and October 12, 1995, with
Commissioner Gleason presiding.[1] At those conferences,
procedural issues were discussed primarily focusing on discovery
and scheduling, as well as the possibility of settlement.

An adjudicatory hearing was held in this matter and in re
James Flanagan on October 30, 1995, and November 8, 1995. At the
beginning of the hearing on October 30, 1995, the Petitioner sought
to have the Commission recognize the Answers of the Respondents as
part of the record of the adjudicatory proceeding.

At the conclusion of evidence, the parties were invited to
submit legal briefs to the full Commission. 930 CMR 1.01(9)(k).
The Petitioner submitted its brief on December 11, 1995. Petruzzi
& Forrester did not file a brief.

The parties were also invited to present their closing
arguments before the full Commission. 930 CMR 1.01(9)(e)(5).
Closing arguments were heard on December 13, 1995. Petitioner
presented its closing argument at that time as did William
Sullivan, Esq., on behalf of Flanagan. Petruzzi & Forrester did
not present a closing argument on December 13, 1995. Deliberations
began in executive session on that date. G.L. c. 268B, s.4(i); 930
CMR 1.01(9)(m)(1). Deliberations were concluded on January 17,
1996.

In rendering this Decision and Order, each undersigned member
of the Commission has considered the testimony, evidence and
argument of the parties, including the hearing transcript.[2]


II. Findings


A. Jurisdiction


It is undisputed that at times relevant to the allegations of
the OTSC, Flanagan was a "state employee" within the meaning of
G.L. c. 268A, s.3(a).


B. Findings of Fact


1. Petruzzi & Forrester is a construction company doing
business in Massachusetts. Petruzzi & Forrester has previously
provided construction services to the MTA.

2. From 1979 until March 29, 1993, the MTA employed Flanagan
as an Assistant Division Engineer. From March 29, 1993, until
August of 1994, when his employment was terminated, Flanagan was
employed by the MTA in the position of Construction Inspector.

3. MTA Assistant Division Engineers direct and participate in
the monitoring of contractors and the inspection of construction
projects to assure that plans and specifications are being properly
implemented. Responsibilities for the position include the
preparation of records involving the recording of total quantities,
payments and work performed.[3]

4. MTA Construction Inspectors monitor the activities of
construction contractors to assure that plans and specifications
are adhered to. Responsibilities for the position include
measuring quantities of materials and maintaining a daily record of
activities.[4]

5. MTA Assistant Division Engineers and Construction
Inspectors, in carrying out their responsibilities, exercise
discretion and make decisions which affect the financial interests
of the MTA contractors whom they are overseeing.[5]

6. Prior to 1992, Petruzzi & Forrester was awarded two MTA
construction contracts. Petruzzi & Forrester also served as a sub-
contractor with regard to an MTA paving contract.

7. Flanagan served as the Assistant Division Engineer with
regard to a construction project at Turnpike Interchange 11A, which
was completed during the early summer of 1990. Subsequently,
Flanagan served as the Assistant Division Engineer with regard to
a construction project at the Turnpike Interchange 9 toll plaza
during the summer and fall of 1990. During 1990, Flanagan also
served as the Assistant Division Engineer with regard to a paving
project at Turnpike Interchange 9. With regard to each of the
foregoing projects, Flanagan admitted that he supervised the work
of Petruzzi & Forrester.

8. On December 12, 1992, the MTA awarded Petruzzi & Forrester
a rock excavation contract (#851-426) valued at approximately one
million dollars.

9. With regard to MTA contract #851-426, during the period of
December 12, 1992, through March of 1993, Flanagan held the title
of Assistant Division Engineer but performed the functions of an
"office engineer".

10. Flanagan's functions with regard to MTA contract #851-426
included assembling shop drawings, using quality control ledger
numbers to prepare pay estimates and investigating extra work
orders.

11. A document entitled "Preconstruction Conference" which
was prepared in the normal course of an MTA construction project,
indicated that
Page 766

Flanagan's role in relation to MTA contract #851-426 would be
limited to assembling and reviewing shop drawings. However, in
preparing pay estimates for the contract, Flanagan was in a
position to question and verify measurements which were supplied to
him by the project inspector, Kevin Moriarty.[6]

12. With regard to MTA contract #851-426, Flanagan
participated in the review of an extra work order, resulting in a
payment to Petruzzi & Forrester of an additional $16,000, and in
the resolution of a controversy concerning the bid
specifications.[7]

13. In late March of 1993, Flanagan approached Petruzzi and
informed him that he was interested in purchasing a car owned by
Petruzzi & Forrester. The car, a 1989 Oldsmobile Cutlass Ciera
with 119,000 miles, had been previously used by a Petruzzi &
Forrester employee who no longer worked for the company.

14. Prior to April 6, 1993, Petruzzi & Forrester contacted
Brookfield Motors and received an oral (by telephone) estimate as
to the value of the car.[8] Brookfield Motors did not inspect the
car in connection with its oral estimate of the car's value.

15. Although the car was not on the market, Petruzzi &
Forrester agreed to sell it to Flanagan for $2,000 after receiving
the oral estimate from Brookfield Motors.

16. On April 6, 1993, Flanagan and Petruzzi & Forrester
signed a bill of sale which stated that Flanagan had paid and
delivered $2,000 to Petruzzi & Forester for the car.

17. On April 22, 1993, Flanagan registered the car in his
name. On or about May 7, 1993, Flanagan dropped off to Petruzzi &
Forrester the license plates that were left on the car when
Flanagan took possession of it. The Massachusetts Registry of
Motor Vehicles acknowledged receipt of the Petruzzi & Forrester
license plates on May 11, 1993.[9]

18. Flanagan paid $215 in sales tax to the Massachusetts
Registry of Motor Vehicles as a result of his purchase of the
vehicle.

19. Between April 6, 1993, and November 5, 1993, Flanagan did
not make payment of the agreed upon $2,000 purchase price. During
the same period, Petruzzi & Forrester did not pursue payment for
the car.

20. Petruzzi & Forrester understood that Flanagan could not
and, therefore, would not pay for the vehicle on April 6, 1993. In
addition, Forrester understood that Flanagan would pay for the
vehicle some time after April 6, 1993, but he did not know
when.[10]

21. Forrester understood that Flanagan had an obligation to
pay $2,000 for the car and he always intended for Flanagan to pay
that debt.[11]

22. Subsequent to April 6, 1993, Forrester put a folder
containing information on the sale of the car in his "suspense
file".[12] Because the time period following the transfer of the
vehicle was Petruzzi & Forrester's "busy season", however,
Forrester never looked in that file between April and November of
1993. Moreover, Forrester failed to follow up on the outstanding
$2,000 debt owed by Flanagan because of the fact that he alone ran
the office for Petruzzi & Forrester without any support staff.[13]

23. At all times prior to November 5, 1993, Flanagan intended
to pay Petruzzi & Forrester $2,000 for the vehicle.[14]

24. On November 2, 1993, Massachusetts State Police Officer
Walter Carlson went to the offices of Petruzzi & Forrester to
inquire about Petruzzi & Forrester's sale of the car to Flanagan.
Immediately thereafter Petruzzi & Forrester telephoned Flanagan to
inform him of the State Police investigation.

25. On November 5, 1993, Flanagan paid Petruzzi & Forrester
$2,000 for the car.

26. Between April 26, 1993 and October 5, 1994, Flanagan paid
a total of $3,322.90 for repairs to the vehicle involving the
battery, tires, starter, steering, hoses, transmission, ignition
and brakes.[15]

27. Flanagan's relationship with Petruzzi & Forrester was
based solely on his official interaction with them as an MTA
employee.[16]


III. Decision


The Petitioner contends that Petruzzi & Forrester violated
G.L. c. 268A, s.3(a). This section prohibits anyone, otherwise
than as provided for by law for the proper discharge of official
duty, from directly or indirectly, giving, offering or promising
anything of substantial value to any present or former public
employee for or because of any official act[17] performed or to be
performed by such an employee.

Page 767

We must therefore determine whether Petruzzi & Forrester gave
Flanagan an item of substantial value, and if so, whether the gift
was for or because of any official act performed or to be performed
by Flanagan.


The term "substantial value" is not defined in G.L. c. 268A.
In construing this term, both the courts and the Commission have
established a $50 threshold at which and above, a gift will be
regarded as of substantial value. See Commonwealth v. Famigletti,
4 Mass. App. 584 (1986) (a gift of $50 would be considered
substantial within the context of s.3(b)); Commission Advisory No.
8 (Free Passes) (1985); EC-COI-93-14 (re-affirming Commission's use
of $50 threshold in measuring substantial value). The Commission
has not limited its application of s.3 and the $50 threshold to
cash gifts. Rather the Commission has found tickets, meals, loans
(In re Antonelli, 1982 SEC 101) and transportation valued at $50 or
more to be of substantial value. In contrast, gifts, discounts or
meals worth less than $50 have been treated as of nominal value.
See In re Michael, 1981 SEC 59.

Here, the Petitioner alleges that by not requiring Flanagan to
pay $2,000 for the car after he had taken possession of it,
Petruzzi & Forrester gave Flanagan something of substantial value
because it:

a) gave Flanagan a "free car"; or

b) had forgiven the $2,000 debt; or

c) had given an interest free loan of $2,000 for seven
months; or

d) had given a discount of $50 or more on the fair market
value of the car.

a. Gift of a Car

The parties agree that Petruzzi & Forrester provided to
Flanagan a 1989 Oldsmobile Cutlass Ciera with 119,000 miles on
April 6, 1993. It is undisputed that Flanagan paid to Petruzzi &
Forrester $2,000, the agreed upon sales price, on November 5, 1993.
Thus, the Commission does not find that Petruzzi & Forrester
provided to Flanagan a "free car".


b. Forgiveness of Debt


The Petitioner contends that Petruzzi & Forrester gave to
Flanagan something of substantial value because the debt owed for
the vehicle had been forgiven prior to the State Police
investigation. In other words, the Petitioner would have us find
that had the State Police not investigated the transaction,
Petruzzi & Forrester would not have required Flanagan to pay the
$2,000 debt.

On this point, the Commission finds that the Petitioner has
presented no direct evidence to demonstrate that Petruzzi &
Forrester had at any time forgiven the $2,000 debt. Based on the
most obvious evidence, the fact that Petruzzi & Forrester
eventually notified Flanagan of the outstanding obligation (albeit
after the State Police investigation) and the fact that Flanagan
eventually paid the previously agreed upon purchase price of
$2,000, we conclude that Petruzzi & Forrester did not forgive the
debt. Moreover, even if we consider the Petitioner's theory that,
but for the State Police investigation, Petruzzi & Forrester had
already treated and would continue to treat Flanagan's debt as
forgiven, we do not find that the theory is supported by any direct
evidence. Flanagan testified that, at all times after receiving
the car, he intended to pay the $2,000. Mr. Forrester also
testified that there was no doubt in his mind that Flanagan was
under an obligation to pay the $2,000 agreed upon price. Thus, the
only two parties who could give definitive testimony with regard to
the terms of the transaction provided testimony in contradiction to
the Petitioner's allegation that the debt had been forgiven.

Further, we find that the circumstantial evidence put forth by
the Petitioner does not permit us to draw a reasonable inference
that Petruzzi & Forrester had forgiven the $2,000 debt. In
particular, the Petitioner has proven by undisputed evidence the
passage of a seven-month time period following the receipt of the
car and before the payment of $2,000 was made. Moreover, the
Petitioner established that the aforementioned payment occurred
only after a state police investigation concerning the car's
transfer had commenced.

In response, however, Petruzzi & Forrester argue that they
understood that Flanagan would not and could not pay for the
vehicle on April 6, 1993. Forrester testified that it was his
understanding that Flanagan would be paying for the car some time
later. We have credited Forrester's testimony that he put a
folder containing information on the sale of the car in his "suspense
file", but that because of time of year (their busy season), he
never looked in that file between April and November of 1993.
Moreover, Forrester explained that his failure to follow up on
Flanagan's payment resulted from the small size of their office.

In summary, the Petitioner's allegation that the debt was
forgiven by Petruzzi & Forrester is supported, at best, by
circumstantial evidence. However, we find Forrester's explanation
concerning his failure to collect

Page 768

the debt during the seven month period credible. This explanation
rebuts the Petitioner's circumstantial evidence. We, therefore,
conclude that the Petitioner has not proven by a preponderance of
the evidence that the debt was forgiven.


c. Interest Free Loan


The Petitioner alleged that, even if Petruzzi & Forrester
intended eventually to require Flanagan to pay for the car,
Petruzzi & Forrester provided an interest free loan of $2,000 for
seven months. However, we find that Petitioner failed to meet its
evidentiary burden concerning the value of the alleged loan, the
type of loan provided, the prevailing interest rate for an
automobile loan at the relevant time, etc. Because we cannot make
such determinations without evidence before us, we cannot
reasonably conclude that Petruzzi & Forrester provided something of
substantial value in the nature of an interest free loan.


d. Discount


The Petitioner further alleged that Petruzzi & Forrester
provided Flanagan with a discount of $50 or more on the fair market
value of the vehicle. We find that the record is devoid of clear
and reliable direct evidence demonstrating that the fair market
value of the vehicle was $2,050 or greater.[18]

The Petitioner relies on circumstantial evidence as to the
vehicle's fair market value. In particular, the Petitioner put
forth the amount of sales tax ($215) paid by Flanagan to the
Registry of Motor Vehicles on his purchase of the vehicle.
Petitioner argues that the Commission may draw an inference from
this evidence that, assuming a sales tax rate of 5%, the Registry
believed the value of the car to be $4,300. However, the
Petitioner presented no testimony or documentary evidence as to how
the Registry assesses the value of a vehicle for sales tax
purposes. Forrester testified that, based on his own inquiry of
the Registry, that agency uses a computer generated value which
does not take into account the condition or mileage of the vehicle.

The owner of the vehicle may file for an abatement if, due to the
condition of the car, the actual value is believed to be less than
that which is assigned to the vehicle by the Registry.[19] Because
there was no evidence as to how the Registry's values are arrived
at, we cannot reasonably draw an inference as to the fair market
value of the vehicle based on the Registry's collection of $215 in
sales tax.

In response to the Petitioner's allegation, the Respondent
contends that the $2,000 price paid for the car reasonably
reflected the fair market value of the vehicle. In support thereof
the Respondent submitted the NADA Official Used Car Guide for May,
1993, to demonstrate that a high mileage deduction of $2,500 would
be applicable to a 1989 intermediate or personal luxury car with
115,000 to 130,000 miles.[20] There was not, however, any
testimony or other evidence to demonstrate how this guide could be
used to assess the actual or fair market value of the car in
question.[21] Additionally, Flanagan submitted repair bills for
the vehicle which he incurred between 4/26/93 and 10/5/94 totaling
$3,322.90. Finally, Petruzzi & Forrester presented evidence that
the depreciated "value of the car", as shown on Petruzzi &
Forrester's 1993 tax return, was $1,818. As a result, the company
reported a taxable gain of $182 on the sale. There was no
testimony as to how the amount of depreciation was calculated
although the tax return was prepared by a Certified Public
Accountant.

We therefore find that the Petitioner has not put forth
sufficient direct evidence of the fair market value of the vehicle.

Moreover, we do not find the circumstantial evidence sufficiently
clear or reliable so as to permit us to draw an inference as to the
vehicle's fair market value.[22] As a result, we conclude that
the Petitioner has not proven by a preponderance of the evidence
that Flanagan received a discount of $50 or more on the fair market
value of the vehicle.

Because we conclude that the substantial value element of
s.3(a) has not been proven with regard to any of the Petitioner's
allegations, we do not reach the question: was Flanagan,
immediately prior to the transfer of the vehicle, in a position to
use his authority to affect Petruzzi & Forrester so that a gift to
him would violate s.3(a).

The Commission has previously found a s.3 violation where
gifts and other things of substantial value are given "for or
because of" the employee's official acts even where there is no
understood "quid pro quo" or intent to influence the employee's
acts. The Commission will examine the relationship between the
gratuity and the employee's official duties. The Commission has
previously explained that

[a] public employee need not be impelled to wrongdoing as a
result of receiving a gift or gratuity of substantial value,
in order for a violation of Section 3 to occur. Rather, the
gift may simply be a token of gratitude for a well-done job or
an attempt to foster goodwill. All that is required to bring
Section 3 into play is a nexus between the motivation for the
gift and the employee's public duties. If this connection
exists, the gift is prohibited. To allow otherwise would

Page 769

subject public employees to a host of temptations which would
undermine the impartial performance of their duties, and
permit multiple enumeration for doing what employees are
already obliged to do - a good job. Sound public policy
necessitates a flat prohibition since the alternative would
present unworkable burdens of proof. It would be nearly
impossible to prove the loss of an employee's objectivity or
to assign a motivation to his exercise of discretion. In re
Michael, 1981 SEC 59, 68.

In its Free Passes Advisory, the Commission announced that the
application of s.3 is not limited to instances in which matters are
actually pending before a public official, but includes prior or
future official acts as well. The Commission created a policy
whereby it will infer a "for or because of" relationship between
the gift and the recipient where there is no prior social or
business relationship between the giver and the receiver, and where
the recipient is in a position to use his authority in a manner
which could affect the giver.

We note that in this case, we have found that Flanagan took
actions in his official capacity which affected the interests of
Petruzzi & Forrester. Furthermore, Dionne testified that there was
a likelihood that Flanagan could have again been assigned to a
Petruzzi & Forrester contract after the transfer of the vehicle.


IV. Conclusion

In conclusion, the Petitioner has not proven by a
preponderance of the evidence that Petruzzi & Forrester gave to
Flanagan something of substantial value in relation to the vehicle
transaction. We therefore find that Petruzzi & Forrester did not
violate s.3(a) of G.L. c. 268A. Accordingly, this matter is now
concluded.


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


[1] Commissioner Gleason was duly designated as the presiding
officer in this proceeding. See G.L. c. 268B, s.4(e).

[2] Commissioner Gleason is not a signatory to the Decision
because his term ended prior to its issuance. He did, however,
fully participate in the Commission's deliberations and decision in
this matter.

[3] This finding is derived from a written job description for
the position of MTA Assistant Division Engineer which was admitted
in evidence.

[4] This finding is derived from a written job description for
the position of MTA Construction Inspector which was admitted in
evidence. MTA inspector Kevin Moriarty's testimony concerning his
job responsibilities further supports this finding. Flanagan's
testimony concerning his role as a Construction Inspector also
supports this finding.

[5] This finding is supported by the testimony of Ronald
Dionne, MTA Division Engineer. Although on cross-examination, Mr.
Dionne was challenged as to the extent of Flanagan's responsibility
with regard a particular contract involving Petruzzi & Forrester,
we find Dionne credible as to the general job responsibilities for
the two MTA positions. Moreover, this finding is supported by
written job descriptions for the two positions which were admitted
in evidence.

[6] This finding is supported by the testimony of Ronald
Dionne. Although Dionne admitted on cross-examination that
Flanagan did not give the final approval with regard to pay
estimates or extra work orders, we find Dionne credible with regard
to the actual role played by Flanagan on contract #851-426. We
note that Flanagan admitted preparing the pay estimates.

[7] This finding is supported by Ronald Dionne's testimony
which we find credible.

[8] Forrester's testimony as to the value placed on the car by
Brookfield Motors was unclear.

[9] This finding is based on Flanagan's testimony and several
Registry of Motor Vehicles documents including a Plate Return
Receipt.

[10] This finding is supported by the testimony of Forrester.
We note that Forrester was challenged on cross-examination
concerning his prior understanding of when Flanagan would pay for
the car. However, we find Forrester credible in that he understood
payment would be made some time after April 6, 1993, and that the
exact time for payment was not scheduled.

[11] This finding is based on Forrester's testimony which we
find credible.

[12] The "suspense file" apparently was mechanism intended to
work as a tickler system to remind Forrester of matters which would
require his future attention.

[13] We find Forrester's testimony concerning his failure to
pursue payment from Flanagan due to other more pressing concerns
credible.

[14] This finding is based on Flanagan's testimony which we
find credible. The Petitioner's introduction of evidence
concerning Flanagan's financial status in 1993 does not prompt us
to draw an inference contrary to this finding.

[15] This finding is supported by the bills for these repairs
which were admitted in evidence.

[16] Flanagan testified that his relationship with Petruzzi &
Forrester was purely business.

[17] "Official act," any decision or action in a particular
matter or in the enactment of legislation. G.L. c. 268A, s.1(h).

[18] As to the fair market value of the vehicle, Forrester
testified that he received an oral estimate from Brookfield Motors
(prior to April 6, 1993), which was based in part on a deduction
for high mileage "somewhere in the neighborhood of $2,500." On
cross examination, Forrester, claiming a lack of clear memory, put
the Brookfield Motors statement of the high mileage deduction at
"$2,900 or whatever. . . ." The testimony was unclear as to what
value was actually placed on the car by Brookfield Motors. A
written estimate from Brookfield Motors was admitted in evidence.
The written estimate, prepared by Sales Representative Troy D.
Kruzewski, was provided to Forrester in May of 1994 (more than one
year after the transaction) and states that the "average loan"
using "April's NADA official used card guide" is $2,075 which
includes a mileage deduction of $2,200. However, we do not credit
the written estimate as reliable where there was no evidence, other
than the document itself, as to how it was prepared or what the
meaning of the term "average loan" is and how it relates to the
fair market value of a used vehicle.

[19] There was no evidence as to whether Flanagan ever
attempted to obtain an abatement and if he did not, the reason for
that decision.

[20] A review of the record indicates that the document was
admitted solely for the purpose of demonstrating a mileage
deduction as opposed to the value of the vehicle in question.

[21] Because the car was not sufficiently identified, we are
unable to determine which of several values provided by the Guide
would be applicable to the car in question.

[22] For example, there was no expert testimony as to the fair
market value of a 1989 Oldsmobile Cutlass Ciera with 119,000 miles.

End of Decision