In the Matter of Maureen Brennan

March 4, 2009
DECISION AND ORDER

Appearances: Karen Beth Gray, Esq.
Counsel for Petitioner

Thomas R. Kiley, Esq.
Counsel for Respondent

Commissioners: Matthew N. Kane, Jeanne M. Kempthorne, David L. Veator
Presiding Officer: Commissioner Jeanne M. Kempthorne

Background and Procedural History


This matter was commenced on February 28, 2008, with Petitioner's issuance of an Order to Show Cause ("OSC") alleging that Respondent Maureen Brennan violated G. L. c. 268A, s.s. 19 and 23(b)(3) in 2002 through 2005, while she was employed as a finance assistant by the City of Marlborough ("City") Department of Community Development ("DCD"). More specifically, the OSC alleges that Brennan, in the years 2002 through 2004, participated as a DCD employee in several matters in which Keith Wheeler ("Wheeler"), first her fiancé and then her husband, had, to her knowledge, a financial interest, in violation of sections 19 and 23(b)(3). In addition, the OSC alleges that, in or about 2005, Brennan violated section 23(b)(3) by participating as a DCD employee in processing a housing rehabilitation loan for her cousin James Matsikis and his wife Christina Matsikis.

In her Answer, Brennan denies most of the allegations of the OSC and that her actions violated G. L. c. 268A, sections 19 and 23(b)(3). She pleads the statute of limitations as an affirmative defense.[1]

In August 2008, Brennan filed a motion to dismiss, together with a supporting memorandum, affidavit and exhibits, on the grounds that the statute of limitations,
930.CMR 1.0 l (10)(a) and (f), bars Petitioner's claims. In September 2008, Petitioner filed its memorandum in opposition to the motion and, with leave, a supplemental memorandum.

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[1] The Answer pleads three additional affirmative defenses, but Brennan did
not support any of them with evidence or argument.

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Commissioner Kempthorne deferred decision on the motion, reserving it for resolution by the full Commission following the evidentiary hearing.

The matter was heard on October 20 and 21, 2008. Documents were admitted
into evidence and both parties called witnesses to testify. Brennan testified on her
own behalf. Following the hearing, the parties submitted in evidence a joint stipulation concerning the testimony of former City Solicitor James Agoritsas. Petitioner also submitted in evidence Brennan's answers to six paragraphs of the OSC and to three interrogatories.

The parties filed their concluding memoranda on December 10th. After the presentation of testimonial and documentary evidence, and upon consideration
of the evidence and the arguments of the parties, the Commission finds as follows.


Findings of Fact

During the years 2001 through 2005, Brennan held the position of DCD finance assistant, in which capacity she had served since the early 1990s. Brennan also served as the DCD finance officer. As DCD finance assistant/director, Brennan's
duties included many actions relating to DCD loans to homeowners to rehabilitate properties in the City. Brennan was never the DCD Director, Department Head or Program Manager. Brennan has been an attorney since January 2002. The DCD is overseen by the Community Development Authority, whose chairman is the Mayor.

The Wheeler Rehabilitation Project

At all times here relevant, Wheeler owned and resided in a house ("Wheeler's House") in Marlborough. In or about 2001, Wheeler contemplated applying to the
DCD for housing rehabilitation assistance. The DCD program was funded by a Community Development Block Grant ("CDBG") originating from the federal Department of Housing and Urban Development ("HUD") through the state
Department of Housing and Community Development ("DHCD"). At the time,
Wheeler and Brennan were engaged to be married.

Before Wheeler applied, Brennan disclosed her relationship with Wheeler and Wheeler's interest in applying for DCD assistance to DCD Director Alfred Lima
("Lima") and DCD administrative assistant Grace Lyons ("Lyons"). Lima and Lyons consulted with then City Solicitor James Golden ("Golden"). In a very brief conversation, they asked Golden if Wheeler could apply given his relationship with Brennan and Golden responded "Yes, but she can't touch it."[2] Whether Brennan could participate in the processing of payments or single case waivers relating to Wheeler was not addressed. Golden's advice was not put into writing and was not filed with the Commission.

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[2] We find Golden's testimony concerning this meeting credible.

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Golden did not directly discuss the Wheeler matter (or the Matsikis matter) with Brennan.

Wheeler's application was approved. The loan was closed on September 3,
2002, without Brennan's participation, except that she notarized the mortgage.
While, as DCD finance assistant/director, Brennan handled all DCD rehabilitation
loan closings, she did not handle the closing on Wheeler's loan.

At the closing, Wheeler signed a 0% interest loan promissory note for $7,700,
a 3% interest loan promissory note for $5,100, a deferred-payment loan agreement for $15,000, a security agreement for $15,000 and mortgage for $21,000 (securing the $5,100 3% interest loan and the $15,000 deferred payment loan). Lima signed the notes and agreements for the City. All or most of the loan funds were retained by the City until they were paid to the contractors performing the work for the rehabilitation project.

In connection with the loans, Wheeler signed several standard DCD documents, including a Housing Rehabilitation Program rehabilitation contract which obligated Wheeler as the property owner to pay the contractor a total of $18,224 for all services and materials necessary to complete the project. The project was defined in a "write-up" by the DCD rehabilitation specialist, to which Brennan signed Wheeler's name. Wheeler also signed a Neighborhood Improvement Program Agreement which, inter alia, required him to "correct all violations documented by the [City] Housing Rehabilitation Program inspections and as mandated by HUD requirements," and which provided, under the heading "Sanctions," "It is agreed that, if the OWNER fails to comply with these requirements and provisions, the funds conveyed or utilized as the subject matter of this Agreement, shall revert back to the Program, or if dispensed, the OWNER shall become personally liable for those such funds which shall be consistent with other applicable portions of this Agreement."

Contractors working on DCD loan-funded rehabilitation projects submit invoices for payment to the DCD, which in turn submits requests for payment to the City Auditor. The City Auditor makes such payments in response to a payment request form containing a vendor number, an amount and a signature of a person with signing authority. To the City Auditor such a signature is a representation that the goods or services being paid for had been received. Brennan had signing authority under certain conditions.

As described in the City's May 2001 application for the CDBG to the DHCD, written by Lima with the assistance of Brennan and Lyons, the proper procedure for such progress payments was to have the homeowner, rehabilitation specialist and the Program Manager all sign the form. In practice, the DCD deviated from the proper procedure for progress payments, but generally the forms were signed by more than one person.

Prepayment inspection by the rehabilitation specialist is an important part of the process as it confirms that the work being paid for was in fact performed. The standard rehabilitation contract signed by Wheeler provides that compensation paid to a contractor is subject to inspection and a determination by the rehabilitation specialist

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whether "the work thus far performed and the materials thus far supplied...are in compliance with the Write-up," and empowers the rehabilitation specialist to direct the withholding of payment to the contractor upon his determination that the work or the materials do not comply with the write-up.

On September 26, 2002, Brennan as DCD finance assistant/director processed a progress payment of $8,495 to a contractor working on Wheeler's House. On October 16, 2002, she similarly processed a progress payment of $9,909 to a contractor working on Wheeler's House. In each case, Brennan signed, ostensibly as DCD "Program Manager," a "payment request form" certifying "that all of the rehabilitation work for this progress payment has been performed in accordance with the work write-up specifications, and therefore the progress payment shall be released in accordance with the payment schedule." Although she was not the DCD Program Manager, Brennan signed as such in order to assure payment by the City Auditor. In both cases, Brennan's was the only signature on the form. The signature lines for the owner(s) and the rehabilitation specialist remained blank.

On October 19, 2002, Brennan and Wheeler married. Brennan did not take up residence in Wheeler's House until about one year later.

On March 17, 2003, Brennan as DCD finance assistant/director processed a progress payment of $2,750 to a contractor working on Wheeler's House. The contractor's invoice refers to this as a "change order." As with the 2002 payments, Brennan signed a payment request form containing the above-stated certification as DCD Program Manager, although she did not hold that position, in order to ensure payment by the City Auditor. She also initialed the contractor's invoice "Ok MB." Brennan's approval of this invoice/change order increased the project cost on Wheeler's House to $20,970. As with the two 2002 progress payments, Brennan was the only signer of the form and the signature lines for the owner(s) and the rehabilitation specialist remained blank.

Thus, in 2002 and 2003, Brennan signed a total of $21,154 in DCD progress payments to contractors working on Wheeler's House. The Housing Rehabilitation Program rehabilitation contract under which the progress payments were made obligated Wheeler as the property owner (and not the City) to pay the contractor for all services and materials necessary to complete the project. If the progress payments had not been made by the City, Wheeler would have been responsible under the rehabilitation contract for making them. Brennan was aware of this obligation of Wheeler's as the property owner given that the rehabilitation contract was a standard DCD form.

On or about June 7, 2004, Brennan prepared a Single Case Waiver form, requesting that DHCD increase the amount of rehabilitation assistance available on Wheeler's House to $29,664.95, and sent it to DHCD with a cover letter she wrote and signed as DCD Finance Officer. The form states in part "The [City] respectfully requests a waiver

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for project number 99/01-203, to exceed our per-unit limit of $25,000 and allow us to allocate a total of $29,664.95 towards this project." In the cover letter, Brennan notified DHCD that the majority of the additional funding would be in the form of a zero percent, deferred payment loan due and payable upon sale. She explained on the waiver form that the change was necessary as the project had incurred unforeseen costs. Brennan further wrote "The waiver is recommended because [Wheeler] has contributed a substantial amount of his own funds in order to make this project work..." and "is unable, at this point, to contribute additional funds in order to make this project work." Brennan further explained how it had been determined that Wheeler could not himself meet the additional cost of the project. At the time she acted, Brennan understood that if the DHCD did not approve the waiver, the City probably would require Wheeler to repay the money expended above the project limit.

Although, under DHCD procedure, a single case waiver request is supposed to precede the work, as of the time the Single Case Waiver was requested, the work at Wheeler's House had already been performed by the contractor and paid for, in whole or in part, by the City. The last four progress payments, totaling $7,120, were signed by Lima and not by Brennan. Two of the payment request forms were signed solely by Lima as "Department Head." The other two forms were signed by both Lima as Department Head and Raymond Therrien as Rehabilitation Specialist.

The DHCD approved the Single Case Waiver on July 15, 2004. The DHCD employee who approved the waiver did not know at the time that Wheeler was Brennan's husband.

The work on Wheeler's House funded by the DCD increased the value of his property. Wheeler was required to pay back the DCD funding he received.

The Matsikis Rehabilitation Loan

In 2003, Brennan participated as the DCD finance assistant in processing a housing rehabilitation loan of approximately $40,000 for her cousin James Matsikis and his wife Christina for their home in Marlborough where Christina operated a daycare center. Brennan and Lyons checked the DHCD CDBG manual to determine whether Brennan was prohibited from participating in her cousin's loan application. Brennan and Lyons then determined the Matsikises' eligibility for the loan and Brennan personally handled the loan closing. Brennan and the Matsikises are not close and do not socialize although they attended her wedding to Wheeler. Brennan and the Matsikises do not have any business relationship.


The HUD IG Subpoenas


On or about January 14, 2005, the HUD Office of the Inspector General ("HUD IG") issued two subpoenas duces tecum to the City respectively seeking "escrow records" concerning Wheeler's House (identified only by its street address) and the September

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2002 closing and Brennan's employment records. The HUD IG investigators serving the subpoenas did not disclose to Ronald Guest, who accepted service for the City, what they were investigating. In response to the subpoena for the records concerning Wheeler's House, the DCD's original file was turned over without a copy of the file being retained. Guest did not connect the street address on the subpoena with Wheeler or Brennan. The record is unclear as to whether and, if so, when the DCD received the file or a copy of the file back from the HUD IG.

Sometime after the HUD IG subpoenas were served, Lima informed then City Solicitor Agoritsas that Wheeler owned the house in question and of Wheeler and Brennan's relationship. Lima also told Agoritsas of the advice that had been sought and received from then-City Solicitor Golden in 2001 and of controls that, according to Lima, had been put in place so that Brennan would not participate in the decision-making concerning Wheeler's loan. Lima and Agoritsas did not discuss Brennan's participation in the Wheeler progress payments or Single Case Waiver and, at the time, neither was aware of that participation. After speaking with Lima, Agoritsas spoke with Golden. Based on his conversations with Lima and Golden, Agoritsas did not perceive any problems with Brennan's involvement in the rehabilitation assistance provided to Wheeler, which appeared to him to be purely ministerial.

Sometime later, Brennan and Agoritsas spoke briefly and she told him that she did not participate in the application or qualification of Wheeler's loan or in any decision-making regarding the file. Brennan did not inform Agoritsas of her participation in authorizing the Wheeler progress payments, change order or Single Case Waiver request or her involvement in the Matsikis matter.

On or about January 25, 2005, Lima and Agoritsas met with the HUD IG investigators who did not provide them with any details of what the investigation had yielded to that point. They did not address Brennan's participation in the progress payments or the single case waiver for Wheeler's House.

Brennan did not seek a section 19(b)(1) exemption from her appointing authority concerning her participation in the Wheeler matter, nor did she make any section 23(b)(3) disclosures regarding her participation in either the Wheeler or the Matsikis matters.


III. Decision


The burden of proving Brennan's alleged violation of G. L. c. 268A is on Petitioner, which must prove its case by a preponderance of the evidence. 930 CMR 1.01(9)(m)(2). The burden of proving compliance with an exemption to a prohibition under G. L. c. 268A is on the public employee claiming the exemption. In re Pathiakis, 2004 SEC 1167; In re Cellucci, 1988 SEC 346.

Respondent's Statute of Limitations Affirmative Defense and
Motion to Dismiss

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Under the Commission's statute of limitations regulation, an order to show cause must issue within three years after a disinterested person learned of the violation. 930 CMR 1.02(10)(a). Pursuant to the regulation and Commission precedent, in the face of Brennan's statute of limitations affirmative defense and motion to dismiss, Petitioner has the burden of showing that it (and, as to the alleged section 23 violations, a disinterested person capable of acting for the City) did not know, nor should have known, of the alleged violations more than three years prior to the issuance of the OSC. In the Matter of James H. Quirk, 1998 SEC 918, 920; In the Matter of Michael J. O'Toole, 2008 SEC (Commission Adjudicatory Docket No. 07-0001, Decision and Order issued September 30, 2008); 930 CMR 1.02(10)(c). Petitioner may satisfy this burden by submitting the affidavits required by 930 CMR 1.02(10)(c) (1), (2) and (3). Id.


Petitioner Has Met Its Burden under 930 CMR 1.02 (10)(c)


Petitioner has met its burden under 930 CMR 1.02 (10)(c) (1), (2) and (3) by providing affidavits by an investigator from the Commission's Enforcement Division,
the Chief of the Criminal Bureau of Attorney General's Office, the Chief Trial Counsel of the Middlesex District Attorney's Office, and the City's Mayor and Chairman of the Community Development Authority. Consistent with the regulation, the affidavits indicate that the records of each office have been reviewed and there is no record of any complaint relating to Brennan's alleged violations more than three years before the OSC was issued.[3] Accordingly, the affidavits are sufficient to shift to Brennan the burden under 930 CMR 1.02 (10)(d).


Brennan Has Not Met Her Burden under 930 CMR 1.02 (10)(d)

930 CMR 1.02 (10)(d) provides that if the petitioner meets its burden under 930
CMR 1.02 (10)(c), as Petitioner has done, the respondent "will prevail on the statute of limitations defense only if he/she shows that more than the three (3) years before the order was issued the relevant events were either: (1) a matter of general knowledge in the community, or (2) the subject of a complaint to the Ethics Commission, the Department of the Attorney General, the appropriate Office of the District Attorney, or, with respect to a section 23 violation only, the respondent's public agency." Thus, under 930 CMR 1.02 (10), a respondent's public agency's knowledge of its employee's alleged conflict of interest which is not also general knowledge in the community and which is not communicated to the Commission, the Attorney General or the relevant district attorney, is of significance only with respect to Petitioner's section 23 claims. Therefore, proof of the City's receipt of a complaint concerning Brennan's alleged violations more than three years before the OSC was issued would bar Petitioner's section 23 allegations against Brennan, but would have no effect on Petitioner's section 19 allegations.

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[3] Brennan has not challenged the sufficiency of the affidavits. We find that the affidavits of the Attorney General's Office and the Middlesex District Attorney's Office establish that neither office received a relevant complaint more than three years before the OSC's February 28, 2008 issuance notwithstanding their use of the phrase "prior to February 27, 2005," given that February 27, 2005 was a Sunday. To the degree that the Mayor's affidavit fails to fully comply with the regulation, we find that those deficiencies are cured by the other evidence in the record of the City's knowledge. As Quirk and O'Toole demonstrate, the Commission may look at evidence beyond the affidavits in determining whether or not Petitioner's claims are time-barred under the regulation.

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Brennan did not attempt to prove that the relevant events concerning her alleged violations were a matter of general knowledge in the community, and the evidence would not support that conclusion. Nor did Brennan attempt to prove, and the evidence does not suggest that the relevant events were "the subject of a complaint" to the Commission, Attorney General, District Attorney or the City more than three years before the OSC issued.[4] Accordingly, Brennan has not met her burden under 930 CMR 1.02 (10)(d).

Brennan instead argues that Petitioner's claims are time-barred because, she asserts, disinterested parties capable of acting on behalf of the City received notice of her alleged violations more than three years before the OSC issued:

a) when Brennan disclosed the Wheeler application to DCD Director Lima,
who in turn informed City Solicitor Golden, in October 2001;

b) when the HUD IG subpoenaed the file on Wheeler's House and Brennan's personnel records, in January 2005; and

c) when City Solicitor Agoritsas and Lima were notified of HUD's action in seizing the file and records, and Agoritsas met with Brennan, in January 2005.

Brennan argues that, as City Solicitors, Golden and Agoritsas were disinterested persons capable of acting on behalf of the City to enforce the conflict of interest law, and that, under the principles of Nantucket v. Beinecke, 379 Mass. 345 (1979), and Quirk, the three-year statute of limitations period of the Commission's regulation began to run upon notice to them of the alleged violations and, thus, had lapsed prior to the issuance of the OSC on February 28, 2008. Brennan also contends that the HUD IG was a disinterested person capable of acting "on behalf of the taxpayers on the basis of the perceived conflict involving the Wheeler loan," who was aware of Brennan's violations more than three years prior to the OSC's issuance.

Brennan's arguments are not persuasive.


In contrast to the situations in Quirk and O'Toole, there is no basis in the evidence in this matter for concluding that Petitioner itself knew or should have known of Brennan's alleged violations more than three years before the OSC was issued. First, there is no legal basis for constructively attributing to Petitioner the former city solicitors' purported knowledge of Brennan's violations in the absence of evidence that they communicated that knowledge to the Commission. City solicitors are not agents of the Commission. Second, to the degree that Brennan argues for constructively attributing to Petitioner the HUD IG's purported knowledge of her alleged violations, her argument is without basis. There is no legal support for such an attribution and, in any case, the

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[4] Although Brennan, in her memorandum in support of her motion to
dismiss, refers to allegations made in 1996, the preponderance of the evidence
shows that the first complaint to the Commission relating to the events relevant
to Brennan's violations as alleged in the OSC was received in December 2005.

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preponderance of the evidence does not show that the HUD IG in fact knew of Brennan's alleged violations more than three years prior to the issuance of the
OSC. The evidence shows only that, in January 2005, the HUD IG subpoenaed
and obtained the file on Wheeler's House and Brennan's personnel file and reveals nothing about the focus of the investigation or the state of the HUD IG's knowledge prior to February 28, 2005.

In addition, even granting that City Solicitors Golden and Agoritsas were disinterested persons capable of acting on behalf of the City, the preponderance
of the evidence is that neither knew or should have known of Brennan's violations
prior to February 28, 2005. First, the evidence is clear that Golden did not in 2001,
or at any other time more than three years prior to the issuance of the OSC, know
or have reason to know of Brennan's alleged violations. Second, while it is a closer question as to what Agoritsas knew or should have known, and when, about Brennan's actions, we find that Agoritsas did not know nor should he have known of Brennan's alleged violations more than three years before the OSC issued.

Although the January 2005 HUD IG subpoenas were some notice to Agoritsas
and the City that something was possibly amiss involving Wheeler's House and Brennan, the subpoenas and the HUD IG investigators revealed little about the nature of HUD's investigation. Furthermore, the HUD IG took the original DCD file and did not leave a copy, making it difficult for the matter to be reviewed on the local level. Finally, the preponderance of the credible evidence shows that Lima and Brennan, in their separate conversations with Agoritsas, minimized Brennan's participation in the Wheeler matter to the point that Agoritsas reasonably, albeit contrary to the actual facts, concluded that Brennan's involvement was purely ministerial. Lima did not know the actual extent of Brennan's participation concerning the Wheeler matter and, thus, could not have informed Agoritsas. Brennan did not tell Agoritsas anything about the Single Case Waiver. Nor did Brennan tell Agoritsas about her involvement in any change order for the Wheeler House or in the Matsikis matter. Although Brennan testified that she told Agoritsas that she likely processed payments regarding Wheeler's House, we conclude, first, that her testimony was not credible on this point and, second, that, whatever Brennan in fact told Agoritsas about her involvement in the payments, she characterized her involvement as purely clerical and did not indicate to Agoritsas the true nature and extent of her participation (i.e., that she was the sole signer, had signed as the Program Director or Department Head and had signed without a sign-off by the rehabilitation specialist or the homeowner).

We conclude that the OSC was issued within three years after a disinterested person learned, or knew or should have known, of Brennan's violations, and was
timely issued. Accordingly, Brennan's statute of limitations-based motion to dismiss and affirmative defense fail as to all allegations against her.

The Alleged Violations

Petitioner Has Proved that Brennan Violated sections 19 and 23(b)(3) as to Wheeler

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Section 19


Section 19, in relevant part, prohibits a municipal employee from participating as such in a particular matter in which he or a member of his immediate family has, to the employee's knowledge, a financial interest.

Brennan was a municipal employee of the City at all times here relevant. As her husband since October 19, 2002, Wheeler is a member of Brennan's immediate family. Petitioner alleges that Brennan violated s. 19 in 2003 by processing a progress payment for work on Wheeler's House and, in 2004, by submitting to the DHCD a Single Case Waiver request for Wheeler's House.

The March 2003 change order/progress payment request and the June 2004
Single Case Waiver request were particular matters.[5] Each involved determinations, decisions and recommendations by Brennan. By signing the progress payment/change order and by making the Single Case Waiver request, Brennan personally and substantially participated[6] in those particular matters as a DCD employee. Particularly where she was the sole signer of each of these documents, Brennan's participation was neither ministerial nor clerical. To the contrary, in each of these matters, Brennan's participation was significant, decisive and consequential, and was thus plainly substantial.

Petitioner argues that Wheeler had a reasonably foreseeable financial interest
in the progress payments because they paid the contractor for the rehabilitation
work on Wheeler's House and because that work increased the home's value. Petitioner further argues that Wheeler had a financial interest in the Single Case Waiver because otherwise he would have been responsible for the approximately $4,000 above the $25,000 limit expended by the City on his home.

Brennan argues that Wheeler did not have any financial interest in the progress payments because they involved payments by the City to the contractor and not to Wheeler himself. She contends that Wheeler did not have any financial interest in the Single Case Waiver because the City had already paid out the funds and the waiver merely adjusted the relationship between the City and the state. In short, Brennan asserts that "there is nothing in this record to indicate any financial benefit whatsoever flowed to Mr. Wheeler from those events." According to Brennan, the progress payments did "not change Mr. Wheeler's obligations one iota."

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[5] "Particular matter" includes any application, submission, request for a ruling or determination, claim, decision or determination. G. L. c. 268A, section 1(k).

[6] Participate" includes participating in agency action or in a particular matter personally and substantially as a municipal employee through approval, disapproval, recommendation, the rendering of advice, investigation or otherwise. G. L. c. 268A, section 1(j)

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We disagree. The term "financial interest," as used in the conflict of interest
statute, is not limited to direct financial interests, but extends to reasonably
foreseeable financial interests, whether large or small, positive or negative, so
long as they are not remote, speculative or not sufficiently identifiable. EC-COI-02-2 (and cases cited).

Wheeler had a financial interest in the progress payment, first, because it was
for work on an ongoing project to make necessary and substantial repairs and improvements to his home. If the payment had not been made by the City to the contractor, the work on Wheeler's home would have ceased (unless he himself
made the payment) and he would have lost the benefit of that work. Second, the Housing Rehabilitation Program rehabilitation contract, under which the progress payment was made, obligated Wheeler as the property owner (and not the City) to
pay the contractor for all services and materials necessary to complete the project. Thus, if the progress payment had not been made by the City, Wheeler would have been responsible for making it. Finally, the funds from which the City would pay the contractor were effectively the funds Wheeler had borrowed and agreed to repay.

Wheeler also had a financial interest in the 2004 Single Case Waiver request approval. The waiver request form that Brennan drafted stated that the change was necessary as the project had incurred unforeseen costs and Wheeler had limited income and "is unable, at this point, to contribute additional funds in order to make this project work." When asked by Petitioner's counsel "So if the State did not approve this single case waiver, then Mr. Wheeler would be liable to pay back that money? Brennan answered "I mean, well, I don't know legally if he would be responsible for paying it. Keith, being the guy he is, yeah, I'm sure he would have paid it." Brennan explained that if the DHCD had not approved the waiver, the City "probably would have asked [Wheeler] to repay the money." In addition, the standard Neighborhood Improvement Program Agreement signed by Wheeler (and which Brennan signed for the CDC in connection with the Matsikis project) provides, "It is agreed that, if the OWNER fails to comply with these requirements and provisions, the funds conveyed or utilized as the subject matter of this Agreement, shall revert back to the PROGRAM, or if dispensed, the OWNER shall become personally liable for those such funds which shall be consistent with other applicable portions of this Agreement."

On our record, Wheeler's financial interests in these matters were readily foreseeable by and in fact known to Brennan at the times she acted. As a result of her years of DCD experience, including her handling all loan closings, and her personal relationship with Wheeler, Brennan was aware of the obligations imposed on Wheeler by the standard DCD forms which he had signed in obtaining DCD financing and of the likely practical and financial consequences to him if the progress payment and the Single Case Waiver she requested were not made or approved.

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Accordingly, we conclude that Brennan violated section 19 when she signed and processed the progress payment in March 2003 and again when she drafted and submitted to DHCD the Single Case Waiver request in June 2004.[7]

Section 23(b)(3)

Section 23(b)(3), in relevant part, provides that no municipal employee "shall knowingly or with reason to know... act in a manner which would cause a reasonable person, having knowledge of the relevant circumstances, to conclude that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is likely to act or fail to act as a result of kinship, rank, position or undue influence of any person or party." The section further provides, " [i]t shall be unreasonable to so conclude if such officer or employee has disclosed in writing to his appointing authority...the facts which would otherwise lead to such a conclusion." Petitioner alleges that Brennan repeatedly violated section 23(b)(3) in her DCD actions relating to Wheeler by processing two progress payments for work on Wheeler's House in 2002 and one such progress payment in 2003 and by submitting the Single Case Waiver request concerning the house in 2004.

Our record shows that there were numerous irregularities in the handling of progress payments and the Single Case Waiver request for Wheeler's House.
As described above, payments were approved and requested without the signatures of the rehabilitation specialist or the homeowner, and the Single Case Waiver request was made after the work had been completed and paid for, in whole or in part. These irregularities and others, combined with Brennan's close personal relationship with Wheeler, would, in our judgment, cause a reasonable person with knowledge of the relevant circumstances to conclude that Wheeler could improperly influence or unduly enjoy Brennan's favor in the performance of her DCD duties with respect to the progress payments and the Single Case Waiver. Brennan acted knowingly and knew or should have known how her actions would be perceived by others. Brennan did not make any disclosures as provided by section 23(b)(3).

Accordingly, we conclude that Brennan violated section 23(b)(3) each of the three times in 2002 and 2003 that she processed progress payments for Wheeler's House and also when she requested the Single Case Waiver for Wheeler's House.


Petitioner Has Not Proved that Brennan Violated section 23(b)(3) as to the Matsikises
Petitioner alleges that Brennan violated section 23(b)(3) by approving her cousin's financing application and handling the closing and other related matters.

The evidence establishes that Brennan handled the Matsikises' application for rehabilitation assistance, including determining their eligibility and handling the closing on their financing. We find, however, that Brennan and the Matsikises, while related, are not close and rarely even see each other.

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[7] Brennan did not meet the requirements for an exemption from section 19.

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There is no evidence of any irregularities in the handling of the Matsikis matter, let alone any evidence that the Matsikises received any special treatment or any benefit to which they were not eligible and entitled. For example, there is no evidence in the record that Brennan handled any progress payment request relating to the Matsikises' project, much less that such requests were signed only by Brennan.

Accordingly, we conclude that Petitioner has not proved that Brennan violated
section 23(b)(3) in her actions regarding the Matsikises.

Conclusion


We summarize our rulings as follows:

First, that the OSC was timely issued and that Brennan's motion to dismiss
and affirmative defense based on the statute of limitations fail as to all allegations against her.

Second, that Brennan violated G. L. c. 268A, sections 19 and 23(b)(3), as alleged, in her official actions relating to Wheeler and Wheeler's House. Specifically, that Brennan violated section 19 when she signed and processed the progress payment in March 2003 and again when she drafted and submitted to DHCD the Single Case Waiver request in June 2004, and Brennan violated section 23(b)(3) each of the three times in 2002 and 2003 that she processed progress payments for Wheeler's House and also when she requested the Single Case Waiver for Wheeler's House.

Third, that Petitioner has not proved its allegations that Brennan violated
section 23(b)(3) in her actions relating to the Matsikises.


Order


Brennan's motion to dismiss is DENIED. Having concluded that Respondent Brennan violated G. L. c. 268A, sections 19 and 23(b)(3), as specified above, the Commission, pursuant to the authority granted it by G. L. c. 268B, section 4(j), hereby ORDERS Brennan to pay a total civil penalty of $5,000 for those several violations. Finally, the claim that Brennan violated section 23(b)(3) in her actions relating to the Matsikises is DISMISSED.

DATE AUTHORIZED: February 20, 2009

DATE ISSUED: March 4, 2009

SIGNED:

/s/Matthew N. Kane

/s/Jeanne M. Kempthorne

/s/David L. Veator

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NOTICE OF APPEAL

Respondent is notified of her right to appeal this Decision and Order pursuant
to G. L. c. 268B, section4(k), by filing a petition in the Superior Court within thirty (30) days of the issuance date.

To: Thomas R. Kiley, Esq.
Cosgrove, Eisenberg & Kiley, P.C.
One International Place, Suite 1820
Boston, MA 02110-2600

BY FAX & FIRST CLASS MAIL

Karen Beth Gray, Esq.
Deputy Chief, Enforcement Division
State Ethics Commission
One Ashburton Place, Room 619
Boston, MA 02108

BY HAND

-14-

End of Decision