Docket No. 599

In the Matter of Paul Gaudette

Date: December 16, 1999



DISPOSITION AGREEMENT


The State Ethics Commission ("the Commission") and Paul
Gaudette ("Gaudette") enter into this Disposition Agreement
("Agreement") 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.40).

On June 23,1999, 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
Gaudette. The Commission has concluded its inquiry and, on December
15, 1999, found reasonable cause to believe that Gaudette violated
G.L. c. 268A.

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

1. Gaudette was, during the time relevant, the building
inspector for the town of Dracut. As such, Gaudette was a municipal
employee as that term is defined in G.L. c. 268A, s. 1.

2. The building inspector's duties include issuing
building permits based on submitted applications and plans, and
enforcing the zoning and building codes.

3. On July 26,1996, Gaudette and his wife bought

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lot 33A on Diamond Drive in Dracut (number 42 Diamond Drive)from
Charles Kleczkowski ("Kleczkowski") for $65,000. The lot contained
150,718 square feet of land (3.3 1 acres).

4. Kleczkowski was then the treasurer, agent/ clerk and
sole director of K&K Equipment Inc., a development company located
in Dracut. Kleczkowski's wife, Lucille, was the president of the
corporation. Kleczkowski and/or K&K Equipment were in the process
of developing a number of properties in Dracut, including a large
subdivision known as Glenwood Estates.

5. At the time of the closing, Gaudette and his wife made
a $ 1,000 deposit on the property and borrowed $64,000 from K&K
Equipment to cover the balance of the purchase price. Gaudette and
his wife also borrowed $110,000 as a construction loan from the
Jeanne D'Arc Credit Union, secured by a first mortgage on 42
Diamond Drive. K&K Equipment's $64,000 loan to purchase the
property was secured by a second mortgage on the property, with
interest due at the rate of 91/2% per annum. Payment in full
(principal and interest) was due September 30,1996.

6. In order to obtain a construction loan from the Jeanne
D'Arc Credit Union, Gaudette had to expend certain sums that were
not refundable even if Gaudette were unable to obtain a building
permit and had to cancel the construction loan.[1/] First, Gaudette
had to pay for an initial credit report ($50), an initial appraisal
(about $250), and a flood-zone determination certificate ($25). In
addition, Gaudette had to pay various attorneys' fees and loan
closing costs to record the credit union's lien. Gaudette's total
expenditure was at least $350.

7. On or about August 21, 1996, Gaudette submitted an
application for a building permit to construct a new home at 42
Diamond Drive. He identified himself as the contractor on the job.
Gaudette estimated the square footage of the house to be 2,200 and
the cost of the work to be $85,000.[2/]

8. In his capacity as building inspector, Gaudette also
reviewed the building plans for compliance with the building and
zoning codes, and found that the plans were in compliance.[3/]
Thereafter, Gaudette signed the application, thereby authorizing
the issuance of a building permit to himself. Gaudette also set the
fee for the permit at $425 (equal to 0.5% of the construction
costs). Thereafter, Gaudette forwarded the building plans to the
fire department for approval.[4/]

9. In 1996, the formula for calculating building permit
fees was $45 times the square footage of the building, times
$5/1000 ($.005). Accordingly, the fee for Gaudette's building
permit should have been $495 ($45 x 2200 x $.005), not $425.

10. On August 22, 1996, Gaudette in his capacity as
building inspector signed the excavation and foundation permit for
42 Diamond Drive.

11. On or about September 26, 1996, a certified plot plan
for 42 Diamond Drive was submitted to the building department based
on the foundation having been poured. The plan demonstrated that
the location of the foundation met the applicable zoning
requirements. Thereafter, Gaudette as building inspector issued
himself the building permit to begin construction on the house.

12. On September 30, 1996, the Gaudettes and K&K
Equipment amended the terms of the mortgage note securing the
$64,000 loan. According to the amendment, the balance of principal
and interest was now payable in full on or before the date on which
the Gaudettes took occupancy of the property at 42 Diamond Drive.
At the same time, the Gaudettes paid K&K Equipment $50,000, which
K&K Equipment acknowledged as payment of a portion of the
outstanding principal. The principal balance due was then $14,000.

13. Gaudette completed construction on 42 Diamond Drive
in April 1997, and took occupancy shortly thereafter.[5/]

14. K&K Equipment discharged the (second) mortgage on 42
Diamond Drive on April 18,1997.

15. On June 10, 1997, Gaudette and his wife issued two
personal checks on their joint bank account to Charles Kleczkowski.
One check was for $9,000 and the other was for $5,000; they were
numbered sequentially and signed by Gaudette's wife. Kleczkowski
deposited both checks on June 25, 1997.

16. The Gaudettes repaid a total of $64,000 on their
loan: $50,000 to K&K Equipment and $14,000 to Charles Kleczkowski
directly; the Gaudettes paid no interest on their loan. Apparently,
Kleczkowski has a history of not charging interest on certain
loans.

17. During the time that Gaudette had a mortgage
arrangement with K&K Equipment, Gaudette acted as building
inspector on at least twenty matters that were of significant
interest to K&K Equipment and/or its principals, Charles and
Lucille Kleczkowski. These matters included issuing building
permits and approving final inspections for houses within the
Glenwood Estates subdivision, as well as for other properties owned
and/or developed by K&K Equipment and its principals.

18. Except as otherwise permitted, G.L. c. 268A, s. 19
prohibits a municipal employee from participating as such in a
particular matter in which to his knowledge he has a financial
interest.[6/]

19. The building inspector's decisions to issue an

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excavation and foundation permit and a subsequent building permit
for 42 Diamond Drive were particular matters.[7/]

20. As the building inspector for Dracut, Gaudette
participated[8/] personally and substantially in the decisions to
issue the excavation and foundation permit and the building permit
for 42 Diamond Drive by reviewing the application and plans,
setting the building permit fee and issuing the permits.

21. Gaudette had a financial interest in the particular
matters because, as the owner of 42 Diamond Drive and applicant for
the permits, he was obligated to pay the permit fee as established
by the building inspector. In fact, as Gaudette was able to
establish his own permit fee, he set the fee at $425 when it should
have been calculated at $495, based on the square footage of the
house.

22. Moreover, Gaudette had a financial interest in the
decisions to issue the permits because he had expended considerable
sums of money (at least $350) to obtain a construction loan from
the credit union. Those sums were not refundable even if Gaudette
had been unable to get a building permit.

23. Finally, Gaudette had a financial interest in the
decisions to issue the permits because obtaining a building permit
would ensure that he had paid $65,000 for a buildable lot and not
just a vacant parcel of land.

24. Gaudette had knowledge of his own financial interests
in the decisions to issue the permits when he acted as building
inspector in issuing them. He knew that he would be obligated to
pay the stated permit fee, he knew that he had expended non-
refundable sums of money to obtain his construction loan (which
loan he would have to cancel if he could not obtain his building
permit), and he knew that his securing a building permit would
ensure his being able to build a house on the lot he had purchased.

25. Therefore, by participating as building inspector in
the decisions to issue the permits, particular matters in which to
his knowledge he had financial interests, Gaudette violated s.
19.[9/]

26. Section 23(b)(3) prohibits a municipal employee from
knowingly, or with reason to know, acting 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 party or
person.[10/]

27. By acting as building inspector on matters of
interest to K&K Equipment and/or its principals while having a
$64,000 loan/mortgage arrangement with K&K Equipment and after
repaying the loan without any interest, Gaudette acted in a manner
that would cause a reasonable person to conclude that K&K Equipment
and/or its principals could unduly enjoy Gaudette's favor in the
performance of his official duties. By doing so, Gaudette violated
s.23(b)(3)[11/]

In view of the foregoing violations of G.L. c. 268A by
Gaudette, 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 Gaudette:

(1) that Gaudette pay to the Commission the sum of two
thousand dollars ($2,000) as a civil penalty for
violating s.s.19 and 23(b)(3); and -

(2) that Gaudette 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/] According to Gaudette, he knew that it was a buildable
lot which complied with the Dracut zoning bylaw when he and his
wife purchased it.

[2/] In fact, the square footage was approximately 2,150, just
under the estimated 2,200.

[3/] There is no evidence that the lot was not a valid
building lot or that the plans were not in compliance.

[4/] According to Gaudette, this was his usual practice with
respect to building permit applications, so long as the cost
estimates were within normal limits.

[5/] Gaudette did not perform the inspections on his own
house; those inspections were performed by other building
inspectors acting on behalf of the town.

[6/] None of the s. 19 exemptions apply here.

[7/] "Particular matter" means any judicial or other
proceeding, application, submission, request for a ruling or other
determination, contract, claim, controversy, charge, accusation,
arrest, decision, determination, finding, but excluding enactment
of general legislation by the general court and petitions of
cities, towns, counties and districts for special laws related to
their governmental organizations, powers, duties, finances and
property. G.L. c. 268A, s. 1(k).

[8/] "Participate" means to participate in agency action or in
a particular matter personally and substantially as a state, county
or municipal employee, through approval, disapproval, decision,
recommendation, the rendering of advice, investigation or
otherwise. G.L. c. 268A, s.10).

[9/] Gaudette maintains that the lot was in fact a valid
building lot and that he was entitled to a building permit for the
lot. The Commission

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makes no finding as to these facts. In any event, Gaudette's
purported compliance with the zoning bylaws does not avoid his
violation of the conflict of interest law. G.L. c. 268A, as set
forth in this Agreement. The s.19 violation addresses solely the
impropriety of Gaudette's issuing permits to himself.

[10/] Section 23(b)(3) further provides. It shall be
unreasonable to so conclude if such officer or employee has
disclosed in writing to his appointing authority or. if no
appointing authority exists. discloses in a manner which is public
in nature, the facts which would otherwise lead to such a
conclusion.- Gaudette made no such disclosure.

[11/] This Agreement does not address any gratuity issues
regarding whether Gaudette paid fair market value for his property
or should have paid interest on the $64,000 loan. Those matters are
currently under review by other government offices.

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End of Decision