Public Enforcement Letter 97-1

Richard Penn

August 9, 1996


Dear Mr. Penn:

As you know, the State Ethics Commission ("the Commission")
has conducted a preliminary inquiry into allegations that you
violated the state conflict of interest law, General Laws c. 268A,
by participating as a member of the Revere City Council in matters
in which Wonderland Greyhound Park, Inc., a private corporation of
which you are an employee, had a financial interest. Based on the
staff's inquiry (discussed below), the Commission voted on August
8, 1996, that there is reasonable cause to believe that you
violated the state conflict of interest law, G.L. c. 268A, s.19.
In view of certain mitigating circumstances, the Commission does
not believe that further proceedings are warranted. Instead, the
Commission has determined that the public interest would be better
served by bringing to your attention, and to the attention of the
public, the facts revealed by the preliminary inquiry and by
explaining the application of the law to such facts, with the
expectation that this advice will ensure your understanding of and
future compliance with the conflict of interest law. By agreeing
to this public letter as a final resolution of this matter, you do
not admit to the facts and law discussed below. The Commission and
you have agreed that there will be no formal action against you in
this matter and that you have chosen not to exercise your right to
a hearing before the Commission.


I. Facts


1. At all times relevant, you were a member of the Revere
City Council. You were also an employee of Wonderland Greyhound
Park, Inc. ("Wonderland").

2. Wonderland and Westwood Development, Inc. are wholly
owned subsidiaries of Westwood Group, Inc. ("WGI"). WGI owned
fifteen acres of land abutting Wonderland Greyhound Park. WGI had
used the land to secure a $3 million loan from U.S. Trust Company.
In December 1983 WGI conveyed the property to Wonderland subject to
U.S. Trust's mortgage, and Wonderland assumed WGI's note as a co-
obligor. In May 1992 Westwood Development, Inc. used nine acres of
the property to secure a $4.5 million note from MSCGAF Realty
Trust. Wonderland agreed to act as a guarantor of Westwood
Development's $4.5 million note. On April 15, 1993, Revere Realty
Group, Inc. took title to lots 6, 7, & 8 of the parcel. Thus,
Westwood Development owned nine acres of the original fifteen
acres, while Revere Realty Group owned the remaining six acres.

3. On March 22, 1993, you sought advice from the Commission
on whether you could participate in the Revere City Council's
review of the special permit application submitted by the Revere
Realty Trust. You disclosed that Revere Realty Trust was seeking
to build a shopping center on land owned by the general manager for
Wonderland and by Wonderland itself, and that you were an employee
of Wonderland and a city councilor.

4. On April 12, 1993, the Commission's Legal Division issued
an informal advisory opinion to you, which provided in pertinent
part as follows:

Section 19 prohibits municipal employees from
participating in particular matters in which they or
their immediate family members or partners, or a business
organization in which he is serving as officer, director,
trustee, partner or employee has a direct or reasonably
foreseeable financial interest. See, e.g. EC-COI-89-19.
The financial interest must be "direct and immediate, or
at least reasonably foreseeable." EC-COI-84-123; 84-98;
86-25; 84-96.

Under s.19, your employer's financial interests are
imputed to you. Since the [Wonderland Greyhound] Park
has a financial interest in the special permit, you may
not participate as a city councilor in that particular
matter. Participation includes discussion and informal
lobbying of colleagues, as well as voting (binding and
non-binding). EC-COI-92-30. Under s.19, if any
financial interest is implicated, no matter how small, or
whether the affect is positive or negative, participation
is impermissible. EC-COI-84-96.

5. National Development Associates of New England ("National
Development"), the developer of the fifteen acres, planned to build
a 157,500 square-foot retail shopping complex on the property. On
July 9, 1993, National Development submitted a special

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permit application to the Revere City Council to exceed the 10%
retail use restriction for the zoning area encompassing the
property.[1] National Development's purchase and sale agreement
was conditioned on the City's issuance of the special permit. The
permit application listed Revere Realty and Westwood Development as
the owners of the affected land.

6. Pursuant to the advice received from the Commission, you
attended but did not participate in an August 30, 1993 City Council
public hearing on the special permit application.

7. Sometime in December 1993 City Council President Arthur
Guinasso sought an advisory opinion from City Solicitor Richard
Villiotte on the upcoming city council vote on the special permit
application, which required a two-thirds majority of the city
council (at least eight of the eleven councilors) to pass.
Believing that at least four councilors had conflicts of interest
as they or their family members were Wonderland employees, Guinasso
sought Villiotte's advice on invoking the Rule of Necessity to
permit all eleven councilors to vote on the matter.[2]

8. Six councilors had no hint of a conflict of interest. At
least four city councilors had apparent s.23(b)(3) conflicts of
interest in the matter, as their family members but not themselves
were employees of Wonderland.[3] You were the only councilor with
a s.19 problem by virtue of your employment at Wonderland.[4]

9. Villiotte researched the Rule of Necessity and provided
the city council with a written opinion on December 9, 1993.
Relevant portions of that opinion provide:

It is my understanding that several city councilors may
have a conflict of interest or have the appearance of a
conflict because of their own employment or the
employment of a member of their immediate family by
Wonderland Greyhound Park, Inc. It is also my
understanding that if all of the councilors who have a
conflict of interest are disqualified from voting on the
Wonderland Marketplace special permit, then the Council
cannot act on said permit; because it will not have a
sufficient number of councilors who can vote to
constitute the two-thirds vote required (or conversely
the four votes necessary to deny the special permit).

Villiotte suggested the following procedure: (1) all
councilors who may be disqualified from voting advise the council
president prior to the vote; (2) if the number of councilors
disqualified is four or more, making an affirmative two-thirds vote
impossible, the council president should invoke the Rule of
Necessity; (3) all disqualified councilors would then be eligible
to vote under the Rule of Necessity; and (4) the meeting minutes
should clearly state that the Rule of Necessity was invoked due to
the insufficient number of qualified councilors to reach a two-
thirds vote.

10. Villiotte's opinion was read into the record of the city
council's December 13, 1993 meeting. Thereafter, pursuant to
Villiotte's opinion, you and Councilors Tata, Singer and Santos-
Rosa gave notice to Council President Guinasso of your "concerns
relative to apparent conflicts of interest." Guinasso then invoked
the Rule of Necessity to enable all city councilors to vote on the
matter.[5]

11. Eight city councilors voted in favor of the special
permit application, including yourself, Guinasso, Santos-Rosa,
Singer and Tata. One councilor voted in opposition to the permit,
and two councilors voted present.


II. Discussion


As a member of the Revere City Council you are a municipal
employee within the meaning of G.L. c. 268A, s.1(g). As such, you
are subject to the conflict of interest law, G.L. c. 268A,
generally, and in particular, for the purposes of this discussion,
to s.19 of the statute.

Section 19 of G.L. c. 268A prohibits a municipal employee from
participating[6] as a municipal employee in a particular matter[7]
in which to his knowledge he or a business organization in which he
serves as an employee has a financial interest.[8] While
s.19(b)(1) provides an exemption for appointed municipal employees,
there is no exemption for elected employees.

The decision by the city council on the special permit
application was a particular matter. As explained below, your
employer had a financial interest in this particular matter.[9]
You knew of this financial interest, as indicated by your seeking
and receiving an informal advisory opinion from the Commission.
Nevertheless, you participated as a city councilor in this
particular matter on December 13, 1993, by voting on

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the special permit application. Therefore, it appears that you
violated s.19.

As stated above, you voted on the special permit matter only
after the city council president invoked the Rule of Necessity in
reliance on City Solicitor Villiotte's advice. In advising the
city council, however, Villiotte did not appreciate that invoking
the Rule of Necessity was not required if all of the conflicted
councilors, except for you, cured their conflicts by filing
s.23(b)(3) disclosures. Villiotte believed "a conflict was a
conflict" for purposes of applying the Rule of Necessity.

Nevertheless, resort to the Rule of Necessity was unnecessary
because an adequate number of city councilors had no conflicts or
could have cured their conflicts.[10] You were the only councilor
with a s.19 problem by virtue of your own employment at Wonderland.
Your s.19 conflict could not be cured. Thus, as you were the only
councilor truly disqualified from voting, the Rule of Necessity was
improperly invoked.

Reliance on a city solicitor's advice is a defense to a
conflict of interest charge only if the opinion is in writing and
has been submitted to and approved by the Commission. Had
Villiotte submitted his opinion to the Commission, it would have
been reviewed for accuracy. Because Villiotte did not submit his
opinion, your s.19 violation is mitigated but not excused by
reliance on the city solicitor's faulty written advice. See
Public Enforcement Letter 87-4 (In the Matter of Walter
Johnson)(selectman violated s.17 despite good faith reliance on
erroneous town counsel opinion).

III. Disposition

Based upon its review of this matter, the Commission has
determined that your receipt of this public enforcement letter
should be sufficient to ensure your understanding of and future
compliance with the conflict of interest law.[11]

This matter is now closed.

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

[1] Although your request for advice from the Commission
disclosed that Revere Realty Trust was submitting a special permit
application for developing the property, National Development
actually submitted the application.

[2] The Commission has emphasized that the Rule of Necessity
should be invoked only as a last resort when a board is unable to
act on a matter because it lacks the number of members required to
take a valid official vote, solely because members are disqualified
from acting. EC-COI-93-12; Commission Fact Sheet: Rule of
Necessity.

[3] Of the four city councilors with s.23(b)(3) conflicts, two
councilors were in fact qualified to vote. Councilor Tata's son
was a maintenance worker at Wonderland who had no direct or
reasonably foreseeable interest in the matter. Thus, Tata's
conflict implicated only s.23(b)(3). Tata had disclosed his
conflict in writing to the city clerk, thereby curing his conflict
and leaving him free to vote on the special permit. Councilor
Santos-Rosa was also free to vote as she had no family member
employed by Wonderland at the time and, therefore, no conflict.

[4] Generally, s.19 does not prohibit public officials from
participating in particular matters in which their family members'
employers have a financial interest, although s.19 may prohibit
public officials from participating in those particular matters
where, for example, a family member will be executing the contract
for the employer. On the other hand, s.23(b)(3) reaches conduct
different than that addressed by s.19. Section 23(b)(3) forbids
municipal employees from acting in a manner which would cause a
reasonable person to conclude that the public official is likely to
act or fail to act as a result of kinship. A reasonable person
would conclude that city councilors with family members employed by
Wonderland might vote for the special permit as a result of
kinship.

[5] It appears that Guinasso also had a conflict as his wife
and son-in-law were employees of Wonderland, although the December
13, 1993 city council minutes do not indicate that he disclosed his
conflict at that meeting.

[6] "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.1(j).

[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] "Financial interest" means any economic interest of a
particular individual that is not shared with a substantial segment
of the population of the municipality. See Graham v. McGrail, 370
Mass. 133, 345 N.E. 2d 888 (1976). This definition has embraced
private interests, no matter how small, which are direct, immediate
or reasonably foreseeable. See EC-COI-84-98. The interest can be
affected in either a positive or negative way. See EC-COI-84-96.

[9] First, the likelihood of Wonderland's having to cover
Westwood Development, Inc.'s $4.5 million mortgage note, as a
guarantor, was directly linked to Westwood Development, Inc.'s
ability to pay its debts. Second, Westwood Development, Inc.'s
(and Revere Realty Group, Inc.'s) ability to pay its debts was
certainly affected by its sale of the property securing the note.
Third, the sale of the property was conditioned on the city
council's issuance of the special permit.

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Therefore, Wonderland had a financial interest in this particular
matter.

[10] The four city councilors with apparent s.23(b)(3)
conflicts of interest in the matter either had cured or could have
cured their conflicts by a public disclosure. Thus, at least ten
councilors were not disqualified from voting.

[11] The Commission is authorized to resolve violations of
G.L. c. 268A with civil fines of up to $2,000 for each
violation. The Commission chose to resolve this case with a public
enforcement letter, rather than imposing a fine, after careful consideration
of all the facts of this case, including: (i) your reliance upon the faulty
written advice of the city solicitor; (ii) a Superior Court judge's order
annulling the city council's December 13, 1993 vote (Civil Action
No. 94-0154-E, Lauriat, J.); and (iii) the lack of evidence that
you intentionally manipulated the city council's invocation of the
Rule of Necessity to enable you to vote. While none of these facts
is by itself determinative, the combination ofall of these factors,
in the Commission's view, made a publicdisposition without
a fine appropriate.

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End of Decision