In The Matter of William G. McLean
Appearing: Robert J. Cordy, Esq: Counsel for the Petitioner, State Ethics Commission William C. Wagner, Esq: Counsel for the Respondent,
William G. McLean
Commissioners: Vorenberg, Ch., Brickman, Bernstein, McLaughlin
Date: January 8, 1982
DECISION AND ORDER
I. Procedural History
The Petitioner filed an Order to Show Cause on July 14, 1981 alleging that the Respondent, William G. McLean, had violated s.s.19,20 and 23(a) of M.G.L. c. 268A, the Conflict-of-Interest Law. The Respondent filed an Answer which denied any violation of the aforementioned provisions and which, in addition, raised certain defenses based on the asserted lack of jurisdiction of the Commission and on exemptions contained in M.G.L. c. 268A.
The parties filled Cross-Motions for Summary Decision and
submitted briefs on October 26 and 28, 1981. Pursuant to notice,
a hearing on the motions was conducted on November 13, 1981 before
the Commission Vice-Chairman, Linda H. Kistler, a duly designated
presiding officer. See, M.G.L. c. 268B, s.4(c). In rendering this
Decision and Order, all members of the Commission have read the
evidence and arguments presented by the parties.[1]
II. Findings of Fact
1. Mr. McLean was appointed a member of the Woburn Golf and
Ski Authority (the Authority) and served in that capacity during
the period of 1973 until March 7, 1981 when he submitted his
resignation.
2. The Authority was established by St. 1968, c. 526. Section
5 of the Authority's enabling statute provides, in part, that
"[a]ny member, agent or employee of the Authority who contracts
with the Authority or is interested, either directly or indirectly,
in any contract with the Authority shall be punished by a fine of
not more than one thousand dollars or by imprisonment for not more
than one year, or both."
3. Mr. McLean was a director and officer of the Woburn Colf
and Social Club (the Club) from August, 1979 until March 24,1981
when he submitted his resignation.
4. The Authority and the Club entered into a contract in
August, 1973 whereby the Club would operate an earn income from the
Authority's clubhouse facilities.
5. A member of Mr. McLean's immediate family[2] was employed
by the Club from January, 1978 through March, 1981 as its
bookkeeper.
6. Mr. McLean received approximately $12,700.00 from the Club
between January 1, 1974 and March 31,1981. These funds were paid
to him from the Club's income for accounting services that he
performed for the Club as its Treasurer.
7. Mr. McLean participated as a member of the Authority in the
initial decision in 1973 approving the contract between the Club
and the Authority and in subsequent decisions to renew the contract
in 1977 and 1979.
8. The Club had no other sources of income except those which
it received from operating the Authority's clubhouse facilities
pursuant to the contract between the club and the Authority.
9. In February, 1981, Mr. McLean learned that the Commission
was investigating his receipt of compensation from the Club as a
possible violation of M.G.L. c. 268A, s.20. In March, 1981, he
submitted his resignations to both the Club and the Authority in
order to comply, in his view, with the exemption contained in
M.G.L. c. 268A, s.20(a).
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10. Thomas Higgins, Mayor of the City of Woburn since 1977,
became aware of the contract between the Club and the Authority and
of Mr. McLean's position as Treasurer with the Club at the time of
his election.[3]
III. Decision
The Respondent has been charged with violating M.G.L. c. 268A,
s.s.19, 20 and 23(a). We will address these charges separately.
A. Jurisdiction under Chapter 268A
Mr. McLean contends that he was not a municipal employee
within the meaning of M.G.L. c. 268A, s.1(g) because the Authority is not a municipal agency within the meaning of M.G.L. c. 268A,
s.1(f). Although Mr. McLean raised these points as affirmative
defenses in his Answer, he failed to pursue them in either his
brief or oral argument in support of his Motion for Summary
Decision. For the reasons stated below, we find that the Authority
is a municipal agency and that Mr. McLean was a municipal employee
for the purposes of M.G.L. c. 268A.
1. Authority
Section 1(f) of M.G.L. c. 268A defines a municipal agency as
"any department or office of a city or town government and any
council, division, board, bureau, commission, institution, tribunal
or other instrumentality thereof or thereunder." On the basis of
our review of the Authority's enabling statute, we conclude that
the Authority complies with this definition as an instrumentality
of the City of Woburn.
Under the terms of the Authority's enabling statute, St. 1968,
c. 526, the Authority was created to establish, maintain and
operate a ski business and golf club. The Authority was designated
as a public instrumentality, the exercise of whose powers are
deemed to be the performance of essential governmental functions.
The members of the Authority are appointed by the Mayor of the City
of Woburn, and the Authority makes an annual report of its
activities for the preceding calendar year to the Mayor. We regard
the interrelation between the Authority and the city of Woburn to
be sufficient for the purposes of the application of M.G.L. c.
268A. Further, s.5 of the Authority's enabling statute demonstrates
a legislative perception of the need for standards of conduct by
Authority's enabling and members which are consistent with M.G.L.
c. 268A.[4] See, In the Matter of Louis L. Logan, Commission
Adjudicatory Docket No. 131, Decision and Order, p. 17 (April
28,1981).
2. Status as a Municipal Employee
Section 1(g) of M.G.L. c. 268A defines a municipal employee
as follows:
A person performing services for or holding an office,
position, employment or membership in a municipal agency,
whether by election, appointment, contract of hire or
engagement, whether serving with or without compensation, on
a full, regular, part-time, intermittent or consultant basis,
but excluding (1) elected members of a town meeting and (2)
members of a charter commission established under Article
LXXXIX of the Amendments to the Constitution.
Inasmuch as we have previously concluded that the instrumentality
which employed Mr. McLean is a municipal agency within the meaning
of M.G.L. c. 268A, s.1(f), we conclude that Mr. McLean held a
membership in a municipal agency on a "full, regular, part-time,
intermittent or consultant basis" within the meaning of the above-
cited definition of municipal employee.
B. Chapter 268A Allegations
1. Section 19
We find that Mr. McLean violated M.G.L. c. 268A, s.19(a), by
participating in the Authority's decision to contract with the Club
in 1973 while he was an officer of the Club; (b) by participating
in the Authority's subsequent decisions in 1977 and 1979 to renew
its contract with the Club while he was being compensated by the
Club for his accounting services, and (c) by participating in the
Authority's decision in 1979 to renew its contract with the Club
while his son was employed as the Club's bookkeeper.
(a) Mr. McLean admits that he voted on the Authority's initial
decision to contract with
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the Club. He also admits that he was an officer of the Club at the
time that he voted on the matter and that the Club had no other
source of income than that which it derived from operating the
Authority's clubhouse facilities pursuant to the contracts in
question. However, Mr. McLean maintains that his act of voting did
not amount to "participation" within the meaning of M.G.L. c. 268A,
s.1(j), since his vote was not proved to be one of five that was
necessary to carry any Authority activity and further, since he had
no knowledge that he was in violation of the law, no violation
could exist.
Section 19 of M.G.L. c. 268A prohibits a municipal employee
from participating as such in a particular matter[5] in which to
his knowledge an organization in which he is serving as an officer
has a financial interest. There is no question that the Club had
a financial interest in its contracts with the Authority since the
contracts generated the Club's only source of income. We also find
that Mr. McLean's vote as an Authority member amounted to
"participation" within the meaning of M.G.L. c. 268A, s.1(j), and
that he possessed sufficient knowledge of the financial interest
for the purposes of s.19.
Under M.G.L. c. 268A, s.1(j), "participation" means to
participate in agency action or in a particular matter personally
and substantially as a . . . municipal employee, through approval,
disapproval, decision, recommendation, the rendering of advice,
investigation or otherwise." The act of voting and any number of
other activities is encompassed in the above definition of
participation. Graham v. McGrail, 370 Mass. 133 , 138, 345 N.E. 2d
888, 891(1976); Buss, The Massachusetts Conflict of Interest
Statute: An Analysis, 45 Boston University Law Review 299, 320
(1965). Further, there is nothing in M.G.L. c. 268A, s.1(j) that
indicates that participation occurs only when an individual's
actions, by voting or otherwise, are determinative.
The element of "knowledge" under s.19 of M.G.L. c. 268A does
not apply to the violation itself but to the financial interest in
question. Since Mr. McLean knew as Treasurer that the Club's only
source of income derived from the contracts it had with the
Authority, he had to know of the Club's financial interest in the
contracts.
(b) Section 19 of M.G.L. c. 268A also prohibits a municipal
employee from participating as such in a particular matter in which
to his knowledge he has a financial interest. Mr. McLean admits
that he was compensated in the amount of $12,700.00 for providing
the Club accounting services between January 1, 1974 and March 31,
1981 and that he voted on the Authority's decisions to renew its
contract with the Club in 1977 and 1979. Further, the Club had no
other source of income than the money it received pursuant to its
contracts with the Authority. Therefore, based on our previous
determination that his act of voting amounted to "participation"
within the meaning of M.G.L. c. 268A, we find that Mr. McLean
violated. s.19 by voting on the Authority's 1977 and 1979 decisions
to renew its contract with the Club. We also find that Mr. McLean
had sufficient knowledge for the purposes of s.19 because he was
clearly aware of his own financial interest in the contract.
(c) Section 19 of M.G.L. c. 268A prohibits a municipal
employee from participating as such in a particular matter in which
to his knowledge a member of his immediate family has a financial
interest. There is no question that Mr. McLean's son had a
financial interest in the 1979 contract between the Club and the
Authority since the contract generated the Club's only source of
income and Mr. McLean stipulated that his son was compensated by
the Club as its bookkeeper from January. 1978 through March, 1981.
Since Mr. McLean worked for the Club and the Authority when his son
was also employed by the Club, he clearly knew of his son's
financial interest in the contract. Mr. McLean also admits that he
voted on the Authority's 1979 decision to renew its contract with
the Club. Therefore, based on our determination that voting amounts
to participation within the meaning of M.G.L. c. 268A, we find that
Mr. McLean violated s.19 in approving the contract renewal. Our
previous analysis of the element of knowledge under s.19 also
applies in this instance.
Mr. McLean submitted an affidavit of the Mayor of the City of
Woburn to support his additional contention that because the Mayor
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had condoned his activities, Mr. McLean did not know he was in
violation of the law. However, we, have consistently held that
condonation by one s appointing official or superior does not
exempt an employee from the prohibitions of M.G.L. c. 268A. See,
In the Matter of Louis L. Logan, supra, at 29; In the Matter of
the Collector-Treasurer's Office of the City of Boston, et al.,
Commission Disposition Agreement, p. 8 (March 2, 1981). Moreover,
the United States Supreme Court has reached a similar conclusion
in interpreting comparable Conflict-of-Interest Laws covering
federal employees. In United States v. Mississippi Valley
Generating Co., 364 U.S. 520,561,81 St. Ct. 294,315(1961), the
Supreme Court held that government employees could not claim
exemption from a conflict of interest 5tatute simply because their
superiors did not discern the conflict. In order for Mr. McLean to
have qualified for the exemption with s.19, he would have had to
comply with the specific disclosure requirements of that section
in each instance. Prior to any participation, a municipal employee
must file a written statement with his appointing official, of the
circumstances and the interest at stake. Additionally, the
appointing official must exempt the employee in writing by finding
that the financial interest is not so substantial as to be deemed
likely to affect the integrity of the employee's services. See,
M.G.L. c. 268A, s.19(b). Mr. McLean did not comply with the
disclosure requirements of s.19(b), and the affidavit of the Mayor
did not fulfill this exemption requirements. Furthermore, since the
Mayor did not take office until 1977, his affidavit could have no
bearing on Mr. McLean's initial participation in the Authority's
decision to contract with the Club in 1973.
2. Section 20
The Petitioner contends that Mr. McLean had a prohibited
financial interest in the contract between the Club and the
Authority when he received $12,700.00 from the Club between January
1, 1974 and March 31,1981 for accounting services he performed as
the Club's Treasurer. Mr. McLean responds that the Petitioner must
prove that he "substantially influenced" the Authority to contract
with the Club. He also maintains that since the Club's by-laws
provided that members be compensated for their services, his salary
did not amount to a direct or indirect financial interest in a
municipal contract. On the basis of our review of the record, we
find that Mr. McLean had a prohibited financial interest in a
municipal contract in violation of M.G.L. c. 268A, s.20.
Initially, we have no doubt that Mr. McLean's salary
constituted a direct or indirect financial interest in a municipal
contract. Mr. McLean admitted that the Club had no other source of
income than that which it derived pursuant to the contracts it had
with the Authority to operate the latter's clubhouse facilities.
He also admitted that he received $12,700.00 from the Club for
performing accounting services. It follows, therefore, that the
Club would not have been in a position to compensate Mr. McLean had
it not contracted with the Authority, not-withstanding the fact
that the Club's by-laws provided that members be compensated for
their services. Since the income Mr. McLean received from the Club
can be directly attributed solely to the contracts the Club had
with the Authority, we find that Mr. McLean had a prohibited
indirect financial interest in a municipal contract in violation
of M.G.L. c. 268A, s.20. In analyzing s.20, it is the source of the
compensation and the existence of the financial interest that are
the crux of the violation. The fact that the Club's by-laws provide
that members be compensated for their services does not supersede
M.G.L. c. 268A, nor does it matter whether Mr. McLean
"substantially influenced" the parties to enter into contract.
"Because it is impossible to articulate a standard by which
one can distinguish between employees in a position to influence and those who are not, all are treated as though they have influence." Buss, supra, at 374.
While it may be true that in order to prove a
violation of M.G.L. c. 268A, s.21, one must show that the employee
"substantially influenced" the action taken by the agency, this is not the case with respect to s.20. Compare, Charbonnier v. Amico,
367 Mass. 146 ,324 N.E. 2d 895(1975)
Section 20(a) of M.G.L. c. 268A provides that it shall not be
a violation for a municipal employee to have a direct or indirect
financial interest in a contract if he "in good faith and within
thirty days after he learns of an actual or prospective violation
of this section makes full disclosure of his financial interest to
the contracting agency and terminates or disposes of the interest."
Mr. McLean argues that he fulfilled
Page 79
the exemption provided in M.G.L. c. 268A, s.20(a) because he
resigned within 30 days of learning from the Commission in 1981
that his relationship with the Club and the Authority might be in
violation of s.20. He also maintains that he fulfilled the "good
faith" requirement in s.20(a) because he had no knowledge that he
was in violation of the law. The Petitioner responds that the
thirty-day time period is triggered at the time that a municipal
employee learns of his financial interest in a contract, not when
he learns that such an interest violates the law. Furthermore, the
Petitioner argues that Mr. McLean does not fulfill the "good faith"
requirement of the s.20(a) exemption because it only applies to
those employees who have no "day-to-day knowledge" of the
activities of organizations with which they are affiliated and
which also contract with the municipality. According to the
Petitioner, the thirty-day time period started to run when Mr.
McLean received his first check from the Club in 1974 and, since
he was Treasurer of the Club, he had "day-to-day knowledge" of the
organization and could not have fulfilled the "good faith"
requirement of s.20(a). For the reasons stated below, we find that
Mr. McLean did not fulfill the requirements of the s.20(a)
exemption.
Initially. we find substantial evidence which weighs against
the contention that Mr. McLean met the "good faith" requirement of
M.G.L. c. 268A, s.20(a). Mr. McLean provided services for the Club
while he was a member of the Authority. He knew the Club was paying
him with funds it received pursuant to its contracts with the
Authority. and, as a member of the Authority, he voted on
establishing the contracts between the two entities. One of the
purposes of s.20 is to prohibit municipal employees from acquiring
a financial interest in subsequent municipal contracts which they
may have become aware of through their official positions. The
exemption provided in s.20(a) accommodates those instances where
an employee belatedly discovers his interest and allows him to
dispose of it promptly without any penalty. This principle does not
apply to those employees who are involved in the daily activities
of companies which also have contracts with the employee's
municipal employer.
In the instant case, we find that Mr. McLean did not fulfill
the "good faith" requirement provided in M.G.L. c. 268A, s.20(a).
As the Club's Treasurer, not only did he have "day-today knowledge"
of the Club's activities, but, as a member of the Authority voting on the contracts between the two entities, he could not have belatedly discovered his financial interest in the contracts. Even if we were to find that Mr. McLean fulfilled the thirty-day time
period, the fact that he participated in the awarding of the
contracts to the Club demonstrates a lack of "good faith". See,
Braucher, Conflict of Interest in Massachusetts, in Perspectives
of Law, Essays for Austin Wakeman Scott 3 (1964). On the basis of
the evidence, we find that where Mr. McLean was instrumental in
obtaining a financial interest in a municipal contract for himself,
he could not fulfill the requirement of s.20(a) and qualify for the
exemption therein.
Additionally. if we were to accept Mr. McLean's position with
respect to when the thirty-day time period starts to run, the
enforcement of s.20 would be virtually impossible since an employee
could terminate his interest upon learning of a Commission
investigation, no matter how long he had actually been in violation
of the law. Mr. McLean's position renders the enforcement of s.20
a nullity and gives this section of the statute an unworkable
meaning. See Graham v. McGrail, supra, at 140.
Lastly, ignorance of the law is no defense to a violation of
M.G.L. c. 268A. In the Matter of Louis L. Logan, supra: In the
Matter of C. Joseph Doyle, Commission Adjudicatory Docket No. 109,
Decision and Order, p. 7 (June 18, 1980). See also, Scola v. Scola,
318 Mass. 1 , 7, 59 N.E. 2d 769, 772 (1945). Mr. McLean was
responsible for being aware of any statutes or regulations which
governed his behavior as a municipal employee including M.G.L. c.
268A and the Authority's enabling statute, St. 1968, c. 526. We
find that both statutes put Mr. McLean on notice that municipal
employees are prohibited from having a financial interest in
contracts made by an agency of the same municipality.[6] See,
Conley v. Town of Ipswich, 352 Mass. 201 ,224 N.E. 2d 411(1967).
Page 80
3. Section 23 (a)
The Petitioner finally contends that Mr. McLean violated
s.23(a) of M.G.L. c. 268A by holding the position of Treasurer with
the Club and accepting compensation for services he performed in
this office. Mr. McLean argues that he did not violate s.23(a)
because he was not an "employee" of the Club, but was an officer
performing duties under and being compensated pursuant to the by-
laws of the Club. We find that Mr. McLean violated s.23(a) by
receiving compensation as the Club's Treasurer while maintaining
his membership on the Authority.
Section 23(a) of M.G.L. c. 268A prohibits a municipal employee
from "accept[ing] other employment which will impair his
independence of judgment in the exercise of his official duties."
It is undisputed that Mr. McLean received $12,700.00 in private
compensation from the Club while be served as its Treasurer. The
fact that Mr. McLean characterizes himself as an "officer" rather
than "employee" does not prevent the enforcement of the law in this
case. We cannot accept Mr. McLean's characterization as it is a
distinction without a difference under M.G.L. c. 268A. Moreover,
it would unduly hamper the enforcement of s.23(a) to give the
employment relationship such a narrow interpretation. As the Club's
Treasurer, Mr. McLean prepared the Club's financial records, and,
as a member of the Authority, he reviewed these same records. By
simultaneously holding positions with the Club and the Authority.
Mr. McLean had divided loyalties - those he owed the Club in his
private capacity and those he owed the public as a member of the
Authority. His independence of judgment was impaired because he was
on both sides of any issue concerning the Club's financial records.
We find that this is precisely the situation which s.23(a) was
designed to prohibit. See, EC-COI-81-133; 81-73.
On the basis of the foregoing, we conclude that William G.
McLean violated M.G.L. c. 268A, s.s.19, 20 and 23(a). Pursuant to
our authority under M.G.L. c. 268B, s.4(d), we hereby order Mr.
McLean to pay the civil penalties as set forth below. In arriving
at these penalties for violations of M.G.L. c. 268A, we have
carefully considered certain mitigating factors raised by Mr.
McLean, particularly the fact that the Mayor of the City of Woburn
apparently condoned Mr. McLean's dual employment arrangement, and
the fact that Mr. McLean may have been unaware that his activities
were in violation of the law. While these factors do not excuse Mr.
McLean's violations of M.G.L. c. 268A, they do furnish a basis for
our decision to impose less-than-maximum penalties in this case.
Accordingly, we order William G. McLean to:
1. Pay $500.00 (five hundred dollars) to the Commission as a
civil penalty for participating by voting on a contract involving
the Club for which he served as an officer; for participating by
voting on a contract in which he had a financial interest, and for
participating by voting on a contract in which a member of his
immediate family had a financial interest in violation of M.G.L.
c. 268A, s.19.
2. Pay $250.00 (two hundred fifty dollars) to the Commission
as a civil penalty for acquiring a financial interest in a contract
made by the Authority in violation of M.G.L. c. 268A, s.20.[7]
We order Mr. McLean to pay these penalties totaling $750.00
(seven hundred fifty dollars) to the Commission within thirty days
of receipt of this Decision and Order.
---------------
[1] Commissioner Kistler's term as a Commission member expired
following the hearing.
[2] For the purposes of M.G.L. c. 268A. immediate family is
defined as the employee and his spouse, and their parents,
children, brothers and sisters. M.G.L. c. 268A, s.1(e). In this
instance, Mr. McLean's son was the family member in question.
[3] The affidavit of the Mayor further indicated that he (the
Mayor) did not view Mr. McLean's activities as a violation of
M.G.L. c. 268A, s.19 or of s.5 of the Authority's enabling statute.
The sufficiency of the affidavit as a defense will be discussed.
infra.
[4] The provision of St. 1968, c. 526 s.5 appear in paragraph 2 of the Findings of Fact.
[5] For the purposes of M.G.L. c. 268A, "particular matter"
is defined as 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. M.G.L. c. 268A. s.1(k). (Emphasis
added.)
[6] We reiterate the fact that the Mayor's condonation of Mr.
McLean's situation does not eliminate the violation, but may be a
mitigating factor to be considered when determining sanctions.
[7] Since we have already assessed penalties under s.s.19 and
20 for conduct which also forms the basis of a violation of
s.23(a), we find no need to impose a separate penalty for Mr.
McLean's violation of s.23(a). See In the Matter of James J.
Craven, Jr., Commission Adjudicatory Docket No. 110, Decision and
Order (June 18,1980).
End Of Decision