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Commonwealth of Massachusetts

Public Reprimand No. 2003-11


Order (public reprimand) entered by the Board July 18, 2003.


Commencing in 1970, the respondent was employed as a police officer by the City of Boston. As a result of a knee injury, he received a disability retirement in 1981. He was admitted to the bar in 1986 and has since maintained a private practice of law, as a solo practitioner until 1995 and with a partner thereafter.

The respondent incorporated his law practice as a Massachusetts professional corporation, Edward J. Kelly, Esq., P.C., on September 1, 1987 and elected Subchapter S status for tax purposes. As such, the corporation filed an informational tax return only. Ordinary income earned by the corporation, as well as all salary earned by the respondent as an employee of the professional corporation, was reported and taxed on the respondent’s federal and state income tax returns filed jointly with his wife.

From 1981 through 1994, the respondent collected a disability retirement pension from the State-Boston Retirement System. Commencing January 1, 1995, the respondent waived collection of his disability retirement pension. In 1999, the respondent returned to active duty as a Boston police detective. He continues to maintain his private law practice.

In calendar years 1993 and 1994, the respondent deposited income earned by his professional corporation to an operating account at Quincy Savings Bank. From this account, the respondent paid business expenses and paid a salary to his secretary.

From the earned fees deposited to the operating account, the respondent in 1993 and 1994 also paid or caused to be paid many of his own or his family’s personal expenses unrelated to the law firm, with checks drawn directly from the operating account to third parties and including but not limited to payment of personal credit card debt, home heating bills, and private school tuition. He also made personal investments by remitting funds directly from the operating account to other financial institutions.

During this same time period 1993 and 1994, the respondent did not fix or establish his own salary as an employee of his professional corporation either at the start of the year or at any time during the course of the year. Instead, if adequate funds remained in the operating account in any given week after payment of business expenses, his secretary’s salary, and personal expenses, the respondent would designate a gross amount as salary, pay withholding taxes on this sum, and write or cause to be written a check to himself for the net amount.

At the end of each calendar year 1993 and 1994, the respondent determined his own “salary” as an employee of Edward J. Kelly, P.C. by preparing a list of the gross amounts from his operating account that were payable to himself during the year and causing an income tax W-2 form to be issued to himself for the total. The respondent did not include as salary any of the checks written from the operating account to third parties to pay his personal expenses or to make investments.

Pursuant to G.L.c. 32, § 91A, the respondent, as a condition of the receipt of his disability retirement pension from 1981 through 1994, was required to complete and file an annual report of earnings form each calendar year. The form required the respondent to report “any earnings from gainful employment” during the preceding year and to sign the form under oath. The respondent’s pension was subject to reduction if he earned over a certain determinable amount each year.

On May 6, 1994, the respondent signed under the penalties of perjury, and filed with the State-Boston Retirement Board, his annual report of earnings form for calendar year 1993. On March 27, 1995, the respondent signed under the penalties of perjury, and filed, his annual report of earnings form for calendar year 1994.

The respondent made no effort to ascertain the meaning of the term “earnings from gainful employment.” Without research or any inquiry to an appropriate authority, he heedlessly reported only his W 2 income on the annual report of earnings forms required by G.L.c. 32, § 91A, for the calendar years 1993 and 1994. The respondent failed to calculate and include as income or earnings the amounts he paid for personal expenses. He did not consider whether his additional payments of personal expenses directly from his operating account to his own or his family’s creditors or other third parties constituted “earnings from gainful employment” for purposes of the reporting requirement and thus improperly did not include these amounts on the forms as part of his earnings. As a result of this understatement of earnings, the forms filed for 1993 and 1994 were misleading and the respondent received and retained excess disability pension benefits in the amount of $39,468.00 for the two year period.

On May 11, 2000, the Boston Municipal Court, on application by the Office of the Attorney General, issued a criminal complaint alleging violations by the respondent of G.L.c.32 § 18(2) (filing a false statement with a retirement board), in calendar years 1993 and 1994. On that same date, the respondent was placed on pre trial probation by the court and ordered to pay restitution in the amount of $39,468 to the State-Boston Retirement Board. Restitution was made in full, also on May 11, 2000, and the respondent was discharged from probation.

The respondent’s negligent misstatement of his earnings on the annual report of earnings forms for 1993 and 1994, without intent to defraud but resulting in substantial overpayment of disability pension benefits for two years and prompting an investigation by the Attorney General’s office, constituted conduct in violation of Canon One, DR 1-102(A)(6).

This matter came before the Board on a stipulation of facts and disciplinary violations and a joint recommendation for discipline by public reprimand. The Board accepted the parties’ recommendation and imposed a public reprimand.

1 Compiled by the Board of Bar Overseers based on the record of proceedings before the Board.

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