i. Procedural History
The Petitioner filed an Order to Show Cause on January 6, 1981alleging that the Respondent, George A. Michael, had violated Sections 3(b), 6, 23(d), 23(e), and 23(f) of M.G.L. Chapter 268A, the Conflict-of-Interest Law, Section 7 of M.G.L. Chapter 268B, the financial disclosure law. The Respondent filed an Answer which denied any violation of the aforementioned provisions and which, in addition, raised defenses based on the asserted unconstitutionality of the Commission's organization and procedures.
On or about March 26, 1981, Respondent filed in Superior Court a Complaint for Declaratory Judgment and requested issuance of a preliminary order against the Commission's proceedings, asserting the constitutional rights included in his Answer. The Request was denied by the Superior Court (Ronan, J.) on March 30, 1981 and this was affirmed on April 3, 1981 by the Appeals Court (Armstrong, J.).
Pursuant to notice, evidentiary hearings were conducted on April 1,6,8,10, and 28 and June 23, 24, and 30 before the Commission Vice-Chairman, Linda H. Kistler, a duly designated presiding officer. See, M.G.L. c. 268B, s.4(c). The parties thereafter filed post-hearing briefs on July 31 and August 4, 1981. In rendering this Decision and Order, each member of the Commission has heard and/or read the evidence and arguments presented by the parties.
II. Findings of Fact
1. George A. Michael ("Mr. Michael") was employed as the Director of the Mass. Division of Food and Drug from 1953 to 1981.
2. The Division of Food and Drug is a division within the Department of Public Health established by M.G.L. c. 17, s.4. It has regulatory and inspection authority over the manufacturing, wholesale and retail sale of most foods, beverages, drugs, cosmetics, bedding and upholstered furniture in Massachusetts. See, M.G.L. c. 94 and 94B. It has the authority to embargo and seek condemnation of merchandise it finds to be misbranded, adulterated, or otherwise unfit for human consumption, to order destroyed any article of bedding or upholstered furniture it finds to be contaminated in any way, to grant and suspend certain licenses, to seek criminal complaints, and to order the closure of certain businesses which do not comply with the sanitary requirements of the law. See, M.G.L. c. 94, 94B; 105 CMR 590.027, 590.126, 590.127 and 620.005.
3. The Division of Food and Drug is responsible for inspecting and approving or disapproving for sale to the public all food, drugs, cosmetics, beverages, tobacco products, bedding and upholstered furniture which have been exposed to contamination by fire, flood, or other disaster and which are being reconditioned for sale to the public ("salvage merchandise"). M.G.L. c. 94,
4. Building 19, Inc. ("Building 19") is a Massachusetts corporation formed in 1964 by Harry Andler, Gerald Elovitz and one other individual; it is engaged primarily in the business of buying, reconditioning and retailing to the public salvage merchandise.
5. Salvage merchandise owned by Building 19 has been subject to regular and frequent inspections by the Division of Food and Drug since 1964. Some of these inspections were conducted by Mr. Michael personally, and others were conducted by other inspectors from the Division of Food and Drug at Mr. Michael's direction.
6. On numerous occasions, the President of Building 19, Gerald Elovitz, discussed with Mr. Michael and received advice from him on the salvageability of merchandise which had not yet been purchased by Building 19; on some occasions, the Division of Food and Drug tested such merchandise for Building 19.
7. Since at least 1972, Mr. Michael personally participated in the evaluation of salvage merchandise from Building 19. In addition, on numerous occasions he told inspectors whether to release embargoed merchandise, what had to
be done to merchandise before it could be released for sale, and when it had to be destroyed.
8. During the period from approximately 1964 through 1980, Mr. Michael accepted discounts, ranging up to sixty percent, on merchandise he purchased at Building 19 on numerous occasions, which discounts were not and are not extended or available to Building 19's regular customers.
9. During the period from approximately 1964 through and including 1980, Mr. Michael accepted charge account privileges from Building 19, which privileges were not and are not extended or available to Building 19's regular customers.
10. During the period from approximately 1975 through and including 1980, Mr. Michael obtained discounts and charge privileges for others, including members of his family and staff at the Division of Food and Drug, from Building 19.
11. During the period from 1975 through and including 1980, Mr. Michael bought and charged merchandise, for himself and members of his immediate family and staff, from Building 19, which would have cost an ordinary customer approximately $7,000, but on which Mr. Michael received discounts, most of which ranged between 30 and 60 percent; in 1976 through 1980, inclusive, the discounts received by Mr. Michael totaled at least $100 each year.
12. Gerald Elovitz, the President of Building 19 who, for the past five years, has been responsible for extension of discounts and charge privileges, became acquainted with Mr. Michael exclusively in the context of business and regulatory dealings between Building 19 and the Division of Food and Drug, and had no independent social or familial relationship or friendship with him.
13. The maintenance of a cooperative working relationship with the Division of Food and Drug is and has been important to Building 19's business; in particular the availability of inspectors to check Building 19's merchandise promptly is and has been of benefit to the business.
14. The discounts and charge privileges noted in paragraphs 8 through 11 above, were extended to and received by Mr. Michael, at least in part, for or because of acts within his official responsibility performed or to be performed by him, as set out in paragraphs 5 through 7 above; specifically, they were extended to him in appreciation for the guidance and counsel given to the management of Building 19 by
Respondent, and the prompt inspections performed by the Division of Food and Drug at Building 19.
15. Pursuant to the requirements of M.G.L. c. 268B, Mr. Michael was designated a "public employee" as defined in Section 1(o) of that chapter, and was required to file and did file Statements of Financial Interests with the Ethics Commission for calendar years 1978 and 1979.
16. M.G.L. c. 268B requires the disclosure of gifts received by "public employees" which aggregate more than $100 in the calendar year and which come from individuals or businesses which have a direct interest in a matter or matters before the governmental body by which the public employee is employed.
17. Building 19 had a direct interest in matters before the Division of Food and Drug during 1978 and 1979.
18. Building 19 extended discounts to Mr. Michael which exceeded $100 in aggregate value in both 1978 and 1979.
19. Mr. Michael did not disclose the discounts he received from Building 19 in 1978 and 1979 in the Statements of Financial Interests which he filed with the Ethics Commission for 1978 and 1979.
20. The Bargain Center, Inc. ("Bargain Center") is a Massachusetts company, formed in 1937, and engaged in the business of buying, reconditioning and retailing to the public salvage merchandise.
21. From at least 1972 through and including 1980, Mr. Michael and other Division of Food and Drug inspectors inspected on a regular and frequent basis and at the times requested by the Bargain Center, salvage merchandise owned and proposed for sale by the Bargain Center.
22. From at least 1972 through and including 1980, Mr. Michael regularly and frequently advised the principals of the Bargain Center on how to handle and recondition its salvaged products, and approved, both directly and indirectly, such merchandise for sale to the public.
23. From at least 1976 through and including 1980, Mr. Michael accepted discounts of 15 to 25 percent on merchandise purchased at the Bargain Center, which discounts were not extended or available to the Bargain Center's regular customers; further, Mr. Michael availed himself of these discounts approximately ten times a year during that period and, on at least one occasion in 1979, the value of the discount exceeded $50.
24. On at least one occasion in 1980, Mr. Michael obtained a discount for a Diane Hurley, whom he represented to be his assistant, on merchandise she purchased at the Bargain Center; the value of the discount was $145.
25. The maintenance of a cooperative working relationship with the Division of Food and Drug is and has been important to Bargain Center's business; in particular, the availability of inspectors to check Bargain Center's merchandise promptly is and has been of benefit to the business.
26. The discounts noted in paragraphs 23 and 24, above, were extended to and received by Mr. Michael, at least in part, for or because of acts within his official responsibility performed
or to be performed by him, as set out in paragraphs 21 and 22 above.
27. Value Village, Inc, ("Value Village") is a Massachusetts company, formed in 1968, and engaged in the business of buying, reconditioning and retailing to the public salvage merchandise.
28. From at least 1973 through and including 1980, Mr. Michael, and other Division of Food and Drug inspectors at his direction, on a regular and frequent basis and at times requested by Value Village, inspected salvage merchandise owned by Value Village.
29. On at least one occasion, Mr. Michael personally advised the president of Value Village as to how to recondition products. On another occasion, three days before Easter in 1976, Mr. Michael directed two other inspectors to accompany him on the inspection of a shipment of Easter candy, owned by Value Village. The candy could not be sold until it was inspected and approved by the Division of Food and Drug, and Mr. Michael released it for sale the same day.
30. From approximately 1968 through and including 1980, Mr. Michael received a 10 to 15 percent discount on merchandise he purchased at Value Village.
31. From approximately 1968 through and including 1980, Mr. Michael purchased at least $200-$300 worth of merchandise at Value Village, on which he received discounts.
32. The discounts set out in paragraphs 30 and 31 above were extended to and received by Mr. Michael because of the prompt service which the Division of Food and Drug provided to Value Village, which service was of importance and benefit to Value Village.
33. D.G.M. Consultants ("DGM") is a food testing and consulting company doing business in Massachusetts. It is owned and operated by Dr. George T. Michael, the son of George A. Michael, the Respondent.
34. Cumberland Farms, Inc. ("Cumberland Farms") is a company doing business in Massachusetts, engaged in the business of manufacturing, processing and retailing food products. It employs DGM as a technical analytical consultant for its products at a fee of approximately $500 per month.
35. On March 13,1979, a major ammonia leak occurred in the Cumberland Farms ice cream processing plant in Canton, Massachusetts. Inspectors Babineau and Luke from the Division of Food and Drug went to the plant that same day, placed an embargo on the Cumberland Farms ice cream processing and storage facilities and on all ice cream raw materials and products then held in those facilities.
36. On March 13, and 14,1979, Inspectors Babineau and Luke, of the Division of Food and Drug, took samples of the ice cream products which had been exposed to the aforementioned ammonia leak and brought the samples to Mr. Michael's office at the Division of Food and Drug in Jamaica Plain.
37. On March 13, and 14, 1979, Mr. Michael personally participated, with others, in the testing of the ice cream samples from the Cumberland Farms plant.
38. During the period from March 13, 1979, through approximately April 30, 1979, Mr. Michael personally participated in the Cumberland Farms matter by assigning Division of Food and Drug personnel to work on the matter, by testing the aforementioned ice cream product samples, by participating in decisions on the reconditioning of some of the Cumberland Farms products which had been embargoed after the ammonia leak, and by personally contacting the management of Cumberland Farms with regard to the matter.
39. On or about March 13, 1979, Dr. George T. Michael, the owner of DGM and son of Mr. Michael, the Respondent, was asked by the management of Cumberland Farms to evaluate, test and provide professional advice on reconditioning of the ice cream exposed to ammonia by the March 13,1979 ammonia leak.
40. During the period from March 13, 1979 through approximately April 30, 1979, Dr. George T. Michael tested and evaluated this ice cream on behalf of Cumberland Farms, provided professional advice concerning the reconditioning of this product, in return for compensation, and had a financial interest in the resolution of this matter.
41. During the period from March 13, 1979 through approximately April 30, 1979, the Respondent, Mr. Michael knew that his son, Dr. George T. Michael, was being compensated by Cumberland Farms for testing and evaluating the aforementioned ice cream products and for providing professional advice on the reconditioning of those products.
42. DeMoulas Supermarkets, Inc. ("DeMoulas Markets") is a company doing business in Massachusetts, and is engaged in the business of retailing food products to the public.
43. DeMoulas Markets employs DGM as a food consultant.
44. On or about February 2,1977, all foods in the DeMoulas Markets' warehouse located in Tewksbury, Massachusetts, were seized by the U.S. Food and Drug Administration due to rodent infestation; a consent decree was subsequently entered and a bond posted by DeMoulas Markets.
45. On or about February 4, 1977, DeMoulas Markets hired DGM to develop and implement a reconditioning program in order to secure the release of the bond which had been posted pursuant to the aforementioned seizure, and DGM, therefore, had a financial interest in the matter.
46. During the period from February 4, 1977 through at least March, 1977, the Respondent, Mr. Michael, initiated and participated in several official actions intended to accelerate the release of the bond which had been posted by DeMoulas Markets, pursuant to the seizure and consent decree. In particular, he personally visited the DeMoulas Markets warehouse on February 5, 1977 and told a federal inspector that he had given "them" a clean bill of health and asked how the reconditioning process could be expedited; he spoke with the Acting District Director of the U.S. Food and Drug Administration on February 7, 1977, at which time the Respondent agreed to assist federal officials in the DeMoulas matter; he assigned inspectors from the state Division of Food and Drug to inspect DeMoulas Markets' retail outlets and warehouse, and to monitor the reconditioning process, and had documentation of the latter sent to federal authorities shortly before the end of the seizure and release of the bond on March 4, 1977.
47. In its decision to release the bond on the DeMoulas Markets' warehouse contents and end the seizure on March 4, 1977, the federal
Food and Drug Administration relied, in part, on the results of the state Division of Food and Drug investigation, conducted at the initiation and direction of Mr. Michael, the Respondent.
48. During the period from February 5, 1977 through approximately March 1, 1977, the Respondent, Mr. Michael, knew that DGM had been retained by DeMoulas Markets to help secure the release of the warehouse from federal custody, and that his son had a financial interest in the matters.
49. Seamark Corporation ("Seamark"), is a company doing business in Massachusetts which is engaged in the business of importing and wholesaling seafood products.
50. Seamark has retained DGM to test its seafood imports since approximately 1977; among the services it performs, DGM tests shrimp for Seamark.
51. On or about April 18, 1978, Purity Supreme Supermarkets of North Billerica, Massachusetts, purchased and took delivery at its warehouse of a shipment of MarcaMar brand shrimp from Seamark.
52. On or about April 21, 1978, after a problem with MarcaMar brand frozen shrimp had arisen in a retail store in Walpole, a Division of Food and Drug seafood inspector visited the Purity Supreme warehouse in North Billerica, visually examined and embargoed 110 cases of MarcaMar shrimp at the warehouse and took samples for testing.
53. Tests on the shrimp samples from the previously mentioned retail outlet and from the Purity Supreme Warehouse were not completed by the Division of Food and Drug until April 24, 1981, at which time they were found to have a strong odor.
54. On the same day that the aforementioned samples were collected from the embargoed shrimp at the warehouse, April 21, 1978, and prior to completion of tests on these samples by the Division of Food and Drug, the Respondent directed and lifting of the embargo on the shrimp at the warehouse, and the inspector lifted the embargo.
55. The investigations unit of the staff of the State Ethics Commission conducted the investigation into the subject matter of this proceeding. That unit is headed by Robert J, Cordy ("Mr. Cordy"), Associate General Counsel for Investigation and Enforcement, who directed the inquiry.
56. On October 16, 1980, Mr. Cordy filed with the Commission a written recommendation, based on evidence referred to the Commission by the Department of the Attorney General, that the Commission authorize a Preliminary Inquiry into the actions of George A. Michael. The Commission authorized the inquiry on that date.
57. On December 1,1980, Mr. Cordy filed with the Commission a report on the Preliminary Inquiry in the Matter of George A. Michael, summarizing the information developed during the inquiry and recommending that there was sufficient factual basis to support a finding of "reasonable cause" to believe that Mr. Michael had violated M.G.L. c. 268A and 268B.
58. Based upon the Preliminary Inquiry Report, the Commission voted, on December 1, 1980, to find that there was reasonable cause to
believe that Mr. Michael had violated the aforementioned laws, and authorized the staff to conduct a full investigation and, at its conclusion, initiate adjudicatory proceedings.
59. Following the above-mentioned authorization, Mr. Cordy drafted and filed an Order to Show Cause why Mr. Michael should not be found in violation of M.G.L. c. 268A and 268B, on January 6, 1981. The text of that Order was not reviewed by the Commission.
60. Mr. Cordy appeared as Counsel for the Petitioner, the State Ethics Commission, during the adjudicatory proceedings in this matter.
61. The members of the State Ethics Commission have acted as triers of fact and law in the instant proceeding, and have made findings of fact and conclusions of law as set forth in this Decision and Order.
The Respondent has been charged with violating M.G.L. c. 268A, s.s.3(b), 6, 23(d), (e) and (f) and c. 268B, s.7. We will address these charges separately. First, however, the Commission addresses certain constitutional issues raised by Respondent.
A. Constitutional Issues
I. Combination of Investigatory, Prosecutorial and Adjudicatory Functions.
In his Answer, Respondent contends that his due process rights under the federal and Massachusetts constitutions are violated by virtue of the organization and procedures of the State Ethics Commission, in which investigatory, prosecutorial and adjudicatory functions are combined, in one agency. He also alleges that this combination of functions, in and of itself, impermissibly deprives him of an impartial fact-finder.
The Commission finds no merit in Respondent's constitutional argument. The constitutional validity of such a combination has been upheld both by the United States Supreme Court, in Withrow v. Larkin, 421 U.S. 35(1975), and by the Massachusetts Appeals Court in School Committee of Stoughton v. Labor Relations Commission, 4 Mass. App. Ct. 262 (1976). In addition, Withrow has been cited and applied by the Massachusetts Supreme Judicial Court in the case of Dwyer v. Commissioner of Insurance, 376 N.E. 2d 826(1978), in which the court affirmed the authority of the Commissioner of Insurance to conduct a dismissal hearing after having directed a subordinate to investigate the matter and reviewing the investigative results. Withrow was also cited by the Massachusetts Superior Court (Ronan, J.) in George A. Michael v. State Ethics Commission, Superior Ct. No. 47401, the action in which the Respondent unsuccessfully attempted to obtain injunctive relief against the Commission's hearing prior to their commencement. That court also cited the Opinion of the Justices, 375 Mass. 795 (1978), an opinion which was rendered to the Massachusetts Senate prior to the passage of M.G.L. c. 268B (the statute which created the Commission), and which noted no constitutional defect in the statutory scheme.
2. Alleged Disqualification of Commission
Respondent also contended in his Answer that the Commission members were disqualified from sitting in judgment on this matter by virtue of their prior exposure to evidence in the matter, their ex parte communications with Counsel for Petitioner relative to the matters in issue, their vote authorizing the filing of an Order to Show Cause, and their issuance of press releases relative to the matter.
The only evidence introduced by Respondent in support of this contention is an affidavit from Counsel for the Petitioner, setting forth the activities of the Commission and its staff with regard to this matter prior to the issuance of the Order to Show Cause, and copies of the Preliminary Inquiry Recommendation and Report renewed by the Commission during that period.
The Commission, in reviewing this record, finds no support for the Respondent's argument that the Commission is disqualified as a matter of law from adjudicating this matter. Rather, the Commission calls attention to: (a) M.G.L. c. 268B, s.4(a), which mandates that the Commission initiate a preliminary inquiry upon receipt of evidence which it deems sufficient . . .thereby assigning to the Commission the duty of evaluating the sufficiency of evidence at an early stage; (b) M.G.L. c. 268B, s.4(c), which permits the Commission to vote to initiate proceedings if a preliminary inquiry indicates reasonable cause for belief that c. 268A or 268B has been violated -- again, an authorization for the Commission to review the sufficiency of evidence before
proceeding to the next phase of a matter; and (c) the Dwyer and Stoughton cases, cited above, which find no disqualification by virtue of prior exposure to evidence in an ex parte administrative context, or by prior issuance of a complaint in a matter, respectively.
3. Applicability of Ex Post Facto Prohibition to Commission's Adjudication and Penalization of Conduct Which Occurred Prior to the Commission's Creation
The Respondent maintains that the Commission is constitutionally prohibited from penalizing those whom it finds to have violated M.G.L. c. 268A prior to the enactment of c. 268B, i.e., prior to the Commission's creation and its assumption of enforcement powers over such violations.
The Commission rejects this contention by noting that the ex post facto prohibition is only applicable to criminal or penal statutes, Calder v. Bull, 3 (U.S.) Dall., 386 (1798); Bank and Trust v. Blodgett, 260 U.S. 647 (1923); Reale v. Judges of the Superior Court, 265 Mass. 135 (1928) and not to the imposition of additional civil or regulatory sanctions on past conduct, Helvering v. Mitchell, 303 U.S. 391,399(1938); Fleming v. Nestor, 363 U.S. 603 (1960). In Opinion of the Justices, 375 Mass. 795 (1978), the Supreme Judicial Court stated that the imposition of a $1,000 penalty by the State Ethics Commission, envisioned by M.G.L. c. 268B, was not to be imposed where there was a criminal violation, was not intended to punish the commission of a crime, was not a "capital or infamous punishment", and was a familiar device conferred upon administrative bodies to assist them in the performance of their duties. The Commission considers these elements sufficient to characterize its enforcement powers as civil rather than criminal, thus negating any application of the ex post facto prohibition to its regulatory activities.
Both parties agree that Respondent was, at all times relevant to the matter at issue, a state employee within the meaning of M.G.L. c. 268A, s.1(q) and thus subject to the proscriptions of that chapter. The parties also agree that Respondent was designated a "public employee", as defined in M.G.L. c. 268B, s.1(o) and was required to file (and did in fact file) Statements of Financial Interests with the Commission for Calendar years 1978 and 1979, pursuant to that chapter.
C. Chapter 268A Allegations
1. Building 19
a. Section 3
The Petitioner contends that Mr. Michael violated M.G.L. c. 268A, s.3(b) by receiving discounts and charge privileges from Building 19 as tokens of appreciation for the prompt service and guidance that his Division provided the store. The Commission agrees.
Section 3(b) prohibits a state employee otherwise than as provided by law for the proper discharge of official duty, directly or indirectly . . . [to] receive anything of substantial value for himself for or because of any official act or act within his official responsibility performed or to be performed by him. The record is abundantly clear that Mr. Michael received the discounts and charge privileges from 1964 through 1980. It is also clear from the sales receipts in the record that discounts received by Mr. Michael from 1976 through 1980, inclusive, totaled more than $100 each year, and often considerably more. The Commission finds that these discounts constitute something of "substantial value" received by Respondent. See, Commonwealth v. Famigletti, 4 Mass. App. 584,354 N.E. 2d 890(1976). The record contains no evidence that the discounts and charge privileges were provided by law for the proper discharge of official duty, and thus the Commission concludes that they were not, and that Respondent violated Section 3(b) in 1976 through 1980, inclusive.
Mr. Michael argues that there was no "quid pro quo" involved here, and thus no violation of
Chapter 268A. However, a Massachusetts court has held that, to find a violation under Section 3(b), corrupt intent need not be shown, and it is enough that a defendant requested or received something of substantial value for or because of an official act already performed or to be performed by him. Commonwealth v Dutney, 4 Mass. App. 363, 375, 348 N.E. 2d 812 (1976). The Ethics Commission has followed this ruling, and has found Section 3 to be violated when extra compensation was received by a public employee for doing the job she was required to do by virtue of her public employment. See In the Matter of the Collector-Treasurer's Office of the City of Boston, et al., Commission Disposition Agreement (March 2, 1981).
A public employee need not be impelled to wrongdoing as a result of receiving a gift or gratuity of substantial value, in order for a violation of Section 3 to occur. Rather, the gift may simply be a token of gratitude for a well-done job or an attempt to foster goodwill. All that is required to bring Section 3 into play is a nexus between the motivation for the gift and the employee's public duties. If this connection exists, the gift is prohibited. To allow otherwise would subject public employees to a host of temptations which would undermine the impartial performance of their duties, and permit multiple remuneration for doing what employees are already obliged to do a good job. Sound public policy necessitates a flat prohibition since the alternative would present unworkable burdens of proof. It would be nearly impossible to prove the loss of an employee's objectivity or to assign a motivation to his exercise of discretion. If public credibility in government institutions is to be fostered, constraints which are conducive to reasoned, impartial performance of public functions are necessary, and it is in this context that Section 3 operates.
Thus the Commission disagrees with Respondent's contention that, because he performed his official duties as provided by law, his receipt of discounts and charge privileges was not illegal. The record contains adequate evidence for the Commission to find that the extension of the privileges was in return for past cooperation and prompt service by Respondent's Division, and to ensure the continuation of such service. In so finding, the Commission notes that it is probably rare to find an explicit expression or open acknowledgement of such a mutual "understanding," and thus it is to be expected that such a finding will ordinarily have to be drawn
by inference, as is done here, if Section 3 is to be given a sensible reading.
b. Section 23
The Commission finds that Respondent violated Section 23(d), which prohibits "use [of official position to secure unwarranted privileges or exemptions for himself or others." The record contains adequate evidence to find that, from at least 1975 through and including 1980, Respondent obtained discounts for himself, his sister (or sister-in-law) and his secretary/assistant. The Commission finds most of these discounts to have been "unwarranted" to the extent that they were not generally available to the public, not given for reason of merchandise damage in most cases, not the result of personal, social acquaintance or family relationships with Building 19's owner, not provided for by law, and thus in violation of Section 23(d).
The Commission also finds that Respondent violated Section 23(e), which prohibits a state employee by his conduct (giving] reasonable basis for the impression that any person can improperly influence or unduly enjoy his favor in the performance of his official duties...
In sustaining the violation, the Commission notes that the record shows that Respondent advised Building 19's owner as to whether or not to purchase certain shipments of salvage merchandise, and occasionally had such merchandise inspected before Building 19 decided to purchase it. Such advice, even if not improperly given, nevertheless indicates that Respondent at times was particularly accommodating towards Building 19. This, coupled with his receipt of the discount and charge privileges, provides reasonable basis for the impression that Respondent was influenced in the performance of his duties with respect to Building 19 because of the privileges.
2. Bargain Center
a. Section 3
Petitioner asks the Commission to find that Respondent violated M.G.L. c. 268A, s.3(b) by
receiving discounts for himself and others from the Bargain Center which were given for or because of acts within his official responsibility performed or to be performed by him.
There is sufficient evidence in the record to support the assertion that Respondent received discounts of 15 to 25 percent on his purchases from the Bargain Center. There is also sufficient evidence to find that these discounts were extended for or because of acts within his official responsibility: Maxwell Van Dam, president of Bargain Center, testified that his reasons for providing the discounts were his appreciation for the prompt service and advice by the Respondent's Division, and Van Dam's desire to continue to receive such prompt service and advice.
With respect to whether or not the discounts from the Bargain Center were of "substantial" value, the Commission finds that they were, on at least two occasions: (a) In 1979, the Respondent received a discount of over $50 on the purchase of linoleum; and (b) in 1980, Respondent obtained a discount of $145 on a piece of furniture purchased by Diane Hurley, Accordingly, the Commission finds that Respondent violated Section 3(b) on these two occasions.
b. Section 23
The Commission finds that Respondent also violated M.G.L. c. 268A, s.23(d) and (e) by his receipt of discounts from the Bargain Center,
With respect to Section 23(d), the Commission is persuaded that Respondent used his position to obtain these discounts for himself and for Diane Hurley, and that, at least in the case of the
linoleum purchase, the discount was unwarranted, The Commission makes no such finding with respect to the discount received by Diane Hurley since there was evidence in the record to the effect that the merchandise she purchased was damaged; absent any specific information as to the extent of the damage, the Commission is unable to determine to what extent the discount may have been warranted.
With respect to Section 23(e), the Commission finds that the Respondent did, by his conduct, give reasonable basis for the impression that Bargain Center could unduly enjoy his favor in the performance of his official duties. Specifically, the Commission finds that Respondent personally performed inspections of merchandise at Bargain Center and, in doing so, disregarded the procedures set forth in M.G.L. c. 94 and in the Department of Public Health regulations. According to Maxwell Van Dam's testimony, Respondent, on at least one occasion in 1980, looked over a shipment of tuna, took an entire case as a sample without leaving a receipt or a copy of his inspection report, and never communicated with Van Dam any test results; it was Van Dam's understanding that if he didn't hear from Respondent, he could sell the tuna. By his disregard for established procedures in his official dealing with a store which afforded him discounts, Respondent gave reasonable basis for the impression that Bargain Center could unduly enjoy his favor in the performance of his official duties, in violation of Section 23(e).
3. Value Village
a. Section 3
The Petitioner contends that, by receiving discounts on merchandise he purchased at Value Village, Respondent violated M.G.L. c. 268A, s.3(b). The Commission deems the record insufficient to support such a finding.
Although Melvin Van Dam, President of Value Village testified that he extended a 10 to 15 percent discount to Respondent, he was certain as to the value of merchandise purchased by Respondent; in his testimony, he estimated total purchases of $200-$300 by the Respondent, and was uncertain if this was correct, or a higher figure he may have quoted during an interview. Because the uncertainty was unresolved, and because a 10-15% discount on purchases of $200-$300 is arguably not substantial, the Commission declines to rule that Respondent's conduct here violated Section 3.
b. Section 23
Petitioner alleges that Respondent used his official position to secure unwarranted privileges for himself or others, in violation of Section 23(d). The Commission finds that, by accepting discounts which were extended to him in part because of the prompt service his Division rendered to Value Village, Respondent used his official position to secure unwarranted privileges for himself, and thus violated Section 23(d).
The Commission also finds that Respondent violated Section 23(e), by accepting discounts from a business he regulated (Value Village), and by taking personal action to expedite the
inspections necessary to that business on an occasion when the commercial value of the merchandise to be inspected depended on its quick approval for sale. With respect to the latter, the Commission points to the findings of fact, paragraph 29.
4. Building 19, Bargain Center, Value Village
a. Section 23(f)
Petitioner alleges that, by receiving discounts from businesses subject to his inspection and regulatory authority, and over which he exercised that authority for a number of years, the Respondent pursued a course of conduct which would raise suspicion among the public that he was likely to be engaged in acts that were in violation of his public trust. The Commission agrees.
The record substantiates the Respondent's regulatory authority over the three businesses in question (see, e.g. paragraphs 2 and 3 of the Findings of Fact). It also supports the findings that Respondent personally inspected and exercised other authority over these businesses. As set forth in the Findings of Fact, Respondent accepted discounts from all three businesses.
Respondent argues that, because the discounts in issue were a "private matter" between himself and the stores involved, they could in no way give rise to suspicion on the part of the public. The Commission finds this argument unpersuasive for several reasons: (a) Respondent cites no authority to support his assertion that actual public knowledge is an element of the offense here charged; he instead argues an analogy to M.G.L. c. 272 s.s.16 and 53, the statutes on lascivious cohabitation and lewdness, and common night walkers, respectively, into which courts have read a requirement of public involvement before a violation will be found; the Commission considers those statutes and rulings to be inapposite; (b) to read into Section 23(f) a requirement of actual public knowledge of any violation of the conflict of interest law is contrary to common sense and would render the section meaningless in almost all cases. The Commission considers a more reasonable reading of the section to require that the course of conduct, if known, would raise suspicion among the public that the employee is in violation of his public trust; and (c) further, the Commission deems the Respondent's conduct sufficient to have given rise to such a suspicion, in this case. Specifically, sales personnel in the stores involved were aware of his public office and of the special treatment he was afforded by the stores' management; one can infer that others were also aware. For all of these reasons, the Commission finds that Respondent violated Section 23(f).
5. Cumberland Farms
a. Section 6
Petitioner contends that Respondent violated M.G.L. c. 268A, s.6 by participating in his official capacity in testing, evaluating and deciding to release ice cream products which were owned by Cumberland Farms, at a time when Respondent knew that his son had a financial interest in the handling of the same matter for Cumberland Farms. Respondent admitted his participation in the matter as alleged, but denied having known of his son's financial interest in the matter. Respondent's son confirmed in testimony that his firm was in fact on paid retainer with Cumberland Farms during the period in question.
Section 6 prohibits a state employee from participating as such in a particular matter in which to his knowledge a member of his immediate family has a financial interest (emphasis added). Thus, the Commission must find that Respondent knew of his son's interest in the matter at the time of his participation in order for a violation to be found.
In paragraph 41 of the Findings of Fact, above, the Commission found that Respondent did know of his son's financial interest in the matter during the period when Respondent was participating in the matter in his official capacity. In relying on this finding, the Commission acknowledges that it is based on hearsay statements of Respondent introduced through an interviewer, Captain Agnes; however, the Commission considers these statements to be persuasive because of the strength and credibility of Captain Agnes' testimony; because, even if the Commission were bound by the Rules of Evidence in these proceedings (which it is not), the statements would be admissible as admissions of a party-opponent.
In view of the facts found, and in the absence of any evidence that Respondent satisfied any of the exceptions from Section 6, the Com-
mission finds that Respondent's participation in the Cumberland Farms matter violated Section 6.
b. Section 23(e)
The Commission finds that Respondent also violated Section 23(e) by his participation in the Cumberland Farms matter, in that he gave reasonable basis for the impression that Cumberland Farms and his son could improperly influence him or unduly enjoy his favor in the performance of his official duties.
By virtue of his participation in the testing, evaluation and decisions in the Cumberland Farms matter, and specifically by serving as a contact person between the Division of Food and Drug and the management of Cumberland Farms, Respondent did give reasonable basis for the impression that Cumberland Farms or his son could enjoy his favor in the performance of his official duties, or that he was unduly affected by the kinship of his son or the position of influence of his son or Cumberland Farms. In particular, he gave basis for such an impression on the part of his employees at the Division of Food and Drug, and those individuals at Cumberland Farms with whom he dealt personally. Had the Respondent wished to avoid any impropriety in the matter, he should have abstained from any actions in it and so advised Cumberland Farms and his son.
6. DeMoulas Markets
a. Section 6
Petitioner contends that Respondent violated M.G.L. c. 268A, s.6 by participating in decisions and official actions affecting the federal seizure of the DeMoulas Markets' warehouse in 1977, while knowing that his son had a financial interest in the matter.
In paragraph 46 of the Findings of Fact, the Commission found that Respondent participated in a number of official actions with respect to the DeMoulas consent decree (a judicial proceeding which qualified as a "particular matter" within the ambit of M.G.L. c. 268A). His participation was personal and substantial, in view of the findings that he, as the Division of Food and Drug's contact with the U.S. Food and Drug Administration, offered help in the investigation, assigned the resources of his office to it, and caused to be sent to the FDA documentation from the state agency which was necessary to the release of the bond.
With regard to Respondent's knowledge of his son's financial interest in the matter, paragraph 48 of the Findings of Fact ascribes that knowledge to the Respondent. As in the findings in the Cumberland Farms matter, this is also based in part on hearsay introduced through Captain Agnes, but nevertheless would qualify under the admissions exception as discussed above,
In view of these facts, the Commission finds that Respondent violated Section 6 as alleged.
b. Section 23
Petitioner alleges that, by his conduct, Respondent violated M.G.L. c. 268A, s.23(d). The Commission agrees that Respondent used his official position in the DeMoulas matter, and in one respect finds the evidence sufficient to determine that Respondent attempted to secure unwarranted privileges or exemptions for himself or others, in violation of Section, 23(d). The Commission is persuaded that, in his statement to Jane Howell of the FDA on February 5,1977, Respondent's representation that either the stores or the warehouse were in satisfactory condition was unwarranted (because not all retail stores had been inspected by the Division as of that date, nor had the warehouse); and that his statement to her was made in an effort to affect the actions of the federal inspectors and officers. In that respect, the Commission finds Respondent's conduct violated Section 23(d). However, with regard to Respondent's subsequent actions on the matter, the Commission finds no clear demonstration in the record that his efforts were directed towards an unwarranted release of the DeMoulas bond and seizure, and thus the finding of violation is confined to the incident outlined above.
The Commission also finds that Respondent violated Section 23(e), in particular by visiting the warehouse with Michael DeMoulas on February 5, 1977 and by urging the federal inspectors there to make arrangement to expedite the reconditioning process so that the DeMoulas stores could be resupplied. In doing so he gave the federal inspectors reasonable basis for the impression that Mr. DeMoulas unduly enjoyed his favor in the performance of his official duties.
7. Seamark/Purity Supreme
a. Section 23
The Petitioner alleges that Respondent violated Section 23(d) by directing the early and unwarranted release of an embargo on frozen shrimp owned by Purity Supreme Supermarkets, which it had allegedly bought from Seamark Corporation. The Commission finds the evidence insufficient to support this allegation.
Although the record clearly demonstrates that Respondent directed the lifting of the embargo on the same day it was imposed, the Commission finds the record unclear as to whether the inspector involved imposed the embargo properly according to statutory standards, and if not, to what extent Respondent's action may have been justified. Because the Commission is unwilling, without further evidence, to substitute its judgment on what appears to be a matter of discretion, it declines to find that the Respondent's action was unwarranted.
Petitioner also alleges that Respondent violated Section 23(e) by using his official position to secure the release of a product which was imported and sold by a company which employed his son's firm, thus giving reasonable basis for the impression that the firm could unduly enjoy his favor in the performance of his official duties. The Commission also finds the evidence insufficient to justify such a finding.
Specifically, while the record shows that Seamark and Purity Supreme used the services of DGM, the embargo documents state that the shrimp in question originated from "Sea Corp." and there remains an uncertainty as to whether the names "Sea Corp." and "Seamark" referred to the same company, either in fact or in the understanding of those using the terms. In view of this uncertainty, the Commission is not persuaded that a basis existed for an unfavorable impression of Respondent's actions in the matter.
8. Cumberland Farms, DeMoulas Markets, Purity Supreme/Seamark
a. Section 23
With respect to his participation in the Cumberland Farms and DeMoulas matters, the Commission finds that Respondent engaged in a course of conduct which would raise suspicion among the public that he was likely to be acting in violation of his public trust, as prohibited by Section 23(f). The Commission points to Respondent's communications with Cumberland Farms personnel and his own employees on the ice cream matter, and his contacts with federal inspectors at the DeMoulas warehouse, in support of this finding.
D. Chapter 268B Allegations
Petitioner has alleged that Respondent's failure to include the value of the discounts, which he received on purchases he made from Building 19 in 1978 and 1979, on his 1978 and 1979 Statements of Financial Interest violated M.G.L. c. 268B, s.7, which states that, “Any person who. . . files a false statement of financial interests under Section 5 of this chapter shall be punished by a fine...”
In paragraph 15 of the Findings of Fact, the Commission found that Respondent was extended discounts totaling over $100 from Building 19 in both 1978 and 1979. It also is undisputed that Respondent did not disclose these discounts on his Statements of Financial Interests for those years. The position of Respondent is that he was not required to do so because discounts do not fall within the definition of "gifts" which are required to be so disclosed. The Commission disagrees.
Although the definition of "gift" in the Instructions for Statements of Financial Interests in both 1978 and 1979 does not specifically include "discount," it does include "anything of value." Respondent argues that he received nothing of value in availing himself of the discounts because he gave consideration (payment) which was equal to or greater than the value of the item received in exchange. The Commission is not persuaded by this argument and finds that the amount of the discount is something of value which is included in the term "gift" and required to be reported.
In making this finding, the Commission points to an example given in the Filing Instructions for both years which discusses the filer's use of a ski chalet for a weekend, where the fair market value of the rental is $300 but the filer pays the owner $100 in whiskey. The example explains that this item is required to be listed, and does not discuss whether the use of the chalet was worth $100 or $300 or whether the amount
paid was sufficient to cover costs. The Commission finds this example to be analogous to Respondent's payment of a price less than that charged the public for merchandise he purchased at Building 19.
The Commission concludes that the example given in the instructions, even if not completely identical to Respondent's situation, was sufficiently similar to put a reasonable person on notice that he should be required to disclose the discounts. As a result, the Commission finds that his omission of this information was negligent, in that he should have either requested further clarification from the Commission, or listed the items in question.
However, the Commission considers the evidence in the record insufficient to support a finding that Respondent intentionally omitted the information. The best evidence on intent would undoubtedly have come from the Respondent himself, but due to his failure to take the witness stand, the record contains inadequate evidence to infer intentional failure to file, in the Commission's view. For this reason, the Commission finds that Respondent violated Section 7 of M.G.L. c, 268B, but will refrain from imposing the maximum penalty allowable under that section.
On the basis of the foregoing, the Commission concludes that George A. Michael violated M.G.L. c. 268A, s.s.3(b), 6, 23(d), (e) and (f), and c. 268B. s.7. Pursuant to the authority granted it by M.G.L. c. 268B, s.4(d), the Commission hereby orders Mr. Michael to pay the civil penalties set forth below. In arriving at these penalties, the Commission has carefully considered the differences in frequency and gravity of the offenses, as reflected in the record, and thus imposes less-than-maximum fines in some instances. Accordingly, the Commission orders George A. Michael to:
1. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for receiving discounts and charge privileges of substantial value for himself from Building 19 for each of the years 1976, 1977, 1978, 1979 and 1980, in violation of M.G.L., c. 268A, s.3(b), for a total of $5,000 (five thousand dollars).
2. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for obtaining discounts and charge privileges for others from Building 19 in 1975, 1976, 1977, 1979 and 1980, in
violation of M.G.L. c. 268A, s.23(d).
3. Pay $500 (five hundred dollars) to the Commission for the false filing of his 1978 Statement of Financial Interests in violation of M.G.L. c. 268B,s.7.
4. Pay $500 (five hundred dollars) to the Commission for the false filing of his 1979 Statement of Financial Interests in violation of M.G.L. c.268B,s.7.
5. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for receiving discounts of substantial value for himself from the Bargain Center in 1979, in violation of M.G.L. c.
6. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for obtaining a discount of substantial value for another from Bargain Center in 1980, in violation of M.G.L. c.
7. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for receiving discounts for himself from the Bargain Center in 1976, 1977, 1978 and 1980 in violation of M.G.L. c. 268A, s.23(b),
8. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for his participation in the Cumberland Farms matter in violation of M.G.L. c. 268A, s.6.
9. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for his participation in the DeMoulas Markets matter, in violation of M.G.L. c. 268A, s.6.
We order Mr. Michael to pay these penalties totaling $12,000 (twelve thousand dollars) to the Commission within thirty days of the receipt of this Decision and Order.