I. Introduction
Howard Hansen was the Town Moderator in Stoughton during the period 2009 through 2014.[1] Hansen, for himself and as sole proprietor of Hansen Brothers Printing Co., submitted invoices for charges to the Town for copying and printing services he provided to himself as Town Moderator or to other Town officials, then approved the charges as Town Moderator. The evidence presented at an adjudicatory hearing on March 29, 2017 proved that Hansen thereby violated § 19 by participating as a municipal employee in particular matters in which he had a financial interest; violated § 20 by having a financial interest in a series of contracts with the Town while serving as a municipal employee; and violated § 23(b)(2)(ii) by using or attempting to use his official position to secure for himself and Hansen Brothers Printing Co. unwarranted privileges and exemptions in the approximate amount of $13,000 which were not properly available to other similar vendors.
II. Findings of Fact
On the basis of the evidence, we make the following findings of fact.
Service as Town Moderator.
Hansen was elected as Town Moderator of Stoughton in 1993 and was re-elected each year through 2016.
Printing services prior to 1993.
Hansen is the sole proprietor of Hansen Brothers Printing Co. Hansen Brothers Printing Co. provided services to the Town of Stoughton since 1968 or 1969. Prior to 1993, Hansen provided printing services to the Town. After he became Town Moderator in 1993, he stopped much of his business with the Town, so he no longer had that income.
Request for special municipal employee designation and Declaration of Disclosure.
On February 18, 1993, Hansen requested that the Selectmen designate the position of Town Moderator as a special municipal employee position. (Ex. 5A). As part of his request, he explained:
The reason for requesting this designation is that I, Howard Hansen, am the sole proprietor of Hansen Brothers Printing Co. Hansen Brothers Printing Co. has from time to time bid and produced work for the Town of Stoughton or its departments or boards…..
As a practice in the Town of Stoughton, the Town Manager is the Chief Procurement officer who is directed to act according to the provisions of the Massachusetts Procurement Law, Chapter 30B. He is obligated to award bids in the best interest of the Town, and when so directed, disclose and/or obtain approval from the Board of Selectmen upon making such contracts. By this law, any contract awarded to the firm of Hansen Brothers Printing Co. has to meet all specifications and criteria established for any competitive bid.
The law requires that the status of Special Municipal Employee be voted by the Board of Selectmen so that I may continue to bid and contract for such work.
In the letter to the Board of Selectmen, Hansen did not indicate that, as Town Moderator, he intended to hire his own company to do work for the Town, particularly without going through a bidding process.
Also on February 18, 1993, Hansen filed a second document entitled “Declaration of Disclosure, Ch.268A, Sec. 19, 20 and 23” with the Town Clerk. (Ex. 5B). He wrote:
To whom it may concern:
Pursuant to the provisions of M. G.L. c. 268A, Sections 19, 20 and 23;
I, Howard Hansen, Moderator of the Town of Stoughton, having requested status as a Special Municipal Employee, do hereby disclose that as sole proprietor of Hansen Brothers Printing Company, a business located in the town of Stoughton, Massachusetts, do bid and engage in contracts with the Town of Stoughton and its departments or boards.
As a bidder and contractor, I am obliged to meet the specifications in an equally competitive manner as any other bidder or contractor and that no special or different criteria is applied in awarding any contract or business association, by virtue of my office.
Being the owner of Hansen Brothers Printing Company, I do have a financial interest in that firm. My financial interest includes paying for all services and materials employed in the production of goods as well as receiving any remuneration relative to that production performed by me.
The “Declaration of Disclosure” does not mention any particular contract which Hansen, as Town Moderator, expected to have with his own company or with himself.
On March 3, 1993, the Town Manager, Phillip J. Farrington, notified Hansen that on March 2, 1993, “the Board of Selectmen voted to approve your request that the Town Moderator be designated as a Special Municipal Employee of the Town of Stoughton, as requested in your letter of February 18, 1993.” (Ex. 5C).
Budget for the Town Moderator.
In Stoughton, Town boards, officers and committees charged with the expenditure of Town funds prepare detailed estimates of expenses and income and submit them to the Town Manager, who submits them to the Selectmen. The Finance Committee considers the estimates and makes recommendations to the Selectmen. Each year, Hansen made a presentation to the Finance Committee about the budget for the Town Moderator’s Office and itemized expenses.
At all relevant times, Hansen was paid either a salary or a stipend for serving as Town Moderator. There was a separate line item in the Town budget for expenses of the Moderator’s Office.
Procurement policy
In 2008, the Town Accountant, William Rowe, created a local procurement manual. The Board of Selectmen approved it in November, 2008. The manual applied to all municipal departments, other than the School Department. The manual provided that, for procurements under $3,000, Town employees were to use sound business practices. Sound business practices was defined to mean periodically soliciting three quotes to get the best value for the Town. Preferably, the quotes would be written, but they did not have to be in writing.
In 2010, the Town hired a Procurement Officer, but Hansen did not go through the Procurement Officer to make purchases related to his Town Moderator duties.
Hansen, as Town Moderator, did not solicit business quotes for the work or materials provided by Hansen Brothers Printing Co. As sole proprietor of Hansen Brothers Printing Co., Hansen did not submit quotes from Hansen Brothers Printing Co. to the Town regarding the work or materials.
Charges to the Town Moderator’s budget for copying, printing and goods
From 2009 to 2014, Hansen, as Town Moderator, submitted charges to the Town Accountant for services and goods provided by himself or by Hansen Brothers Printing Co. to the Town. Generally, the Town Accountant allowed him about two weeks after Town Meeting to submit requests for expenses. Hansen’s charges were submitted after the services and goods already had been provided to the Town.
Prior to 2014, when Hansen submitted bills, the Town Accountant paid them. The Town Accountant never rejected any of the invoices included as exhibits at the hearing.
Hansen’s pricing for services and goods
For Hansen Brothers Printing Co., Hansen used a “basic standard price list” to determine charges to the Town for services and goods purchased. (Transcript (“Tr.”), 90). To make sure that what he charged the Town was fair and reasonable, “[m]aybe about every two years,” Hansen compared the costs of getting copies from a public facility, such as a library, or copy center. (Tr., 147). Hansen’s price list was “a note piece of paper, notepad piece of paper….” (Tr., 162). He estimated the costs of the services he provided. He had a working price list per copy for different colors, sizes and types of paper.
For example, for Moderator’s Office Supplies provided by Hansen Brothers Printing Co., Hansen took the items listed out of the company’s supplies. Mostly such supplies would be ink and toner and paper that were kept in inventory. He said he did not add any markup – “Basically I’m saying this is what it costs.” (Tr., 166). In a number of instances, receipts from Staples, Stop & Shop, or Walmart showed that what Hansen Brothers Printing Co. paid for an item was what Hansen Brothers Printing Co. charged the Town for the item.
In an invoice for Hansen Brothers Printing Co. dated June 19, 2009, Hansen charged the Town both for toner and paper and for copies. (See Ex. 4, p. 0010, 0013).
In a single invoice for Hansen Brothers Printing Co. dated June 1, 2010 for Moderator Supplies, Hansen charged 15 cents a copy in one instance and 20 cents a copy in another instance. (See Ex. 4, p. 0024; Tr. 107-108).
On June 29, 2013, in an invoice for Hansen Brothers Printing Co., he charged the Town for two five-page e-mails at $70 each, for a total of $140. (See Ex. 4, p. 0076).
Other copying options
A significant number of the charges submitted by Hansen were for copies.
According to Town Manager Michael Hartman, there are at least 30 copy machines in the Town Clerk’s Office and Town Manager’s Office and at least 50 printers in Town Hall. At least four copy machines in Town Hall also have printing functions. Town employees and Town officials, including members of boards and commissions, have access to the Town Hall copy machines and printers. The Town Moderator had such access.
Hansen did not use the copiers at Town Hall.
Hansen’s Schedules of Bills Payable
A schedule of bills payable is a summary which is attached to the front of vendor invoices. It outlines the vendor code, vendor name and address, the purchase order, if applicable, the account codes to which the invoice is to be charged, and the amount of the invoice. The schedule of bills payable is used to authorize the payment of the bills, as required by G.L. c. 41, § 56. The schedule of bills payable must be signed by the department head or, in his absence, the assistant department head.
As Town Moderator, Hansen submitted Schedules of Bills Payable to the Town Accountant. He attached his own invoices from himself, Howard Hansen, and from Hansen Brothers Printing Co. to the Schedules. (Ex. 4, p. 0001 – 0093; Ex. 8).
Every Schedule submitted by Hansen was signed as “Department Head, Howard Hansen.” The Town Accountant confirmed that Hansen was considered a department head, and when Hansen signed schedules of bills payable, he did so as a department head. Hansen acknowledged that presenting the bills “was my department responsibility.”
There were separate vendor numbers for the two types of invoices Hansen submitted. The vendor number for payments to Howard Hansen, individually, was 26487. For charges from Hansen Brothers Printing Co., the vendor number was 8037. Payments for both the invoices for Howard Hansen and the invoices for Howard Hansen Printing Co. were charged against the budget line item for expenses of the Town Moderator’s Office.
Reimbursements
Generally, for the invoices for payments to be made to him individually, Hansen used letterhead saying, “Town Moderator.” The invoices he submitted on behalf of his business said, “Hansen Brothers Printing Co.”
According to the Town Accountant, the invoices for payments to be made to Howard Hansen individually were for “employee reimbursements,” but if Hansen was providing services for the Town, they would be under the vendor number for Hansen Brothers Printing Co.
In 2009, Hansen used the word “reimbursement” in the subject line of letters regarding both bills payable to himself and bills payable to Hansen Brothers Printing Co. (Ex. 4, p. 0002 and 0003-0004; 0006 and 0009; and 0010 and 0013). In subsequent years, only the bills payable to himself were entitled “Request for Reimbursement.” See bills payable to Hansen (Ex. 4, p. 0022, dated 6/2/10; 0035, dated 6/30/11; 0061, dated 6/30/12; 0069, dated 6/29/13; 0093, dated 6/27/14).
After 2009, the bills payable to Hansen Brothers Printing Co. no longer said “reimbursement”. See, e.g., invoices for Moderator Supplies: (Ex. 4, p. 0024, dated 6/1/10; p. 0038, dated 6/18/11; p. 0052, dated 3/28/12); and invoices for Workbook Expenses (Ex. 4, p. 0030, dated 6/2/10; p. 0041, dated 6/20/11; p. 0051, dated 6/29/12; p. 0076, dated 6/29/13).
A Schedule of Bills Payable dated June 20, 2011, showed charges from both Howard Hansen and Hansen Brothers Printing Co., with both vendor numbers. (Ex. 4, p. 0034). In a letter dated June 30, 2011, from Hansen to the Town Accountant, Hansen wrote, “The reimbursement bill for $ 71.31 payable to me should be kept separate from the invoices for Hansen Brothers Printing Company.” (Ex. 4, p. 0035). Hansen submitted a separate request for the amounts payable to Howard Hansen. (Ex. 4, p. 0036-0037).
Schedules of bills payable to Howard Hansen
On June 22, 2009, Hansen signed off on a Schedule of Bills Payable for “Reimbursement of Moderator Expenses, FY 2009” for $606.44 payable to himself, Howard Hansen. The expenses included dues and subscriptions to the Massachusetts Moderators Association, plaques, and expenditures for Annual Town Meeting, including numerous charges for “Supplies” and “copies.” (Ex. 4, p. 0002, 0004).
On June 2, 2010, along with MMA dues and associated gas and tolls, Hansen charged the Town for 120 copies of Study Committee Reports for $24.00 and 60 copies of “Howard’s Rules of Order” for $9.00 which he made for the MMA meeting. (Ex. 4, p. 0021-0022). Howard’s Rules of Order were his own, Howard Hansen’s, rules of order.
Subsequent bills payable to Hansen, individually, separated costs relating to the MMA from other costs for goods and supplies. Bills he submitted in 2011 and 2012 included charges for “Office Supplies,” and the bill for 2013 included charges for “Committee Supplies.” These bills attach receipts for purchases directly from Staples, Office Max and Ocean State Job Lot. (Ex. 4, p. 0036-0037, 0061-0065, 0069-0071).
Schedules of bills payable to Howard Hansen Printing Co.
The Schedules of Bills Payable for charges from Hansen Brothers Printing Co. include both charges related to Hansen’s Town Moderator duties and other charges.
Duties of the Town Moderator
The Town of Stoughton has a representative Town Meeting with elected Town Meeting members. By statute, G.L. c. 39, § 9, and under the Town Charter, the Moderator is responsible for conducting all Town Meetings. Under G.L. c. 39, § 15, this includes deciding questions of order, publicly declaring votes, and administering oaths of office.
In addition to conducting Town Meeting, the Town Moderator has the following duties:
- Serves on and is Chair of the Committee on Rules.
- Appoints nine members of a Committee on Finance and Taxation which shall prepare the budget Article.
- Appoints one member at large of:
- the Committee on Municipal Regulations, which shall study and report on Articles and bylaws and zoning regulations of the Town.
- the Committee on Municipal Operations, which shall study and report on Articles that affect functions performed by offices and departments of Town government.
- the Committee on Intergovernmental Relations, which shall study and report on Articles which affect the relations of the Town with other municipalities, regional government bodies, and agencies of county, state and federal government.
- Appoints a temporary chairman to organize each standing committee.
In 2012, Hansen was made chairman of a Town Code Review Committee, which was going to go over the Town Code book.
Charges from Hansen Brothers Printing Co.
The invoices from Hansen Brothers Printing Co. include amounts charged for Moderator Supplies and the Moderator’s Workbook. The invoices also include charges relating to Rules Committee meetings, various Standing Committees and Public Hearings.
Charges for meetings the Moderator did not need to attend
The Moderator is not a member of the municipal regulations committee, the intra-governmental committee or the municipal operations committee, and his only duties in the Charter are to appoint one member of each and a temporary chairman to organize each. On occasion, Hansen attended meetings of these committees and brought documents that he had prepared.
Charges for an event the Moderator was not required to host
On his own accord, Hansen set up a program to encourage residents to run for Town Meeting. He acknowledged that it was not part of the Moderator’s job, “but nobody else has that job. Nobody does it.” (Tr., 122). In the course of three days, December 12-14, 2012, he sent 170 letters twice to Town Meeting members. On June 30, 2012, he approved payment of an invoice from Hansen Brothers Printing Co. for $660.95. (Ex. 4, p. 0053, 0059).
Charges related to work assigned by Charter to the Town Clerk
By his own account, Hansen performed duties which, by Charter, are assigned to the Town Clerk with regard to precinct caucuses and Organizational Town Meeting, and he submitted requests for payment to Hansen Brothers Printing Co. with regard to the work.
Duties of Town Clerk or precinct clerk
The Charter for the Town of Stoughton indicates that some duties with regard to Town Meeting are to be performed by the Town Clerk or the precinct clerk. Ex 1, Charter.
The Town Clerk has the following duties:
- After the election of Town Meeting representatives, to notify each such representative of his election. Charter, § C7-5.
- In the case of vacancies in a precinct, to call a special meeting of the remaining representatives of the precinct and mail notice of the special meeting to each representative. Charter, C7-6.1.
- With regard to an Organizational Town meeting to be held by Town Meeting Representatives on the Thursday preceding the Annual Town Meeting, to notify Town Meeting Representatives at least seven days before it meets. Charter, § C7-11.
- To notify Town Meeting Representatives of the time and place where Representative Town Meetings are to be held and send the notices by mail at least seven days before the meeting. Charter, § C7-10.
- Within 30 days after sessions of Annual and Special Town Meeting, to post in the Town Hall and publish in a local newspaper or on the official town website a list of Town Meeting Representatives present and absent. Charter, § C7-7.
With regard to the precinct caucuses, candidates receiving the greatest number of votes are to be notified by the precinct clerk. Charter, C7-6.
Charges for work assigned to the Town Clerk
Between 2002 and 2017, there was never a time when the Town did not have either a permanent Town Clerk or an Acting Town Clerk. The Board of Selectmen is the appointing authority for the Town Clerk.
On June 20, 2009, Hansen signed off on charges for $395.58 for expenses “incurred for the preparation of the Precinct Caucuses and the Post Caucus recording and organizing the Town Meeting Member election records on behalf of the Town Clerk’s Office.” (Ex. 4, p. 0005, 0006).
In an attached letter to the Town Accountant dated June 19, 2009, Hansen wrote,
This work involved arranging the information prior to the Annual Town Election to determine vacancies and expiring terms of town meeting representatives, mailing letters to newly elected or re-elected town meeting representatives, posting notices and arranging for facilities to hold the caucus. Following the caucus, the entire town meeting membership records had to be updated and verified.
(Ex. 4, p. 0006. See Tr., 86-87).
Having already done the work, Hansen asked what account should pay for it:
It was necessary for the Moderator to do this task as there was no one in the Town Clerk’s Office familiar with the work.
You will note there are some unexpended funds remaining in the Moderator’s account that could be used to pay the bill directly. Or perhaps that it should be charged to Elections and Town Meeting Accounts under the Town Clerk’s/Registrar of Voters. Under normal circumstances, this work would not be under the direction of the Moderator. I did allow for this contingency in the 2010 budget.
The invoice for Hansen Brothers Printing Co. for the charge of $395.58 includes a labor charge of $240.00 for 8 hours of work. (Ex. 4, p. 0006, 0009.) Hansen charged $30 an hour for his labor, because “that was basically the going rate.” (Tr., 87).
Also on June 20, 2009, Hansen approved a charge for $203.06 for the preparation of the Organizational Town Meeting on April 30, 2009. (Ex. 4, p. 0005, 0010). In a letter to the Town Accountant, Hansen wrote, “It was necessary for the Moderator to organize this material as there was no one in the Town Clerk’s Office familiar with the Organizational Town Meeting business. This process is required by the Town Charter and has to be completed on a strict schedule.” (Ex. 4, p. 0010).
While the Town Clerk’s unfamiliarity with the process was the reason he gave in 2009, Hansen charged for similar preparation for precinct caucuses and organizational meetings from 2010 through 2013. See Precinct Caucuses charges (Ex. 4, p. 0026 dated 6/2/10; p. 0039 dated 6/16/11; p. 0050 dated 6/30/12; p. 0077 dated 6/29/13). See Organizational Meeting charges (Ex. 4, p. 0027 dated 5/15/10; p. 0043 dated 6/15/11; p. 0054 dated 6/29/12; p. 0077 dated 6/29/13).
Hansen also assigned himself other responsibilities of the Town Clerk. He testified that the Town Clerk has never done adequate record-keeping. He said, “…no one took responsibility for recordkeeping except on an informal basis. So most of all the procedures that have been going on through the town meeting process have been under my direction for the last 27 years.” (Tr., 58).
Document search for the Treasurer
On April 4, 2013, Hansen signed off as Town Moderator on payment of an invoice for $984.15 from Hansen Brothers Printing Co. for a “Document Search and Copies of Moderator Records, 2012 ATM for Bond Counsel.” (Ex. 4, p. 0066, 0067). A new Town Treasurer had called Hansen looking for documents for bond counsel regarding the 2012 annual meeting. Hansen told the Treasurer that the documents should be in the Town Clerk’s Office. He delivered a memorandum and packet of information to the Town Clerk, but the Town Clerk refused to take it. The prior treasurer recommended that Hansen should provide the answer.
- Hansen spent 32 hours going through his own records and copying and certifying documents. He commented that one or two items would have been within the scope of his work, but “[t]his is long above any duties of being Moderator.” (Tr., 131-132). He then decided on his own what to charge. “So I billed her roughly what you could legally do as a person assigned by the town to perform the minimal task of doing research.” (Tr., 132). Hansen subsequently billed $ 830.40, (or $25.95 times 32 hours), plus the cost of copies and materials. (Ex. 4, p. 0067).
Hansen sent the invoice for Hansen Brothers Printing Co. for this work to the Treasurer, but handwriting on the invoice says that the amount was charged to the Moderator’s Account.
Changes in procedure with regard to the Town Moderator
The Town Manager is the Chief Administrative Officer and Chief Procurement Officer for the Town of Stoughton. Michael Hartman has been Town Manager since December, 2012. At some point, the Town Manager became concerned with Town Moderator Hansen’s billing practices. He was concerned that Hansen was not using sound business practices, and was directing business to his own company.
The Town Treasurer/Collector is responsible for cutting checks. The Town Accountant is responsible for conducting the warrant. In 2014, the Town Manager informed the Town Treasurer/Collector and Town Accountant that there were to be no further payments to Hansen. He told the Town Accountant that he could only pay Hansen for reimbursements, not fee for service. The Town Manager also informed Hansen and the Board of Selectmen in writing about his decision.
In response, according to the Town Manager, Hansen “bypassed my office and… attempted to go to the Board of Selectmen to receive payment.” (Tr., 39). An invoice that Hansen submitted in 2014 still has not been paid.
In fiscal 2015, by action of the Town Manager and the Finance Committee, and through Town Meeting, the Town Moderator’s funds were placed under the Town Clerk’s budget and under her direct control. The Town Clerk would now be the department head with responsibility to sign off on the Town Moderator’s budget. To be paid, Hansen would first have to receive clarification from the Town Clerk that he could expend the funds.
III. The Burden of Proof
Petitioner must prove its case and each element of the alleged violations by a preponderance of the evidence. 930 CMR 1.01(10)(o)(2). The weight to be attached to any evidence rests within the sound discretion of the Commission. 930 CMR 1.01(10)(n)3. In determining this case, the Commission must make a determination of every issue of fact or law necessary to its Final Decision. 930 CMR 1.01(10)(o)3.
IV. The Evidence Shows That Hansen Violated § 19
Under § 19, a municipal employee may not participate as a municipal employee in a particular matter if, to his knowledge, he has a financial interest in the matter. Section 19 includes a disclosure procedure which an appointed municipal employee can use to seek authorization from his appointing authority to participate in a particular matter despite having a financial interest in it. No exemption of this kind is available to elected municipal employees. See PEL 97-1, 1996 SEC 822, 823. They must recuse themselves rather than participate in a matter in which they have a financial interest.
There is no dispute that Hansen was an elected municipal employee from 2009 through 2014.
"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..." G.L. c. 268A, § 1(k). Decisions by the Town Moderator to use Hansen Brothers Printing Co. as a vendor for printing services and to authorize payments to Hansen Brothers Printing Co. were particular matters in which the Town was a party and had a direct and substantial interest.[2]
With regard to participation as Town Moderator in the alleged particular matters, as Town Moderator, Hansen decided how much money to request for the Town budget for the Town Moderator, and he decided whether and how to spend the budget he requested. There were copiers and printers he could use for free in Town Hall, but he repeatedly used his own business for copying and printing services. The Schedules of Bills Payable and back-up invoices show that Hansen, signing off as “Department Head,” consistently directed payment of amounts from the Town budget to himself or to Hansen Brothers Printing Co.
In defense, Hansen argues first that the act of approving Schedules of Bills Payable was not “participation.” “Participate” means “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, § 1(j). Hansen argues that Hansen’s signing off on the Schedules of Bills Payable was ministerial, pro forma, or preliminary, and not integral to the decision-making process, and so was not “substantial” because the Town Accountant, and not Hansen, decided whether the amounts billed would be paid or not. See In re Sullivan, Decision and Order, Docket No. 319 (May 19, 1988), and cases cited.
Approval of payment has been regarded as participation, i.e., personal and substantial participation, in a particular matter in prior cases, however. See, e.g., In re Foskett, Disposition Agreement, Docket No. 16-0002 (April 28, 2016) (approval by Town of Charlton Highway Superintendent of payments to his own brothers and son for snowplowing); In re Prue, Disposition Agreement, 2014 SEC 2505 (July 31, 2014), (approval by transportation director of the Greater Lawrence Educational Collaborative of invoices submitted by a bus company for which his wife had provided services as a bus monitor); In re Dickinson, Disposition Agreement, 2013 SEC 2489 (December 4, 2013) (approval by Hosting Services Director for the Commonwealth of Massachusetts Information Technology Division of contract payments to a vendor with whom he was negotiating prospective employment – relevant provision was § 6, the counterpart to § 19 applicable to state employees).
More specifically, at the hearing in this case, Town Accountant William Rowe testified that the Schedules of Bills Payable were used to satisfy the requirements of G.L. c. 41, § 56. The text of G.L. c. 41, § 56 regarding Warrants for Payment of Bills provided the following through November 7, 2016:
The selectmen and all boards, committees, heads of departments and officers authorized to expend money shall approve and transmit to the town accountant as often as once each month all bills, drafts, orders and pay rolls chargeable to the respective appropriations of which they have the expenditure. Such approval shall be given only after an examination to determine that the charges are correct and that the goods, materials or services charged for were ordered and that such goods and materials were delivered and that the services were actually rendered to or for the town as the case may be….
(Emphasis added).
This statute previously was considered in EC-COI-98-5, 1998 SEC 704. There, in a Town, the practice was for school administrators to review and approve charges and pass them on to the Superintendent, who then put them on a Schedule and passed it to the School Committee for a final sign-off before they were submitted to the Town Accountant. Even though the practice of the School Committee was to sign off without further review or investigation, the Commission found that, pursuant to the statute, it was the School Committee’s responsibility to certify the correctness of the accounts payable. The Commission found, “G.L. c. 41, s. 56 clearly gives the members not only the power to approve bills which are correct, but the concomitant power to disapprove those bills which are not correct. Such power, whether exercised or not, implies discretion and judgment, and removes the signing of the Schedules from the realm of the ministerial.” 1998 SEC at 706.
Hansen also argues that the “Declaration of Disclosure, Ch.268A, Sec. 19, 20 and 23” that he filed on February 18, 1993 was a disclosure under § 19(b)(1), and that the response he received from the Selectmen, designating him as a special municipal employee, was effective as an exemption under 19(b)(1).
This argument fails for several reasons. Most importantly, an elected municipal employee is not eligible to use the § 19(b)(1) disclosure procedure and cannot otherwise get authorization from the Selectmen to participate in a particular matter in which he has a financial interest. Once Hansen was an elected employee, his only option was to recuse himself as Town Moderator from any matter regarding payments from the Town that would benefit him. Second, as a matter of law, being a special municipal employee does not make a difference with regard to obligations under § 19.
As to whether Hansen had a financial interest in his decisions to send Town business to, or approve bills from, his own company, Hansen was the sole proprietor of Hansen Brothers Printing Co., so that payments made by the Town to Hansen Brothers Printing Co. were payments in which Hansen had a financial interest.
Hansen argues, however, that the payments Hansen received were only reimbursements of Hansen’s out-of-pocket expenses, and that reimbursement did not rise to the level of a financial interest because he just was made whole and received nothing of additional value. For reasons explained in detail in the section below regarding § 20, we have concluded that the payments made by the Town to Hansen Brothers Printing Co. for goods, copying or printing were not reimbursements of Hansen’s expenses, but payments for vendor services. “It is established Commission policy that § 19 will apply to every financial interest regardless of size and regardless of whether the interest affects the municipal employee favorably or adversely.” EC-COI-89-33. If Hansen complains that he did no better than break even in some instances when his sole proprietorship provided vendor services, as a matter of law, for purposes of § 19, a financial interest need not be a gain.
A final issue is whether Hansen had knowledge of his financial interest. The evidence makes clear that he knew he was interested in having his invoices be paid. For example, there was testimony that the Town did not pay an invoice that Hansen submitted in 2014. The fact that Hansen by-passed the Town Manager and went to the Selectmen to pursue the payment proves that he knew he had a financial interest in receiving it.
V. The Evidence Shows That Hansen Violated § 20
Under § 20, a municipal employee may not have a financial interest, directly or indirectly, in a contract made by the Town he serves, in which the Town was an interested party. An element of the violation is that a municipal employee knows or has reason to know of the financial interest. Section 20 includes some exemptions, however, and if a municipal employee can satisfy the requirements of an exemption, he may have a financial interest in a Town contract.
Hansen repeatedly violated § 20. The Commission has defined “contract” very broadly to include “any type of agreement or arrangement between two or more parties, under which each undertakes certain obligations in consideration for promises made by the other.” In re Pathiakis, 2004 SEC at 1176.
Petitioner argues that on eleven occasions,[3] Hansen, as Town Moderator on behalf of the Town of Stoughton, made contracts with Hansen Brothers Printing Co. to provide goods and services in exchange for payments that would be made from the Town Moderator’s budget which he controlled. As sole proprietor of Hansen Brothers Printing Co., Hansen subsequently billed the Town, and the Town paid the invoices. Petitioner contends that in each instance, there was a contract made by the Town, the Town had an interest in the contract, and Hansen had a financial interest in the contract. Hansen counters that he only had an arrangement with the Town for reimbursement of out-of-pocket expenses which he incurred as Town Moderator. He asserts that this did not constitute a separate contract and that the elements of a contract -- offer, acceptance, consideration and mutual assent to the terms – were not met. See EC-COI-04-4.
A § 20 violation occurs when a municipal employee has a financial interest in a Town contract distinct from his employment arrangement. If the terms of a municipal employee’s employment entitle him to benefits or reimbursements, these are part of his employment arrangement and not a separate contract. For example, reimbursement of an employee’s mileage for trips he takes as part of his employment is a part of his employment agreement and not a separate contract. A public employee does not violate § 20 by submitting a request for reimbursement of expenses, such as a mileage report, to which he is entitled as a term of his employment. Amounts that Hansen charged personally for subscriptions and membership dues for the Massachusetts Moderators Association or gas and mileage for its meetings are examples of such reimbursements. (See Ex. 4, p. 0002, 0003, 0022, 0036, 0069).
Hansen contends that charges he billed for Hansen Brothers Printing Co. likewise were reimbursements associated with his employment as Town Moderator, rather than a separate contract. He testified that when he appeared before the Finance Committee to present the budget for the Town Moderator, he “[i]temized it as reimbursement,” “broke them down… committee supplies, Moderator specific supplies.” (Tr., 76). He testified that the Finance Committee was aware that the expenses he was asking for were for reimbursement to him. He then incurred costs as he had indicated for Town Meeting and other commitments, and finally submitted requests for reimbursement of his expenses each year after Town Meeting and meetings of the Rules and Standing Committees were over. He testified that the bill included direct reimbursements for items for which he paid out of pocket, such as notebook covers or pocket portfolios purchased at Ocean State Job Lot. He testified that he also sought reimbursement for his costs for creating or making copies of documents. Hansen contends that the Town’s repeated payment of his bills since 1993 demonstrates the Town’s understanding that he was entitled to recover what he spent to do his work.
For the following reasons, we reject Hansen’s argument that the payments from the Town to Hansen Brothers Printing Co. were simply reimbursements of his expenses. First, Hansen’s own statement is the only evidence that the Finance Committee was aware either that Hansen Brothers Printing Co. would supply the goods, copying and printing that he itemized in the Town Moderator’s budget, or that the payments would only reimburse Hansen for his expenses. Coming from Hansen rather than a Finance Committee member, his statement is self-serving hearsay, and as such, we find it unpersuasive.
Second, the Town’s historical payment of Hansen’s invoices proves that his bills were honored by the Town, but not necessarily that the Town understood he was entitled to recovery of the costs he charged to Hansen Brothers Printing Co. as reimbursements due as part of his employment arrangement. As a matter of common sense, the items for which Hansen sought payment, such as toner, paper, name tags, and notebooks, and the charges for document preparation and copies are not the types of expenses, such as mileage and travel expenses, which are typically reimbursed as part of an employment arrangement.
More to the point, Hansen Brothers Printing Co. was not an employee of the Town, so payments to the business were not payments due to an employee as part of the employee’s employment arrangement. Factually, the payments made to Hansen Brothers Printing Co. were indistinguishable from usual vendor transactions. Even if Hansen Brothers Printing Co. paid Staples for a notebook and then provided the notebook to the Town at the same price, it was an ordinary sale to the Town, albeit with no profit to the business.
In addition, there was evidence that the Town regarded the payments to Hansen Brothers Printing Co. as expenses different from reimbursements. The Town Accountant testified that one vendor number was for Hansen’s “employee reimbursements”, but “[i]f he was performing services for the town, they would be under Hansen Brothers Printing.” (Tr., 22). Also, when the Town Manager changed procedures about paying Hansen’s bills in 2014, he instructed the Town Accountant to pay Hansen only for reimbursements, not fee for service.
After 2009, even Hansen’s own billing distinguished between “reimbursements” to himself as an individual, on the one hand, and charges from Hansen Brothers Printing Co., on the other. This evidence also indicates that the payments to Hansen Brothers Printing Co. were not considered reimbursements to which Hansen was entitled as part of his service as Town Moderator, but rather that the invoiced transactions with Hansen Brothers Printing Co. were contracts separate from his employment agreement.
A final point is that the evidence does not support a finding that all Hansen received in the course of these transactions was repayment of his expenses. Hansen charged the Town not only for toner and paper, but also for copies made with them, and charged for copies in a single invoice at both 15 cents per copy and 25 cents per copy. He charged $70 for each of two five-page e-mails. In some instances, the invoices include labor charges as well as charges for items. We think the only possible conclusion from these facts is that Hansen’s charges exceeded repayment of his expenses and therefore cannot accurately be characterized as “reimbursement”.
After consideration of the evidence, we conclude that in each instance when Hansen Brothers Printing Co. delivered goods and services in exchange for payments from the Town budget, there was a contract for purposes of § 20. Hansen had a financial interest in the contracts as sole proprietor of Hansen Brothers Printing Co.
No exemption to § 20 was satisfied. Section 20 includes exemptions, and if a municipal employee can satisfy the requirements of an exemption under § 20, he may have a financial interest in a contract made by the Town he serves. Petitioner asserts that Hansen never satisfied the requirements of any exemption under § 20 with regard to any contract that he or Hansen Brothers Printing Co. had with the Town between 2009 and 2013. Hansen contends that the “Declaration of Disclosure” that he filed in 1993 satisfied an exemption under § 20 with regard to future contracts.
Availability of exemptions. Section 20 includes two exemptions for special municipal employees. Being able to take advantage of these exemptions involves two steps.
First, in a Town, a position must meet one of the eligibility requirements listed in G.L. c. 268A, 1(n) for special municipal employee status, and the Selectmen must vote to designate the position as a special municipal employee position.
Second, with regard to a financial interest in a contract, a municipal employee must satisfy the requirements of one of the two exemptions for special municipal employees. Here, where the relevant contract is between the Town Moderator and Hansen Brothers Printing Co., the appropriate exemption is § 20(d) because Hansen, in his position as Town Moderator, participates in or has official responsibility for the agency that made the contract. To satisfy the requirement of a § 20(d) disclosure, Hansen had to complete a § 20(d) disclosure, get approval of the exemption from the Selectmen, and file the approved disclosure with the Town Clerk. Separate disclosures would have been appropriate to address each specific contract with a municipal agency unless an ongoing exemption was approved.
In a number of instances, Hansen submitted invoices for goods, copying or printing provided to an official or agency other than the Town Moderator. For example, Hansen Brothers Printing Co. created plaques for the Committee on Finance and Taxation at the request of the Town Manager. (See Ex. 4, p. 0033 and 0047). Because Hansen, as Town Moderator, did not participate in or have official responsibility for the activities of the agency making the contract, he was required to file a disclosure under § 20(c) before performing the work.
Hansen also submitted an invoice from Hansen Brothers Printing Co. for researching documents for the Town Treasurer after a request from bond counsel. (Ex. 4, p. 0067). This work either was part of his Town Moderator duties and he should not have charged the Treasurer for the work, or it was separate work done for the Treasurer, and he had to file a § 20(c) disclosure to do it.
Failure to satisfy any exemption. We agree with Petitioner that Hansen did not satisfy any exemption under § 20 in relation to his financial interest in the series of contracts that Hansen Brothers Printing Co. had with the Town between 2009 and 2013. We reject Hansen’s contention that the exchange of correspondence in 1993 – his letter to the Selectmen and “Declaration of Disclosure” dated February 18, 1993, and the Selectmen’s response dated March 2, 1993 -- met the requirements of any exemption under § 20.
Hansen’s letter of February 18, 1993, in which he requested special municipal employee status, does not refer to any specific contract. Rather, it speaks about the obligations his business would have with regard to potential future contracts generally: “…any contract awarded to the firm of Hansen Brothers Printing Co. has to meet all specifications and criteria established for any competitive bid.” (Ex. 5A).
The response from the Selectmen on March 2, 1993 likewise did not refer to any contract, or even to the subject of contracts. It only said that the Selectmen “voted to approve your request that the Town Moderator be designated as a Special Municipal Employee of the Town of Stoughton, as requested in your letter of February 18, 1993.” (Ex. 5C). At most, this response resulted in Hansen being designated as a special municipal employee. It did not provide approval of any specific contract, and it did not provide blanket approval of all possible future contracts between Hansen, acting on behalf of the Town as Town Moderator, and Hansen’s own business.
Likewise, in the so-called “Declaration of Disclosure, Ch.268A, Sec. 19, 20 and 23,” Hansen speaks only in general terms about the fact that he bids on contracts, has to meet specifications as other bidders or contractors do, and is not entitled to beneficial treatment because of his public office. (Ex. 5B). He also explains generally that he has a financial interest in Hansen Brothers Printing Co. as its owner. Nothing in the Declaration of Disclosure mentions any particular contract.
There is no evidence that the Selectmen responded at all to the Declaration of Disclosure. Their letter refers only to Hansen’s letter dated February 18, 1993, and not to the “Declaration of Disclosure.” There is no evidence that, in 1993 or at any subsequent time, the Selectmen approved an exemption under § 20(d) or otherwise authorized Hansen to have free rein with regard to entering into contracts between his business and the Town.
Consequently, as we have found that Hansen had a financial interest in a series of contracts with the Town from 2009 through 2013, and that he did not satisfy any exemption under § 20 with regard to his financial interest, we conclude that he violated § 20 with regard to each of the contracts.
VI. The Evidence Shows That Hansen Violated Section 23(b)(2)(ii)
Section 23(b)(2)(ii) prohibits a municipal employee from, knowingly or with reason to know, using or attempting to use his official position to secure unwarranted privileges or exemptions which are of substantial value, i.e., worth $50 or more, and which are not properly available to similarly situated individuals. In precedent, the Commission has found that public employees violated § 23(b)(2)(ii) by departing from or circumventing usual procedure to give themselves or others advantages or exemptions which were worth $50 or more and not available to people or entities in similar situations.[4]
Petitioner argues that, pursuant to the Town’s procurement policy, when the cost of copying or printing would be below $3,000, Hansen had an obligation to follow “sound business procedures” by seeking three quotes before selecting a vendor for printing and copying services and supplies, and that he misused his official position when he failed to seek three quotes and instead took the printing and copying business himself. Hansen counters that he did not violate any procurement policies of the Town of Stoughton or the state.
The evidence supports a finding that Hansen was required to follow the procurement policy and that he failed to do so. As the Town Accountant testified, the procurement policy that was instituted in 2008 applied to all municipal departments, other than the school department. The evidence also shows that Hansen never sought three quotes from other copying and printing vendors or selected the vendor with the lowest prices. At most, “maybe every two years,” he compared his own prices with those of other vendors and then consistently took the business himself.
Hansen directs us to testimony by the Town Accountant. The Town Accountant agreed that “[i]t’s fair to say that what was submitted by Mr. Hansen was within the procurement rules of the Town of Stoughton at the time.” (Tr., 30). He also testified that it was “correct” that ‘[t]hey were not rejected because there was any violation of any procurement rules of the town or the state.” (Id.) This testimony is about the point in the procurement process when invoices are submitted, however, not the point when three quotes should be obtained before a vendor is selected.
One element of a § 23(b)(2) violation is whether a municipal employee misused his position knowingly, or with reason to know. This raises the question about whether Hansen knew of the procurement policy and of an obligation to follow it. Hansen testified that he is not familiar with Stoughton’s procurement procedures because they never were presented to him. Hansen also testified that he was not asked to be at a training session for procurement, and that his department was the only one that was not asked. According to Hansen, no one said anything about the training, “other than references that they hired a Procurement Officer.” (Tr., 146).
On the other hand, Hansen’s letters in 1993 indicate that he was aware of various procurement and bidding requirements. The procurement policy adopted in 2008 applied to all employees except school employees. If he in fact was not notified of training and was not trained about the Town’s procurement policy, this does not establish that he was exempted from the policy, or from an obligation to find out what policy applied to him. We conclude that a municipal employee, and particularly an elected Town Moderator who holds a position of exceptional trust, has a duty to find out about the policies and procedures that apply to him in the course of his municipal service.
As to whether Hansen secured an unwarranted privilege or exemption, the term, “unwarranted,” is not defined in G.L. c. 268A, and the Commission has applied common experience and common sense in interpreting the term. In EC-COI-98-2, the Commission wrote, “In common usage, ‘unwarranted’ means ‘lacking adequate or official support’ or ‘having no justification; groundless.’” The American Heritage Dictionary, Second College Edition 1327 (1991); Webster's Third New International Dictionary 2514 (1993). Privilege is generally defined as "a special legal right, exemption or immunity granted to a person or class of persons; an exception to a duty." Black's Law Dictionary 1234 (8 th ed. 1999).
By by-passing the requirement to collect three quotes and select the most advantageous quote, and instead directing all orders for goods, copying and printing related to the work of the Town Moderator to his own business, Hansen unjustifiably obtained a virtually exclusive opportunity to receive payment from the Town.
By regulation, “substantial value” is $50 or more. 930 CMR 5.05. The amounts that Hansen invoiced for Hansen Brothers Printing Co. and approved as Town Moderator well exceeded $50, and in the aggregate exceeded $13,000.
The advantage that Hansen took by failing to follow sound business practices was not properly available to other vendors similar to Hansen Brothers Printing Co. As the Town Manager confirmed, other printing companies could not unilaterally decide to provide services to the Town and receive payment. Instead, when Hansen failed to consider quotes from them and assign work to them, they were deprived of the opportunity to compete for the Town’s business.
Accordingly, we find that Hansen was required to follow the procurement policies, and that he misused his position as Town Moderator by consistently failing to seek three quotes or select a copying and printing vendor on the basis of that comparison and instead directing the business to his sole proprietorship.
We also find that, as Town Moderator, Hansen uniquely was positioned to maximize the benefit to his own company as a vendor. He repeatedly increased the amount of business he sent to his own printing company by assigning himself work as Town Moderator that was not part of his duties, and then billing the Town after the charges to Hansen Brother Printing Co. already had been incurred. In a number of instances, although he already earned a salary or stipend as Town Moderator, he set his own additional labor charges and invoiced them through his business.
Instances in which he used his Town Moderator position to increase the charges to his business include:
(1) Although it was “not his job” to run a meeting to recruit Town Meeting representatives, Hansen submitted an invoice for Hansen Brothers Printing Co. on April 30, 2012 for $660.95 for charges related to running the meeting. (Tr., 122).
(2) In 2008, he decided on his own accord that no one in the Town Clerk’s Office was capable of performing duties relating to Precinct Caucuses and the Organizational Town Meeting which, by Charter, were assigned to the Town Clerk. He did this despite the fact that the Town Clerk had an appointing authority, the Board of Selectmen, who had the responsibility to oversee the Town Clerk’s work. Although the Town Clerk no longer was new or, presumably, incapable in subsequent years, Hansen submitted and approved charges from Hansen Brothers Printing Co. for goods, copying and printing associated with the same work from 2010 through 2013. From 2009 through 2013, these charges totaled $2,760.58.
(3) Among the charges Hansen invoiced for Hansen Brothers Printing Co. were labor charges which, according to his own testimony noted above, he arbitrarily set himself and then billed after already having completed the work. These included:
a. Eight hours of labor at a rate of $30, for a total of $240, which Hansen invoiced on June 19, 2009 for doing work on Precinct Caucuses that, by charter, was assigned to the Town Clerk. (Ex. 4, p. 0006, 0009).
b. Thirty-two hours of labor at a rate of $25.95, for a total of $830.40, which he invoiced on December 10, 2012 to the Town Treasurer for work done at her request. (Ex. 4, p. 0067). Hansen decided to charge this amount for research he did as Town Moderator on documents that he himself maintained.
Other labor charges apparently were billed, but were not so clearly identified. Presumably, in the invoice dated June 29, 2013 for Moderator’s Workbook Expenses, the charge of $70 for each of two 5-page e-mails on June 29, 2013 was not only for copying.[5] (Ex. 4, p. 0076).
No other copying and printing vendors were in a position to increase the business they got from the Town by adding new Town duties, taking over duties from Town employees or deciding on their own how much to pay themselves for doing Town work. We find that Hansen misused his Town Moderator position to secure an unwarranted privilege for his business by unilaterally and arbitrarily generating these charges for Hansen Brothers Printing Co.
VII. Penalty
Having found that Hansen violated sections 19, 20 and 23(b)(2)(ii), it remains to set a penalty. By statute, a maximum civil penalty of $10,000 per violation can be assessed with regard to each of the provisions that Hansen violated. G.L. c. 268B, § 4(j)(3). As explained below, we have concluded that some mitigation of the penalty is justified.
Hansen asserts that, year after year, he followed the same practice, informing the Finance Committee that he would pay his own business for goods and services related to the Town Moderator’s work, submitting invoices from his own business, approving the charges as Town Moderator, and passing them on to the Town Accountant. He emphasizes that the Town Accountant made the payments each year through 2013 without rejecting any of the charges. The Town Manager who was hired in December, 2012 raised an objection to the fact that Hansen was steering business to his own sole proprietorship for the first time in 2014.
In a number of instances, the Commission has reduced penalties to be paid by a public employee in light of the fact that other governmental officials knew of or condoned the activity that violated the conflict of interest law. See, e.g., In re Turner, 2011 SEC 2370, 2376 (although the policy of the Town cemetery was that a plot should be sold only for a burial, the Cemetery Superintendent knew that a Division Foreman sold four cemetery plots to his parents, who were not near death, prior to an expected change in the price of plots and did nothing to stop the transaction); In re Green, 1994 SEC 714, 715 n. 7 (the fact that the Building Inspector was following an established, albeit unlawful, practice in issuing building permits for his own work was known to his appointing authority, the Board of Selectmen); In re Cassidy, 1988 SEC 371, 378 (in six appointment processes, Police Chief made no effort to conceal the fact that he was recommending his sons to be appointed as police officers, and Town officials who could have taken preventative action were aware of the situation and chose not to object).
To be clear, we do not regard the fact that other Town officials provided actual or de facto approval of Hansen’s actions as an excuse for his repeated violations. The conflict of interest law demands that each public employee take responsibility for the integrity of his own governmental service, and we do not suggest that Hansen was relieved of such responsibility because other Town officials did not take action to prevent his violations. As stated in Turner, however, we recognize the possibility that “this post-violation inaction by others …did as a practical matter deprive him of the opportunity to correct his mistake while it was relatively harmless, and it may have misled him into erroneously believing that there was no mistake that needed correction.” Turner, 2011 SEC at 2376.
VIII. Order
Accordingly, for his multiple violations of G.L. c. 268A, §§ 19, 20 and 23(b)(2)(ii) during the years, 2009 to 2014, Respondent Howard Hansen is ordered to pay a civil penalty of $4,000.00.
DATE AUTHORIZED: September 21, 2017
DATE ISSUED: October 4, 2017
