|Organization:||State Ethics Commission|
Decision In the Matter of James J. Craven, Jr.
Decision and Order
We find that the Respondent, Representative James J. Craven, violated Section 6 and 23(d) of Chapter 268A and order that he pay a civil penalty in the amount of $1,000 within 30 days of the issuance of this Decision.
I. Procedural History
On November 29, 1979, the Petitioner filed an Order to Show Cause alleging that the Respondent, James J. Craven, Jr., had violated Sections 2(b), 6, and 23(d) of Massachusetts General Laws Chapter 268A, the state's conflict-of-interest law. The Respondent filed his Answer to that Order on December 20, 1979, denying that he had violated those provisions.
An evidentiary hearing was held in this matter on March 10 and 11, 1980, before James Vorenberg, Chairman of the Commission. See Mass. G.L. c. 268B, s.4(c). Post-hearing briefs were filed by counsel. Each Commissioner received copies of the transcript of the proceeding and of all exhibits, together with copies of the briefs. Oral argument before the full Commission occurred on April 30, 1980. Each of the Commissioners participating in this Decision and Order has heard and/or read the evidence and arguments presented by the parties.
II. Findings of Fact
1. James J. Craven, Jr. has been an elected member of the Massachusetts House of Representatives representing parts of Roxbury, Jamaica Plain and Roslindale from 1957 to the present.
2. James J. Craven, Jr. has been a member of the Ways and Means Committee of the Massachusetts Mouse of Representatives from 1957 to the present. 3. The Ways and Means Committee of the Massachusetts House of Representatives evaluates and makes recommendations to the full House on the budget requests of all state agencies. These recommendations carry great weight with the full House membership.
4. In 1976 Representative Craven assisted some associates in the formation of a community development corporation in Jamaica Plain, known as the Jamaica Plain Community Development Foundation, Inc. (JPCDF), by recruiting members of the Hispanic community in Jamaica Plain to serve on its Board of Directors.
5. JPCDF was incorporated in April of 1977. The first Executive Director of JPCDF was Cornelius Joseph Doyle. Mr. Doyle was, from November, 1976, through June, 1979, employed by the Rules Committee of the Massachusetts House of Representatives and assigned to Representative James J. Craven.
6. In the late summer or fall of 1978 Representative Craven assisted JPCDF in its efforts to obtain government funds by advising persons associated with that organization of the availability of grant monies in the budgets of the Massachusetts Department of Youth Services (DYS) and Department of Community Affairs (DCA) and by arranging and attending a meeting between DYS Commissioner Calhoun and representatives of JPCDF.
7. In December of 1978, JPCDF was awarded an $18,000 contract by DYS. That contract was cancelled in June, 1978, because DYS officials determined that there was a conflict-of-interest involved in the award.
8. In the spring of 1979, JPCDF was tentatively awarded one $40,000 contract and one $24,500 contract from the City of Boston. Both awards were subsequently cancelled.
9. In August or September of 1978, Representative Craven arranged and attended a meeting in the offices of the Massachusetts House Ways and Means Committee. Also attending were Cornelius Joseph Doyle, then Executive Director of JPCDF, William Flynn, then Secretary of the Executive Office of Communities and Development of the Commonwealth of Massachusetts (EOCD), and Paul Collis, then William Flynn's legislative assistant. At this meeting Representative Craven recommended that JPCDF be funded by EOCD. Secretary Flynn advised Representative Craven at this meeting that there were several EOCD programs, including the Urban Reinvestment Study (URS) Program, under which JPCDF could apply for funding.
10. In November, 1978, Representative Craven attended another meeting with Secretary Flynn in the Ways and Means Committee offices. Several other state legislators representing portions of the City of Boston were also in attendance at this meeting. The subject of this meeting was the funding by EOCD of community development groups in Boston. Secretary Flynn advised the persons present at this meeting that there were three EOCD programs, including the URS Program, under which Boston groups could apply for funding.
11. During the fall of 1978, DCA, a state agency within the jurisdiction of EOCD, was implementing a $150 million program which could not proceed to the actual construction phase until the Massachusetts House Ways and Means Committee approved a schedule submitted to it by DCA. This schedule was pending before the Ways and Means Committee of which Representative Craven was a member at the time that the two meetings described in Paragraphs 9 and 10 above took place, a fact of which Secretary Flynn was aware.
12. On November 21, 1978, James J. Craven, Jr. attended a meeting at the DCA offices located at 10 Tremont Street in Boston. Also in attendance were Cornelius Joseph Doyle, then Executive Director of JPCDF, two professionals who were to conduct the research for JPCDF in the event that it received a URS grant from DCA (Dr. Janet Duncan, Associate Professor of Geography at Boston State College, and Dr. John Shea, also affiliated with Boston State College), and two DCA staff members who would review any proposal submitted by JPCDF for a URS grant (Gerald Tuckman, Director of the DCA office of Resource Development, and Jeanne Myerson, Community Economic Coordinator in that office). Gerald Tuckman described at this meeting the Request for Proposals for the Department's URS grants and explained that the RFP had been circulated to a number of groups throughout the state.
13. In the course of this November 21, 1978 meeting, Representative Craven strongly pressed the DCA staff members present to award a URS grant to JPCDF and indicated that the DCA budget might be adversely affected if that award were not made.
14. Gerald Tuckman knew of Representative Craven's position on the House Ways and Means Committee and was very concerned about Craven's comments at the November 21, 1978 meeting. Tuckman reported the occurrence to his immediate supervisor. David Entin, that same day. Mr. Entin knew of Craven's position on the Ways and Means Committee and was concerned about the reported reference by Representative Craven to the DCA budget, since he views DCA as primarily a public housing agency serving many people in need. Entin subsequently advised Secretary Flynn and Gerald W. Hayes, Assistant Secretary of EOCD, of Representative Craven's reference to the DCA budget. Mr. Hayes was aware that DCA had programs that could not get under way without Ways and Means approval of schedules and took David Entin's report of Representative Craven's reference to the DCA budget very seriously.
15. On December 1,1978, JPCDF submitted to DCA a proposal for a URS grant. DCA received six other proposals for the $30,000. in URS monies. All seven proposals were reviewed and evaluated by Gerald Tuckinan, Jeanne Myerson, Jack Kittredge, an expert in community investment with the Social Economic Council, and Harriet Tagget, an official in the Banking Commissioner's office. They were evaluated on the basis of the criteria set forth in the Request for Proposals prepared by the DCA staff.
16. As a result of these evaluations, the DCA staff submitted to Secretary Flynn a recommendation that three of the groups receive grants, in the amount of $10,000 each. Those three groups were the Community Union Rural Development, Inc., in Greenfield, Massachusetts, the Jamaica Plain Banking and Mortgage Committee, Inc., and the Southeastern Massachusetts Advocacy Center in New Bedford, Massachusetts. In making this recommendation, the staff noted that a fourth proposal, that from the Brightwood Neighborhood Council, Inc., in Springfield, was of very high quality, but was not as good as the other three. The staff did not recommend that JPCDF receive funding under the URS program because JPCDF did not propose the creation of strategies to deal with dis-investment, as required by the RFP.
17. Gerald Hayes subsequently informed David Entin that he had discussed the URS proposals with Secretary Flynn and that they had decided to fund two of the groups recommended for funding by the staff - namely, the Community Union Rural Development, Inc. and the Jamaica Plain Banking and Mortgage Committee, Inc. - and tentatively to commit funds to JPCDF subject to their improving their proposal to meet the program requirements. The contacts made by Representative Craven with EOCD officials relative to JPCDF and the concern generated by those contacts over the implications for the DCA budget of failing to award a grant to JPCDF were major factors leading to this decision tentatively to commit funds to JPCDF.
18. Cornelius Joseph Doyle and Representative Craven were notified by letter dated January 2, 1979, from Secretary Flynn that an award of $10,000 in URS monies had been approved subject to two alterations in the program design.
19. When Secretary Flynn was replaced by Secretary Matthews in January of 1979, the latter agreed to award all grants to which Flynn had committed EOCD. On April 30, 1979. Secretary Matthews signed the $10,000 contract between DCA and JPCDF.
20. By the spring of 1979, then, JPCDF had been tentatively or finally awarded $92,500 in state and city funds.
21. On May 5,1977, Representative Craven and four of his brothers established the Celtic Realty Trust. Representative Craven and the four brothers were named as beneficiaries of the Trust. Albert Buchwald, who was then serving as President of JPCDF, and John Lawless, a Director of JPCDF. were named as Trustees of the Trust. Also in May of 1977, the Celtic Realty Trust purchased the building located at 2-16 Hyde Park Avenue, Jamaica Plain (the "Minton Building"). In the fall of 1977, Representative Craven assigned his 20 percent beneficial interest in the Celtic Realty Trust to his daughter, Theresa Craven. The other four beneficial interests remained unchanged throughout 1978 and 1979.
22. During the fall of 1978, it was the intention of JPCDF to use some portion of the URS grant, if received, to pay rent on office space in the Minton Building. Representative Craven was, during the period of time that he was arranging and attending meetings with EOCD officials relative to JPCDF, aware of this intention.
23. The proposal submitted to DCA by JPCDF for URS funds called for, and the contract ultimately awarded to JPCDF authorized, the expenditure of some portion of the grant monies on overhead expenses.
24. JPCDF paid to the Celtic Realty Trust out of the URS grant monies $490 in rent on space in the Minton Building for the month of June, 1979. JPCDF subsequently received from Gerald Tuckman of DCA a notice not to make further expenditures out of the URS grant monies.
The Respondent has been charged with violating three separate provisions of Chapter 268A - Sections 6, 2(b), and 23(d). We will address each of these charges separately.
Before turning to the three charges, however, we will discuss certain preliminary issues.
A. Constitutional Issues
The Respondent lists, in his Brief, six issues relating to the constitutionality of Chapter 268A and/or Chapter 268B [Arguments #1-6]. The Respondent provides no discussion or citations relative to these issues and has not, therefore, properly raised the issues for our consideration. In any event, the Commission has no authority to adjudicate the constitutionality of Chapters 268A or 268B, as distinguished from the constitutionality of applications of either statute to particular facts. See Weinberger v. Salfi, 422 U.S. 749, 765 (1975); Johnson v. Robison, 415 U.S. 361, 367-68 (1974); Public Utilities Commission of California v. U.S., 355 U.S. 534, 539 (1957); Engineers Public Service Co. v. U.S., 138 F.2d., 936, 952-53 (D.C. Cir. 1943), dismissed as moot, 332, U.S. 788 (1947); Panitz v. District of Columbia, 112 F.2d. 39, 41-42 (D.C. Cir. 1940); Davis, Administrative Law Treatise, s.20.04 at 74 (1st ed. 1958). Respondent's issues numbered one through four and six constitute pure questions of the constitutionality of legislation acts and are, therefore, not within the jurisdiction of this Commission. Respondent's issue number five, while posing a question of constitutional applicability, is again addressed to the wrong forum. That issue is not relevant in the context of this civil enforcement proceeding.
B. Respondent's Motion to Dismiss
The Commission rejects the Respondent's conclusion that there is a lack of probative evidence on the record of any wrongdoing on his part and accordingly denies the Respondent's Motion to Dismiss this matter.
C. Standard of Proof
The question has arisen as to what standard of proof applies to this proceeding. The Petitioner argues for application of the "preponderance of the evidence" standard. It is settled law that the "beyond a reasonable doubt" standard of proof need not be satisfied before sanctions are unposed by an administrative agency. even where the conduct for which the administrative sanctions are imposed may also be prosecuted criminally. See Alsbury v. U.S. Postal Service, 530 F.2d 852, 855 (9th Cir. 1976); Polcover v. Secretary of the Treasury, 477 F.2d 1223,1231-32 (D.C. Cir 1973); Kowal v. U.S., 412 F.2d 867, 870 (Ct. Cl. 1969). Proof by a preponderance of the evidence is the standard generally applicable to administrative proceedings. See Fairfax Hospital Association Inc. v. Califano, 585 F.2d 602, 611-12 (4th Cir. 1978); Kephart v. Richardson, 505 F.2d 1085, 1089 (3rd Cir. 1974); Kent v. Hardin, 425 F.2d 1346, 1349 (5th Cir. 1970). This standard applies to administrative proceedings in Massachusetts, even where a Sanction as serious as disbarment is imposed. See Matter of Ruby, 328 Mass. 542, 547 (1952).
Administrative agencies are occasionally held to a standard of clear and convincing proof in cases where the potential consequences to the subject of the adjudicatory proceeding are extremely serious. See, e.g., Addington v. Texas, 441 U.S. 418(1979) [civil commitment proceeding]; Woodby v. INS, 385 U.S. 277 (1966) [deportation proceeding]; Schneiderman v. U.S., 320 U.S. 118, 125 (1943) [denaturalization] Collins Sec. Corp. v. S.E.C., 562 F.2d 820, 824 (D.C. Cir. 1977) [deprivation of livelihood by revocation of broker's license].
Since the sanctions which the Commission may impose upon the Respondent as a result of this proceeding - namely, civil penalties and orders to cease and desist - are not nearly as severe as those involved in the cases requiring a clear and convincing standard, we hold that the traditional preponderance standard applies to this proceeding.
D. Single Presiding Commissioner
As was noted in Section I of this Decision, James Vorenberg, Chairman of the Commission, served as Presiding Officer at the evidentiary hearing in this matter. The Respondent has objected, both at the hearing and in his Brief, to the absence of the full Commission from that hearing. He claims that the procedure followed was an unconstitutional denial of his right to due process of law in that "the single Commission member hearing the matter could recommend criminal prosecution" and "was the same single member who signed and served upon the Respondent the Order to Show Cause." The Commission rejects these arguments on the grounds that the factual allegations upon which they are based are untrue. A single Commission member has no authority to refer a matter for criminal prosecution, Since Chapter 268B, Section 2(j) requires the affirmative votes of three Commission members for any action or recommendation of the Commission. The Order to Show Cause was signed by Robert J. Cordy, Associate General Counsel of the Commission, and not by Chairman Vorenberg. That Order was issued following a majority vote of the Commission that there existed reasonable cause to believe that the Respondent had violated Chapter 268A.
We would point out that the combination of investigative and adjudicatory functions in one administrative agency is quite typical and has been upheld by the United States Supreme Court, See Withrow v. Larkin, 421 U.S. 35, 46-59 (1974). Thus, the issuance of the Order to Show Cause in this matter by a majority of the Commission members who were to participate in the ultimate decision was entirely appropriate. See School Committee of Stoughton v. Labor Relations Commission, 4 Mass. App. Ct. 262, 272, 346 N.E.2d 129, 137 (1976) [". . . the mere issuance of the complaint by the Commission does not indicate a prejudgment of the merits of the case."].
The Respondent further contends that the denial of his request for a hearing before the full Commission violated Chapter 268B, Section 4(c), which authorizes the Commission to initiate "appropriate proceedings" to determine whether Chapter 268A has been violated. Contrary to the Respondent's assertion, Section 4(c) expressly authorizes "any member" of the Commission to "administer oaths" and to "hear testimony or receive other evidence" in any proceeding before the Commission. In view of the facts that there are only five Commission members, that they serve on a part-time basis, and that evidentiary hearings can be very time-consuming, a we believe it is reasonable for the Commission to authorize single members to preside at hearings.
We hold, therefore, that the denial of the Respondent's request for a hearing before the full Commission did not violate Chapter 268B, Section 4(c).
E. Section 6
We believe the prosecution has proved, by a preponderance of the evidence, a violation of Chapter 268A, Section 6. Indeed, we would reach the same result even were we to apply the more stringent standard of clear and convincing evidence.
Section 6 embodies what has been described as "the most obvious of all conflict-of-interest principles" - namely, "that a public official does not act in his official capacity with respect to matters in which he has a private stake." W.G. Buss, "The Massachusetts Conflict-of-Interest Statute: An Analysis," 45 B.U.L. Rev. 299, 353 (1965). That section prohibits a state employee from knowingly participating in "particular matters" in which he/she or members of his/her immediate family have a financial interest. It seeks to ensure honesty in government by preventing state employees from advancing their own interests or those of family members at the expense of the public welfare.
The Respondent, being an elected member of the Massachusetts House of Representatives, is a "state employee" for purposes of Chapter 268A. The award of the URS contract to JPCDF is a "particular matter" for purposes of that Chapter. See Chapter 268A, Section 1(k).
Chapter 268A, Section 1(j) defines "participate" to mean "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." (Emphasis Supplied) We find that Representative Craven "participated" in the award of the URS contract by EOCD to JPCDF by his "recommendation" of JPCDF for the contract. We also find that he "participated" by injecting himself into the EOCD "decision" relative to that contract.
We have found that Representative Craven had, during the fall of 1978, contacts with EOCD officials relative to funding for JPCDF. At the time of these contacts DCA, an agency within EOCD, was implementing a $150 million program which could not proceed to actual construction until the House Ways and Means Committee of which Representative Craven was a member approved a schedule pending before it. The record contains much and conflicting testimony as to whether Representative Craven "threatened" the DCA budget at a November 21, 1978 meeting with DCA officials. Indeed, some of the questions posed by counsel for the Respondent suggest a concern for whether Gerald Tuckman was personally threatened, obviously not an issue in this case. While we do not believe that any particular characterization of Representative Craven's reference to the budget is crucial to this case, we do conclude, having reviewed all of the testimony and made assessments as to credibility, that Representative Craven strongly pressed the DCA officials present at the November 21 meeting to award a grant to JPCDF and indicated that the DCA budget might be adversely affected if that award were not made.
The pressure applied by Representative Craven to EOCD officials at a time when they had a matter of significance pending before his Committee and his reference to the agency's budget amounted to substantial participation in the award of the contract to JPCDF by way of recommendation. Moreover, the record shows that Representative Craven's contacts with EOCO officials and the concern generated by those contacts for the DCA budget were major factors leading to the ultimate decision to award the URS contract to JPCDF. Thus, Representative Craven actually participated personally and substantially in the decision to fund JPCDF.
Even if we had not made the finding noted above with respect to Representative Craven's reference to the DCA budget at the November 21 meeting, we would still hold that his strong pressing of agency officials who knew of his position on the Ways and Means Committee at a time when their agency had a significant matter pending before that Committee constituted "participation" in the award of the grant, both by way of "recommendation" and by way of "decision."
Representative Craven's brothers and daughter had a "financial interest" in the award of the URS contract to JPCDF. JPCDF had decided, prior to that award, to rent office space in the Minton Building, which Representative Craven's brothers and daughter owned as beneficiaries of the Celtic Realty Trust. JPCDF intended to pay some portion of the URS grant, once received, over to the Trust as rent on that space. Since Representative Craven's family members stood to benefit financially from the award of the contract to JPCDF, they had a "financial interest" in that contract within the meaning of Section 6. It is irrelevant that the Celtic Realty Trust could secure other paying tenants for the space which JPCDF intended to occupy and meet its mortgage payments without renting that space and that JPCDF could make the rental payments without receiving the URS grant.
The evidence further shows that Representative Craven knew, at the time he had his contacts with EOCD officials relative to JPCDF, that JPCDF planned to move into the Minton Building and to pay rent to his family members through the Celtic Realty Trust.
Thus, Representative Craven knowingly participated in a particular matter in which members of his family had a financial interest in violation of Chapter 268A, Section 6. In so doing, Representative Craven exhibited an insensitivity to the fundamental principle that a public official may not act on matters where the financial interests of family members may interfere with his or her impartial execution of the public trust.
We hereby order the Respondent to pay within 30 days of the issuance of this Decision a civil penalty in the amount of $1,000 for his violation of Chapter 268A, Section 6.
F. Section 2(b)
Chapter 268A, Section 2(b) prohibits a state employee from "corruptly" demanding anything of value for himself or for another person or entity in return for being influenced in his/her performance of any act within his/her official responsibility. The Petitioner contends that Representative Craven violated this provision by corruptly demanding at the November 21, 1978 meeting with DCA employees a $10,000 contract for JPCDF in return for being influenced not to take unfavorable action as a member of the House Ways and Means Committee on the DCA budget.
While we are clear that Representative Craven's conduct, including his conduct at the November 21, 1978 meeting, constituted an abuse of his public position and so find in connection with his violation of Sections 6 and 23 of Chapter 268A, we do not believe that the record in this case sufficiently establishes a separate violation of Section 2(b).
G. Section 23
Section 23 of Chapter 268A sets out a code of conduct to which public officials and employees must adhere if public confidence in government is to be maintained. Paragraph (d) of that Section provides that no state employee may "use or attempt to use his official position to secure unwarranted privileges" for himself or others. We find that Representative Craven violated this provision of the state's conflict-of-interest law when he attempted to and did use his position as a member of the powerful House Ways and Means Committee to secure the $10,000 DCA contract for JPCDF.
It is appropriate for members of the state legislature and other public officials to recommend constituents for government benefits. However, no public official may use his or her official position to apply pressure to other state employees or officials to abandon normal agency procedures for evaluating applicants for and awarding those benefits. An award of government benefits based not on such procedures but rather on pressure by a public official to act upon an extraneous and inappropriate consideration such as concern for the agency's budget in an "unwarranted privilege" within the meaning of Chapter 268A, Section 23(d). Moreover, public officials and employees should not use their public positions to benefit ventures in which they or members of their families have a financial interest.
The record shows that Representative Craven, in his contacts with EOCD officials, went beyond merely recommending a constituent for government benefits. His intense efforts to secure the grant from DCA at a time when a schedule of considerable importance to that agency was awaiting action by his Committee and his indication that failure to award the grant to JPCDF might have adverse consequences for the DCA budget constituted an attempt to secure an unwarranted privilege for JPCDF in violation of Section 23(d).
The record reflects that these efforts by Representative Craven were a major factor leading to the decision by EOCD officials to award a grant to JPCDF even though the established process for evaluating competing proposals did not lead to a recommendation for such an award. Thus, Representative Craven not only attempted to use his position to secure the grant, but was actually successful in that attempt. In other words, Representative Craven did in fact "use" his official position to secure the grant in violation of Section 23(d). If the Section 29(d) charge stood alone in this case, we would order the Respondent to pay a civil penalty for its violation. However, since the conduct involved here is closely related to that which we have already found violative of Chapter 268A, Section 6, we will not impose a separate penalty for this violation.