|Organization:||State Ethics Commission|
- Appearance for Petitioner: David J. Burns, Esq
- Appearance for Respondent: David A. Mills
- Commissioners: Vorenberg, Ch.; Kistler, Brickman, Bernstein, McLaughlin
|Organization:||State Ethics Commission|
The Petitioner filed an Order to Show Cause on September 26, 1980 alleging that the Respondent, Louis L. Logan, had violated Sections 3(b), and 4(a) and 6 of Chapter 268A, the Conflict of Interest Law and Section 7 of Chapter 268B, the financial disclosure law. The Petitioner subsequently amended the Order on November 5, 1980 to allege that Logan had also violated Sections 23(a), 23(e) and 23(f) of Chapter 268A. The Respondent filed a timely Answer and Supplemental Statement of Material Facts which denied any violation of the aforementioned provisions.
Pursuant to notice, evidentiary hearings were conducted on January 13, 14 and 28,1981 and February 4 and 6,1981 before 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 March 27, 1981 and argued orally before the full Commission on March 30, 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.
1. Louis L. Logan is a certified public accountant. During the period of December, 1976 to April, 1980, Mr. Logan was employed by the Massachusetts Science and Technology Foundation (Foundation) and its successor, Massachusetts Technology Development Corporation (Mass. Tech) and provided financial management and technical assistance to private companies in Massachusetts.
2. The Foundation was an entity created by the General Court in 1969 to encourage, promote and assist scientific and technological development in the Commonwealth. St. 1969, c. 843, s.s.1 et seq. Foundation employees and consultants provided a broad range of free technological and financial assistance to small and emerging technology-based businesses.
3. Section 10 of the Foundation's enabling legislation (St. 1969, c. 843) established the following limitations on Foundation offices and employees:
No officer or employee of the Foundation shall be in the employ of or be in any way, directly or indirectly, financially interested in any person, partnership, corporation or association having any business or financial transactions with the Foundation. No member shall act as a member of the governing board, or vote as such, in connection with any matter in which to his knowledge, he, his immediate family, or any organization which he is serving as a director, officer, trustee, partner or employee, has a financial interest; and any member, immediately upon learning that any such matter is being considered or proposed by the board, shall fully disclose to the board the nature of his interest therein.
As a Foundation employee, Logan was aware that he was prohibited from accepting compensation from companies which dealt with the Foundation.
4. The Foundation received an annual appropriation from the General Court ranging from $50,000 to $280,000. The Foundation was subject to an annual audit by the state auditor and used stationery and forms bearing the seal of the Commonwealth. Foundation employees were not eligible for membership in the state employee retirement system or group insurance plan. Additionally, the Foundation was represented by private firms for legal and financial matters. Foundation officials regarded the Foundation as a quasi- public organization.
5. The General Court enacted legislation in 1978 which abolished the Foundation and replaced it with Mass. Tech. St. 1978, c. 497, s.s.1 et seq. Mass. Tech continued the Foundation's management assistance functions and was additionally authorized to lend nearly one million dollars to technologically oriented businesses. Mass. Tech delegated the investment decision-making to an Investment Advisory Committee (IAC) comprised of Mass. Tech governing board members who met periodically in 1979 and 1980 to review and discuss investment applications with the Mass. Tech staff.
6. Section 2 of the enabling statute of Mass. Tech, G.L. c. 40G, establishes, in part, the following limitations on Mass. Tech directors, officers and employees:
The provisions of Chapter two hundred and sixty-eight A shall apply to all directors, officers and employees of the MTDC, except that the corporation may invest in, purchase from, sell to, borrow from, loan to, contract with or otherwise deal with any person or entity in which any director of the corporation is in any way interested or involved, provided that such interest or involvement is disclosed in advance to the members of the board and recorded in the minutes of the board and provided, further that no director having such an interest or involvement may participate in any decision of the board relating to such person or entity.
7. During the period of December 2,1976 to September 26,1977, Mr. Logan was employed as a consultant to the Foundation. With few exceptions, Mr. Logan worked on a full-time five-day work week basis at a daily compensation rate of one hundred dollars.
8. Mr. Logan assumed full-time employee status with the Foundation on September 26, 1977 until October, 1978.
9. Mr. Logan continued as a full-time employee when Mass. Tech succeeded the Foundation in October, 1978 and remained at Mass. Tech until April 25,1980. His annual salary level at Mass. Tech in 1979 was approximately $28,000.
10. As an employee of the Foundation and Mass. Tech and as part of his official duties, Mr. Logan provided expert management and financial analysis assistance to several technologically-based Massachusetts businesses. These services included the preparation of financial projections and assisting businesses in preparing and pursuing loan applications with private and public financial sources. Mr. Logan received assignments from his supervisor, Paul Kelley, and also worked directly with John Silvers and Irving Sacks. Dr. Silvers was the Director of the Foundation until May, 1977. Mr, Sacks served as the Director of the Foundation and later President of Mass. Tech until April, 1980. Mr. Logan additionally made presentations directly to Mass. Tech governing board members during IAC meetings in 1979 and 1980.
11. New England Ocean Services, Inc. (NEOS) had developed and was attempting to market micro-computer-based meters for underwater use by divers in recreational, military and commercial activities. During the period of 1977 to 1980, NEOS sought and received considerable assistance from both the Foundation and Mass. Tech. Mr. Logan was the principal staff member to NEOS and serviced NEOS for approximately two hundred hours during this period. His financial management responsibilities included assisting NEOS in the preparation and pursuit of SBA loan applications. In particular, Mr. Logan successfully assisted NEOS in receiving an SBA-backed $220,000 loan from the Shawmut Bank in May, 1979.
12. The Compactor Corporation (Compactor) is a Chicopee-based company which produces household garbage compactors. When Compactor was referred to the Foundation in 1976 or 1977, Mr. Logan became the principal Foundation staff member for Compactor. Mr. Logan's assistance to Compactor began in 1977 and continued through the summer of 1979 while at Mass. Tech. His services included providing advice to Compactor in seeking Small Business Administration (SBA)- backed loans, and in preparing balance sheets and financial projections.
13. During an unspecified period in 1977 prior to September, Mr. Logan prepared Compactor's Massachusetts Corporation Excise Tax Return and United States Corporation Income Tax Return for the taxable year ending October 31, 1976. Mr. Logan performed the work on several weekends at Compactor's office in Chicopee. Mr. Logan did not immediately submit the returns to Compactor. On June 12, 1978, Mr. Logan forwarded duplicates of the Massachusetts and United States tax returns to Compactor together with signing and mailing instructions which directed Compactor to pay $254 to the Commonwealth of Massachusetts.
14. Within one week after receiving the Massachusetts and United States tax returns from Mr. Logan, Compactor mailed to Mr. Logan a check for $600 as compensation for Mr. Logan's preparation of the tax returns. Mr. Logan received and endorsed the check shortly thereafter. During this period, Mr. Logan was a full-time employee of the Foundation.
15. While employed as a Foundation consultant in 1977; Mr. Logan prepared documentation for NEOS which included financial projections and financial statements to accompany a NEOS SBA-backed loan application. On September 20, 1977, Mr. Logan submitted a bill to NEOS for $1,192 which included $980 for his professional services in preparing the aforementioned documentation and $212 in expenses. Mr. Logan wrote the following message on the bottom of the invoice to NEOS:
Mike: Next Monday, I become a full-time employee of the Foundation. Therefore, I can no longer be your accountant. I'll work with my replacement to insure a smooth transition.
I know that you folks are broke. Whenever you have some excess cash, I'd appreciate a little on account. NEOS paid Mr. Logan $1,192 in two installments in 1978. On March 30, 1978 and November 11, 1978, NEOS wrote two checks to Mr. Logan for $502 and $690, respectively. Mr. Logan received the checks in 1978 and endorsed them.
16. In January, 1978, NEOS invited a small group of outside experts in the areas of finance, insurance and engineering, including Mr, Logan, to serve on the NEOS Board of Advisors. Following a discussion with his supervisor, Paul Kelley, over the propriety of joining this group, Mr. Logan accepted the invitation. Mr. Logan forwarded to Mr. Kelley a copy of his January 27, 1978 acceptance letter in which he stated that as a Foundation employee he was constrained not to accept stipends, gratuities or compensation in any form from any Foundation clients for any services which he rendered. Mr. Logan attended a NEOS Board of Advisors meeting in early 1978 and received and endorsed a $25 check from NEOS in April, 1978 as a fee for his advisory services.
17. On at least four occasions in 1978, Mr. Logan received checks from NEOS which he characterized as loan reimbursements or reimbursements for the use of his credit card which he had lent to NEOS officers. The checks were for $512.50, $502.75, $1,000 and $200.
18. On March 14, 1978, Mr. Logan was elected to the NEOS Board of Directors as one of its three directors. Mr. Logan diligently pursued his duties as director until his resignation on December 28,1979. In particular, Mr. Logan signed a resolution as a NEOS director on January 12, 1979 authorizing either of the NEOS officers, including himself, to execute a loan application to the Shawmut Bank for up to $250,000. Shawmut subsequently approved a
$220,000 SBA-backed loan to NEOS in May, 1979.
19. Mr. Logan was elected as NEOS Vice-President in June, 1979 and resigned from this office on December 28,1979.
20. On several occasions in 1978 and 1979, NEOS attempted to hire Mr. Logan as a full-time officer. In early or mid-1978, Mr. Logan rejected a NEOS offer to serve as its Treasurer at an annual salary of $35,000. Mr. Dembowski frequently invited Logan to join NEOS as an officer and informed Shawmut Bank officials on two occasions about his interest in Logan. In September, 1979, both Mr. Dembowski and NEOS Treasurer and Director, John Conway, expressed to Mr. Logan their interest in his becoming President of NEOS, although Mr. Logan did not regard these discussions as formal job offers.
21. In June or July, 1979, Mr. Logan prepared financial projections for NEOS which he understood were to be submitted with a NEOS SBA loan application. In September, 1979, Mr. Logan received and endorsed a check from NEOS for $300 for his preparation of the financial projections.
22. On three separate occasions in 1979, Mr. Logan received and endorsed checks from NEOS, which he had characterized as reimbursements, for loans to officers who had used Mr. Logan's personal credit card. The first two checks for $450 and $483.35 were reimbursements for out-of-state trips by NEOS officers. The third check for $67.20 was a reimbursement for dinner. On each occasion, Mr. Logan allowed NEOS officers to use his personal credit card to cover NEOS' expenses.
23. By the end of 1979, NEOS owed money to Logan for loans which he had advanced through the use of his personal credit card, including $570 for a business trip in December, 1979. Mr. Logan testified that NEOS continued to owe him money through 1980. 24. By the latter part of 1979, NEOS needed additional capital. During the fall of 1979, Mr. Dembowski and Mr. Sacks discussed the availability of loans from Mass. Tech, and NEOS thereafter notified Mass. Tech that it wished to become a loan candidate. NEOS filed a formal loan application for $200,000 with Mass. Tech on January 15,1980, although Mass. Tech was aware of NEOS' application in December, 1979 and had commenced its investigation of the anticipated application well before the actual filing date.
25. Mass. Tech scheduled an initial IAC meeting for January 29, 1980 to consider the NEOS loan application. Prior to this meeting, Mr. Logan played a primary role in the Mass. Tech staff review of the loan application. Mr. Logan prepared the necessary staff work including documentation and analysis and rewrote the NEOS financial projections. Mr. Logan also prepared, with another Mass. Tech staff member, a flip chart as a visual aid for the January 23, 1980 IAC meeting. Mr. Logan evaluated the NEOS loan application for Mr. Sacks and determined that NEOS was qualified as a Mass. Tech loan candidate. Mr. Sacks thereafter recommended presentation of the NEOS loan application to the IAC on the basis of Mr. Logan recommendation. 26. Mr. Logan attended the January 23, 1980 IAC meeting and made a three to five-minute staff presentation regarding the NEOS application. Mr. Logan utilized the flip chart showing his projections for NEOS and outlined the background of the company and how much it was seeking. Mr. Logan also displayed a sample of NEOS' technology. Although Mr. Logan did not state that he was recommending approval of the loan, both Mr. Sacks and Mr. Kelley believed that the recommendation of a Mass. Tech staff member was implicit in an appearance before and presentation to the IAC. Following Mr. Logan's presentation, the IAC decided to invite the officers of NEOS to appear before the IAC. 27. Mr. Logan and the NEOS principals attended the second IAC meeting on February 19, 1980. Mr. Logan introduced the NEOS principals to the IAC and sat down. Although
Page 44 Mr. Logan did not play an active role at this meeting, he may have answered a question posed by an IAC member regarding NEOS. Following the meeting, the IAC expressed skepticism over NEOS' financial outlook and assigned Mass. Tech staff member Robert Crowley to investigate the matter.
28. During the three-week period following the February 13,1980 IAC meeting, Mr. Logan met with NEOS officials on four occasions and discussed the Mass. Tech loan application. Additionally, Mr. Logan attended a meeting in Waltham on March 17,1980 where the participants discussed ways of raising money for NEOS. Mr. Logan's activity sheets which he prepared for Mass. Tech payroll purposes reveal references to NEOS on one dozen occasions during this period.
29. During a NEOS Board of Directors meeting in January, 1980, Mr. Conway requested that the Board replace Dembowski as President. During the discussion, Mr. Logan's name was raised as a replacement. Mr. Logan respondent, "Let's think about it and take it from there.
30. On the basis of this discussion, Mr. Conway drafted a new version of the NEOS business plan in January, 1980 which contained biographical information about Mr. Logan and which stated that Mr. Logan was a candidate for President of NEOS. Mr. Conway testified that he notified neither Mr. Logan nor Mr. Dembowski of his changes to the NEOS business plan. Mr. Conway distributed several copies of the business plan containing Mr. Logan's name to the investment community during the period of January to March, 1980.
31. Mr. Logan may have been unaware until March, 1980 that a NEOS business plan was in circulation containing his resume and indicating his candidacy for NEOS President.
32. When Mr. Sacks became aware of the NEOS business plan in mid-March, 1980, he met with NEOS and Mass. Tech officials, including Mr. Logan, and announced that NEOS would not receive a loan from Mass. Tech. When the issue of the appearance of Mr. Logan's name on a NEOS business plan was discussed, Mr. Dembowski denied that Mr. Logan was to become the President of NEOS.
33. In February, 1979, the Executive Office of Economic Affairs notified the Commission that certain employees appointed to positions within the secretariat, including Mr. Logan, Mr. Sacks and Mr. Kelley, were required to file annual financial disclosure statements.
34. In April, 1979, the Commission mailed to Mr. Logan a financial disclosure form for 1978 together with instructions for filing. Mr. Logan received the form and instructions on April 12, 1979 at the office of Mass. Tech. Mr. Logan read the instructions for ten to fifteen minutes and discussed with Mr. Kelley whether they should file the form. Following this discussion, Mr. Logan quickly filled out the form. Mr. Logan testified that he filled out the form "hastily" and "gratuitously" to get the matter out of the way before the form became lost. Mr. Logan directed Esther Larson to type a copy of his handwritten form. Mr. Logan signed the form on April 12,1979 and mailed it to the Commission. Mr. Logan did not allege to the Commission at the time of his 1978 or 1979 filings that he had been improperly designated as a reporting employee.
35. Mr. Logan did not disclose in either his original April, 1979 filing or in his amended filing in July, 1979 that he was a Director of NEOS in 1978, that he was employed by NEOS and Compactor in 1978, or, alternatively, that he was engaged in the private practice of accounting in 1978. Further, Mr. Logan failed to list the income which he derived from businesses such as NEOS with which he was associated, including the private practice of accounting. Page 45 36. Mr. Logan testified that he filed his 1979 United States and Massachusetts Income Tax Returns on April 15, 1979 and included within his computation of gross income for 1978 the compensation which he had received from NEOS and Compactor.
37. In January, 1980, the Executive Office of Economic Affairs again designated Mr. Logan as an employee subject to the financial disclosure law, G.L. c. 268B. Accordingly, Mr. Logan received a 1979 SFI form and instructions from the Commission in April, 1980. Mr. Logan reviewed the form and instructions and determined that they had not changed from the previous year. Mr. Logan thereupon filled out the form as "gratuitously" as in 1979. Mr. Logan did not disclose in his 1979 SFI that he was a Director and Vice-President of NEOS in 1979, that he had received reimbursements from NEOS in 1979, that he was employed by NEOS in 1979, or, alternatively, was engaged in the private practice of accounting in 1979.
The Respondent has been charged with violating Sections 3(b), 4(a), 6, 23(a), 23(e) and 23(f) of Chapter 268A and Section 7 of Chapter 268B. We will address these charges separately.
A. Jurisdiction under Chapter 268A.
Mr. Logan initially contends that he was not a state employee within the meaning of Section 1(q) of Chapter 268A because neither the Foundation nor Mass. Tech are state agencies within the meaning of Section 1(p) of Chapter 268A, Alternatively, Mr. Logan argues that it is unfair to impute to him any knowledge that either the Foundation or Mass. Tech is a state agency. We agree with the Petitioner that the Foundation and Mass. Tech are state agencies and that Mr. Logan is therefore a state employee for the purposes of Chapter 268A. We will consider Mr. Logan's alternative argument in due course.
Section 1(p) of Chapter 268A defines state agency as "any department of a state government including the executive, legislative or judicial, and all councils thereof and thereunder, and any division, board, bureau, commission, institution, tribunal or other instrumentality within such department, and any independent state authority, district, commission, instrumentality or agency, but not an agency of a county, city or town." On the basis of our review of the Foundation's enabling legislation and evidence presented during the hearings, we conclude that the Foundation complies with this definition as an independent instrumentality. Contrary to Mr. Logan's assertion, we find ample interrelation between the Foundation and Commonwealth to warrant the application of Chapter 268A to the Foundation.
Under the terms of the Foundation's enabling legislation, Chapter 843 of the Acts of 1969, the Foundation was created to accomplish the public purposes of encouraging, prompting and assisting scientific and technological development in the Commonwealth. The Governor appointed the Foundation's governing board members and, during the Foundation's existence, it received an annual appropriation from the General Court. The Foundation was also subject to an annual audit by the State Auditor and used copies of the official seal of the Commonwealth on its stationery and forms. We regard the interrelation between the Foundation and the Commonwealth to be sufficient for the purposes of the application of Chapter 268A. While it may be true that the Foundation's organizational structure was more akin to a corporation rather than to a traditional public sector agency, we do not believe that the application of Chapter 268A can be conditioned on the organizational status of an entity. Previous opinions of the Attorney General and Commission have applied the definition of state agency broadly to a wide range of entities, and we find no reason to depart from this policy on the facts of this case. See, EC-COI-79-131; EC-COI-79-105; Attorney General Conflict Opinion No. 856 (division of savings bank life insurance); Attorney General Conflict Opinion No. 855 (governor's council on vocational education); Attorney General Opinion No. 548 (Lowell Technological Institute of Massachusetts Page 46 Research Foundation); W.G. Buss, "The Massachusetts Conflict-of-Interest Statute: An Analysis", 45 B.U. Law Rev. 299,309(1965).
Further, we do not believe that the General Court intended to exempt the Foundation from the provisions of Chapter 268A when it created the Foundation in 1969. To the contrary, the terms of the enabling legislation and, in particular, Section 10 of Chapter 843 of the Acts of 1969, demonstrate a legislative perception of the need for standards of conduct by Foundation employees and officers which are consistent with Chapter 268A. Moreover, our examination of the progression of legislative drafts which culminated in the passage of Chapter 843 of the Acts of 1969 reveals that the specific issue of exempting the Foundation from Chapter 268A was at no time raised or considered by the General Court.
2. Mass. Tech
We conclude that Mass. Tech is a state agency within the meanings of Section 1(p) of Chapter 268A. By its terms, Mass. Tech's enabling statute applies the provisions of Chapter 268A to all directors, officers and employees of Mass. Tech. See, M.G.L. c. 40G, s.2.
3. Status as a State Employee
Section 1(q) of Chapter 268A defines a state employee in relevant part as follows: a person performing services for or holding an office, position, employment, or membership in a state agency, whether by election, appointment, contract of hire or engagement, whether serving with or without compensation, on a full, regular, part-time, intermittent or consultant basis, including members of the general court and executive councils. In as much as we have previously concluded that the instrumentalities which employed Mr. Logan between December, 1976 and April, 1980 are state agencies within the meaning of Section 1(g) of Chapter 268A, we conclude that Mr. Logan performed services for a state agency on a "full-time, part-time, intermittent or consultant basis" within the meaning of the above-cited definition of state employee.
3. Chapter 268A Allegations
1. Section 3(b)
The Petitioner contends that Mr. Logan violated Section 3(b) of Chapter 268A by receiving $300 from NEOS in 1979 as private compensation for his assistance in preparing financial projections for an SBA loan application. We agree. 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." Mr. Logan admits receiving $300 in private compensation from NEOS in 1979 but claims that the preparation of financial projects was outside of his official responsibility at Mass. Tech. We have reviewed the record and find substantial and credible evidence which demonstrates that the preparation of financial projections was within Mr. Logan's responsibilities both at the Foundation and at Mass. Tech. Further, we find that Mr. Logan's receipt of $300 from NEOS was not as provided by law for the proper discharge of his official duty. We conclude that the $300 which Mr. Logan received from NEOS constitutes something of substantial value. See, Commonwealth v. Famigletti, 4 Mass. App. 584,354 N.E. 2d 890(1976). Mr. Logan argues that he was unaware of the provisions of Chapter 268A and therefore had not intent to violate the statute. Even assuming that Mr. Logan was unaware of the provisions of Chapter 268A the issue of Mr. Logan's intent is irrelevant to our finding of a violation of Section 9(b). Commonwealth v. Dutney, 4 Mass. App. 353,369,375,348 N.E. 2d 812(1976); In the Matter of C. Joseph Doyle, Page 47 Commission Adjudicatory Docket No. 109, Decision and Order, p. 7 (June 18, 1980). See, Final Report of the Special Commission on Code of Ethics, 1962 House Doc. No. 3650, at 11. Accordingly, we find by a preponderance of evidence that Mr. Logan violated Section 3(b) by receiving $300 from NEOS in 1979 as private compensation for his assistance in preparing financial projections for an SBA loan application. We disagree with Mr. Logan's contention that the standard of proof applicable in Commission. proceedings is "proof beyond a reasonable doubt". We have fully treated this matter previously and find no reason to repeat that discussion here. See, In the Matter of James J. Craven, Jr., Commission Adjudicatory Docket No. 110, Decision and Order, pp. 10-12 (June 18, 1980). See, also, Steadman v, Securities and Exchange Commission, U.S., 101 S. Ct. 999 (February 25, 1981) where the United States Supreme Court added further support to our view that Commission findings need be supported by a preponderance of evidence rather than by stricter standards of proof.
2. Section 4(a)
We agree with the Petitioner that Mr. Logan violated Section 4(a) of Chapter 268A by receiving $600 in private compensation from Compactor in 1978 for the preparation of Compactor's Massachusetts Corporation Excise Tax Return. Section 4(a) prohibits a state
employee from". otherwise than as provided by law for the proper discharge of official duties, directly or indirectly [to] receive or request compensation from anyone other than the Commonwealth or a state agency, in relation to any particular matter in which the Commonwealth or a state agency is a party or has a direct and substantial interest". Section 1(k) of Chapter 268A defines "particular matter" to include submissions. Since 1963, both the Attorney General and more recently the Ethics Commission have advised state employees that state tax returns are submissions and are therefore particular matters within the meaning of Section 1(k). Further, these Advisory Opinions have consistently stated that the Commonwealth is a party to and has a direct and substantial interest in state tax returns and in the collection of state taxes. See, Attorney General Conflict Opinion Nos. 645, 154, 2; EC-COI-80-16, EC-COI-79-23. See, also, Commission Compliance Letter 80-7 (May 23, 1980). Accordingly, Mr. Logan's receipt of $600 from Compactor for the preparation of Compactor's Massachusetts Corporation Excise Tax Return involved a matter of direct and substantial interest to the Commonwealth. Inasmuch as Mr. Logan prepared the tax return for Compactor and received compensation from Compactor while serving as a state employee we conclude that Mr. Logan violated Section 4(a) of Chapter 268A.
Mr. Logan concedes that he received $600 from Compactor in 1978 for the preparation of a state tax return but claims that his supervisor and agency head at the Foundation were aware of his private arrangement with Compactor and had condoned it. Even assuming that Mr. Logan's superiors had approved of the arrangement, their condonation does not establish a defense for Mr. Logan or otherwise exempt him from the provisions of Chapter 268A. See, In the Matter of Collector-Treasurer's Office of the City of Boston, et al., Commission Disposition Agreement pg. 8 (March 2,1981). As a matter of sound policy, to hold otherwise would legitimize an agreement by the supervisors of a state agency to undermine the provisions of Chapter 268A. Evidence of condonation is relevant, however, in determining the sanctions which the Commission will impose under Section 4(d) of Chapter 268B following the finding of a violation. Accordingly, we will consider the evidence surrounding the condonation of Mr. Logan's activities at an appropriate point in this Decision.
3. Section 6
The Petitioner alleges that Mr. Logan violated Section 6 of Chapter 268A by participating in the Mass. Tech review and evaluation of the NEOS loan application while he was negotiating or had an arrangement with NEOS concerning prospective employment. On the basis of our review of the record, we conclude that Mr. Logan's actions did not constitute a violation of Section 6. In particular, we find insufficient persuasive evidence from which we can conclude that
Mr. Logan was actively negotiating with NEOS or had an arrangement with NEOS concerning prospective employment. While a NEOS business plan containing Logan's name as a NEOS presidential candidate was apparently circulating in January, February and/or March, 1980, we find insufficient evidence to conclude that Mr. Logan was aware of the plan prior to March or had authorized its distribution. Although there is evidence that NEOS had offered positions to Mr. Logan in 1978 and 1979, we are not persuaded that Mr. Logan was continuing to negotiate with NEOS in 1980. In particular, we note that when Mr. Conway raised the possibility in January, 1980 of Mr. Logan becoming President of NEOS, Mr. Logan s response was neutral. While there are other inferences in the record from which we could arguably speculate that Mr. Logan was negotiating with NEOS, we find such inferences, as a whole, unpersuasive.
4. Section 23
Section 23(a) of Chapter 268A prohibits a state employee from "accept[ing]" other employment which will impair his independence of judgment in the exercise of his official duties". The record is clear that Mr. Logan received $600 in private compensation from Compactor and over $1300 from NEOS during the period in which he was the primary staff person assigned by the Foundation and Mass. Tech to assist these companies. The compensation, moreover, was intended to pay Mr. Logan for services which were within areas of his official responsibility at the Foundation and Mass. Tech. We therefore conclude that Mr. Logan's acceptance of private compensation from the companies which he was assisting as a state employee compromised his impartiality and independence of judgment in violation of Section 23(a).
Section 23(e) of Chapter 268A prohibits a state employee from engaging in". . . conduct [which would] give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties. . ." Section 23(f) of Chapter 268A prohibits a state employee from, ". . . pursu[ing] a course of conduct which will raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust."
We conclude that Mr. Logan violated both provisions by his conduct during the period of December, 1979 through February, 1980. By the end of 1979, NEOS owed money to Logan from the use of Mr. Logan's credit card and from personal loans which he had advanced to NEOS. During this period, NEOS notified Mass. Tech that it was intending to apply for a large loan, and Mr. Logan accepted the Mass. Tech assignment to investigate and review the anticipated application prior to the January 23, 1980 IAC meeting. It is clear that Mr. Logan played a primary role in the Mass. Tech staff review and recommended NEOS as a qualified applicant. The IAC later recognized that NEOS' financial picture, which had been based in part on Mr. Logan's input, was unduly optimistic and warranted further investigation.
Mr. Logan should not have involved himself in any way in the Mass. Tech review of the NEOS loan application and should have immediately disclosed his financial connection with NEOS when he received the assignment to review the application. We conclude that by advancing his personal funds to NEOS during the period of his investigation of the merits of the NEOS loan application, Mr. Logan created the impression that NEOS could unduly enjoy favor in the performance of his official duties and raised suspicion that his actions were in violation of his trust.
C. Jurisdiction under Chapter 268B
We agree with the Petitioner that Mr. Logan was a public employee within the meaning of Section 1(o) of Chapter 268B and was therefore properly designated as a reporting person for 1978 and 1979 The definition of public employee under Section 1(o) of Chapter 268B applies to any person who holds a major policy-making position in a governmental body. Section 1(e) defines a major policy-making position as
". . .any person whose salary equals or exceeds that of a state employee classified in step one of job group XXV of the general salary schedule contained in section forty-six of chapter thirty and who reports directly to said executive or department head". We find that Mr. Logan complies with this definition. His annual salary exceeded the statutory threshold, and he regularly reported directly to the administrative head of the Foundation and Mass. Tech. Notwithstanding Mr. Logan's assertions that his policy-making role was minimal, we find that evidence such as Mr. Logan's presentations to the IAC confirms Mr. Logan's direct reporting relationship to his executive or department heads.
D. Chapter 268B Allegations
We agree with the Petitioner that Mr. Logan filed false SFIs in both 1978 and 1979 in violation of Section 7 of Chapter 268B and, accordingly, we will order appropriate sanctions. However, we do not concur with the Petitioner's Contention that the false filings were intentionally motivated and we therefore find no need to impose maximum sanctions in each instance or to commence proceedings for perjury.
1. 1978 SFI
The evidence establishes that Mr. Logan was a NEOS Director in 1978 and that he was employed by NEOS and Compactor in 1978. Further, Mr. Logan received in excess of $1,000 in income from NEOS. Inasmuch as the 1978 SFIs which Mr. Logan prepared, signed and filed do not disclose that he was a NEOS Director, that he was employed by NEOS and Compactor in 1978 or that he received in excess of $1,000 income from NEOS in 1978, we conclude that Mr. Logan filed a false 1978 SFI.
2. 1979 SFI
The evidence establishes that Mr. Logan held the offices of NEOS Director and Vice-President in 1979, that he received reimbursements from NEOS in 1979 totaling $1,000.25, and that he was employed by NEOS in 1979. Inasmuch as the 1979 SFI which Mr. Logan prepared, signed and filed did not disclose his NEOS offices, his reimbursements from NEOS and his employment with NEOS in 1979, we conclude that Mr. Logan filed a false 1979 SFl.
3. Intentional False Filing
On the basis of our review of the record, we find that Mr. Logan's conduct in preparing and filing his 1978 and 1979 SFIs did not rise to the level of intentional and deliberate false filings, as alleged by the Petitioner. We do find, however, that Mr. Logan demonstrated a cavalier and reckless approach in his filings. The Supreme Judicial Court has recognized that the filing of SFIs provides a means "which the Legislature or the people could believe to be rationally related to the achievement of the legitimate goal of assuring the people of 'impartiality and honesty of public officials (s.1 of the proposed new G. L. c. 268B)"'. Opinion of the Justices, Mass. Adv. Sh. (1978) 1116, 1131, 376 N.E. 2d 810, 819. The law requires a commitment to a reasonable degree of care and diligence in fulfilling this legislative goal. We expect no less from certified public accountants such as Mr. Logan who serve in positions of public trust.
On the basis of the foregoing, we conclude that Louis L. Logan violated Sections 3(b), 4(a) and (e) and (f) of General Laws Chapter 268A and Section 7 of General Laws Chapter 268B. Pursuant to our authority under Section 4(d) of Chapter 268B, we hereby order Mr. Logan to pay the civil penalties as set forth below. In arriving at these penalties for violations of Chapters 268A and 268B, we have carefully considered the mitigating factors raised by Mr. Logan and
in particular are aware that the practice of the Foundation and Mass. Tech in advocating private companies may have created ambiguity for Mr. Logan over his loyalty to the Commonwealth. While this factor does not excuse Mr. Logan's violations of Chapter 268A, it does furnish a basis for our decision to impose less-than- maximum penalties in this case. Accordingly, we order Louis L. Logan to:
1. Pay $300 (three hundred dollars) to the Commission as reimbursement for the amount of compensation which he received from NEOS in violation of Section 3(b) of Chapter 268A.
2. Pay $200 (two hundred dollars) to the Commission as a civil penalty for receiving compensation from NEOS in violation of Section 3(b) of Chapter 268A.
3. Pay $600 (six hundred dollars) to the Commission as reimbursement for the amount of compensation which he received from Compactor in violation of Section 4(a) of Chapter 268A.
4. Pay $200 (two hundred dollars) to the Commission as a civil penalty for receiving compensation from Compactor in violation of Section 4(a) of Chapter 268A.
5. Pay $500 (five hundred dollars) to the Commission as a civil penalty for his violations of Sections 23(e) and (f) of Chapter 268A.
6. Pay $750 (seven hundred fifty dollars) to the Commission for the false Filing of his 1978 SFI in violation of Section 7 of Chapter 268B.
7. Pay $750 (seven hundred fifty dollars) to the Commission for the false Filing of his 1979 SFI in violation of Section 7 of Chapter 268B.
We order Mr. Logan to pay these penalties totaling $3,300 (three thousand three hundred dollars) to the Commission within thirty days of receipt of this Decision and Order.