Decision  In the Matter of Rocco Antonelli, Sr.

Date:	06/29/1982
Organization:	State Ethics Commission
Docket Number:	148

Parties

Appearing: Robert J. Cordy, Esq: Counsel for the Petitioner, State Ethics Commission Bernard A. Dwork, Esq: Counsel for the Respondent, Rocco J. Antonelli

Commissioners Participating: Vorenberg, Ch., McLaughlin, Bernstein, Brickman, Mulligan

I. Procedural History

The Petitioner initiated these adjudicatory proceedings on October 7, 1981 by filing an Order to Show Cause pursuant to the Commission's Rules of Practice and Procedure, 930 CMR 1.01(5)(a).  The Order alleged that the Respondent, Rocco J. Antonelli, Sr., had violated G.L. c. 268A, s.3(b) by soliciting and accepting private loans and other accommodations from the Coolidge Bank and Trust Company (Coolidge), the Capitol Bank and Trust Company (Capitol), the U.S. Trust Company (U.S. Trust) and the Suffolk Franklin Savings Bank (Suffolk Franklin) for or because of his official acts as the Treasurer of Middlesex County.  The Petitioner also alleged that the Respondent had repeatedly used or attempted to use his position as County Treasurer to secure unwarranted benefits for his private businesses at these banks, and had also given reasonable basis for the impression that these banks could improperly influence him or unduly enjoy his favor in the performance of his Treasurer duties in violation of G.L. c. 268A, s.23(d) and(e).

The Respondent's Answer denied these allegations and raised several affirmative defenses asserting the Commission's lack of jurisdiction or authority to adjudicate the factual allegations.  Prior to the commencement of adjudicatory hearings in this matter, the Respondent filed motions to dismiss the Order, for summary judgment on the pleadings.  These pre-hearing motions were denied by Commissioner Bernard McLaughlin, who was designated as the Presiding Officer.^[1]  See, M.G.L. c. 268B, s.4(c).

Hearings were conducted on twelve days between December, 1981 and February, 1982.  The parties thereafter filed briefs with the Commission and presented oral argument before the full Commission on April 6,1982. In rendering this Decision and Order, all members of the Commission have considered the testimony, evidence and arguments presented by the parties.

II. Findings of Fact

1. Mr. Antonelli was elected Treasurer of Middlesex County (County) on November 7, 1978 and took office on January 9, 1979.  His responsibilities as Treasurer included the authority to decide when and with which banks the County, the County Retirement System or County Hospital would open maintain accounts, the nature of the accounts, the amount of money to be deposited into each account, the duration of deposits in each account and when the accounts would be closed.
 

2. At all times material, Mr. Antonelli either owned or had a substantial financial interest in R. J. Antonelli and Company, an accounting firm; Urban Equity Development Company (UEDC) a limited partnership which was engaged in a
commercial redevelopment within Davis Square, Somerville, and the Bartlett Manor and Buchanan Nursing Homes located in Malden.

Coolidge Bank

3. In December, 1976, UEDC received a $450,000 loan from the Coolidge Bank to finance a commercial redevelopment in Davis Square, Somerville. Mr. Antonelli and Coolidge Bank subsequently became involved in litigation over whether Coolidge Bank had agreed to lend Mr. Antonelli an additional $225,000 for construction costs.  During the pendency of the litigation, Mr. Antonelli ceased payments on the $450,000 loan, Coolidge Bank took possession of the commercial property, and the construction was halted.

4. Following a hearing before a court-appointed master, the master released his preliminary findings in July, 1979 which found in favor of UEDC but which left unresolved the issue of whether UEDC should be awarded damages or specific performance of its agreement.  Before July, 1979, Coolidge Bank was opposed to both renegotiating its loan with Mr. Antonelli and to considering granting to him new construction financing.

5. In July, 1979, Mr. Antonelli learned that Coolidge Bank had a new president, Harry Klein, and he arranged a meeting with Mr. Klein to discuss the financing of the Davis Square redevelopment.  At their first meeting in July, 1979, Mr. Antonelli requested Coolidge to refinance the loan and to put additional funds into the project.  Mr. Klein's initial response was not encouraging.  Mr. Klein thereafter discussed with other Coolidge officials the possibility of salvaging the loan through a refinancing whereby Coolidge would hold a mortgage over the entire Davis Square development and would "wrap around" the prior financing of other lending institutions.^[2]

6. In early August, 1979, Mr. Antonelli and Mr. Klein met once or twice and came closer to a refinancing agreement incorporating a "wrap around" concept.  At one of these refinancing meetings they discussed the subject of Coolidge Bank doing business with Middlesex County.  Mr. Antonelli told Mr. Klein that the County would be interested in opening accounts with Coolidge, but he did not specify a particular deposit amount. Prior to August, 1979, Coolidge Bank did little, if any, business with either Middlesex County, the County Retirement System or the County Hospital.^[3]

7. On either August 8 or 9, 1979, Mr. Antonelli directed Assistant County Treasurer James Ferretti to write a series of checks totaling $500,000 made payable to Middlesex County and to give the checks to him.  On the same day, Mr. Antonelli also directed the Chief Retirement Officer of the County Retirement System, John McMahon, to write out Retirement System checks totaling $600,000 and to give the checks to him. Mr. Antonelli did not explain the purpose of these checks at that time to either Mr. Ferretti or Mr. McMahon.

8. After banking hours on August 9,1979, Mr. Antonelli visited Mr. Klein's office in Watertown and personally handed him the County Treasurer and County Retirement System checks totaling $1.1 million for the purpose of opening accounts.^[4] Mr. Antonelli customarily did not make personal visits to banks to open accounts or to deposit County funds.  The letters signed by Mr. Antonelli and which accompanied the initial deposits into the accounts stated, "We are enclosing herewith initial deposits with your financial institution and trust that our future relationship will prove to be mutually beneficial."

9. At the time of the opening of these accounts, Coolidge Bank was agreeable to the general concept of a UEDC refinancing, but major details over the terms of the refinancing remained to be negotiated and finally ratified by the Coolidge Bank Executive Committee.  On August 13, 1979, Mr. Antonelli submitted a formal refinancing proposal to Coolidge.  On August 23, 1979, Coolidge Bank's Executive Committee approved the refinancing proposal with some modification, including a requirement that Mr. Antonelli acquire $600,000 in construction financing from another bank.

10. In September, 1979, John Street, the Coolidge Bank attorney who was negotiating the refinancing, wrote a message to Seta Nercessian, a Coolidge mortgage officer, instructing her to make a "low-key" call to Mr. Antonelli and see if Coolidge could help him secure financing. At the time, Mr. Antonelli was being consistently turned down by banks which did not regard offering a $600,000 construction loan, under the circumstances, to be a sound investment. In the message, Mr. Street stated that Mr. Antonelli had deposited substantial sums of County money in the bank but was under no legal obligation to keep them there and that he could in fact shift them to another bank as an inducement to lend him the construction money.

11. On October 9, 1979, Coolidge Bank agreed to a $1.95 million "wrap around" refinancing package which included lending Mr. Antonelli $575,000 in construction loans at an 11 1/2 percent interest rate.  The construction loan was to be converted into a permanent loan in 1980 at the market rate of interest at the time the permanent loan was placed.  When Mr. Antonelli objected on October 11, 1979 to the "market rate of interest" provision, Coolidge agreed to set the permanent financing at a fixed interest rate of 11 1/2 percent.  The loan arrangements were finalized on the next day.

Capitol Bank

12. Prior to his becoming County Treasurer on January 3, 1979, Mr. Antonelli had been involved with the Capitol Bank in two private loan transactions as a borrower and guarantor.  His accounting firm, R. J. Antonelli, Inc., also had a relatively inactive checking account which was opened in 1975.

13. Prior to 1979, neither the County Treasurer, the County Hospital nor the County Retirement System had maintained any bank accounts or investments in the Capitol Bank.  Capitol was anxious to do business with the County when Mr. Antonelli took office.

14. On January 11, 1979, Mr. Antonelli received on behalf of R. J. Antonelli, Inc. an unsecured $18,000 loan for a one-month period at a rate of 13 percent (two points over prime).  The loan had been requested during the previous week.  During the same week in which he had requested the $18,000 loan, Mr. Antonelli invested $3.7 million of County funds with the Capitol Bank in a six-day repurchase agreement.^[5]  During the subsequent one-month period, Mr. Antonelli opened a County Treasurer's checking account ($500,000); a checking account for Hospital funds ($300,000) and a Retirement System savings accounts ($300,000) at the Capitol Bank. T he $18,000 loan was received and extended and finally paid off in September, 1979.

15. On September 26, 1979, the Capitol Bank loaned Mr. Antonelli $135,000 for R. J. Antonelli, Inc. to free up funds for the Davis Square commercial redevelopment.  The initial terms of the loan were for one year at two percent over prime, secured by Mr. Antonelli's accounts receivable and two second mortgages on land in Winchester and Somerville, and a reduction of the principal by $3,000 monthly.  In the process of determining whether to grant Mr. Antonelli the loan, Capitol Bank was lax in reviewing the sufficiency of the collateral and the financial statements of Mr. Antonelli's payment performance at Capitol prior to granting the loan.^[6]

16. Following the execution of the loan, Mr. Antonelli complained on or about October 10,1979 that he was being unfairly penalized by the two point over prime interest rate which he claimed was out of line with rates which other banks were offering him.  The Capitol Bank Executive Committee thereupon voted at a later date in October, 1979 to reduce the interest rate from two to one point above prime.^[7]

17. On October 17, 1979, Capitol Bank received $500,000 from Middlesex County to be deposited in a County Treasurer's checking account which Mr. Antonelli had opened in January, 1979.^[8]

18. On July 7, 1980, Mr. Antonelli directed Mr. McMahon, the Chief Retirement Officer, to deposit $300,000 into the County Retirement System savings account at Capitol thereby bringing the balance up to $400,000.  The account remained idle until December 29,1980.

19. On July 17, 1980, Mr. Antonelli requested from the Capitol Bank Executive Committee and received a six-month moratorium on the payment of $3,000 monthly principal on the loan.^[9]

20. Although the loan came due in September, 1980, Capitol continued the loan for two months because of the pending sale of the Winchester land which secured the loan.  Mr. Antonelli thereafter reduced the outstanding amount by $45,000, and Capitol rewrote the loan for a new one-year period at one percent over prime on November 26, 1980.^[10]

21. On November 10,1980, Mr. Antonelli directed that $500,000 be deposited into the County Treasurer's checking account at Capitol Bank.

22. In January, 1981, Mr. Antonelli contacted Capitol Bank and applied for an $80,000 loan for computer equipment after another bank which had previously committed itself to the loan had backed out. Thereafter, on January 12, 1981, Capitol loaned Mr. Antonelli $116,000 ($80,000 plus $36,000 interest) for a five-year installment loan secured by the computer equipment.  The interest rate initially recommended by Capitol Bank loan officer Peter Lane to the Capitol Bank Executive Committee ws 18 percent.  However, the final interest rate approved by the Capitol Bank Executive Committee was 16 percent.

23. On January 13, 1981, the County deposited $300,000 into the County Treasurer's checking account at Capitol where it remained idle through the end of May, 1981.  On January 19, 1981, Mr. Antonelli opened a County Retirement System NOW account at Capitol with a $100,000 deposit.

24. In May, 1981, Mr. Antonelli requested and received from Capitol Bank two $7,500 short-term loans to provide working capital for his two nursing homes which were awaiting vendor payments or welfare reimbursements.

25. Mr. Antonelli's private checking account at Capitol was frequently and substantially overdrawn in 1979 and 1980, and Mr. Antonelli received accommodations from Capitol in the form of either covering the overdrafts or in not charging an overdraft penalty.^[11]

U.S. Trust

26. Prior to Mr.. Antonelli assuming office in 1979, U.S. Trust had not received any deposits or investments from the previous Middlesex County Treasurer.

27. At the time of Mr. Antonelli's assumption of the County Treasurer office in 1979, Mr. Quinn Sullivan was the President of U.S. Trust. Mr. Antonelli had dealt with Mr. Sullivan frequently during the previous fifteen years when Mr. Sullivan was a lending officer for BayBank.

28. On January 17, 1979, Mr. Antonelli received a $25,000 unsecured personal loan from U.S.  Trust at one point above prime.  The original request for the loan was made during a car ride with Mr. Sullivan during the first week of January, 1979.  Shortly after Mr. Antonelli became Treasurer, Mr. Sullivan made a goodwill visit to the Treasurer's office on behalf of U.S. Trust to let Mr. Antonelli know that U.S. Trust was interested in County business and could provide favorable rates to the County.  Mr. Antonelli made no commitment to deposit County funds in U.S. Trust but responded that the County would be interested if the rates were competitive.  Mr. Sullivan and Mr. Antonelli left the County offices together, and Mr. Antonelli asked Mr. Sullivan to drop him off on the way home.  During the car ride to Somerville, they discussed the progress of Mr. Antonelli's Davis Square project.  When Mr. Sullivan asked Mr. Antonelli if he had any requirements which U.S. Trust could help him with, Mr. Antonelli responded that he needed a personal loan of $25,000 to reimburse a family member.  Sullivan responded that it would not be much of a problem and that his bank would be willing to lend him the money.

29. Mr. Antonelli opened up three County accounts with U.S. Trust on January 30, 1979.  The initial deposits were $10,000 (County Treasurer checking account), $100,000 (Retirement System checking account) and $750,000 (Retirement System savings account).

30. Mr. Antonelli requested and received from U.S. Trust private loans of $15,000 and $35,000 in July and October, 1979.

31. Mr. Antonelli requested and received from U.S. Trust in June and July of 1980 a series of loans for his nursing homes totaling $35,000.

32. On July 7,1980, Mr. Antonelli directed Mr. McMahon to deposit $300,000 into the County Retirement System account at U.S. Trust, where it remained idle through the end of the year.

33. On August 12, 1980, Mr. Antonelli received a short-term $75,000 loan from U.S. Trust in connection with the mortgage financing of his Davis Square, Somerville commercial property. 

34. Mr. Antonelli arranged for a deposit of $250,000 into the County Hospital maintenance account one week later on August 20,1980.  The funds remained idle through mid-1981.

35. On October 15, 1980, Mr. Antonelli received from U.S. Trust an eight-month $100,000 loan for roof work on his Somerville commercial property.  The loan was secured by a second mortgage on the property.  On February 12,1981, at Mr. Antonelli's request, U.S. Trust agreed to lift its secured mortgage position to allow Mr. Antonelli to borrow an additional $25,000 from Somerset Savings Bank, the holder of a $300,000 first mortgage on the property.

Suffolk Franklin Bank

36. In November, 1971, the Suffolk Franklin Savings Bank agreed to lend to a company owned by Mr. Antonelli and which later became UEDC $500,000 for commercial redevelopment in Davis Square, Somerville. Suffolk Franklin had difficulties with Antonelli because of frequent delinquency payments, and it had authorized foreclosure proceedings on two occasions prior to 1979.

37. In August, 1979, Suffolk Franklin instructed its attorney to commence foreclosure proceedings against Mr. Antonelli and notified Mr. Antonelli that it would increase the interest rate to 11 percent even if all of the back payments were brought up-to-date.  Mr., Antonelli thereafter arranged a meeting with a Suffolk Franklin official, Mr. Charles Douglas, on August 30, 1979 to discuss whether the Bank would increase the interest rate on the loan.
 

38. At that meeting, Mr. Antonelli delivered a check to Mr. Douglas bringing the mortgage loan account up to date. Mr. Douglas informed Mr. Antonelli that Suffolk Franklin would rescind its rate increase if Mr. Antonelli kept his payments up-to-date.  At that same meeting, after the Bank had agreed to reduce or revoke its rate increase, Mr. Antonelli advised Mr. Douglas that he was the Treasurer of Middlesex County and suggested that he could deposit County funds or would consider opening a savings account on behalf of the County at Suffolk Franklin Bank.  Mr. Douglas felt that Mr. Antonelli was paving the way for leverage with the Bank in the event that the mortgage loan account went into default, again.  "When Mr. Douglas indicated that he did not think opening an account would be appropriate, Mr. Antonelli responded that he might open an account anyway in five or six months.^[12]

III. Decision

Mr. Antonelli has been charged with violations of G.L. c. 268A, s.s.3(b), 23(d) and (e).  Prior to determining the merits of these allegations, the Commission will address certain constitutional and procedural issues raised by Mr. Antonelli.

A. Constitutional Issues

1. Combination of Accusatory and Adjudicatory Functions

The Respondent alleges in his Answer that the combination of the Commission's accusatory and adjudicatory functions within the same agency violates his due process-and fair hearing rights under the federal and Massachusetts constitutions.  The Commission rejects this argument as one which is well settled under both federal and Massachusetts law.  In two recent decisions, In the Matter of George A. Michael, Commission Adjudicatory Docket No.
137, Decision and Order, pp. 24-25 (September 28, 1981) and In the Matter of John P. Saccone and Edmund W. DelPrete, Commission Adjudicatory Docket No. 132, Decision and Order, pp. 12-13 (June 1, 1982), the Commission reviewed federal and Massachusetts decisions which affirm the constitutional validity of combining accusatory and adjudicatory functions within the same agency.  See, e.g., Withrow v. Larkin, 421 U.S. 35, 46-54, (1975).  The mere authorization by the Commission of an investigation or Order to Show Cause in fulfillment of its obligation under G. L. c. 268B, s.4 does not constitute a prejudgment of the merits of a case. See, School Committee of Stoughton v. Labor Relations Commission, 4 Mass. App. Ct. 262, 272 (1976); Saccone and DelPrete, Decision and Order, pp. 27-29.  Moreover, the Respondent has not suggested how the combination of functions violates the federal and state constitution when applied to the facts of his case.

2. Standard of Proof

The Respondent contends that the civil "preponderance of evidence" standard which the Commission applies to its proceedings is improper and constitutionally defective inasmuch as G.L. c. 268A and c. 268B do not prescribe a preponderance standard.

The Commission reiterates that it is a civil enforcement agency which possess the authority to assess only civil or regulatory sanctions.  See, G.L. c. 268B, s.4(d).  The Attorney General and District Attorneys remain responsible for enforcing the criminal provisions which may result in punitive sanctions, including imprisonment.  Commission proceedings have been consistently characterized as civil in nature and are therefore not subject to the constitutional standards applicable to criminal proceedings.  See, Opinion of the Justices, supra, at 819; Saccone and DelPrete, at 13. In the Matter of James J. Craven, Jr. Commission Adjudicatory Docket No. 110, Decision and Order pp. 10-12 (June 18, 1980) aff'd sub nom. Craven v. Vorenberg, Suffolk Superior Court Civil Action No. 43269, (further appeal pending) the Commission determined that the preponderance of evidence standard, rather than a higher standard of clear and convincing proof or proof beyond a reasonable doubt, was applicable to Commission adjudicatory proceedings.  In rejecting the adoption of these higher standards, the Commission reasoned that its potential sanctions were not sufficiently severe to warrant departure from the traditional preponderance standard applicable to civil administrative proceedings.  The Commission has applied the preponderance standard to every adjudicatory proceeding under G.L. c. 268A and G.L. c. 268B since Craven and believes that these decisions provide sufficient notice of its standard of proof to Respondents such as Mr. Antonelli.^[13]

3. Vagueness

The Respondent further asserts that G.L. c. 268A is unconstitutionally vague, over broad and ambiguous. In Saccone and DelPrete pp. 16-17, the Commission fully responded to similar contentions and finds no reason to repeat those responses in their entirety here.  In summary, the Commission regards the provisions of G.L. c. 268A to be adequately specific to put Respondents on notice as to what behavior is proscribed.  See, United States v. Brewster, 506 F.2d 62 (D.C. Cir. 1974); United States v. Irwin, 354 F.2d 192, 196-197, (2nd Cir., 1965), cert den. 383 U.S. 967 (1966); Colten v. Kentucky 407 U.S. 104,110 (1972).^[14]

4. Other Constitutional Issues

The Respondent alleges in his Answer that the Commission has exceeded its statutory and constitutional authority by adjudicating matters during the pendency of a criminal investigation of these same matters by another agency.  In the absence of any evidence in the record verifying the pendency of other investigations, the Commission finds no need to address this contention in any detail.  However, even assuming that the record confirmed such an investigation, the Commission finds no basis for either dismissing or delaying the adjudication of the Petitioner's allegations in the Order to Show Cause.  The Commission's statutory scheme clearly anticipates that the Commission may act concurrently with criminal investigations by other agencies.  See, G.L. c. 268A, s.9, 15(b); G.L. c. 268B, s.4(a).  Moreover, delaying the Commission's adjudication of alleged violations of G.L. c. 268A would be contrary to the legislative goal of a speedy Commission determination, see, G.L. c. 268B, s.4(c), and would effectively bar the Commission from proceeding in cases for which the statute of limitations is a relevant factor.  See, Saccone and DelPrete, pp. 17-21.

The Respondent also alleges that the adjudication of this case results in an arbitrary and selective enforcement.  However, there is no evidence in the record to support his general contention, and the Commission finds no basis for concluding that the Petitioner has abused its broad enforcement discretion.  See, Bordenkircher v. Hay:, 434 U.S. 857, 365 (1978); Oyler v. Boles, 368 U.S. 448,456(1962); Commonwealth v. King, 374 Mass. 5, 20 (1977); see, generally, 2 K. Davis, Administrative Law Treatise, 2nd ed., s.s.9,1-9,22(1979).

B. Procedural Issue:

Prior to the commencement of the adjudicatory hearings, the Presiding Officer ruled on a series of procedural motions.  For the reasons set forth below, the Commission affirms each ruling.

1. Sufficiency of Evidence

The Respondent contends that the evidence surrounding Capitol Bank's granting of overdraft accommodations to him was not sufficient to warrant inclusion of this allegation in the Order to Show Cause.  In the Matter of John R. Buckley, Commission Adjudicatory Docket No. 108, Decision and Order, pp. 7-14 (May 7, 1980), the Commission fully articulated the well-established principle that the sufficiency and adequacy of evidence which forms the basis of a Commission Order to Show Cause is not subject to prehearing challenge.  See, Buckley, at pp. 11-14 and cases cited therein.  Any prejudice which may have accrued to the Respondent by defending those allegations is outweighed by the requirement that the Petitioner prove the sufficiency and adequacy of the evidence through the adjudicatory hearing process.^[15]

2. Discovery

The Respondent urges dismissal of these proceedings on the grounds that the Petitioner has failed to provide transcriptions of pre-hearing conversations and interviews of witnesses who were not appearing at those interviews pursuant to a subpoena.  However, G.L. c. 268B, s.4(c) requires the Commission to record and preserve the testimony of witnesses only where the witnesses have testified pursuant to a subpoena.  Inasmuch as there is no requirement that
Commission investigators record their conversation or interviews with witnesses who are not under oath or who voluntarily testify, the Commission was under no obligation to provide transcriptions of such conversations or interviews.

3. Signature on Order to Show Cause

The Respondent also urges dismissal of these proceedings on the grounds that the Order to Show Cause was signed by the Associate General Counsel for Enforcement.  However, the fact that the Order to Show Cause was issued by the Associate General Counsel for Enforcement rather than the General Counsel does not warrant the dismissal of the proceedings.  Both the Commission and General Counsel possess the authority to delegate the power to sign Orders to Show Cause and to initiate adjudicatory proceedings on behalf of the Commission.  See Commission Rules of Practice and Procedure, 930 CMR 1.01(1)7.  This authority was properly delegated to the Associate General Counsel for Enforcement.  Moreover, the purpose of the issuance of an Order to Show Cause is to notify a Respondent of the facts and law upon which the adjudicatory proceeding will be conducted.  The fact that this purpose has been substantially satisfied in this case outweighs whatever prejudice the Respondent may have incurred by receiving an Order to Show Cause signed by the Associate General Counsel for Enforcement.

4. Duration of Full Investigation

The Respondent also seeks dismissal of the Order to Show Cause on the grounds that the Commission based its September 22, 1981 vote for an adjudicatory proceeding on the same evidence upon which its earlier September 2, 1981 vote finding reasonable cause to believe that violations of G.L. c. 268A had occurred and authorizing a full investigation into this matter had been based.  In essence he alleges that he has been deprived of the benefits of a full investigation.  However, the Commission fails to see how the duration of a full investigation can furnish a basis for dismissing an Order to Show Cause or for otherwise examining the sufficiency or adequacy of evidence presented to the Commission during the investigative stage of these proceedings.  See, Buckley, supra.  The Commission reiterates that the sufficiency and adequacy of evidence is measured through the adjudicatory hearing process.

C. G.L. c. 268A Allegations^[16]

1. Coolidge Bank

The Commission concludes that Mr. Antonelli solicited and accepted something of substantial value from Coolidge Bank in 1979 for or because of his official acts as County Treasurer in violation of G.L. c. 268A, s.3(b).^[17]

Section 3(b) prohibits a county employee otherwise than as provided by law for the proper discharge of official duty, directly or indirectly [from] . . . solicit[ing], accept[ing] [or] receiv[ing] anything of substantial value for or because of any official act or act within his official responsibility performed or to be performed by him.

To establish a violation of s.3(b) the Petitioner need not demonstrate either a corrupt intent in an employee's conduct or an understood "quid pro quo" between the receipt of the thing of substantial value and the performance of official acts.  Commonwealth Famigletti, 4 Mass. App. 584,587(1976); Commonwealth v. Dutney, 4 Mass. App. 363, 375(1976); Michael, supra, at p. 29.^[18]   Further, there need be no showing that the performance of any official acts was in fact influenced by the receipt of the thing of substantial value.  Under s.3(b) the Petitioner must establish a relationship between the solicitation or receipt of the thing of substantial value and the performance of an employee's official acts. Commonwealth v. Dutney, supra.  "All that is required to bring s.3 into play is a nexus between the motivation for the gift and the employee's public duties."  Michael, supra, at p. 31.  The purpose of statutes such as s.3(b) is to reach any situation in which the judgment of a government official might be clouded because of the receipt of gifts or other things of substantial value.  "Even if corruption is not intended by either the donor or the donee, there is still a tendency in such a situation to provide conscious or unconscious preferential treatment of the donor by the donee, or the inefficient management of public"  United States v. Evans, supra, at 480.  On the basis of these principles, the Commission makes the following findings with respect to the Coolidge Bank allegations.

a) "Something of Substantial Value"

The Commission finds that the terms of the refinancing and other loan requests which Mr. Antonelli made to Coolidge Bank on behalf of UEDC in 1979, whether examined individually or as part of a single ongoing transaction between August and October, 1979, were "something of substantial value" within the meaning of s.3(b).  When viewed in terms of the dollar value involved, the $1.95 million refinancing package, which included a new $575,000 construction loan, is something of substantial value.  Compare, Commonwealth." Famigletti, supra [$50 constitutes something of substantial value].  Further, the refinancing which Mr. Antonelli requested was intended to salvage a commercial development which was at a construction standstill and for which other banks were refusing to lend additional funds.  Mr. Antonelli was therefore seeking a refinancing which would allow completion of the construction and which would necessarily result in substantial benefit to him.^[19]

b) 'Official Acts Performed or to be Performed"

Mr. Antonelli decided to open the County and County Retirement accounts with the Coolidge Bank and to deposit initially funds totaling $1.1 million in these accounts on August 9,1979.  These decisions were official acts which Mr. Antonelli performed as County Treasurer.

c) "For or Because of"

The facts amply support the allegation of a relationship or nexus between Mr. Antonelli's solicitation and receipt of the refinancing package from Coolidge Bank and his official acts in opening County Treasurer and County Retirement System accounts with Coolidge Bank in August, 1979:

1. The opening of the County Treasurer and County Retirement System accounts and the deposit of funds occurred during an important stage of UEDC negotiations with Coolidge Bank in which major details of the terms of the refinancing package had not yet been worked out.

2. Mr. Antonelli chose that particular period to open accounts and to deposit funds into a bank which had done little, if any, previous business with the County.

3. The initial deposits made with Coolidge on August 9,1979 exceeded $1 million.

4. The facts surrounding Mr. Antonelli's interaction with Messrs. McMahon and Ferretti prior to opening the accounts, and Mr. Antonelli's actions in personally appearing after banking hours to open the accounts and to deposit the funds suggest an urgency to make the deposits while UEDC negotiations were ongoing.

5. In the week prior to the opening of the accounts, Mr. Antonelli had discussed with Mr. Klein the possibility of opening County accounts with the Coolidge Bank.  This discussion occurred during a meeting whose subject was Mr, Antonelli's UEDC refinancing request. Mr, Antonelli personally delivered the County checks to Mr. Klein the following week.

The "for or because of' determination is a question which must be resolved in light of the facts of each case.  Compare, Michael, supra, at p. 29; Saccone and DelPrete, supra, at p. 10.  The Commission has carefully considered Mr. Antonelli's explanations for opening County accounts and for depositing large sums in Coolidge during this period but finds these explanations unpersuasive.  In particular, Mr. Antonelli's testimony that he wished to deposit funds in banks with several branches located within Middlesex County does not rebut the strong inferences supporting a relationship.

d) "Otherwise than as Provided by Law for the Proper Discharge of Official Duty"

The Commission finds that the solicitation and acceptance by Mr, Antonelli of the UEDC refinancing requests and loan from Coolidge Bank was not provided by law for the proper discharge of his official duties.^[20]

Capitol Bank

The Commission concludes that Mr. Antonelli violated s.23(e) in his dealings with the Capitol Bank during the period of January, 1979 through May, 1981.^[21]

Under s.23(e) a county employee may not "by his conduct give reasonable basis for the impression that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is unduly affected by the kinship, rank, position or influence of any party or person."  A major purpose of s.23(e) is to prohibit an employee from engaging in conduct which will raise questions over the credibility and impartiality of his work as a public employee.  The Commission has consistently applied the s.23(e) prohibitions whenever a public employee has had private financial dealings with the same parties with whom he deals as a public employee.  See, e.g. In the Matter of William L. Bagni, Sr., Commission Adjudicatory Docket No. 124, Decision and Order (January 29, 1981) [state inspector violates s.23(e) by repeatedly soliciting private work from businesses over whom he has official responsibility]; In the Matter of Louis L. Logan, Commission Adjudicatory Docket No. 131, Decision and Order (April 28, 1981) [state employee violates s.23(e) by advancing his Personal funds to a company while the company is applying for a large loan which the employee will review in his state position]; EC-COI-81-134 [state official violates s.23(e) by taking a foreign charter trip which is paid for by private individuals whom the official regulates in his official capacity.]

In reviewing Mr. Antonelli's public and private dealings with Capitol Bank during the period of January, 1979 through May, 1981, the Commission finds a troublesome pattern of decisions either made by Mr. Antonelli or within his official responsibilities as County Treasurer to open County accounts or to deposit and retain large amounts of County funds in Capitol Bank during the same period in which he was either seeking or receiving private loans from Capitol Bank.  For example, Mr. Antonelli requested an $18,000 loan from Capitol Bank during the same week in which he invested $3.7 million in county funds at Capitol Bank; within one month, he had opened three County accounts at Capitol Bank.  On October 17, 1979, three weeks after Mr. Antonelli received a $135,000 loan from Capitol Bank, $500,000 was deposited into the County Treasurer's checking account at Capitol Bank. Further, Mr. Antonelli received a $116,000 loan from the Capitol Bank on January 12,1981.  On the following day $300,000 was deposited into the County Treasurer's checking account at Capitol Bank where it remained idle through the end of May, 1981.  The Commission finds that the time pattern of Mr. Antonelli's public and private dealings with Capitol Bank during the period of January, 1979 through May, 1981 gives a reasonable basis for the impression that Capitol Bank could improperly influence him or unduly enjoy his favor in the performance of his official duties as County Treasurer, in violation of s.23(e).  While the facts also reveal other violations of s.23(e) as well, the Commission believes that the three aforementioned fact patterns exemplify the kind of conduct which s.23(e) was designed to prohibit and therefore finds that the consideration of additional violations would be unnecessarily cumulative.^[22]

The Commission has carefully considered the merits of the Petitioner's allegation of a s.3(b) violation with respect to Mr. Antonelli's public and private dealings with Capitol Bank.  While the facts present a clear pattern of s.23(e) violations, the Commission is not persuaded that the inferences from the coincidence of Mr. Antonelli's public and private dealings with Capitol Bank, without more, establish facts sufficient for a violation of s.3(b).  Compare, Michael, Supra, at p. 34; Saccone and DelPrete, supra, at pp. 10-11; discussion of Coolidge Bank violations, supra, at pp. 29-30.

U.S. Trust

The Commission similarly concludes that Mr. Antonelli violated s.23(e) in his dealings with U.S. Trust during the period of January, 1979 to May, 1981.

A review of Mr. Antontelli's public and private dealings with U.S. Trust during this period again reveals, as with Capitol Bank, a troublesome pattern of decisions by Mr, Antonelli to open County accounts or to deposit and retain large amounts of County funds in U.S. Trust during the same period in which he was seeking or receiving private loans from U.S. Trust.  In particular, the Commission finds that Mr. Antonelli's solicitation or receipt of three specific loan transactions during the same period in which he opened County accounts and deposited County funds exemplify conduct which violates s.23(e).

Within two weeks after Mr. Antonelli had received an initial $25,000 personal loan from U.S. Trust, he opened three County accounts, including a Retirement System Savings account of $750,00.  Additionally, a series of U.S. Trust loans to Mr. Antonelli's nursing homes in June and July, 1980 totaling $35,000 occurred during the same period in which Mr. Antonelli directed a $300,000 deposit into a County Retirement System account at U.S. Trust where it remained idle through the end of the year.  Further, within one week after Mr. Antonelli received a $75,000 loan in August, 1980, he arranged for a deposit of $250,000 in the U.S. Trust County Hospital account where it remained idle through the middle of 1981.

For the reasons expressed in the discussion of Capitol Bank, the Commission finds that the time pattern of Mr. Antonelli's public and private dealings with U.S. Trust during the period of January, 1979 to May, 1981 gives a reasonable basis for the impression that U.S. Trust could improperly influence him or unduly enjoy his favor in the performance of his official duties as County Treasurer in violation of s.23(e).^[23]

Suffolk Franklin Bank

The Commission concludes that Mr. Antonelli violated s.23(e) on August 30, 1979 by offering to either open a County account or deposit County funds in the Suffolk Franklin Bank.  The facts warrant no extended discussion. Mr. Antonelli's offer occurred at a meeting with a Suffolk Franklin Bank official who had agreed during the meeting to rescind an interest rate increase a $500,000 UEDC private loan account which was delinquent.  The Commission finds that the timing of Mr. Antonelli's offer created a reasonable basis for the impression that Suffolk Franklin would unduly enjoy Mr. Antonelli's favor in the performance of his official duties in violation of s.23(e).^[24]

IV. Order

On the basis of the foregoing, the Commission concludes that Mr. Rocco J. Antonelli, Sr. violated G.L. c. 268A, s.s.3(b) and 23(e). Pursuant to its authority under G.L. c. 268B, s.4(d) the Commission hereby orders Mr. Antonelli to pay the civil penalties set forth below.  In arriving at these penalties, the Commission has carefully considered the differences in the gravity of the offenses. Accordingly, the Commission orders Mr, Antonelli to:

1. Pay $1,000 (one thousand dollars) to the Commission as a civil penalty for soliciting and accepting something of substantial value from the Coolidge Bank in violation of G.L. c. 268A, s.3(b).^[25]

2. Pay $750 (seven hundred and fifty dollars) to the Commission as a civil penalty for each of the three violations of G.L. c. 268A, s.23(e) relating to the Capitol Bank, for a total of $2,250 (two thousand two hundred and fifty dollars).

3. Pay $500 (five hundred dollars) to the Commission as a civil penalty for each of the three violations of G.L. c. 268A, s.23(e) relating to the U.S. Trust, for a total of $1,500 (fifteen hundred dollars).

4. Pay $500 (five hundred dollars) to the Commission as a civil penalty for his violation of G.L. c. 268A, s.23(e) relating to the Suffolk Franklin Savings Bank.

The Commission orders Mr. Antonelli to pay these penalties totaling $5,250 (five thousand two hundred and fifty dollars) to the Commission within thirty days of the receipt of this Decision and Order.^[26]

^[1] The substance of these motions is discussed, Infra.

^[2] The "wrap around" was a financial restructuring arrangement under which Coolidge Bank would provide Mr. Antonelli with funds to pay off his other outstanding obligations.

^[3] As of January, 1979, neither the count,. county Retirement System or county Hospital had accounts with Coolidge.  During Mr. Antonelli's first month in office, he received requests from Coolidge shareholders and clients to open county accounts with Coolidge, although he had not opened any such accounts through July, 1979.

^[4] Mr. Antonelli did not recall this visit during his testimony at the adjudicatory hearing.  The Commission credits Mr. Klein's testimony on this point.

^[5] The repurchase agreement was a short term investment which provided higher income potential than certificates of deposit but which was not insured by the Federal Deposit Insurance Corporation.

^[6] According to the testimony of Capitol Bank officials, Capitol's decision was made on the basis of Antonelli's relationship with them, rather than on the sufficiency of the paperwork requirements.  In March, 1980, an FDlC examiner classified this loan as substandard.  The principal criticism was the lack of complete, reliable paperwork to substantiate the sufficiency of Mr. Antonelii's finances or his collateral.  The examiner also felt that the loan should have clearly indicated the remaining terms at the end of the one-year period.

^[7] The record does not reveal the precise date in October, 1979 on which the interest rate reduction decision occurred.

^[8] It is unclear from the record whether Mr. Antonelli or his assistant treasurer Mr. Ferretti decided to deposit these fund.  However, Mr. Antonelli's official responsibilities as County Treasurer included decisions regarding the maintenance of accounts, and Mr. Antonelli reviewed county bank status records on a weekly basis.

^[9] Capitol Bank officials testified at the hearings that their rationale for the moratorium included Mr. Antonelli's stature in the community, his credit-worthiness, and an effort to ease Mr. Antonelli's financial difficulty at the time.

^[10] A follow-up FDIC review in 1981 continued the substandard classification of this loan.

^[11] Capitol Bank officials explained during the hearings that Capitol had no fixed customer policy on overdrafts, and accommodated Mr. Antonelli based on efforts to ease his business difficulties.  However, following the FDlC substandard classification of the $195,000 loan in March, 1980.  Capitol informed Mr. Antonelli that it would no longer cover his overdrafts and would charge him for each overdraft.  The bank also arranged for Mr. Antonelli to have a $5,000 overdraft coverage provision through an AMEX Gold Card.  Most of the overdrafts in 1980 and 1981 were due to the sequence of check clearing procedures rather than from insufficient deposits.  Testimony was offered at the hearings that the sums which would have been assessed for overdraft penalties would have been less than $500.

^[12] An examination of the County banking records does not reveal the subsequent opening of any County accounts with Suffolk-Franklin.

^[13] The Commission regards the statutory scheme of G.L. c. 268B, s.4. as applied in this case, to be sufficient to satisfy amply due process requirements.  Moreover, the Respondent chose not to pursue his constitutional arguments following the filing of his Answer and has offered no precedent to support his contention.

^[14] The standards of conduct appearing in s.23 have been enforced and interpreted by the Commission on hundreds of occasions since 1980.  These standards, and in particular the provisions under which Mr. Antonelli has been charged, are sufficiently clear to satisfy constitutional standards, see. Tenney v. State Commission on Ethics, 395 So.2d 1244 (Mass. 2nd D.C.A., 1981) and are commonly employed to enforce the principles of conflict of interest
statutes.  See, i.e., Presidential Executive Order 11222, s.201(c) (1965); 5 C.F.R. 735.201(a) (1976); N.Y. Public Officers law, s.74 (9) (F) (McKinney Supp. 1981); Del Code Ann Tit. 29, s.5855(d), (g) (Supp. 1974); Michigan Stat. Ann., s.15.275.

^[15] Even if the sufficiency and adequacy of the evidence forming the basis of the Commission's allegations in the Order to Show Cause could be independently adjudicated in a pretrial proceeding, the allegations in the Order to Show Cause related to the Capitol overdraft accommodations were within the scope of the Petitioner's preliminary inquiry report which was presented to the Commission.

^[16] As an elected county official, Mr. Antonelli is a "County employee" within the meaning of G.L. c. 268A, s.1(d).

^[17] These same facts also constitute a violation of s.23(e) which prohibits a county employee from, "by his conduct giv[ing] reasonable basis for the impression that any person can improperly influence or unduly enjoy his favor in the performance of his official duties or that he is unduly affected by the kinship, rank, position or influence of any party or person."  See discussion of s.23. infra.

^[18] See, also United States v. Niedberger, 580 F.2d 63,69 (3rd Cir. 1978). cert. den. 439 U.S. 980 (1978). United States v. Evans, 572 F.2d 455, 480(5th Cir., 1978); United States v. Irwin, 354 F.2d 192, 196 (2nd Cir. 1965). which reach the same conclusions under comparable federal provisions. See, 18 U.S.C. s.201(g).

^[19] See, Final Report of the Special Commission on Code of Ethics, 1962 House Doc. No. 3650 at 11 upon which the provisions of s.3 were based. ("Significant in these subsections is the provision that the thing given must be of 'substantial value.'  The Commission concluded that this was a standard to be dealt with by judicial interpretation in relation to the facts of the particular case and that it was more desirable than the imposition of a fixed valuation formula.").  In his Answer, Mr. Antonelli admitted that the refinancing was something of substantial value to Coolidge Bank.

^[20] The Commission does not agree with the Respondent's contention that his activities prior to the passage of St. 1981, c. 293 were implicitly lawful under G.L. c. 268A. In 1981, the Legislature amended G.L. c. 35. s.10 to prohibit county officials from accepting loans or other things of value from an institution or business where they have invested or committed county funds as part of their official duties, See, St. 1981, c. 293.  Nothing in the language or legislative history of the amendment suggests that the Legislature intended to confer immunity on county officials for prior violations of other statutes such as G.L. c. 268A.  Moreover, the commission's findings of violations of G.L. c. 268A in this patter do not rest merely on Mr. Antonelli's dual status as a county Treasurer and businessman.

^[21] Contrary to the Respondent's pre-hearing assertion, the Commission pose the authority under G.L. c. 268B, s.4 to investigate, adjudicate and impose penalties for any violation of G.L. c. 268A, including the six standards of conduct contained in G.L. c. 268A, s.23.  The reference in G.L. c. 268B, s.3(i) to the commission's status "as the primary civil enforcement agency for violations of c. 268A, as specified in ss.9 and 15 of that chapter . . ." is not inconsistent with G.L. c. 268B, s.4. G.L. c. 268A, ss.9 and 15 authorize the Commission to initiate an additional action for the recovery of damages on behalf of the Commonwealth or county where a party's violation of c. 268A has resulted in an economic advantage.  The Commission's authority to initiate such civil enforcement actions can only be reasonably read as a supplement to, rather than a limitation on, the commission's broad authority under G.L. c. 268B, s.4. See, Graham v. McGrail, 370 Mass. 133. 140(1976) [G.L. c. 268A must be given a workable meaning.]

The Commission's policy of adjudicating violations of G.L. c. 268A, s.23 has received judicial approval. See, Craven v. Vorenberg, supra.  While it is true, as the Respondent suggests, that the commission could have chosen to exercise its authority over s.23 in a different manner, for example, by merely reporting previously investigated violations of s.23 to an employee's appointing official rather than by initiating adjudicatory proceedings, the policy which the Commission has adopted is a permissible exercise of its discretion under G.L. c. 268B, s.4.  Moreover, the adoption of the Respondent's alternate suggestion would render s.23 ineffective in cases involving elected officials such as Mr. Antonelli who do not have an appointing official who can exercise disciplinary authority over them.

^[22] For the same reasons, the Commission does not reach the issue of whether the same facts which form the basis of the s.23(e) violations would also violate s.23(d).

^[23] The three cited fact patterns arc merely examples of violation of s.23(e) and are not a complete recitation of all such violations within the record. For the reasons stated previously, the Commission finds no need to either accumulate additional violations of s.23(e) in this case or adjudicate further violations of s.23(d) based upon those same facts.

The Commission also notes that it is not persuaded that the inferences from the coincidence of Mr. Antonelli's public and private dealings with U.S. Trust establish facts sufficient for a violation of s.3(b).

^[24] The Petitioner did not pursue the allegation of a s.3(b) violation from these facts in its post-hearing brief.  See, Brief of Petitioner at p. 43.  The Commission does not find a sufficient "relationship" to warrant a s.3(b) violation.  The Commission also finds that the consideration of additional violations under s.23(d) would be unnecessarily cumulative.

^[25] The commission finds no need to impose a separate penalty for Mr. Antonelli's violation of s.23(e) for Coolidge Bank since the same facts form the basis of both violations.

^[26] Commissioner McLaughlin dissents from the Commission's conclusion of a s.3(b) violation but concurs in the conclusion of a s.23(e) violation with respect to the allegations involving Coolidge Bank as well as the other banks.