Settlement  Disposition Agreement in the Matter of Jeanne Carnevale

Date:	04/16/2020
Organization:	State Ethics Commission
Docket Number:	20-0001

Disposition Agreement

The State Ethics Commission (“Commission”) and Jeanne Carnevale enter into this Disposition Agreement pursuant to Section 3 of the Commission’s Enforcement Procedures. This Agreement constitutes a consented-to final order enforceable in the Superior Court, pursuant to G.L. c. 268B, § 4(j). 

On March 19, 2018, the Commission initiated a preliminary inquiry, pursuant to

G.L. c. 268B, § 4(a), into possible violations of the conflict of interest law, G.L. c. 268A. On October 17, 2019, the Commission concluded its inquiry and found reasonable cause to believe that Jeanne Carnevale violated G.L. c. 268A, §§ 19 and 23(b)(2)(ii).

The Commission and Jeanne Carnevale now agree to the following findings of fact and conclusions of law:

Findings of Fact

1.    Jeanne Carnevale (“Carnevale”), a resident of Peabody, Massachusetts, was at all relevant times the City of Peabody (“City”) Treasurer.

2.    As City Treasurer, Carnevale was responsible for initiating tax title foreclosure proceedings on properties with delinquent real estate taxes.

3.    During the relevant time, Carnevale and real estate agent Janet Howcroft (“Howcroft”) were friends.

4.    As of October 25, 2016, Carnevale’s daughter was trustee of Victory Realty Trust, a trust created to purchase and sell real property.

5.    As of October 25, 2016, Carnevale’s husband, Richard Carnevale, was a beneficiary of Victory Realty Trust.

6.    As of October 25, 2016, Howcroft’s husband, Richard Howcroft, was a beneficiary of Victory Realty Trust.

7.    Melo’s Construction, LLC was at all relevant times a building contracting company in Peabody. Melo’s Construction performed private vinyl siding work on Carnevale’s private residence in or about 2013.

22 Catherine Drive

Facts

8.    As of 2015, the property located at 22 Catherine Drive, Peabody, Massachusetts had an outstanding tax liability of approximately $27,624. The property was owned by the Catherine Drive Estate.¹

9.    The City’s Office of Inspectional Services deemed 22 Catherine Drive unsafe on May 20, 2015.

10.    Carnevale as City Treasurer hired private attorney Paul Rabchenuk (“Rabchenuk”) to probate the Catherine Drive Estate so that 22 Catherine Drive could be sold.²

11.    In May 2015, the principal of Melo’s Construction and the administrator of the Catherine Drive Estate, who was also an heir, signed a purchase and sale agreement for Melo’s Construction to purchase 22 Catherine Drive for $195,000.

12.    The purchase and sale agreement identified Howcroft as the real estate broker. Her broker’s fee under the purchase and sale agreement was $9,750.

13.    According to the purchase and sale agreement, the closing on the sale of 22 Catherine Drive was scheduled for July 31, 2015.

14.    The closing did not occur on July 31, 2015.

15.    On or about August 4, 2015, Carnevale as City Treasurer sent a letter on City Treasurer letterhead to the administrator and heir of the Catherine Drive Estate noting that the City had expended resources to assist him with probating his parents’ estate and because the City had been unable to contact him, it would be moving forward with court actions including foreclosure proceedings on 22 Catherine Drive due to delinquent taxes.

16.    On August 13, 2015, the administrator and heir of the Catherine Drive Estate went to Carnevale’s City Treasurer’s office to discuss 22 Catherine Drive with Carnevale. In an email to real estate agent Howcroft and attorney Rabchenuk sent using her City email account, Carnevale recounted her discussion with the administrator and heir as follows:

I informed him that we are still moving forward with the closing.  . . . He said that it is the “best news.” I told him that he needed to call Paul [Rabchenuk] Monday and let him know that he is going to cooperate with him and participate in the closing. I also told him that foreclosure is the next step if he does not cooperate and that I expect him to contact me on Monday. I explained the seriousness of the situation and that he should be listening to me, Paul and Janet [Howcroft] and no one else. I am hopeful I got through to him.

17.    The Essex County Probate and Family Court issued attorney Rabchenuk a license to sell 22 Catherine Drive on September 1, 2015.

18.     The administrator and heir of the Catherine Drive Estate sold 22 Catherine Drive to Melo’s Construction on October 2, 2015 for $195,000. At the time, the assessed value of the property was $282,800.

19.    Melo’s Construction secured a construction permit from the City to construct a garage addition with a kitchen and bath valued at $90,000. Melo’s Construction resold 22 Catherine Drive for $625,000 on June 1, 2016.

Conclusions of Law

20.    Section 23(b)(2)(ii) of G.L. c. 268A prohibits a municipal employee from knowingly, or with reason to know, using or attempting to use his official position to secure for himself or others unwarranted privileges or exemptions which are of substantial value and which are not properly available to similarly situated individuals.

21.    As City Treasurer, Carnevale was a municipal employee as that term is defined in G.L. c. 268A, § 1(g). 

22.    The opportunity to purchase 22 Catherine Drive from the administrator and heir of the Catherine Drive Estate was a privilege.

23.    This privilege was of substantial value. As a result of the purchase, Howcroft was able to receive a broker’s fee of $9,750 and Melo’s Construction was able to realize a substantial profit on the June 1, 2016 sale of 22 Catherine Drive.

24.    This privilege was unwarranted because it was secured through Carnevale’s knowing use of her City Treasurer position and her foreclosure power to steer, direct and compel the administrator and heir to sell 22 Catherine Drive to Melo’s Construction using her friend Howcroft as his real estate broker.

25.    This privilege was not properly available to similarly situated individuals because no private buyer of real estate is entitled to benefit from the use of the official governmental power of a city treasurer to foreclose on property for nonpayment of taxes to steer, direct, coerce or otherwise compel the owner of the real estate to sell to them.

26.    Therefore, by using her official City Treasurer position to steer, direct and compel the administrator and heir of the Catherine Drive Estate to sell property to Melo’s Construction and to otherwise facilitate that sale, Carnevale knowingly used her City Treasurer position to secure for Howcroft and Melo’s Construction an unwarranted privilege of substantial value not properly available to other similarly situated individuals. In so doing, Carnevale violated § 23(b)(2)(ii).

32 Columbia Boulevard

Facts

27.    As of 2016, the property located at 32 Columbia Boulevard, Peabody, Massachusetts had an outstanding tax liability of approximately $24,613. The property was owned by the Columbia Boulevard Estate.³

28.    At the time, the daughter of the deceased owner of 32 Columbia Boulevard (the “Decedent’s Daughter”) was living at 32 Columbia Boulevard and unable to pay the real estate taxes.

29.    In or about May 2016, Carnevale as City Treasurer hired attorney Rabchenuk to probate the Columbia Boulevard Estate so that 32 Columbia Boulevard could be sold. Attorney Rabchenuk charged $733.36 for filing fees and advertising, which the City paid on July 6, 2016.

30.    In order for her to move from 32 Columbia Boulevard upon its sale, the Decedent’s Daughter required replacement housing. On or about July 12, 2016, Carnevale as City Treasurer sent a letter on City Treasurer letterhead to the Peabody Housing Authority requesting assistance in placing the Decedent’s Daughter in “suitable housing.”

31.     On August 23, 2016, Carnevale as City Treasurer contacted the Peabody Housing Authority using her City email account to ask about the Decedent’s Daughter’s place on the public housing list. Carnevale advised that a “cash sale” for 32 Columbia Boulevard was ready to proceed. The “cash sale” was the sale of 32 Columbia Boulevard to Victory Realty Trust.

32.    On September 16, 2016, Carnevale, using her City email, notified attorney Rabchenuk and real estate agent Howcroft that the Decedent’s Daughter would soon have housing and that they needed to complete the “two trusts.” The “two trusts” were the Decedent’s Daughter’s Trust⁴ and Victory Realty Trust.

33.    The Decedent’s Daughter’s Trust was recorded with the Southern Essex District Registry of Deeds on September 20, 2016 along with a quitclaim deed to the trustee of the Decedent’s Daughter’s Trust.

34.    On September 22, 2016, Carnevale as City Treasurer used her City email to request an invoice from attorney Rabchenuk for his legal work related to establishing the Decedent’s Daughter’s Trust. Attorney Rabchenuk submitted an invoice for $5,710 for the Decedent’s Daughter’s Trust, which the City paid on September 29, 2016. 

35.    On September 29, 2016, Carnevale as City Treasurer again contacted the Peabody Housing Authority using her City email to ask when the Decedent’s Daughter’s apartment would be ready stating, “She is currently living with no heat/hot water in the house.”

36.    Richard Carnevale signed a check dated October 6, 2016, to attorney Rabchenuk from The Carnevale Group checking account in the amount of $587.50 for drafting the Victory Realty Trust. Richard Carnevale operates The Carnevale Group. Carnevale is a signatory on The Carnevale Group checking account and uses the company’s email account.

37.    On October 25, 2016, Victory Realty Trust was recorded at the Southern Essex District Registry of Deeds. Carnevale’s daughter was trustee of Victory Realty Trust. Carnevale’s husband, Richard Carnevale, and Howcroft’s husband, Richard Howcroft, were beneficiaries.

38.    On November 15, 2016, Carnevale as City Treasurer again contacted the Peabody Housing Authority using her City email inquiring as to the date when the Decedent’s Daughter’s public housing unit would be available. The Decedent’s Daughter moved into public housing on November 21, 2016.

39.    On November 22, 2016, the decedent’s granddaughter, as trustee of the Decedent’s Daughter’s Trust, signed a purchase and sale agreement to sell 32 Columbia Boulevard to Carnevale’s daughter, as trustee for Victory Realty Trust, for $125,000.  On the same date, Carnevale’s daughter, as trustee for Victory Realty Trust, signed a purchase and sale agreement to sell 32 Columbia Boulevard to Melo’s Construction for $210,000.

40.    At the time, the assessed value of 32 Columbia Boulevard was $228,800.

41.    On November 26, 2016, Victory Realty Trust issued a check for $5000 payable to the decedent’s granddaughter as trustee for Decedent’s Daughter’s Trust as an advance payment on the purchase of 32 Columbia Boulevard.

42.    On December 6, 2016, two deposits of $59,000 were made to the Victory Realty Trust checking account from lines of credit secured by Victory Realty Trust beneficiaries Richard Carnevale and Richard Howcroft.

43.    On December 7, 2016, the trustee of the Decedent’s Daughter’s Trust sold 32 Columbia Boulevard to the trustee of Victory Realty Trust, Carnevale’s daughter, for $125,000. Under the terms of the sale, real estate agent Howcroft was to receive a broker’s commission of $4,000.

44.    On December 12, 2016, the trustee of the Decedent’s Daughter’s Trust filed a confirmatory deed for the sale of 32 Columbia Boulevard to the trustee of Victory Realty Trust.

45.    Also on December 12, 2016, the trustee of Victory Realty Trust, Carnevale’s daughter, sold 32 Columbia Boulevard to Melo’s Construction for $210,000.

46.    On December 12, 2016, a deposit of $204,016.84 was made to the Victory Realty Trust checking account.

47.    On December 15, 2016, Victory Realty Trust issued the following checks: Janet Howcroft, $59,000.00; Richard Carnevale, $59,000.00; The Carnevale Group, $43,430.92; and Janet Howcroft $43,430.92.

48.    On December 15, 2016, an electronic funds transfer of $21,594 was made from The Carnevale Group to Carnevale and her husband’s joint savings account.

49.    On December 15, 2016, an electronic funds transfer of $1,050 was made from Carnevale and her husband’s joint savings account to their joint checking account.

50.    On December 15, 2016, Carnevale wrote a check for $1,050 to her daughter for “trustee fees.”

51.    The City was not reimbursed from the sale of 32 Columbia Boulevard for any of the fees it paid to attorney Rabchenuk in connection with probating the Columbia Boulevard Estate and establishing Decedent’s Daughter’s Trust. 

§ 19

52.    Except as otherwise permitted,⁵ § 19 of G.L. c. 268A prohibits a municipal employee from participating⁶  as such an employee in a particular matter₇  in which, to his knowledge, he or an immediate family member⁸  has a financial interest.⁹

53.    The particular matters in which Carnevale participated were the decisions to hire attorney Rabchenuk to probate the Columbia Boulevard Estate and create a trust to sell 32 Columbia Boulevard, and to expedite Decedent’s Daughter’s move into public housing. Carnevale participated as City Treasurer in these particular matters by: (1) hiring attorney Rabchenuk to probate the Columbia Boulevard Estate and create the trust, and repeatedly following up regarding this legal work with emails to attorney Rabchenuk copied to real estate agent Howcroft; and (2) sending the July 2016 letter on her City Treasurer letterhead to the Director of the Peabody Housing Authority and repeatedly following up using her City email to the housing authority in an effort to expedite Decedent’s Daughter’s move out of 32 Columbia Boulevard and into public housing.

54.    Carnevale’s daughter is a member of Carnevale’s immediate family and trustee of Victory Realty Trust. Carnevale’s husband is a member of Carnevale’s immediate family and a beneficiary of Victory Realty Trust.

55.    Carnevale and her immediate family had a financial interest in the decisions to hire attorney Rabchenuk to probate the Colombia Boulevard Estate and create the Decedent’s Daughter’s Trust and to contact the Peabody Housing Authority in order to expedite the Decedent’s Daughter’s move into public housing, because these decisions, and the actions that were taken as a result, facilitated the sale of 32 Columbia Boulevard to Victory Realty Trust of which her daughter was trustee and her husband was a beneficiary.

56.    When, as City Treasurer, Carnevale asked attorney Rabchenuk to draft the Decedent’s Daughters Trust documents and notified the Peabody Housing Authority that the sale of 32 Columbia Boulevard was imminent in an effort to expedite the Decedent’s Daughter’s move to public housing, she knew that her immediate family members had a financial interest in these matters as they were necessary for the completion of the sale of 32 Columbia Boulevard to Victory Realty Trust.

57.    Therefore, by as City Treasurer hiring attorney Rabchenuk to probate the Columbia Boulevard Estate and create the Decedent’s Daughter’s Trust, and by as City Treasurer repeatedly communicating with the Peabody Housing Authority to expedite the Decedent’s Daughter’s move to public housing, Carnevale violated § 19.

§ 23(b)(2)(ii)

Use of Public Funds to Probate a Private Estate

58.    The use of public resources to pay attorney Rabchenuk to probate the Columbia Boulevard Estate and create the Decedent’s Daughter’s Trust was a privilege.

59.    This privilege was unwarranted because Carnevale’s use of public resources for these private purposes was not authorized by law except only where the City was fully reimbursed from the proceeds of sale of the estate’s property.

60.    The unwarranted privilege was of substantial value because attorney Rabchenuk’s legal fees totaled $6,443.36 and the creation of the trust made possible Victory Realty Trust’s profitable acquisition of 32 Columbia Boulevard.

61.    Carnevale secured this unwarranted privilege for herself and Victory Realty Trust and its beneficiaries. Attorney Rabchenuk’s services on the Columbia Boulevard Estate and Decedent’s Daughter’s Trust enabled Victory Realty Trust to purchase 32 Columbia Boulevard.

62.    The privilege of using City funds to pay to probate a private estate and create a private trust without full reimbursement of the City for the expenditure was not properly available to Carnevale, the Victory Realty Trust beneficiaries or any other similarly situated individuals seeking to purchase real estate in Peabody.

63.    Therefore, by, as City Treasurer, using public resources for a private purpose without fully reimbursing the City for that use, Carnevale knowingly used her official position to secure an unwarranted privilege of substantial value for herself and Victory Realty Trust and its beneficiaries.

§ 23(b)(2)(ii)

Use of City Email and Letterhead to Expedite Public Housing Move

64.    The Decedent’s Daughter’s expedited move into Peabody Housing Authority housing so that Victory Realty Trust could purchase 32 Columbia Boulevard was a privilege which Carnevale sought by repeatedly contacting the housing authority using her official title, office letterhead and City email.

65.    This privilege was unwarranted because there was no legal basis or justification for Carnevale to use public resources, including her position as City Treasurer, to facilitate and expedite the Decedent’s Daughter’s move into public housing so that Victory Realty Trust could purchase 32 Columbia Boulevard.

66.    This privilege was of substantial value because the Decedent’s Daughter vacating the property enabled Carnevale’s daughter, as trustee of Victory Realty Trust, to purchase the property for $125,000, when the assessed value was $228,800, and immediately sell the property for $210,000, realizing a profit of $85,000 for the beneficiaries of the Victory Realty Trust.

67.    This unwarranted privilege was not properly available to Carnevale or any other similarly situated individual as no public employee may use his or her official position to help facilitate a private purchase of real estate with which the employee, the employee’s family or the employee’s friends are associated.

68.    Therefore, by, as City Treasurer, using public resources to expedite the Daughter’s move to public housing, Carnevale knowingly used her official position to secure for herself, her immediate family, and her friends an unwarranted privilege of substantial value that was not property available to similarly situated individuals. Thus, Carnevale violated § 23(b)(2)(ii). 

 

22 Lynnfield Street

Facts

69.    As of 2015, the property located at 22 Lynnfield Street, Peabody, Massachusetts had an outstanding tax liability of approximately $12,379. The property was held in Trust (“Lynnfield Trust”¹⁰).  

70.    In September 2015, Carnevale as City Treasurer filed a complaint in Land Court to foreclose on the tax lien.

71.    Between September 2015 and 2017, a trustee of the Lynnfield Trust was removed and replaced, and a private attorney was granted a mortgage on the property.

72.    In or about 2017, Carnevale as City Treasurer asked a Peabody Building Commissioner whether the building on 22 Lynnfield Street was a two-family or a single-family dwelling because she was assisting the owners in selling the property. 

73.    The Building Commissioner advised Carnevale that he considered the building to be a two-family dwelling.

74.    Victory Realty Trust required a mortgage to purchase the 22 Lynnfield Street property. An April 2, 2017 email to Century Bank, from Carnevale’s husband’s email account, advised that Victory Realty Trust planned to close on the purchase of 22 Lynnfield Street in mid-April.

75.    In an April 12, 2017 email, Carnevale as City Treasurer advised the City’s Tax Title Attorney’s paralegal that the sale of 22 Lynnfield Street was scheduled for closing on April 20, 2017, and asked whether a redemption¹¹ could be filed immediately following the closing.

76.    In accordance with Carnevale’s request as City Treasurer, the City’s Tax Title Attorney’s paralegal prepared an Instrument of Redemption dated April 18, 2017.

77.    On April 26, 2017, the trustee of Victory Realty Trust secured a mortgage for 22 Lynnfield Street through Century Bank in the amount of $244,000.

78.    On April 26, 2017, the trustee of the Lynnfield Trust sold 22 Lynnfield Street to the trustee of Victory Realty Trust for $239,500.

79.    Carnevale as City Treasurer signed the Instrument of Redemption and it was recorded with the Southern Essex Registry of Deeds on May 11, 2017.   

Conclusions of Law

§ 19

80.    The decisions to ask a City Building Commissioner to determine whether 22 Lynnfield Street was a two-family or a single-family dwelling, to direct the City’s tax title attorney to prepare an Instrument of Redemption in anticipation of the sale of 22 Lynnfield Street to Victory Realty Trust, and to sign the Instrument of Redemption, were particular matters. Carnevale participated as City Treasurer in each of these particular matters by making these decisions and taking these actions.

81.    Carnevale’s immediate family had a financial interest in these particular matters because her decisions and actions as City Treasurer facilitated Victory Realty Trust’s purchase of 22 Lynnfield Street and cleared the tax lien. When she acted as City Treasurer on these particular matters, Carnevale knew of her immediate family’s financial interest in these particular matters resulting from their involvement in the Victory Realty Trust.

82.    Therefore, by as City Treasurer taking actions she knew would facilitate the sale of 22 Lynnfield Street to the Victory Realty Trust, Carnevale participated officially in particular matters in which her immediate family had to her knowledge a financial interest. In so doing, Carnevale violated §19.

Resolution

83.    The Commission has determined that the public interest would be served by the disposition of this matter without further enforcement proceedings, on the basis of the following terms and conditions agreed to by Jeanne Carnevale:

(1)  that Jeanne Carnevale pay to the Commonwealth of Massachusetts, with such payment to be delivered to the Commission, the sum of $50,000 as a civil penalty for violating G.L. c. 268A, §§ 19 and 23(b)(2)(ii); and,

(2)  that Jeanne Carnevale waive all rights to contest, in this or any other administrative or judicial proceeding to which the Commission is or may be a party, the findings of fact, conclusions of law and terms and conditions contained in this Agreement.

By signing below, Jeanne Carnevale acknowledges that she has personally read this Disposition Agreement, that it is a public document, and that she agrees to all of the terms and conditions therein.

[1]  A pseudonym.

[2] The City paid Attorney Rabchenuk’s fees. The City was reimbursed upon the sale of 22 Catherine Drive.

[3]  A pseudonym.

[4] A pseudonym.

[5] None of the exemptions applies.

[6] “Participate” means to participate in agency action or in a particular matter personally and substantially as a state, county or municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise. G.L. c. 268A, § 1(j).

[7] “Particular matter” means any judicial or other proceeding, application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the general court and petitions of cities, towns, counties and districts for special laws related to their governmental organizations, powers, duties, finances and property.  G.L. c. 268A, § 1(k).

[8] “Immediate family” means the employee and his spouse, and their parents, children, brothers and sisters. G.L. c. 268A, § 1(e).

[9] “Financial interest” means any economic interest of a particular individual that is not shared with a substantial segment of the population of the municipality. See Graham v. McGrail, 370 Mass. 133 (1976). This definition has embraced private interests, no matter how small, which are direct, immediate or reasonably foreseeable.  See EC-COI-84-98.  The interest can be affected in either a positive or negative way. EC-COI-84-96.

[10] A pseudonym.

[11] An Instrument of Redemption is a document signed by the City Treasurer indicating that the tax title taking, including costs, has been satisfied.