Settlement  In the Matter of Charles Flaherty

Date:	03/27/1996
Organization:	State Ethics Commission
Docket Number:	547

Disposition Agreement

This Disposition Agreement ("Agreement") is entered into between the State Ethics Commission ("Commission") and Charles F. Flaherty, Jr. ("Flaherty") pursuant to s.5 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, s.4(j).

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On February 14, 1996, the United States Attorney's Office and Flaherty brought to the Commission's attention information indicating that he had violated the conflict of interest law, G.L. c. 268A, and the financial disclosure law, G.L. c. 268B.^[1]  The Commission has reviewed the facts, and on March 22, 1996, voted to find reasonable cause to believe that Flaherty violated G.L. c. 268A, s.3(b) and s.23 and G. L. c. 268B, s.6.

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

VI. The Martha's Vineyard Townhouse

34. From 1974 to 1994, Jay Cashman ("Cashman") was a 50% owner of a construction business in Massachusetts known as JM Cashman, Inc.  From 1985 to 1994, JM Cashman, Inc. had over $100 million in contracts with the Commonwealth.  Among such projects, the company repaired bridges and waterfront facilities, and participated in some of the largest construction projects in Massachusetts, including 

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the Third Harbor Tunnel and Massachusetts Water Resource Authority Treatment Plant at Deer Island.

35. J.M. Cashman, Inc. is also a member of a construction industry group known as the Construction Industries of Massachusetts ("CIM").  Among its activities, CIM lobbies the Massachusetts Legislature on behalf of the interests of the construction industry.  Cashman has held various offices in CIM, including serving as its chairman in 1993-1994, its vice-chairman in 1992-1993, and as a board member from 1986-1992.

36. On an annual basis, the Legislature must vote to authorize the Commonwealth to issue bonds to finance construction projects.  During the period here relevant, Cashman lobbied Flaherty several times on behalf of CIM to secure passage of bonding authorization for construction projects.  Jay Cashman and another CIM member also met with Flaherty to discuss CIM's position on an initiative petition which sought to repeal a constitutional amendment Flaherty had previously sponsored.

37. At the time here relevant, Edward Carroll ("Carroll") was a friend of the Cashman family.

38. Cashman and other members of his family controlled a limited partnership that owned a two-bedroom townhouse condominium on Martha's Vineyard in an area known as Tashmoo Woods.

39. In 1991, Carroll arranged for Flaherty to use the Cashman vacation townhouse on two occasions:  March 22-24, 1991 and July 30, 1992 to August 2, 1992.  Flaherty brought personal guests to the Cashman townhouse on both occasions and no member of the Cashman family was present during either visit.

40. When Flaherty used the Martha's Vineyard townhouse, he knew it was Cashman's and knew of Cashman's interest in legislation.  It was also Flaherty's understanding that Cashman had approved Flaherty's use of the Martha's Vineyard townhouse.

41. The total value of Flaherty's use of the Cashman townhouse was $700.  Flaherty did not pay Cashman anything for the use of the Cashman townhouse.

VII. The Conflict of Interest Law

42. Section 3(b) of G.L. c. 268A, the conflict of interest law, prohibits a state employee from, directly or indirectly, receiving anything of substantial value for or because of any official act or act within his official responsibility performed or to be performed by him.

43. Massachusetts legislators are state employees.

44. Anything worth $50 or more is of substantial value for G.L. c. 268A, s.3 purposes.^[8]

A. The Newport Condominium

45. By, in 1991 and 1992, accepting the use of the Gosman Newport condominium on four occasions, valued at $7,000, while Flaherty was, recently had been, or soon would be in a position to take official actions which could affect Cataldo and/or Gosman, Flaherty accepted items of substantial value for or because of official acts or acts within his official responsibility performed or to be performed by him.  In doing so, Flaherty violated s.3(b).^[9,10]

B. The Cotuit House

46. By, in 1990, accepting the use of the Cotuit house from Murphy and Goldberg, which use was valued at no less than $2,775, while Flaherty was, recently had been, or soon would be in a position to take official actions which could affect Goldberg and/or other Murphy clients, Flaherty accepted items of substantial value for or because of official acts or acts within his official responsibility performed or to be performed by him.  In doing so, Flaherty violated s.3(b).^[11]

C. The Kennebunkport Holidays

47. By accepting the 1990, 1991 and 1992 Kennebunkport July 4th holidays, valued at no less than $2,000, while Flaherty was, recently had been, or soon would be in a position to take official actions which could affect Doran, O'Sullivan, AIM and/or The Choate Group, Flaherty accepted items of substantial value for or because of official acts or acts within his official responsibility performed or to be performed by him.  In doing so, Flaherty violated s.3(b).^[12,13]

D. The Mashpee House

48. By, in 1991, accepting the use of the Mashpee house from Doran on two occasions, valued at $700, while Flaherty was, recently had been, or soon would be in a position to take official actions which could affect Doran, Flaherty accepted items of substantial value for or because of official acts or acts within his official responsibility performed or to be performed by him.  In doing so, Flaherty violated s.3(b).^[14]

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E. The Martha's Vineyard Condominium

49. By, in 1991, accepting the use of the Cashman Martha's Vineyard condominium, valued at $700, while Flaherty was, recently had been, or soon would be in a position to take official actions which could affect Cashman, Flaherty accepted items of substantial value for or because of official acts or acts within his official responsibility performed or to be performed by him.  In doing so, Flaherty violated s.3(b).^[15]

IX. Conclusion

Friendship is not a defense regarding any of the foregoing gratuities.  The existence of a friendship between a public employee and the giver of a gratuity is not a defense to a G.L. c. 268A, s.3 violation unless the friendship was the only motive for the gratuity. In re Flaherty, 1991 SEC 498.  That was not the case here. Flaherty acknowledges that he had no social relationship with Gosman.  Although Flaherty was close personal friends with Murphy and Doran and friendly to varying lesser degrees with the other givers, he nevertheless acknowledges that, in each instance described above, he knew that the givers were in considerable part seeking his official goodwill on behalf of themselves or others who had or would have business interests before the House.  This conduct violates G.L. c. 268A, s.3(b).

The Commission is aware of no evidence that Flaherty took or promised to take any official action concerning any proposed legislation which would affect any of the registered Massachusetts legislative agents or other specific individuals in return for the gratuities as described above.^[16]  However, even if the gratuities were intended only to foster official goodwill and access, they were still impermissible.^[17]

In view of the foregoing violations of G.L. c. 268A, as well as the fact that Flaherty was sanctioned by the Commission in 1990 for receiving unlawful gratuities in violation of G.L. c. 268A, s.3(b), the Commission has determined that the public interest would best be served by the disposition of this matter without further enforcement proceedings on the basis of the following terms and conditions agreed to by Flaherty:

(1) that Flaherty pay to the Commission the total sum of twenty-six thousand dollars ($26,000) as a civil penalty for violating G.L. c. 268A, s.3(b),^[18] and

(2) that Flaherty waive all rights to contest the findings of fact, conclusions of law and terms and conditions contained in this agreement in any related administrative or judicial proceedings to which the Commission is or may be a party.

^[1] The Commission first became aware that Flaherty may have violated G.L. c. 268A and G.L. c. 268B in 1993; however, the Commission chose to defer any investigation of these matters pending an inquiry by the U.S. Attorney's Office, which inquiry is now concluded.

^[2] In re Flaherty, 1991 SEC 498 ($500 fine and $150 disgorgement).

^[3] One of these occasions arises from Flaherty's staying at a vacation home in Cotuit, Massachusetts during a five-week period that a lobbyist and his client rented this home.  Although Flaherty made multiple visits to this home, and stayed approximately 21-25 days in August and September, 1990, these visits are here collectively treated as one of the 13 occasions.  Although Flaherty and/or his guests stayed at these vacation homes on 62 calendar days, not all such stays involved his remaining overnight.

^[4] Beginning in or about May 1990, Goldberg and Bremen Ltd. paid a $2,000 per month retainer for Murphy's lobbying services.

^[5] As noted above, not all of these days involved overnight stays.

^[6] The Commission is not aware of any evidence that Murphy lobbied Flaherty regarding Goldberg matters between 1990 and 1992.  Murphy did, however, lobby Flaherty regarding some of his other clients' matters during 1991 and 1992.

^[7] July, 1990, $500; July, 1991, $800; and July, 1992, $700.

^[8] See Commonwealth v. Famigletti, 4 Mass. App. Ct. 584, 587 (1976); EC-COI-93-14.

^[9] In determining whether the items of substantial value have been given for or because of official acts or acts within one's official responsibility, it is unnecessary to prove that the gratuities given were generated by some specific identifiable act performed or to be performed.  As the Commission explained in Commission Advisory No. 8: Free Passes (issued May 14, 1985):

Even in the absence of any specifically identifiable matter that was, is or soon will be pending before the official, s.3 may apply.  Thus, where there is no prior social or business relationship between the giver and the recipient, and the recipient is a public official who is in a position to use [his] authority in a manner which could affect the giver, an inference can be drawn that the giver was seeking the goodwill of the official because of a perception by the giver that the public official's influence could benefit the giver.  In such a case, the gratuity is given for his yet unidentifiable "acts to be performed."

^[10] This same conduct also violated G.L. c. 268A, s.23(b)(3) which prohibits a public employee from acting in a manner which would cause a reasonable person to conclude that anyone can improperly influence the public employee or unduly enjoy his favor in the performance of his official duty.

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^[11] This conduct also violated G.L. c. 268A, s.23(b)(3).  In addition, where the gratuities were provided by a legislative agent and exceeded $100 in a calendar year, their receipt also violated G.L. c. 268B, s.6, which prohibits a public employee from knowingly and willfully accepting from a legislative agent gifts with an aggregate value or $100 or more in a calendar year.

^[12] Flaherty has stated that he was unaware that AIM and The Choate Group subsidized the entertainment during the July 4th gatherings.  Nothing in s.3 requires that the public official know the ultimate source of an illegal gratuity. All that is required is that the public official know that he is receiving the gratuity for or because of official acts or acts within his official responsibility.  On the foregoing facts, that could be inferred even if Flaherty did not know the specific identity of the all donors.  In any event, here Flaherty knew that the intermediate sources, Doran and O'Sullivan, were prohibited sources, themselves lobbyists.

^[13] This same conduct also violated G.L. c. 268A, 23(b)(3).

^[14] This conduct also violated G.L. c. 268A, s.23(b)(3) and G.L. c. 268B, s.6.

^[15] This conduct also violated G.L. c. 268A, s.s.23(b)(3).

^[16] As discussed in footnote 9, s.3 of G.L. c. 268A is violated even where there is no evidence of an understanding that the gratuity is being given in exchange for a specific act performed or to be performed. Indeed, any such quid pro quo understanding would raise extremely serious concerns under the bribery section of the conflict of interest law, G.L. c. 268A, s.2.  Section 2 is not applicable in this case, however, as there was no evidence of such a quid pro quo between the donors and Flaherty.

^[17] Flaherty has stated that no legislation was discussed during any of the events at issue in the instant Agreement.  However, s.3 applies to generalized goodwill-engendering entertainment of legislators by private parties, even where no specific legislation is discussed.  In re Massachusetts Candy and Tobacco Distributors, Inc., 1992 SEC 609 (company representing distributors violates s.3 by providing a free day's outing (a barbecue lunch, golf or tennis, a cocktail hour and a clam bake dinner), worth over $100 per person, to over 50 legislators, their staffers and family members, with the intent of enhancing the distributors' image with the Legislature and where the legislators were in a position to benefit the distributors).  This rule of law was clearly stated in Flaherty's 1990 Disposition Agreement with the Commission.

^[18] Because the c. 268A, s.23 and c. 268B, s.6 violations are based on the same facts as the s.3 violations, no additional fine is imposed for those violations.

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End of Decision