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Settlement In the Matter of Eugene J. Mahoney
Table of Contents
This disposition agreement ("agreement") is entered into between the State Ethics Commission ("Commission") and Eugene J. Mahoney ("Mr. Mahoney") pursuant to Section 11 of the Commission's Enforcement Procedures. This agreement constitutes a consented to final Commission order enforceable in the Superior Court pursuant to G.L. c.268B,s.4(d).
On September 9,1982, the Commission initiated a preliminary inquiry, pursuant to G.L. c. 268B, s.4(a), into possible violations of the Conflict-of-Interest Law, G.L. c. 288A, involving Mr. Mahoney, a former member of the Braintree Board of Assessors. The Commission has concluded that preliminary inquiry and, on February 4, 1983, found reasonable cause to believe that Mr. Mahoney has violated G.L. c. 288A, s.s.19 ad 3(b). The parties now agree to the following findings of fact and conclusions of law:
1. Mr. Mahoney was a member of the Braintree Board of Assessors ("Board") from April 5,1978 to March 1,1982; he was chairman of the Board from 1978 to 1981. He therefore was a "municipal employee" as defined in G.L. c. 268A, s.1(g).
2. The Braintree Board is comprised of three elected members. Mr. Mahoney was not only chairman of the Board for three years of his tenure; but he was also the Board's acknowledged expert on the assessments on Braintree's approximately 1,100 commercial parcels, and it was to his judgment that the other members deferred on these matters. In Fiscal 1980 (July 1,1979 to June 30,1980), the Town of Braintree had a tax base of approximately $550,000,000.
Jubilation Realty Trust
3. On January 8, 1979, the Citgo station located at 1599 Washington Street in Braintree and owned by Cities Service Company (the "Citgo parcel") burned, substantially damaging the building.
4. In February 1979, Mr. Mahoney began negotiations in his private capacity on behalf of himself and a friend and business associate to purchase the Citgo parcel from Cities Service.
5. On March 13,1979, Mr. Mahoney paid the deposit of $7,000 to secure the $70,000 purchase price for the Citgo parcel to which the parties had agreed. The purchase and sale agreement executed that same day was signed on behalf of the purchaser by the friend and business associate of Mr. Mahoney.
6. In May 1979, the friend and business associate having withdrawn from the deal, Mr. Mahoney and his attorneys determined that title to the Citgo parcel should be taken in the name of a realty trust with secret beneficiaries. Jubilation Realty Trust ("JRT"), of which Mr., Mahoney and his family were
the beneficiaries, was formed for this purpose.
7. On June 20,1979, the closing on the sale of the Citgo parcel occurred. Mr. Dignan as trustee, represented JRT at the closing and took title for it. The balance due on the purchase price, approximately $63,000, was paid by Mr. Mahoney.
8. In August 1979, the Braintree Assessors' Office began its process of compiling and preparing the property tax bills for Fiscal 1980. By statute, G.L. c. 59, s.11, those tax bills were based on the assessed value of property as of January 1,1979.
9. As of January 1, 1979, the assessed value on the Citgo parcel totaled $121,800 ($47,100 in the land and $74,700 in the building).
10. In September or October 1979, Mr. Mahoney directed Mary Norton, the administrative secretary of the Assessors Office who was in charge of the billing process for Fiscal 1980, to reduce the assessment of the building on the Citgo parcel from $74,700. to $2,500. No legitimate reason (e.g., abatement application, demolition permit or Appellate Tax Board decision on the parcel) existed for the reduction. Because this change came from only a single assessor rather than from the whole Board, Mrs. Norton noted that the reduction was "per Mr. Mahoney" on the record card for the parcel maintained by the Assessors' Office.
11. This reduction in value resulted in a tax savings on the parcel for Fiscal 1980 totaling $3,158.75.
12. On December 5, 1979, Mr. Dignan, as trustee for JRT, paid the property bill on the Citgo parcel for the first half of Fiscal 1980, The funds for this tax payment came from Mr. Mahoney.
13. In or about June 1980, Mr. Mahoney became aware of the "per Mr. Mahoney" notation on the record card for the Citgo parcel and directed Mrs. Norton to remove it. Under protest, she erased the notation.
14. Section 19 of G.L. c. 268A prohibits a municipal employee from participating a such an employee in a particular matter in which to his knowledge he or his immediate family has a financial interest.
15. As a municipal employee, Mr. Mahoney violated G.L. c. 268A, s.19, by lowering the assessment on the Citgo parcel which he knew he and members of his immediate family owned through a trust.
16. In imposing a penalty for this violation of Section 19, the Commission has taken into consideration a number of exacerbating factors: (1) Mr. Mahoney's attempts to keep his interest in the Citgo parcel concealed by utilizing JRT with its secret list of beneficiaries as record-owner, denying any interest in or knowledge of JRT to governmental agencies investigating the matter, and directing Mrs. Norton (who has since died) to erase the notation attributing the decrease to Mr. Mahoney; and (2) the fact that the reduction in value was made by Mr. Mahoney acting on his own, Because of these factors, the Commission deems this an appropriate case to impose the maximum fine and to seek both recovery of the benefit accruing to Mr. Mahoney as a result of his action in this matter -- i.e., the tax savings for Fiscal 1980-- and some of the costs incurred by the Commission in investigating the matter.
17. In early December 1979, Mr. Dignan, acting on behalf of JRT, offered a real estate broker, Donald Tofias, acting as agent for the Walworth Company ("Walworth"), $1,000 for the approximately 25,700 square-foot parcel ("Parcel A") owned by Walworth that fronted on Washington Street next to the Citgo parcel. Mr. Tofias, on Walworth's behalf, rejected JRT's $1,000 offer and informed Mr. Dignan that Walworth's asking price for Parcel A was $25,000.
18. On December 14, 1979, Walworth filed abatement applications for two other real estate parcels ("Parcel B" and "Parcel C") it owned in Braintree, larger than Parcel A and also adjacent to the Citgo parcel. Walworth sought to reduce the total assessments on these two parcels by $2,421,333 (from $4,932,100 to $2,470,767). This would have resulted in a tax savings for the first year of the abatement of approximately $110,000.
19. On December 26,1979, Mr. Tofias called the Assessors' Office to schedule a meeting to discuss Walworth's abatement applications, in which Mr. Tofias was also acting as Walworth's agent. He was referred to Mr. Mahoney.
20. The same day, Mr. Tofias spoke with Mr. Mahoney to arrange a meeting to discuss the applications. During this conversation, Mr. Mahoney asked about the status of JRT's offer for Parcel A and disclosed that he had an interest in JRT. Mr. Tofias told Mr. Mahoney that Walworth had rejected JRT's offer and explained that Walworth viewed the sale of Parcel A to JRT and the abatement applications for Parcels B and C as separate issues that should not be discussed in the same conversation.
21. At the meeting to discuss Walworth's abatement applications that followed in late December 1979 or early January 1980, Mr. Mahoney again raised JRT's offer of $1,000 to purchase Parcel A. Mr. Tofias reiterated that Walworth regarded the issues as separate, Mr. Tofias was concerned lest the success of the abatement applications be linked to the sale of Parcel A to JRT.
22. In a telephone conservation in January 1980 to follow up this discussion of the abatement applications, Mr. Mahoney increased JRT's offer for Parcel A to $3,000. Mr. Tofias again emphasized Walworth's position that the issues were separate and distinct.
23. Walworth's abatement applications were not granted by the Board and were therefore deemed denied. ATB appeals covering these and later Walworth abatement applications were settled in 1982.
24. In December 1981, Walworth sold Parcels A, B and C. to the Flatley Company.
25. Section 3(b) of G.L. c. 268A prohibits a municipal employee from soliciting a item of substantial value for himself for or because of his official duties or official acts performed or to be performed.
26. The Commission has construed section 3(b) to mean that if there is an official regulatory relationship between the donor and the donee and each is aware of the relationship, the solicitation or receipt of anything of substantial value by the public official is prohibited barring some legitimate justification. See In the Matter of Saccone and DelPrete, Commission Adjudicatory Docket No. 132, Decision and Order, pp. 10-11 (June 1, 1982); In the Matter of George A. Michael, Commission Adjudicatory Docket No. 137, Decision and Order, p. 31 (September 28, 1981). The Commission recognizes that in certain circumstances -- such as where the item of substantial value involves a personal service contract or other sales agreement for fair value rather than a gift or other gratuity -- further inquiry may be necessary to determine whether section 3 has been violated. Factors to be considered in making the determination in these circumstances include: (1) whether the official has particular power or leverage within his agency; (2) whether the private party is someone with substantial interests that have or may be expected to come before the official's agency for action; and (3) whether the official has a prior relationship with the person he regulates.
27. As a municipal employee, Mr. Mahoney violated G.L. c. 268A, s.3(b), by trying to arrange JRT's purchase of Parcel A from Walworth, the owner of a substantial amount of commercial property in Braintree with pending abatement applications. Not only was Mr, Mahoney chairman of the Board at the time and the acknowledged commercial expert on the Board to whom the other two members deferred (factor 1 above), but Walworth had abatement applications, involving a large amount of money, pending at the time Mr. Mahoney discussed JRT's offer to purchase Parcel A with Mr. Tofias (factor 2). In addition, Mr. Mahoney, Mr. Tofias and Walworth had had no dealings with each other before Mr. Mahoney's election to the Board (factor 3).
28. In deciding to impose the maximum penalty for this violation and to seek recovery of some of its investigative costs, the Commission has taken into consideration that Mr. Mahoney tried to negotiate the purchase of Parcel A in three separate conversations and sought a purchase price substantially below the asking price at least twice following Mr. Tofias informing him that Walworth had rejected JRT's $1,000 offer.
In view of the foregoing violations of G.L. c. 268A, s.s.19 and 3(b), and the statutory rights of the Town of Braintree pursuant to G.L. c. 268A, s.21, 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 Mr. Mahoney:
1. that he pay to the Commission the sum of $1,000 as a civil penalty for violating G.L. c. 268A, s.19, by reducing the assessed value on a parcel in which he knew he had a financial interest;
2. that he pay to the Town of Braintree the sum of $3,150 as reimbursement for the economic advantage he obtained a result of the reduced assessment;
3. that he pay to the Commission the sum of $1,000 as a civil penalty for violating G.L. c. 268A, s.3(b), by soliciting the purchase of a parcel of land from a company with abatement applications pending before the Board; and
4. that he pay to the Commission the sum of $4,850 as costs incurred in investigating these violations.