Settlement  In the Matter of Middlesex Paving Corporation

Date:	10/12/1994
Organization:	State Ethics Commission
Docket Number:	500

Disposition Agreement

This Disposition Agreement ("Agreement") is entered into
between the State Ethics Commission ("Commission") and Middlesex
Paving Corporation ("Middlesex") 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).

On January 25, 1994, the Commission initiated, pursuant to
G.L. c. 268B, s.4(a), a preliminary inquiry into possible
violations of the conflict of interest law, G.L. c. 268A, by
Middlesex. The Commission concluded that inquiry, and, on
September 27, 1994, found reasonable cause to believe that
Middlesex violated G.L. c. 268A, s.3.

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The Commission and Middlesex now agree to the following
findings of facts and conclusions of law:

Findings of Fact

1. Middlesex is a group of affiliated companies incorporated
to do business in Massachusetts. Middlesex performs a variety of
construction services including paving, bridge construction and
repair, landscaping, roadside development and road surfacing.
Seventy-five percent of Middlesex's Massachusetts contracts
consists of publicly bid and funded projects.

2. During 1990, Middlesex successfully bid for Massachusetts
Highway Department ("MHD") contracts valued at over $5 million.
These contracts involved construction, paving and maintenance
services and were awarded to Middlesex as the lowest qualified
bidder.

3. At all times relevant, Stephen Berlucchi ("Berlucchi")
was the MHD highway maintenance engineer. As such, he was
responsible for supervising and inspecting all maintenance work on
state highways performed by state contractors, including Middlesex.

4. On December 22, 1990, Middlesex hosted a Christmas party
at the Marriott Long Wharf Hotel in Boston. The explicit purpose
of the party was to foster goodwill with employees and individuals
doing business with Middlesex. The party included cocktails,
dinner, entertainment and overnight hotel accommodations for
certain guests. More than 400 Middlesex employees and their
families attended the party.

5. Berlucchi attended Middlesex's party and received hotel
accommodations as Middlesex's guest. The cost to Middlesex was
approximately $116.

6. During 1991, Middlesex successfully bid for MHD contracts
valued at over $4 million. These contracts involved construction,
paving and maintenance services and were awarded to Middlesex as
the lowest qualified bidder.

7. At all times relevant, Anthony Salamanca ("Salamanca")
was a MHD district highway director and Edward O'Toole ("O'Toole")
was a MHD civil engineer. As such, each was responsible for
supervising and inspecting work performed by state contractors,
including Middlesex.

8. On December 21, 1991, Middlesex again hosted a Christmas
party at the Marriott Long Wharf Hotel in Boston. The
explicit purpose of the party was to foster goodwill with employees and
individuals doing business with Middlesex. The party included
cocktails, dinner, entertainment and overnight hotel accommodations
for certain guests. More than 400 Middlesex employees and their
families attended the party.

9. Berlucchi attended the party and stayed overnight at the
hotel as Middlesex's guest. The cost to Middlesex was $116.
Salamanca, O'Toole and their spouses also attended Middlesex's
party and received hotel accommodations as Middlesex's guests. The
cost to Middlesex was approximately $170 per couple.

10. During 1992, Middlesex successfully bid for MHD contracts
valued at over $28 million. In 1992, Middlesex also had existing
contracts with the Massachusetts Turnpike Authority ("MTA") valued
at over $400,000.

11. At all times relevant, Robert Calo ("Calo"), Ronald
Iannaco ("Iannaco") and Francis Sandonato ("Sandonato") were MHD
civil engineers. George Ward ("Ward") was the MHD Manager of
Operations for Essex County. As such, each was responsible for
supervising and inspecting work performed by state contractors,
including Middlesex.

12. At all times relevant, a certain MTA assistant division
engineer was responsible for supervising and inspecting work
performed by state contractors, including Middlesex.[1]

13. On December 19, 1992, Middlesex hosted a Christmas party
at the Marriott Long Wharf Hotel in Boston. The explicit purpose
of the party was to foster goodwill with employees and individuals
doing business with Middlesex. The party included cocktails,
dinner, entertainment and overnight hotel accommodations for
certain guests. More than 400 Middlesex employees and their
families attended the party.

14. Calo, Iannaco, Salamanca, Sandonato, Ward and their
spouses attended Middlesex's party and received hotel
accommodations as Middlesex's guests. The cost to Middlesex was
approximately $170 per couple.

15. Berlucchi and his spouse also attended the dinner but did
not stay overnight at the hotel. The cost to Middlesex was $108.

16. The MTA assistant division engineer, O'Toole and their
spouses attended the December 19, 1992 Middlesex party and received
hotel accommodations at the Boston Harbor Hotel. The cost to
Middlesex was approximately $250 per couple.

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Conclusions of Law

17. Section 3(a) of G.L. c. 268A prohibits, otherwise than as
provided by law, the giving or offering of anything of substantial
value to any public official for or because of any official act
performed or to be performed by such employee.[2] The Commission
has found that private parties violate s.3 when they entertain
government officials (who are in a position to benefit them) in an
effort to generate goodwill. See e.g., In re John Hancock, 1994
SEC ___; In re EUA Cogenex, 1992 SEC 607; In re State Street Bank,
1992 SEC 582; In re Stone & Webster, 1991 SEC 552; In re Rockland
Trust, 1989 SEC 416.

18. By providing dinner, entertainment and overnight
accommodations to public officials with the intent to generate and
maintain goodwill with these public employees who had official
responsibilities concerning Middlesex contracts, Middlesex gave
each of these state employees something of substantial value for or
because of an official act performed or to be performed by each of
them, thereby violating G.L. c. 268A, s.3.[3]

19. The Commission is aware of no evidence that any public
official took any official action concerning Middlesex's public
contracts in return for attending the party(s). However, even
though the public officials were invited only with the intent to
foster official goodwill, the invitation was nevertheless
impermissible.[4]

20. Middlesex fully cooperated with the Commission's
investigation.

21. Middlesex has taken prompt action to prevent this
activity from reoccurring.[5]

Resolution

In view of the foregoing violation of G.L. c. 268A by
Middlesex, 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 Middlesex:

(1) that Middlesex pay to the Commission the sum of six
thousand dollars ($6,000.00) as a civil penalty for
violating G.L. c. 268A[6]; and

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

[1] Because of an ongoing Commission investigation, the MTA
employee is not identified in this Disposition Agreement.

[2] In the past, the Commission has considered entertainment
expenses in the amount of $50 to constitute "substantial value".
P.E.L. 88-1. See Commission Advisory No. 8 (issued May 14, 1985).

[3] For s.3 purposes, it is unnecessary to prove that any
gratuities given were generated by some specific identifiable act
performed or to be performed. In other words, no specific quid pro
quo corrupt intent need be shown. Rather, the gift may simply be
an attempt to foster goodwill. It is sufficient that a public
official, who was in a position to use his authority in a manner
that would affect the giver, received a gratuity to which he was
not legally entitled, regardless of whether that public official
ever actually exercised his authority in a manner that benefitted
the gift giver. See Commission Advisory No. 8. See also United
States v. Standerfer, 452 F. Supp. 1178, (W.D.P.A. 1978), aff'd
other grounds, 447 U.S. 10 (1980); United States v. Evans, 572 F.2d
455, 479-482 (5th Cir. 1978).

[4] As discussed above in footnote 2, 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
bribe 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
such quid pro quo between Middlesex and the public employees.

[5] Middlesex created a position within their company to monitor
expenditures and educate its employees concerning conflict of
interest matters.

[6] This amount is approximately three times the value of the
$2,030 in prohibited gratuities Middlesex provided to public
employees.

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