STATE OF FLORIDA
COMMISSION ON ETHICS
In re MICHAEL W. KENTON, Complaint No. 87-41
RECOMMENDED PUBLIC REPORT OF HEARING OFFICER
This matter was initiated through the filing of a complaint by the Complainant, Anthony Shoemaker, who alleged that the Respondent, Michael W. Kenton, violated various provisions of the Code of Ethics for Public Officers and Employees contained in Part III, Chapter 112, Florida Statutes. Following a preliminary investigation, the Commission on Ethics found probable cause and ordered a public hearing on the issues of whether the Respondent, as Assistant Director for Environmental Management for the City of Clearwater, violated Section 112.313(6), Florida Statutes, by his actions while a City employee pertaining to the parcel of property known as Cooper's Point; whether the Respondent violated Section 112.313(7)(a), Florida Statutes, by having a conflicting contractual relationship while a public employee of the City of Clearwater; and whether the Respondent violated Section 112.313(8), Florida Statutes, by using information not available to members of the general public and gained by reason of his official position for his personal gain and for the personal gain of others.
A public hearing was held on March 14 and 15, 1989, in Clearwater, Florida, before the undersigned member of the Commission on Ethics serving as Hearing Officer. Craig B. Willis, Assistant Attorney General, appeared as Advocate for the State of Florida and Ann Cocheu, Assistant Attorney General, served as co-counsel. Kenneth L. Connor, Esquire, and Debra A. Zappi,Esquire, appeared on behalf of the Respondent.
At the public hearing the Advocate called the following witnesses: Joseph R. McFate, II, Anthony L. Shoemaker, Ream Wilson, James Sheeler, Dallas Marshall, Kenneth King, Scott Hopkins, David Healey, Milton A. Galbraith, Jr., and David Walker; the deposition of James W. MacFarland was admitted into evidence in lieu of his live testimony at the public hearing. The Respondent testified and called the following witnesses: Timothy A. Johnson, Jr., Thomas H. Looker, Tom R. Moore, Charles LeCher, Greg Sembler, and Jarrell L. Murchison. The parties filed a prehearing stipulation and various exhibits presented by the parties were received in evidence.
The parties have submitted proposed findings of fact and conclusions of law as well as legal memoranda, all of which have been considered by the Hearing Officer. Specific rulings on each party's proposed findings of fact are set forth in the appendix to this order. References to the transcript of the hearing are denoted by the letter "T" followed by the page number(s); references to the Prehearing Stipulation filed by the parties are made by the abbreviation "Stip."; references to the deposition of James W. MacFarland are made by the letters "JWM" followed by the page number(s); references to the deposition of Michael W. Kenton (Advocate's exhibit 12) are made by the letters "MWK" followed by the page number(s); and references to the Advocate's and the Respondent's exhibits are made as "AE" and "RE" respectively, followed by the exhibit number and page number, if applicable.
From the evidence presented at the hearing, the undersigned Hearing Officer finds as follows:
1. At all times material to this complaint the Respondent, Michael W. Kenton, was employed by the City of Clearwater, having served in the following positions during the following time periods:
City Forester, Parks and Recreation Department (February 1972-September 1973);
Environmental Planner, Planning Department (October 1973-July 1978);
Chief Planner, Current Planning Division, Planning Department (August 1978-September 1979);
Assistant Director of Public Works, Environmental Management (October 1979-September 1984);
Assistant Director of Planning and Urban Development, Environmental Management (October 1984-March 1987).
By letter dated February 9, 1987, the Respondent resigned his employment effective March 1, 1987. Stip.; AE 9.
2. Central to this complaint is an area of property known as "Cooper's Point." Located in the City of Clearwater, Cooper's Point is a low-lying peninsula in upper Tampa Bay which lies on the eastern shore of the City just north of the Courtney Campbell Causeway (State Road 60). The peninsula is primarily wetland, with some upland portions. For purposes of this proceeding and for most of the time period relevant to this complaint, the peninsula consisted of three parcels of land owned by three different families, the total of which comprised between 239 and 333 acres. T 53; AE 15, AE 21, AE 22, AE 23, AE 26; Smith v. City of Clearwater, 383 So2d 681 (Fla. 2d DCA 1980).
3. In 1974 the owners of Cooper's Point, the McMullen and Zinsser families and Derwin Smith, submitted to the City a site plan proposal which called for multifamily and commercial development. T 53, 116; AE 23. In 1975, prior to any development orders being issued, the City downzoned Cooper's Point in such as way as to allow only single family residential development on the uplands, to restrict commercial development permitted along the frontage on State Road 60, and to zone the remainder of the lands as quiet lands. T 53, 54.
4. As a result of the City's rezoning of Cooper's Point, the property owners filed an inverse condemnation suit in State Circuit Court. T 54; AE 23. The gravamen of the suit was that the City had deprived the owners of the use of their property by virtue of restrictive zoning limitations which had been imposed by the City. T 53-54. The case, tried in late 1977, resulted in a final judgment rendered in 1978 denying the plaintiffs any relief. AE 23. In 1980 the Second District Court of Appeal affirmed the trial court's judgment; the Florida Supreme Court denied review in 1981. Smith v. City of Clearwater, 383 So.2d 681 (Fla. 2d DCA 1980); Smith v. City of Clearwater, 403 So.2d 407 (Fla. 1981).
5. The City's strategy in defense of the lawsuit was to prove that there was a profitable use of the property under the zoning that the City had designated for Cooper's Point. T 372. The City's concept plan for the property, which included 50 residential units, was the centerpiece of its defense in the case. T 92-94, 372-73; AE 21. Architects, engineers, developers, and real estate people testified at the trial about the concept plan and how Cooper's Point could be developed profitably. T 95, 373-74. The concept plan which was presented and discussed at trial was in the possession of the City and, as such, was available as a public record. T 96, 247. The lawsuit was closely followed by the media, members of the community, developers, and environmentalists. T 371-75.
6. The Respondent played an extensive role in the inverse condemnation suit against the City, testifying as a witness on behalf of the City about environmental concerns involving the property and as a hostile witness of the Plaintiffs, assisting in the preparation of an exhibit showing how Cooper's Point could be economically developed under the City's zoning ordinance, and assisting the City's trial counsel in his preparation for the case. T 56, 377-79, 391-92; AE 13.
7. According to the City's special counsel for the lawsuit, during the City's preparation for defending the suit the Respondent may have become more intimately familiar with information about Cooper's Point than the general public, although the information would have been available to the general public. T 392.
8. Following the litigation, City employees believed that there was a considerable amount of animosity between the owners of Cooper's Point and the City, including particularly the Respondent.
The employees understood that the owners' resentment stemmed not only from the litigation but also from the suicide of one of the owners. T 101-02, 156, 481-82.
9. At various times since 1972 the owners of Cooper's Point have expressed an interest in selling the property to the State or to others. In 1972, the City had attempted to have the State purchase Cooper's Point through the State of Florida Endangered Lands Program. T 477. The Respondent at that time was involved on behalf of the City with attempting to have the State purchase Cooper's Point. T 477.
10. Between the years 1980 and 1983, the City nominated Cooper's Point on three occasions for public acquisition under the State's Conservation and Recreation Lands (CARL) program, until it was successful in having the property placed on the CARL aquisition list. T 57. In a letter dated May 6, 1980, signed by J. D. Sheeler, Grants Development Specialist, the City first nominated Cooper's Point for acquisition under the CARL program. The Respondent is listed in that letter as one of the two City employees to contact for further information. AE 26.
11. The City's goal throughout the late 1970's and the 1980's was to secure public ownership of Cooper's Point. T 127. However, because of a shortage of money available to the City for such a project, the City sought to have the State purchase the property. In addition, the City was attempting to work with Pinellas County to have the County pay from its Endangered Lands Funds the matching local share that would be required if the State were convinced to purchase the property. T 128; AE 16.
12. The Respondent's duties as a City employee in the early 1980's included assisting in the City's lobbying effort with the State to have the Cooper's Point project placed on the CARL list. T 127.
13. In a letter dated September 21, 1983 from the City Manager, Anthony Shoemaker, to the Department of Natural Resources (D.N.R.), the State was requested to reactivate consideration of Cooper's Point for purchase under the CARL program. The letter informed the State that Cooper's Point was now clear of all legal actions, including state and federal cases. The Respondent was listed as one of three City employees receiving copies of the City Manager's letter. AE 45.
14. During 1984 the City mounted an intense lobbying effort to have the Cooper's Point property advanced on the State priority list for purchasing property under the CARL program. T 59-60. In furtherance of this effort, the City prepared and paid for publicity stickers and information brochures. T 59-60; AE 14, AE 15. In the brochure the Respondent is listed as a contact person for additional information about Cooper's Point. AE 15. As a result of the City's public lobbying campaign, the City's position regarding the public acquisition of Cooper's Point through the CARL process was well known. T 59.
15. In 1984 the City paid for a title search regarding Cooper's Point in an effort to facilitate the CARL acquisition process. T 61. In a letter dated March 12, 1984, Sheeler, the City's Grants Development Specialist, transmitted the results of that title search to the D.N.R. Division of State Lands. AE 18. The Respondent is shown on the letter as receiving a copy. AE 18.
16. In 1984 the City also paid for a survey of Cooper's Point and paid the costs of two appraisals required by D.N.R. as part of the CARL acquisition process for Cooper's Point. T 61. Both Dallas Marshall, Land Acquisition Agent with D.N.R., and James MacFarland, former Director of State Lands, testified that these are forms of local support that local governments provide to the State to facilitate the State acquisition process. T 199; JWM, exh. 1, p. 8, 16.
17. Other than these expenditures, the City had not made any monetary commitment toward the purchase of Cooper's Point. T 111, 142; AE 16. This would have been a matter of public record. The Respondent urged the City on several occasions to spend some of its funds to purchase Cooper's Point. T 189-90.
18. The City's survey and title search were available to members of the general public at City Hall upon inquiry, as well as City records, such as appraisals, that were part of the City's 1975 lawsuit. T 194, 247-48, 375-76. The ownership of Cooper's Point has been a matter of public record and generally would have been known, or at least discoverable, by those who were interested in the property. T 106-07, 193-94, 243-44.
19. The Respondent traveled to Tallahassee on numerous occasions in 1984 and 1985 to further the City's goal of having the State of Florida purchase Cooper's Point through the CARL program. T 127; AE 20.
20. In October of 1984, the City Manager transferred the Respondent to the Department of Planning and Urban Development as the Assistant Planning and Urban Development Director/ Environmental Management. The Respondent in that position was to perform such duties as were assigned by the Department Director, the City Manager, or other competent authority. T 120; AE 1.
21. The Director of the Department of Planning and Urban Development testified that the Respondent's duties and responsibilities, in addition to reviewing plans for compliance with the City's environmental concerns, tree permitting, and the general responsibility for the protection of the environment within the City, included serving as the lead person responsible for following up on the State's acquisition of the Cooper's Point property. T 52-53.
22. The Respondent and Mr. Sheeler were responsible for following the State's acquisition of Cooper's Point and handling the environmental issues involved. T 52-53, 58-59. The Respondent provided the technical data and input needed to keep the CARL process moving toward acquisition of Cooper's Point. T 58-59, 184-85. There was no evidence that the Respondent received any information from the State about its appraised values for Cooper's Point.
23. The appraisals paid for by the City were completed in 1985, and the results were transmitted to the Division of State Lands. The appraisal results were used by the Division to prepare an appraisal review. AE 22; JWM, exh. 1, p. 8-10. Based upon the 1985 appraisals, the State made an offer to one of the owners of one of the larger parcels on Cooper's Point, Ms. Ruth D. McMullen. AE 19; T 199-200; JWF, exh. 1, p. 10-13. The offer, in the form of an option agreement dated December 6, 1985, was in the amount of $35,320.00 for 71 acres of land. AE 19.
24. Under the law in effect in 1985 (and still in effect), appraisal reports prepared for D.N.R. as part of the CARL program were confidential and exempt from the public records law until an option contract was executed or, if no option contract were executed, until two weeks before a contract or agreement for purchase was considered for approval by the Board of Trustees of the Internal Improvement Trust Fund. Section 253.025(7)(c), Florida Statutes. In addition, Section 119.07(3)(q), Florida Statutes (1985), provided in relevant part:
In any case in which an agency of the executive branch of state government seeks to acquire real property by purchase or through the exercise of the power of eminent domain all appraisals, other reports relating to value, offers, and counteroffers must be in writing and are exempt from the provisions of s. 119.01 and subsection (1) until execution of a valid option contract or a written offer to sell which has been conditionally accepted by the agency, at which time the exemption shall expire. The agency shall not finally accept the offer for a period of 30 days in order to allow public review of the transaction. The agency may give conditional acceptance to any option or offer subject only to final acceptance by the agency after the 30-day review period. If a valid option contract is not executed, or if a written offer to sell is not conditionally accepted by the agency, then the exemption from the provisions of this chapter shall expire at the conclusion of the condemnation litigation of the subject property. . . . For the purpose of this paragraph "option contract" means an agreement of an agency of the executive branch of state government to purchase real property subject to final agency approval. [E.S.]
25. According to the former Director of State Lands, D.N.R. appraisals and the values set in an appraisal are confidential. His staff could answer questions regarding whether an appraisal were finished, the anticipated date of completion, how the appraisal was done, who did it, and conditions such as zoning, but values or comparables were not to be discussed. JWM, exh. 1, p. 24-25. No evidence was presented which would indicate that the Respondent received information from D.N.R. personnel about State appraised values of Cooper's Point.
26. Later in December of 1985 Ms. McMullen gave Kenneth King, a land developer for whom the Respondent had done some consulting work, a copy of the State's offer. According to King, Ms. McMullen advised him that she was not going to seriously consider the offer and that she was contacting him because he had shown an interest in the property in the past. T 236-38, 244-45, 250-53. In 1983 King had tried, unsuccessfully, to negotiate the purchase of Cooper's Point. T 234-35.
27. King was not at that time interested in purchasing Cooper's Point for development purposes, but was aware of the State's interest in acquiring the property and was considering purchasing the property for possible mitigation purposes for some other property he owned in the Tampa Bay area. T 239. King then contacted the Respondent to find out whether the City, the County, and the State had a genuine interest in acquiring Cooper's Point. T 238-39. King contacted the Respondent because he was aware that the Respondent was coordinating the City's efforts regarding Cooper's Point. T 238.
28. King met with the Respondent and showed him the offer made by the State to Ms. McMullen. T 249. King told the Respondent about his contemplated land swap and asked the Respondent to keep his name and the offer confidential, because King did not want it to become known that he was interested in the property. T 249-50, 253-54. King did not share this information with anyone else other than his partner. T 249-50. The Respondent informed King that the City, County, and State were very interested in purchasing the property. T 239.
29. The Respondent informed Mr. Sheeler and his supervisor, Joseph McFate, that he had learned from an individual who was not one of the property owners that the State had made what he termed a ridiculously low offer for the property. The Respondent did not advise McFate or Sheeler how much the offer was, who had provided the information, or that Ms. McMullen had expressed interest in selling to Mr. King. T 64-65, 99-101, 105, 166-67, 179, 191-92, 487-89.
30. The Respondent and Sheeler went to Tallahassee and met with Dallas Marshall and an appraiser with the D.N.R. Bureau of Appraisals regarding the method of appraising the property. T 203, 207. As a result of this and further communications to D.N.R. from County and Planning Council representatives, it was determined that the State's appraisers had incorrectly applied the County's land use plan, which classified the property as open space, rather than the City's zoning and land use classifications which had been upheld in the earlier litigation. T 65-66, 204-07; AE 23 (letter from Assistant County Attorney to D.N.R. dated March 21, 1986); AE-24 (internal D.N.R. memo dated June 10, 1986, recognizing appropriate zoning classification).
31. Marshall also discussed with the Respondent a further valuation problem for the Drummond/Zinsser portion of the tract. As there was no access provided to that parcel of the peninsula across the McMullen tract, Marshall took the position that it would have to be appraised as an isolated, land-locked parcel. T 203-04, 206-09; AE 25. The Respondent argued that the value of the parcel should be increased because, if the State purchased all of the Cooper's Point property, the parcel would have land-side access. T 216-19. However, D.N.R. representatives did not agree. T 216-19; AE 25.
32. The State did agree to reappraise Cooper's Point and paid for that reappraisal. T 207; AE 25.
33. The Respondent informed City officials about the problems relating to the State's erroneous application of the County's land use designation, but did not tell McFate about the issue of access to the Drummond/Zinsser parcel. T 67-68. It was McFate's understanding that the reappraisals were going to affect all of the peninsula portion, including both the McMullen and the Zinsser tracts, since both were erroneously classified on the County's Land Use Plan. T 67.
34. After the City and County had provided the State with the information about the erroneous land use classification, it was the understanding of Shoemaker, McFate, and Sheeler that the State's appraisal process was back on track. T 66, 128-29, 181.
35. In June of 1986 the State acted to obtain reappraisals of Cooper's Point. AE 24. On November 24, 1986, the Director of the Division of State Lands signed the new appraisals on Cooper's Point and at this time the State was in a position to make new offers to the property owners. AE 25; JWM, exh. 1, p. 21-22. The Director indicated that once he had signed the appraisal, unless there was some restriction on negotiation or insufficient funds in the CARL program, Cooper's Point was eligible for negotiation and new offers. JWM, exh. 1, p. 21-22.
36. During the summer of 1986, after the City had supplied the correct land use and zoning information to the Division of State Lands and the State had agreed to reappraise Cooper's Point, the Respondent expressed concern about the State's willingness to acquire the property at a price acceptable to the sellers and seemed to have lost heart in the CARL process. T 107-108, 183. The Respondent testified that after his meetings with D.N.R. personnel, he became convinced that the State would not acquire Cooper's Point. T 491, 531-32. As the Respondent knew that King had been approached by an owner and that King was not going to get involved, he concluded that Cooper's Point then really was on the market and he assumed that the owners were seeking other purchasers. T 492-93.
37. In June of 1986 the Respondent talked with Jarrell Murchison, a personal friend and attorney who had represented the Respondent, in which the Respondent indicated that he had become extremely frustrated with the attempts to get the State to purchase Cooper's Point and that he had become convinced that the State would not follow through in its efforts. T 438. Murchison, who had represented real estate development corporations, suggested that the two of them buy Cooper's Point and develop it themselves. T 435, 438-39.
38. The Respondent expressed concern to Murchison about a conflict between his acquiring an interest in Cooper's Point and his employment with the City. T 439, 468. Murchison advised the Respondent that during the period they would be negotiating to purchase the property the Respondent did not have a conflict or any obligation to disclose his involvement. T 440, 469. Murchison gave this advice expecting that the Respondent would rely on it. T 440. It is clear that the Respondent did rely on this advice, because he did not disclose his involvement until well after the negotiation stage had passed. AE 6. Murchison, however, was not a neutral source of counsel, since he was to be a partner in the proposed deal.
39. In order to pursue the venture, Murchison contacted Jack Bowman, one of the property owners, at the suggestion of the Respondent. T 442. Murchison inquired of Bowman whether the property was for sale and what he thought it would take to purchase Cooper's Point; Bowman told him $1 million. T 442-43. No evidence was presented which indicated that the Respondent personally contacted, or directly conducted any negotiations with, any of the owners of Cooper's Point.
40. On the advice of another attorney, the Respondent and Murchison decided to form a land trust, primarily in order to conceal the identity of the Respondent from the landowners during negotiations to buy the property, as the Respondent expressed concern that the owners of Cooper's Point would not sell to him. T 443-45. A land trust agreement, dated August 18, 1986, was entered into by the Respondent and Murchison, designating Murchison as trustee and granting each of them a 50% beneficial interest in the trust. AE 28.
41. Around the first week of July, 1986, Murchison prepared a letter for the other attorney to sign which stated that clients of the attorney were interested in purchasing Cooper's Point for $800,000. After a counteroffer by the property owners, the buyers and sellers agreed upon a one million dollar purchase of Cooper's Point. T 445-46. The contract ultimately was executed at the end of October, 1986, at which time escrow funds were provided. T 446-47; AE 30.
42. In August, when it appeared that the land trust and the owners were going to be able to agree to the terms of an option contract, the Respondent consulted with Murchison and the other attorney about his obligations regarding his public employment and a potential conflict of interest. T 447. Their advice was to contact the City Attorney for advice. T 447-48.
43. In August of 1986, the Respondent met with Milton Galbraith, Jr., the City Attorney, and discussed in general terms the legal or ethical implications of a City employee owning property in the City, where the property would be regulated by the City and the employee would be involved in the regulatory process. T 295-96, 447-48; AE 3. According to Galbraith, he responded to a general question with a general answer and did not know what the Respondent contemplated at the time. T 301, 312, 315.
44. On August 28, 1986, the City Attorney received an internal memorandum dated August 27th from the Respondent summarizing the advice of the City Attorney. AE 3. Mr. Galbraith testified that this memorandum accurately reflected the essence of his advice to the Respondent. T 308.
45. In summary, the City Attorney advised the Respondent:
(a) If an employee does not have frequent dealings in real estate matters, a one-time or very infrequent real estate deal would not constitute a conflict of interest;
(b) A conflict of interest would become effective at the time of both the acquisition of a financial interest and the submission of plats, plans, permit applications, or other items under the purview of the employee;
(c) Upon the submission of such plans or applications, a memorandum to the employee's supervisor should be prepared, identifying the conflict and asking that the employee be relieved of regulatory duties regarding the property; and
(d) An interest in non-residential real estate should be reported on the State and City disclosure forms filed each July. AE 3.
46. During the Respondent's discussion with the City Attorney, the Respondent did not inform him that the property in question was Cooper's Point; the Respondent did not give the City Attorney any details about the property in question; the Respondent did not tell the City Attorney that the property involved was environmentally sensitive property; the Respondent did not tell the City Attorney that the City had been involved with the property for over ten years in attempting to have it publicly acquired; the Respondent did not inform the City Attorney that the City had nominated the subject property to the CARL list; the Respondent did not tell the City Attorney that he had been involved with the property for a long period of time as a City employee; and the Respondent did not inform the City Attorney that he was involved as a City employee with the CARL acquisition project. T 301-03, 312.
47. The City Attorney testified that he had served in that capacity for less than a year and that he was not sure that it would have registered if the Respondent had mentioned Cooper's Point specifically. T 307. He also testified that his advice might have differed if he had been provided with other details in addition to what the Respondent provided. T 317-318.
48. The Respondent consulted with Murchison regarding the City Attorney's advice. Murchison indicated that based on the City Attorney's advice the Respondent had no obligation to disclose his involvement with Cooper's Point to the City until July of the next year or until both a financial interest and a regulatory function with regard to the property were involved. T 448-450, 469-70. The City Attorney believed that the Respondent would rely on his advice, "as far as it went." T 316. It is clear that the Respondent relied on what he understood from the City Attorney and from Murchison to be the City Attorney's advice, as he did not disclose his interest or involvement with Cooper's Point or ask to be relieved of any public duty relating to Cooper's Point until late January, 1987.
49. In September of 1986, before the option contract for Cooper's Point was executed, the Land Trust Agreement was amended to add two new beneficiaries, each with a 20% interest, and to change the percentages of interest of the Respondent and Murchison to 30% each. AE 29. The new investors were recruited to put up the escrow money for the property. T 346-47. The Respondent did not invest any money into the deal. T 366. Although the beneficiaries of the land trust primarily intended to develop the property and did not intend to purchase it for sale to the City, the Respondent from the outset was aware of the possibility that the property could be sold to a public agency for a profit. T 345, 356, 452-53; AE 13, p. 10-11. The Land Trust Agreement provided that the Respondent might resign his employment with the City in order to develop the property; in that event he was to be paid a maximum of $50,000 for one year as a cost of the development to be funded out of the acquisition and development loan or by the new investors, who would be reimbursed from the loan. AE 29.
50. On October 23, 1986, the owners of Cooper's Point entered into a contract to sell the property to Jarrell Murchison, as Land Trustee for Land Trust 60, for one million dollars. Closing was to take place after notice but no later than two hundred eighty-five (285) days after full execution of the agreement. The contract called for liquidated damages to the sellers for cancellation of the agreement by the buyer (for reasons other than certain reasons specified in the contract) in amounts ranging from $3,000 to $14,000, depending on how late cancellation would occur, plus forfeiture of the $30,000 earnest money deposit. AE 30. The Respondent had not invested any money toward the purchase price. If the buyer breached the agreement, the Respondent would have had minimal financial exposure, assuming the veil of the trust could not be pierced. T 366, 544, AE 30.
51. On November 20, 1986, the City Manager sent a memorandum to the Parks and Recreation Director seeking information about the current status of the Cooper's Point project. AE 48. The County recently had passed a referendum measure which made County money available to purchase endangered and environmentally sensitive lands. T 130. The memorandum indicates that the City Commission had asked about approaching the County regarding the purchase of "Camp Soule" property and that the City Manager thought that the City also might attempt to have the County purchase Cooper's Point, if appropriate. The memorandum closes by directing the Parks and Recreation Director to prepare a letter for his signature asking that the County consider these two projects with justifications as to why. AE 48.
52. The City Manager, in his memorandum, asked the Director of Parks and Recreation to discuss the matter with the Respondent because of the Respondent's involvement with the Cooper's Point project. T 130-31, 170-71; AE 48.
53. In response to a request from the Parks and Recreation Director, the Respondent prepared and submitted a memorandum dated December 2, 1986, in which he gave a status report and made recommendations as to appropriate City action with regard to Cooper's Point and other properties in the City. T 171-72; AE 4.
54. In his December 2nd memorandum, the Respondent reported that a particular developer had acquired an option to purchase Camp Reed, another parcel of property located in the City which had been nominated for purchase under the CARL program. The Respondent recommended that the City ask the County to approach the developer about buying his option, in order to conserve that area. AE 4.
55. In contrast, the Respondent in his memorandum did not reveal the contract to buy Cooper's Point in which he held a 30% interest and he did not reveal his interest. The Respondent's memorandum did provide detailed information about the status of the State's proposed purchase of Cooper's Point, advising that new reappraisals had been received by D.N.R. and forwarded to the negotiators to renegotiate and that "a reasonable offer can and should be made in the very near future." AE 4. However, in contrast to the Respondent's recommendation about the Camp Reed property, the Respondent's memorandum recommends that the City let the CARL process run its course before involving the County with a direct acquisition proposal. AE 4.
56. The Respondent denied that his private involvement with Cooper's Point had any influence on his memorandum. He testified that he did not disclose the trust's contract to purchase Cooper's Point because the intent of the memorandum was to get attention to the Camp Reed property and it did not seem appropriate to him to disclose the trust's interest. T 509-10. He also testified that he had no concept of ownership, that it was uncertain whether the purchase was going to go through, and that he learned about the other option and felt it appropriate to mention that option because it related to the property emphasized in the memorandum. T 511-12. This testimony was not credible in light of the Respondent's interest in the contract to purchase Cooper's Point, his disclosure of the option on the Camp Reed parcel, and the other circumstances described below.
57. Although the information in the memorandum was true and accurate and contained on its face no affirmative misrepresentations of fact insofar as it related to Cooper's Point, the omissions of fact regarding the Respondent's interest in acquiring the property and the trust's outstanding option were of such a magnitude as to make his memorandum an intentional misrepresentation of the situation. The Respondent's interest in Cooper's Point and his intent to acquire the property influenced the advice he provided in this memorandum. Despite the fact that the Respondent admittedly had given up on the State's purchasing Cooper's Point, his memorandum clearly gives the impression that he felt the State's negotiations might be fruitful and that County involvement therefore was unnecessary at the time. AE 4. In response to the City Manager's expression of interest in using a new funding source to acquire Cooper's Point, the Respondent's memorandum recommended advising the City Manager that it was "premature" to send a letter to the County about Cooper's Point. AE 4 and AE 48. If the Respondent truly believed that the State was not going to acquire Cooper's Point and if he truly were as concerned for the preservation and protection of Cooper's Point as he claims (T 491, 493, 532; AE 13, p.10-11), then he would not have recommended waiting for the State to make the purchase. Rather than recommending delay, he would have seized the potential opportunity to acquire the property for the public. Instead, he fully intended to delay any public acquisition efforts so that he could follow through on his intent--and contractual obligation--to acquire and develop the property. T 523; AE 13, p. 10-11; MWK, p. 181. Ironically, the Respondent criticizes the City Manager for providing little or no support for attempts to publicly secure the property (T 527-528), while, when presented by the City Manager with the opportunity to strongly advocate the public acquisition of Cooper's Point by the County, he recommended delay when convenient to suit his own interests.
58. Both the Parks and Recreation Director, Wilson, and the City Manager, Shoemaker, relied on the recommendations made in the Respondent's memorandum. T 132, 173-74; AE 5.
59. Not long after the contract to purchase Cooper's Point was entered into, and by December, 1986, the financial backers for the Cooper's Point purchase decided that they wanted out of the contract. T 349-50, 357, 451. The original backers requested that Murchison and the Respondent find other financiers. T 350, 357. Murchison and the Respondent, based on Murchison's advice, believed that the original backers were locked into the deal, but Murchison asked them to wait to get out of the deal until someone could be found to replace them. T 350, 452. As there were deadlines imposed by the contract and the original investors wanted out of the deal, there were some financial and time pressures on the Respondent. AE 13, p. 12.
60. The Respondent believed that he would lose his job with the City once he disclosed his interest or involvement in the Cooper's Point property. T 336, 496; AE 13, p. 12. Although the trust agreement provided that he would receive a $50,000 per year salary out of loans for financing, or partially out of the investors' pockets, the investors wanted out. It seems reasonable to conclude that it was not likely that they could get financing until the time came to arrange for the closing on the property. The Respondent knew he would have to resign his City employment at some point, but financially he was not ready to leave even in January, 1987. AE 29; MWK, p. 165, 177. Therefore, in December the Respondent was in a position where, although he did not stand to lose a great deal from failing to close on the contract, he faced a much greater financial risk if he disclosed his private involvement with Cooper's Point.
61. At all times relevant to this proceeding, the Sembler Company was a family owned and operated development company doing business through several limited partnerships. T 400. The Respondent came to know Greg Sembler, who now is a vice president of the company, in 1985 or 1986 in connection with a project which the Sembler Company was developing on land which the Company was considering to have annexed into the City. T 402-03.
62. Prior to his seeking to purchase Cooper's Point, the Respondent in the summer of 1986 expressed to Mr. Sembler his feeling that the public sector would not acquire Cooper's Point and suggested that the Sembler Company look at the property. T 404-05. Although Sembler asked a realtor to look into the purchase of Cooper's Point, nothing came of it, and Sembler advised the Respondent that summer that they would not pursue the matter any farther. T 405-07.
63. Subsequently, in early December of 1986 the Respondent contacted Sembler again, this time about the possibility of the Semblers becoming involved in the purchase of Cooper's Point through the land trust. T 407-09. Shortly afterward Sembler, his brother, the Respondent, and Murchison met at a restaurant to discuss the property. T 408-09, 428. The four met again at Sembler's brother's house and in late December walked the property together. T 410, 429-30.
64. In January of 1987 the Semblers met with their attorneys, the Respondent, and Murchison. The Respondent brought a package of materials relating to Cooper's Point, including his December 2nd memorandum, and was "very candid" with the Semblers. T 332-34; 410-411. At that meeting, the Semblers' attorneys advised the Respondent that he was an equitable owner of the property. T 411, 511. On the advice of one of the Semblers' attorneys, Timothy Johnson, the Semblers required the Respondent to disclose his ownership interest in Cooper's Point prior to leaving his employment with the City. T 332-37; 411-12. The Semblers wanted to know what the community's reaction would be to the disclosure of the Respondent's interest before they would agree to involve themselves in the project. T 334, 412-413.
65. The Respondent first disclosed to the City his ownership interest in or private involvement with Cooper's Point in a memorandum to McFate dated January 26, 1987. T 68-69; AE 6. But for the Semblers' insistence, he would not have disclosed at this time. T 332-37, 411-12; AE 13, p. 12. On January 28, 1987, the City Manager sent a memorandum to the Respondent relieving him of all duties relating to Cooper's Point and directing him to provide specific details about his interest in Cooper's Point and any proposals submitted to the owners. AE 7. The Respondent responded by memorandum dated February 2nd; by letter dated February 9, 1987, he resigned from his position with the City, effective March 2, 1987. AE 8, AE 9.
66. Between the Respondent's December 2nd memorandum and his January 26th disclosure of his interest in Cooper's Point, the City did not change its position to its detriment or suffer any prejudice. T 150, 174.
67. In February of 1987 the City Manager, McFate, and Sheeler traveled to Tallahassee to meet with State officials in the Division of State Lands and to inform them of the situation. T 70-71. At the conclusion of the meeting, James MacFarland, Director of the Division of State Lands, decided not to pursue the State's purchase of Cooper's Point until the issues regarding an outstanding option on the property and regarding the involvement of the Respondent were resolved. JWM, p. 6-9.
68. MacFarland stated that he was concerned about any appearance of impropriety which could have surrounded a situation in which a public employee purchased property and then made a profit from it. JWM, p. 8-10, 27-28. The mere fact that a public employee had acquired the property would not necessarily have prevented the property from purchase through the CARL process, although the ultimate decision whether the State would pursue the property would depend on further information that came to light. JWM, p. 22. MacFarland wrote to the property owners, requesting information about the option; further information was not forthcoming and, eventually, Cooper's Point was dropped from the CARL list after its purchase by the City and County. JWM, p. 6-7, 21-22.
69. After the Respondent's disclosure of his interest in Cooper's Point, the City Manager requested Mr. McFate to approach the Respondent to inquire whether the owners of the option would be interested in selling their interest to the City. The Respondent indicated that he would not be willing to sell without making a profit. The City Manager decided not to pursue this, as he felt that the City Commission would not approve paying the Respondent under the circumstances. T 74-75, 78, 135-38. Although the City was aware of the Respondent's interest, it did not seek to block the sale of the property to him or to succeed to his interest. T 140.
70. In March of 1987 the land trust assigned its contract to purchase Cooper's Point to Cooper's Point Partners, Ltd., a Sembler family partnership in which the Respondent owned a 15% interest. T 413-14; AE 33, AE 34, AE 35. As a limited partner, the Respondent had no authority to bind the partnership. T 425; AE 31. At that time, the Semblers intended to develop the property rather than to sell it to a public entity. T 326.
71. In March of 1987 the Semblers applied to the City for a clearing permit for Cooper's Point. AE 39. The City delayed issuing the permit and discussions began between the City and the Semblers regarding the City's purchase of Cooper's Point. T 414-18. Prior to that time the City had not been willing to contribute funds toward the purchase price of the property. T 80-81. Following further negotiations between the Semblers and the City and County, they agreed that the Semblers would obtain two appraisals of the property and that the City and County would obtain two appraisals. T 420-21. Ultimately, the City and County purchased Cooper's Point from Cooper's Point Partners, Ltd., for the average of the two lowest appraisals, $1,950,000.00, on March 10, 1988. AE 44. The City was aware of the Respondent's interest in the property. T 83-85; AE 44.
72. The Respondent received $150,000.00 from the Sembler Company for his partnership interest from the sale of Cooper's Point. T 425; AE 35, AE 36. The Respondent had $15 invested in the limited partnership. T 545, 548. The Respondent's corporation, Environmental Equities, Inc., further received $50,000.00 for consulting services under the terms of a consulting agreement with Cooper's Point Partners, Ltd. T 426; AE 32, AE 37, AE 45.
Section 112.313(6), Florida Statutes, provides as follows:
MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31.
For purposes of this provision, the term "corruptly" is defined as follows:
"Corruptly" means done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his public duties.
Section 112.313(7)(a), Florida Statutes, provides as follows:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.--No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties.
Section 112.313(8), Florida Statutes, provides as follows:
DISCLOSURE OR USE OF CERTAIN INFORMATION.--No public officer or employee of an agency shall disclose or use information not available to members of the general public and gained by reason of his official position for his personal gain or benefit or for the personal gain or benefit of any other person or business entity.
Based on the foregoing findings of fact, the undersigned Hearing Officer recommends that the Commission on Ethics make the following conclusions of law:
1. The Respondent, Michael W. Kenton, in his capacity as Assistant Director of Planning and Urban Development/Environmental Management for the City of Clearwater, was a public employee subject to the provisions of the Code of Ethics for Public Officers and Employees, Part III, Chapter 112, Florida Statutes, and is subject to the continuing jurisdiction of the State of Florida Commission on Ethics.
Disclosure or Use of Certain Information [Section 112.313(8)]
2. With respect to an alleged violation of Section 112.313(8), Florida Statutes, the Advocate must establish by a preponderance of the evidence that:
a. The Respondent was a public officer or employee;
b. The Respondent disclosed or used information which was
(1) not available to members of the general public, and
(2) gained by reason of his official position; and
c. The information was disclosed or used to secure a personal gain or benefit for the Respondent or any other person or business entity.
3. Regarding this alleged violation, the Advocate argues first that the information, training, and expertise the Respondent gained as a City employee during the City's defense of the inverse condemnation suit in conjunction with his years as an environmental manager for the City and his special duty assignment to facilitate State acquisition of Cooper's Point on behalf of the City placed the Respondent in a unique position to know and use the intimate details about how Cooper's Point could be profitably developed. Secondly, the Advocate argues that as a result of his public position the Respondent learned from Ken King, a local developer, information regarding the State's low offer for a portion of Cooper's Point which he used for the benefit of himself and others. Finally, the Advocate argues that the Respondent learned from State Lands personnel how long the process for State appraisals takes and that the valuation of the Zinsser portion was because of an access problem, that this information was not available to the general public, and that it was used for the personal gain of the Respondent and others.
4. Previous opinions of the Commission on Ethics indicate that the "information" contemplated under Section 112.313(8) is not the sort of general information about an agency's precedent, procedures, policies, or functions that should be acquired by a public employee and that would constitute "expertise." Rather, what is contemplated are specific, identifiable items of information not available to the general public at the time of disclosure or use. See, for example, CEO 82-28, CEO 82-66, and CEO 83-10. Otherwise, each agency employee necessarily would be prohibited by Section 112.313(8) from leaving his position and then representing private clients in connection with the work of his former agency. Such a prohibition, however, comes in the form of such specifically crafted "revolving door" ethics restrictions as are contained in Article II, Section 8(e), Florida Constitution, Section 112.3185, Florida Statutes, and Chapter 89-380, Laws of Florida.
5. The Respondent correctly observes that all information regarding the City's concept plan, title search, boundary survey, and position concerning Cooper's Point was a matter of public record or was well known as a result of the 1974 lawsuit and the City's public awareness campaign. Although it is true that by virtue of his public position the Respondent had perhaps more knowledge and understanding of the materials the City had developed throughout its years of activities regarding Cooper's Point than any other City employee, this information was available to members of the general public. In particular the fact that the City had proven in 1977 that Cooper's Point could be developed profitably as a residential development, as well as the details of the City's concept plan, fell within the realm of information available to the general public in 1986-87.
6. However, the same conclusion cannot be reached concerning the information received by the Respondent from Mr. King. King contacted the Respondent because of his position with the City and his special role with regard to Cooper's Point. Therefore, the information gained by the Respondent from King was by reason of the Respondent's official position. Similarly, the Respondent's contacts with D.N.R. personnel were in his official capacity as a representative of the City, so that the information he gained from D.N.R. was gained by reason of his official position.
7. From King, the Respondent was able to review the State's offer to Ms. McMullen, thereby learning the terms initially offered by the State; he also learned that McMullen considered the amount offered to be too low, that she was looking for another buyer, and that King was considering the purchase of Cooper's Point as a mitigation or land swap possibility. This information was not available to members of the general public: it was not available from the State, where it remained confidential; it was not available from King, who had asked the Respondent to keep his name and the offer confidential and who did not disclose it to anyone other than his partner and the Respondent; and there was no evidence that the property had been listed for sale or that anyone else was aware of the information. Under these circumstances, the information was not a matter of general knowledge among the public and the general public could not have discovered it.
8. The Respondent argues that this information came from a member of the general public and therefore was in the public domain. However, simply because particular information is conveyed to a public official from a member of the public, the information is not necessarily available to members of the general public. For example, in Commission on Ethics Complaint No. 85-03, In re Dwight Bell, 9 FALR 4350 (1985), it was alleged that a county property appraiser had learned from the complainant that the complainant wanted to purchase a certain parcel of property in connection with plans for a development, but the property appraiser acted on that information and purchased the property for his own benefit. Although the Commission found that the property appraiser had not violated Section 112.313(8), Florida Statutes, the conclusion was based on a lack of proof that the property appraiser had acted on information allegedly given to him by the complainant. In the present case, the Respondent learned information that was known by a small group of citizens and that cannot be said to have been available to any member of the general public who sought the information. Therefore, this information was not available to members of the general public within the contemplation of Section 112.313(8).
9. The Respondent learned from State Lands personnel how long the process for State appraisals takes and that the valuation of the Zinsser portion was because of an access problem. This information was accessible to members of the general public, as indicated by the testimony of the Director of the Division of State Lands, and therefore was available to members of the general public.
10. The Respondent disclosed much of the information gained from King to the City and to D.N.R. personnel and disclosed much of the information gained from D.N.R. to the City. However, although this disclosure to affected agencies may indicate the Respondent's good faith during early 1986, it does not mean that the information thereby became available to the general public.
11. This information was disclosed and used for the personal gain of the Respondent and of others. The information from King (the State had made an offer; its offer was too low; McMullen was looking for another buyer), coupled with the information learned from the State (the access problem causing a reduced valuation for the Zinsser parcel; the length of time for appraisals and then another State offer), led the Respondent to believe that the State would never acquire Cooper's Point, that the property was available for purchase, and that it likely would be purchased and developed. The Respondent communicated his understanding of the situation to Murchison, and together they set in motion the chain of events that led to the contract to purchase and the ultimate acquisition by Cooper's Point Partners, Ltd., from which it was purchased by the City and County to the benefit of the Respondent, Murchison, and the Sembler family.
12. It was the combination of information available to members of the general public and information that the Respondent received from King that made it possible for him to know both that the property was available at that time and that it likely could be developed or sold for a profit. However, the information gained from King was significant, because without it he would not have learned of the progress of the CARL process and would not have known of the State's inability to acquire Cooper's Point in the near future. Every decision that leads to personal gain of a public officer or employee or of another necessarily will be based not only on confidential information, but also on some information to which the public would have access. To require otherwise would mandate an impossible burden of proof and frustrate the intent of Section 112.313(8), which seeks to ensure that "public office not be used for private gain other than the remuneration provided by law" and that "promoting the public interest and maintaining the respect of the people in their government must be of foremost concern." Section 112.311(1) and (6), Florida Statutes.
13. Accordingly, the Respondent violated Section 112.313(8), Florida Statutes, by disclosing and using information not available to members of the general public and gained by reason of his official position to acquire a personal interest in property which his employer was seeking to have purchased for the benefit of the public, for the gain or benefit of himself and others.
Conflicting Employment or Contractual Relationship
14. With respect to an alleged violation of Section 112.313(7)(a), Florida Statutes, the Advocate must establish by a preponderance of the evidence that:
a. The Respondent was either a public officer or employee; and
b. The Respondent held an employment or contractual relationship that:
(1) created a continuing or frequently recurring conflict between his private interests and the performance of his public duties, or
(2) impeded the full and faithful discharge of his public duties.
15. Regarding this alleged violation, the Advocate argues that the Respondent's contractual relationship under the Land Trust Agreement impeded the full and faithful discharge of his public duties for two reasons. First, his duty to facilitate the CARL acquisition project was seriously compromised by his private interest since his private goal became to close on the property and further his own interest, rather than seeking to have the State acquire the property. Secondly, because of his interest in the option to purchase Cooper's Point, the Respondent was unable to exercise unimpeded discretion as to the best possible recommendation on what course of action the City should follow in getting the County involved with a direct acquisition effort.
16. In rebuttal, the Respondent presents the following argument. He had fulfilled his duties regarding the CARL nomination and had worked to see that D.N.R. properly appraised Cooper's Point. At the time he acquired the option he had no further public duties regarding the property, since the City's role in the CARL process had been completed. His December 2nd memorandum was accurate, contained no misrepresentations, and was not influenced by his option because he was not under financial or time pressures. Because the City did not intend to spend any of its funds to purchase Cooper's Point until after he disclosed his private involvement in January, 1987, that involvement did not conflict with the City's attempt to purchase Cooper's Point. He never intended to act in a regulatory role regarding the property, as he expected to resign before that would occur, and he was not called upon to act in a regulatory role. In short, the Respondent argues, the one-time transaction could not constitute a "frequently recurring" conflict of interest and his public duties were not impeded because he was advised that he did not have to disclose until being called upon to act in a regulatory role and because his duties regarding Cooper's Point had ended.
17. Notwithstanding these arguments, the Respondent's December 2nd memorandum containing his status report and recommending a course of action for the City evidences his continuing public duties regarding the City's effort to have Cooper's Point acquired by the public. There is no evidence that the Respondent was relieved of his duties regarding the CARL process or regarding Cooper's Point until the City Manager did so following the Respondent's January, 1987, disclosure. As the City at that time wanted the State to purchase Cooper's Point through CARL, and the CARL process had not been completed, it cannot be concluded that the City's role in the CARL process had been completed.
18. The Respondent's failure to disclose his interest and involvement in Cooper's Point in his December 2nd memorandum clearly evidences the conflicting nature of the contractual relationship through which he had an interest in the purchase of Cooper's Point. The memorandum purports to provide an update of the status of Cooper's Point and to objectively recommend a course of action, while intentionally failing to disclose the true status of the property and failing to note that the recommended course of action would be delayed, at the very least, by the Respondent's outstanding contract to purchase, and would be mooted if the Respondent were able to fulfill his objective. In addition, it appears that there were some financial and time pressures on the Respondent as there were deadlines imposed by the contract and the original investors wanted out of the deal. As found above, the memorandum was influenced by the Respondent's private interests and was not an accurate representation of all he knew about Cooper's Point at the time.
19. Moreover, the City's acknowledged goal was public ownership of Cooper's Point; at the time the Respondent acquired an interest in the contract to purchase that property both his intent and his contractual obligation conflicted with his employer's goal. Although it appears true that the Respondent never acted in a regulatory role regarding Cooper's Point while negotiating for its purchase or after acquiring the contract, the City's involvement and goals for the property were not just regulatory but entailed the purchase of the property by the public.
20. Once he acquired his interest in the contract to buy Cooper's Point, the Respondent was placed in the position of having to serve two masters with conflicting interests. As observed by the Florida Supreme Court in City of Coral Gables v. Coral Gables, Inc., 119 Fla. 30, 160 So. 476, 479 (1935),
No principle of law is better settled than that the same person cannot act for himself and at the same time with respect to the same matter as the agent of another whose interests are conflicting. The two positions impose different obligations, and their union would at once raise a conflict between interest and duty and, constituted as humanity is, in the majority of cases duty would be overborne in the struggle.
The same principle holds true even in the private sector. See Farber v. Servan Land Company, Inc., 662 F.2d 371 (5th Cir. 1981), where the president and vice-president of a corporation purchased property which the corporation had intended to acquire.
21. The Respondent argues that reliance on advice of counsel is a defense to a possible violation of Section 112.313(7)(a). However, that provision of the Code of Ethics does not contain any requirement of proof of intent. Moreover, as found in the findings of fact and as discussed in greater detail below, the Respondent's reliance on advice of counsel was not in good faith.
22. Accordingly, the Respondent's interest in 1986 and 1987 as a beneficiary of the land trust which had acquired the contract to purchase Cooper's Point was a contractual relationship which would impede, and in fact did impede, the full and faithful discharge of his public duties as an employee of the City of Clearwater, in violation of Section 112.313(7)(a), Florida Statutes.
Misuse of Public Position [Section 112.313(6)]
23. With respect to an alleged violation of Section 112.313(6), Florida Statutes, the Advocate must establish by a preponderance of the evidence that:
a. The Respondent was a public officer or employee;
b. The Respondent used or attempted to use his official position or any property or resource which may be within his trust, or performed his official duties;
c. Such action on the part of the Respondent was for the purpose of securing a special privilege, benefit, or exemption for himself or others; and
d. Such action on the part of the Respondent was done "corruptly," that is:
(1) Done with a wrongful intent, and
(2) For the purpose of obtaining or compensating or receiving compensation for any benefit resulting from any act or omission of a public servant which is inconsistent with the proper performance of public duties.
24. Regarding this alleged violation, the Advocate argues that the Respondent's preparation of his December 2, 1986, memo to the City Director of Parks and Recreation was a misuse of the Respondent's official position for the purpose of securing a special benefit for himself and others (1) by failing to disclose his interest in Cooper's Point when reporting on the current status of the properties in question and (2) by recommending that the City not get the County involved in a direct acquisition proposal and that the City let the state CARL nomination run its course.
25. On the other hand, the Respondent argues that his reliance on the advice of counsel negates any finding of corrupt or wrongful intent. Further, he argues that there has been no showing that he used his official position or resources not available to the general public in an effort to acquire a special benefit, as any information or resources he used were public and as he never used his position to contact the owners, who were not aware of his involvement as a public employee or otherwise. He also argues that his failure to disclose his interest in the December 2nd memorandum was not influenced by financial or time pressures and that any action or inaction by the City resulting from the memorandum had no bearing on the status of his option. Finally, he argues that his recommendations in that memorandum were not proven to have been motivated by his fear of losing his option rather than his honest evaluation that the need for County funds was greater for the properties other than Cooper's Point.
26. In preparing his December 2nd memorandum and making the recommendations contained in it, the Respondent used his official position and performed his official duties. His superiors with the City called upon him to report on the status of Cooper's Point and to make recommendations because of his public position and his familiarity with that property. Both the City Manager and the Parks and Recreation Director relied on the advice contained in his memorandum.
27. By failing to disclose his contract to purchase Cooper's Point when reporting on the status of the property and by recommending that it was premature to contact the County and that the CARL process should be left to run its course, the Respondent acted for the purpose of securing a special privilege or benefit for himself and the other beneficiaries of the land trust. The Respondent feared losing his employment with the City if he disclosed his interest in Cooper's Point; at the time of the memorandum he wanted to maintain his employment. Therefore, the nondisclosure of his interest benefited himself. He knew that the CARL process was slow and cumbersome. By recommending that the State be allowed to proceed and that the County not be approached regarding Cooper's Point, he gained time to solidify his position regarding the purchase through exploring development possibilities and acquiring new financial backing. This benefited both himself and the other beneficiaries of the land trust because if the deal had fallen through, he and the others not only would fail to realize a profit, but also would stand to lose money under the contract. Contrary to the Respondent's assertion, there were some financial and time pressures.
28. The Respondent acted with wrongful intent. His failure to disclose his outstanding contract for the purchase of Cooper's Point in the face of his superior's request for information about the status of the property was a willful, deliberate, and intentional act, amounting to an intentional misrepresentation, especially when contrasted with his disclosure of an existing option on other property. Respondent argues that he was acting on the advice of counsel, which he understood to be that he was not required under any ethics provisions to disclose his interest in Cooper's Point until he both acquired an ownership interest in the property and was called upon to act in a regulatory capacity regarding the property.
29. This argument fails for two reasons. First, the Respondent's obligation to inform his superiors about the true status of Cooper's Point arose simply because his employer made the inquiry, just as certainly as if his employer had asked him directly whether he had any private interest or involvement in Cooper's Point. This was a duty which arose independent of any ethical obligation imposed on him by statute, rule, or policy. His failure to disclose under these circumstances constituted a deliberate misrepresentation of the status of the property, a misrepresentation from which he sought to benefit.
30. Secondly, the Respondent's argument regarding his reliance on the advice of counsel fails because his reliance was not in good faith. Reliance on advice of counsel is a defense to allegations which require a finding of willfulness or corrupt intent, but only if the reliance is in good faith. Good faith reliance requires that the individual must have fully and honestly laid all the facts before his counsel [Williamson v. United States, 207 U.S. 425, 453 (1908)], that he must have fully disclosed to the attorney all facts material and pertinent to the rendition of the legal advice [Note, "Reliance on Advice of Counsel as a Defense in Corporate and Securities Cases," 62 Va.L.Rev. 1, 19 (1976)].
31. Here, however, the Respondent failed to advise the City Attorney of any of the actual facts of his situation. Instead of asking for legal advice about his particular situation, the Respondent asked a general question and received general advice. For all he told the City Attorney, the Respondent might have contemplated purchasing a corner lot to build a convenience store instead of property which he had labored for years to bring into public ownership. The Respondent did not disclose fully to the City Attorney when seeking legal counsel and he did not disclose fully to his employer when providing the recommendations of his December 2nd memorandum, but he did disclose fully to the Semblers when he sought additional financial backing. Only when the Semblers required him to do so did he finally reveal his private interest in Cooper's Point to his employer. Not only do these facts negate the Respondent's assertion of good faith reliance on advice of counsel, but his failure to disclose fully when seeking legal advice also tends to show his wrongful intent--from the outset he intended to conceal his involvement with Cooper's Point until he was in a position to resign his City employment and pursue his private development. The conclusion that the Respondent failed to disclose material and pertinent facts when seeking legal advice is not simply a result of hindsight; the Respondent knew from the outset that his private involvement with Cooper's Point would create a potential conflict of interest with his City employment.
32. The Respondent acted for the purpose of obtaining a benefit, as described above, resulting from both an act and an omission that were inconsistent with the proper performance of his public duties. The Respondent's omission of not disclosing his involvement with Cooper's Point was inconsistent with the proper performance of his public duties because his duties required him to inform his employer fully of the status of Cooper's Point when asked; his failure to describe the property's true status misrepresented the situation to his employer. His recommendation for City inaction was inconsistent with the proper performance of his public duties; he knew that the State was preparing to renegotiate with the owners and he knew that his recommended course of action (to continue to allow the State's purchasing efforts to proceed) would be mooted if he were to purchase and develop the property or would be delayed, at the least, by his outstanding contract to purchase.
33. Accordingly, the Respondent violated Section 112.313(6), Florida Statutes, by failing to disclose his private interest and involvement in Cooper's Point in his December 2, 1986 memorandum and by recommending that the City allow the CARL process to run its course and not approach the County about purchasing Cooper's Point.
34. The Advocate's second argument is that the Respondent violated Section 112.313(6) through misusing his official position by omission, by failing to notify the City of his ownership interest prior to the request to prepare the December 2, 1986 memorandum. The Advocate notes that the Respondent's public duty and responsibility to the City was the furtherance of the CARL acquisition of Cooper's Point. However, he observes, the Respondent actively began to pursue the acquisition of Cooper's Point in competition with the State without informing his supervisors or asking to be removed from this responsibility.
35. In order to find a violation of Section 112.313(6), it must be found that the Respondent used or attempted to use his official position or any property or resource within his trust, or performed his official duties. The Advocate argues that this is met by the Respondent's omission, his failure to disclose, rather than by any affirmative action taken by the Respondent.
36. Usually it is difficult to perceive a use or attempted use of official position or the performance of official duties where a public officer or employee fails to take some action in his official capacity. However, where the officer or employee has an affirmative duty or obligation imposed on him by virtue of his official capacity, the failure to take action may constitute the use of position or performance of official duties. In addition, the failure to take discretionary action when an official has the legal authority in his official capacity to act could constitute the use of official position or performance of official duties. This view is buttressed by the statutory definition of the term "corruptly," which prescribes that the benefit must result from "some act or omission of a public servant which is inconsistent with the proper performance of his public duties." [E.S.]
37. Nothing in the record of this proceeding indicates that prior to the time he was asked for his recommendation on approaching the County about purchasing Cooper's Point, the Respondent was involved in a situation where he was authorized in his official capacity to take some discretionary action requiring disclosure of his private involvement with the property, but failed to do so to his benefit. Therefore, the question here is whether the Respondent had an affirmative duty to disclose to his employer, and, if so, when did that duty arise?
38. Such an affirmative duty to disclose could arise in one of two ways. First, his employer could have asked him to disclose or asked him to take some action that necessitated disclosure in order to perform that action correctly. Secondly, there may have been an affirmative duty to disclose imposed upon him, for example, by a statute, ordinance, or personnel rule or regulation.
39. As noted above, at least when the Respondent was asked about the status of Cooper's Point he had an affirmative duty to disclose his contract to purchase in order to fully apprise his superiors of his knowledge of the status of the property. This was a duty owed to his employer simply because his employer made the inquiry, a duty which arose independently of any ethical standards imposed by law. However, it has not been shown that the Respondent at any earlier time had been asked to make a report or to take any action which would have necessitated his disclosing his interest in order to fully comply with what was asked of him by his employer.
40. Nor has it been proven that the Respondent had an affirmative duty specifically imposed upon him by the Code of Ethics for Public Officers and Employees or by any local code, rules, or regulations to disclose the negotiations or to disclose the contract prior to the request for his December 2nd memorandum. This is not to say that it was permissible for him to have acquired his interest in Cooper's Point; as found above, that interest was in violation of Section 112.313(7)(a), Florida Statutes.
41. Even assuming, however, that there were a provision in the City's code of ethics or personnel rules that specifically would have required the Respondent to disclose the negotiations or the contract before he was asked to prepare the December 2nd memorandum, in order to prove that the Respondent acted "corruptly" it would have to be shown that he was aware that the requirement existed. However, it was not proven that the Respondent was aware of any provision of the City code or personnel rules that would have required him to disclose his private involvement with Cooper's Point prior to the time he prepared his December 2nd memorandum.
42. Accordingly, the Respondent did not violate Section 112.313(6), Florida Statutes, by failing to notify the City of his ownership interest prior to the request to prepare his December 2, 1986 memorandum.
Having concluded that the Respondent has violated the Code of Ethics for Public Officers and Employees, it is necessary to consider an appropriate penalty for the violations. Of the penalties provided for violations of the Code of Ethics, only the following three are potentially applicable to a public employee who left his position after committing a violation: a civil penalty not to exceed $5,000; restitution of any pecuniary benefits received because of the violation committed; and public censure and reprimand. Section 112.317(1)(b)6, 7, and 8, Florida Statutes.
Research has provided no judicial cases construing the language of Section 112.317(1)(b)7, Florida Statutes, which provides: "Violation of any provision of this part . . . shall . . . constitute grounds for and may be punished by . . . [r]estitution of any pecuniary benefits received because of the violation committed." Although the Commission has recommended restitution in several previous cases, all of these cases have involved benefits received by the officer or employee at a cost to his agency. Further, all but one of these cases were by stipulation, wherein the officer or employee agreed to make payment directly to his agency. The cases of In re Ralph Miller, 3 FALR 1084-A (1981); In re Cary Holland, 5 FALR 1342-A (1983); In re Robert Grafton, 5 FALR 1572-A (1983); In re Jack Vinson, 5 FALR 1573-A (1983); In re Coy Harris, 6 FALR 6196 (1984); and Complaint No. 84-97, In re Lewis Bowman; were by stipulation and the recipient of the payment was not contested. Similarly, although the case of Complaint No. 86-141, In re Jack Highsmith, was not based on stipulation, it was not contested by the respondent, so the issue of the recipient of the penalty also was not contested. Thus, this is a case of first impression involving a benefit impermissibly received by an officer or employee which did not also involve damage or loss to the agency.
As in most cases of statutory interpretation, the language used by the Legislature is the most precise guide to legislative intent. Had the Legislature simply provided that "restitution" could be an appropriate sanction, it appears that the case law cited by the Respondent would require that the amount of restitution be measured by the amount of loss or damage suffered by the City and that the amount should be paid to the City. However, the Legislature chose to qualify the word "restitution" by the lengthy phrase "of any pecuniary benefits received because of the violation committed," thus indicating that the amount of restitution is to be measured by the benefits received by the Respondent rather than by any loss or damage suffered by the City. Construing the statute otherwise would make this qualifying phrase entirely superfluous.
The appropriateness of this interpretation may be seen in any example of a violation of the Code of Ethics where an official benefits but his agency suffers no loss. If an official learns through his public position confidential information regarding the location of a proposed road and purchases land which later increases in value because of its proximity to that road, his agency will not be harmed regardless of the benefit he receives. If restitution is not measured by the amount of pecuniary benefit to the official and the maximum penalty that could be imposed for the violation is $5,000, then any profit in excess of that amount becomes the inducement to a breach of public trust.
Secondly, restitution is conceived by the Legislature under Section 112.317 as a penalty, not as a remedy. Section 112.317(2) provides:
In any case in which the commission finds a violation of this part and recommends a civil penalty or restitution penalty, the Attorney General shall bring a civil action to recover such penalty. No defense may be raised in the civil action to enforce the civil penalty or order of restitution that could have been raised by judicial review of the administrative findings and recommendations of the commission by certiorari to the district court of appeal. [E.S.]
This provision not only expresses the concept that restitution is a penalty rather than a remedy, but also answers the question of what entity should collect and receive the restitution penalty. Under Section 215.32(2)(a), Florida Statutes, all moneys received by the State from every source whatsoever are to be deposited within the General Revenue Fund, unless specifically provided otherwise by law. Therefore, any restitution penalty collected by the Attorney General pursuant to Section 112.317 should be paid to the State General Revenue Fund.
When the citizens of Florida adopted the "Sunshine Amendment," they sought to assure their right to secure and sustain the public trust against abuse by providing:
Any public officer or employee who breaches the public trust for private gain and any person or entity inducing such breach shall be liable to the state for all financial benefits obtained by such actions. The manner of recovery and additional damages may be provided by law. [Article II, Section 8(c), Florida Constitution.]
This language, although adopted by the people after the Legislature had adopted Section 112.317(1)(b)7, is remarkably similar and clearly provides for liability to the State for all financial benefits obtained, not for liability to the agency of the officer or employee for damages or loss suffered by that agency.
Contrasting with the penalties provided in Section 112.317 is the remedies section of the Code of Ethics provided in Section 112.3175, Florida Statutes, which authorizes the voiding of contracts executed in violation of the Code of Ethics. Although the Respondent's arguments regarding the failure to prove loss, damage, or prejudice to the City resulting from the Respondent's actions and estoppel on the part of the City to claim any of its purchase price for Cooper's Point might be relevant to the remedies provided in Section 112.3175, they simply are not relevant to the imposition of a restitution penalty payable to the State under Section 112.317.
The final factor in determining the appropriateness of a restitution penalty relates to causation; restitution is provided for "any pecuniary benefits received because of the violation committed." The Respondent profited through the sale of his interest in Cooper's Point by the amount of $149,985.00 (the amount he received from the sale of his limited partnership interest less the amount he paid for that interest). The Respondent also received $50,000.00 for consulting and management services regarding the development of Cooper's Point under a consulting contract between his corporation, Environmental Equities, Inc., and Cooper's Point Partners, Ltd.
The profit realized by the Respondent from the sale of Cooper's Point to the City and the County resulted from his violation of Section 112.313(8), which prohibited his use of information not available to the general public for his private gain, and from his violation of Section 112.313(7)(a), which prohibited him from acquiring a contractual interest in the purchase of Cooper's Point. Without the disclosure and use of this information and without his interest in the contract to purchase, the Respondent would not have acquired the interest in Cooper's Point which led to his share of the profits. Further, the Respondent's violation of Section 112.313(6), through his nondisclosure and recommendation in his December 2nd memorandum, contributed to his ability to gain from the sale of the property by allowing him time to solidify his position regarding the purchase through exploring development possibilities and acquiring new financial backing. Therefore, it would be appropriate to recommend that a restitution penalty in the amount of $149,985.00 be imposed against the Respondent, as being pecuniary benefits he received because of the violations committed.
The Advocate also suggests that restitution of an additional $50,000.00 be recommended, as the amount received under the Respondent's consulting contract with the Sembler controlled partnership. The question is not whether this contract was in violation of Section 112.313(7), Florida Statutes, as this was not at issue at the hearing, but rather is whether the amount received by the Respondent under the consulting contract was because of his violation of Section 112.313(6), (7), or (8), Florida Statutes. Expressed differently, but for these violations, would the Respondent have received the consulting contract and the pecuniary benefit he obtained under that contract? Under the circumstances presented here, the answer to this question must be in the negative. Originally, the land trust agreement contemplated payment to the Respondent in the amount of $50,000.00 for just such services by him. But for the Respondent's acquiring his conflicting interest in the contract to purchase, he would not have been in a position to receive the $50,000.00. Further, the Respondent would not have acquired that conflicting interest if it had not been for his disclosure and use of "inside" information. The omission in the Respondent's December 2nd memorandum allowed his to maintain his employment with the City and gained him time to negotiate with the Semblers. Although the actual contract under which he received the money from the limited partnership was negotiated later with the Semblers, he would not have been in a position to negotiate to provide consulting services regarding the development of Cooper's Point if he had not brought the contract to purchase to the table. Therefore, the moneys received by the Respondent under the consulting contract were pecuniary benefits received because of the violations committed by the Respondent.
In mitigation, the Respondent argues that he acted with the utmost good faith and entered into the contract only after seeking the advice of counsel, that it is entirely speculative whether the City was damaged by his actions, that any violation of Section 112.313(7) was merely technical, that he was motivated by a genuine desire to protect and preserve the environment of Cooper's Point, and that he did not purchase the property with the intent of holding it out for ransome. It is admittedly to the Respondent's credit that, having received information from Mr. King regarding the current status of the CARL process, he relayed that information to his employer and then to D.N.R. in an attempt to get the CARL process back on track.
However, once having decided to purchase Cooper's Point, the Respondent did not act in good faith. In seeking advice of counsel, he neglected to mention the most salient details; in advising his employer of the status of Cooper's Point, he omitted the most important fact about the status of the property; and if it had not been for pressure applied by the Semblers, he would not have disclosed his interest when he did. Although his desire to protect the environment through assuring public purchase of Cooper's Point clearly was central to many of the Respondent's actions, it took a back seat to his personal gain once he decided to acquire the property himself.
These are not simply technical or inadvertent violations of the ethics laws. The Respondent disclosed and used information gained through his public position to acquire an interest that conflicted with the proper performance of his public duties, and then used his public position to conceal his interest and mislead his employer. Regardless of whether the Respondent acted to the detriment of his employer, and there was not sufficient proof of how the City was damaged or the amount its loss, he used his official position to enrich himself.
For these reasons, it is recommended that the final order of the Commission on Ethics recommend to the City of Clearwater that the Respondent pay a civil penalty of $5,000.00 per violation and pay a restitution penalty in the amount of $199,985.00. Under Section 112.324(4)(c), Florida Statutes, the Commission's penalty recommendation should be made to the "governing body or appointing official" of a city employee.
Based upon the foregoing findings of fact and conclusions of law, the undersigned Hearing Officer recommends that the Commission on Ethics enter a final order and public report finding that the Respondent, Michael W. Kenton, has violated Sections 112.313(6), 112.313(7)(a), and 112.313(8), Florida Statutes, and recommending that a civil penalty be imposed upon the Respondent in the amount of five thousand dollars ($5,000.00) per violation, for a total of fifteen thousand dollars ($15,000.00), and that he be ordered to pay a restitution penalty in the amount of one hundred ninety-nine thousand, nine hundred and eighty-five dollars ($199,985.00).
ENTERED and respectfully submitted this _____ day of August, 1989.
Hearing Officer and Member
Commission on Ethics
Copies furnished to:
Mr. Kenneth L. Connor and Ms. Debra A. Zappi,
Attorneys for Respondent
Mr. Craig B. Willis and Ms. Ann Cocheu,
The following are rulings on the proposed findings of fact submitted by the parties:
Advocate's Proposed Findings of Fact
6. Accepted to the extent noted in paragraph 7; otherwise rejected as not supported by the cited testimony.
10. Accepted to the extent noted in paragraph 4; otherwise rejected as not supported by the decision cited.
13. Accepted, except that the "cc" on the letter does not necessarily indicate that the Respondent also received a copy of the title search. However, it is recognized that the Respondent at least would have had access to these materials, given his responsibilities at the time regarding Cooper's Point. T 177-78.
25. Accepted, except where subordinate or irrelevant to facts found.
26. Accepted, except that it was not clear that they met with other individuals (plural).
31. Accepted, except that it was not proven by a preponderance of the evidence that the Respondent did not tell "anyone else" about the access issue.
39. Accepted, except that it does not appear that the initial offer was made in Murchison's name.
40. Accepted, except that the Respondent eventually disclosed his interest in January, 1987.
42. Accepted, except that a preponderance of the evidence shows that the meeting took place in August.
55. Rejected as being cumulative and unnecessary to the determination of the issues.
61. Rejected as irrelevant and hypothetical.
Respondent's Proposed Findings of Fact
3. Accepted, although subordinate to facts found in paragraph 9, except that it was not proven by a preponderance that the City became "cognizant" of Cooper's Point in 1972.
4. Rejected. Although it was proven that at various times since 1972 the owners had expressed a desire to sell to the State or others, there was not sufficient evidence to conclude that Cooper's Point has been "on the market" continuously in the sense of the owners actively pursuing a sale through listing the property or otherwise.
5. Accepted, except that the entire property was not downzoned to single-family residential.
7. Accepted to the extent noted in paragraph 18; otherwise, rejected as not supported by the record.
8. Accepted first two sentences; remaining three sentences accepted to extent noted in paragraph 8 and otherwise rejected as being based on hearsay.
9. Accepted, except that it is not clear from the record citations that the property was put on the CARL list in 1984.
10. Accepted to the extent noted in paragraph 22; as far as could be determined from the record, the Respondent's only information about the specific values assessed by D.N.R. for any of the Cooper's Point properties came from King.
12. Rejected first two sentences, except as expressed in paragraph 26; otherwise, accepted. No evidence was presented which would indicate that Ms. McMullen actually contacted, or shared the State's offer with, any potential purchaser or member of the general public other than Mr. King. Because Ms. McMullen's statement about contacting "those people" who had shown an interest in the property was uncorroborated hearsay and because she may have made the statement in order to have King believe that others were interested in purchasing Cooper's Point, thereby inducing him to make a higher offer, I do not find that this alleged statement reasonably justifies a finding that any person other than Ms. McMullen and Mr. King were aware of the State's offer to Ms. McMullen.
14. Accepted first three sentences; final sentence accepted to the extent noted in paragraph 68, but not supported by record citation, where the witness's answer was stricken on the motion of Respondent's counsel.
15. Accepted, except where subordinate to facts found; also the statement about the owners expressing an interest in selling was hearsay.
16. Accepted first four sentences, except where subordinate to facts found (specifically, it was proven that Murchison initiated the idea of purchasing Cooper's Point, not the Respondent); last sentence accepted to the extent noted in paragraph 49 and otherwise rejected as not supported by a preponderance of the evidence.
17. Accepted, except to the extent subordinate to facts found; also, it was not proven that "whenever" the Respondent had a legal question, he relied on Murchison.
18. Accepted to the extent noted in paragraph 38; otherwise, rejected as not supported by a preponderance of the evidence.
19. Accepted to the extent noted in paragraph 40; otherwise, rejected as subordinate to facts found or not supported by a preponderance of the evidence.
20. Accepted to the extent noted in paragraph 39; otherwise, rejected as not supported by a preponderance of the evidence.
21. Accepted, except to the extent subordinate to facts found.
22-25. Accepted, except to the extent subordinate to facts found.
26. Accepted to the extent reflected in paragraph 50; otherwise, rejected as not supported by a preponderance of the evidence.
27. Accepted, except that the phrase "in the past" is not supported by the record.
28. Accepted first sentence; rejected second sentence as irrelevant, to the extent it relates to the reasons the Respondent made his recommendation regarding the other two properties, and not supported by a preponderance of the evidence, to the extent it relates to the reasons the Respondent made his recommendation regarding Cooper's Point.
29. Rejected as not supported by a preponderance of the evidence, except to the extent found in paragraph 55.
30. Accepted to the extent noted in paragraph 66; otherwise, rejected as not supported by the record.
31. Accepted, except to the extent subordinate to facts found.
32. Accepted, except that the meeting took place in January.
34. Accepted first two sentences, except to the extent subordinate to facts found; accepted last three sentences to extent noted in paragraph 68, otherwise, rejected as not supported by a preponderance of the evidence.
36. Accepted, except to the extent subordinate to facts found; also, the City's being "obstreperous" was a conclusory statement by the witness not supported by the record evidence except to the extent noted in paragraph 71.
37. Rejected as hearsay and as not being supported fully by the testimony cited.
38. Accepted first two sentences; last sentence rejected as irrelevant.
39. Rejected first clause as not being supported by record citations; accepted second clause.
40. Accepted to the extent found in paragraph 71; however, it does not appear from the record citations that the City was aware of the extent of the Respondent's interest or the amount of profit he realized from the sale.