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Real World Ethics_Diaz


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2010 Fall Seminar presentation - Roxanne Diaz, Richards, Watson & Gershon

2010 Fall Seminar presentation - Roxanne Diaz, Richards, Watson & Gershon

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  • Describe requirement
    MCLE Cert
    Compliance Cert
    Hold questions
    2 minutes
  • Officials charged for misappropriation of public funds in connection with travel expenses to New York. The officials traveled to New York for 6 days at a time in effort to get a higher bond raing. Prosecutors allege that during the trip the officials bought tickets to Broadway shows and sporting events that had nothing to do with city business at a cost of $14,000
  • Former mayor and an attorney was convicted on corruption charges for steering no-bid city contracts worth hundreds of thousands of dollars to a consulting firm he secretly owned. Federal jury found him guilty of 35 counts of extortion, fraud, money laundering and making flase statements to investigators. He was sentenced in 2005 and his conviction was upheld and thus re-sentenced to 15 ears.
  • Pled guilty to 4 misdemeanor counts of failing to file campaign funds and failure to deposit and account for cash given to him. Business and political leaders testified before the grand jury and told them the councilman told contributors that he was using the money for his re-election when he used it to pay for his legal defense on a previous charge of filing a false police report. Also, defendant used campaign fund to pay for a cell phone under another person’s name and failed to report it.
  • The two Los Angeles city workers accused of defrauding the Department of Water and Power by inflating the cost of supplies and then pocketing the difference purchased furniture and other materials for the renovation of offices used by Mayor Antonio Villaraigosa's five-member DWP board, officials said Friday.
    Prosecutors allege that Fonooni and Carone engaged in a scheme over a six-year period in which they purchased at least $3 million worth of supplies for the DWP from dummy companies that marked up the cost by 10% or more. The two men, as well as a third defendant, Troy Mitchell Holt, 45, face felony charges of conspiracy, conflict of interest and misappropriation of public funds. Fonooni and Carone made the purchases using roughly a dozen of the DWP's "P-cards," or purchasing cards, which had a monthly spending limit of $20,000. Because those cards did not allow a single expenditure to exceed $2,000, the defendants were forced to split purchase orders into smaller pieces, prosecutors said.
  • Convicted on charges stemming from accusations the mayor along with two others accepted payment in return for support of a developer’s mall project. The amount--$13,100. She plead out to 1- felony charges of bribery, perjey. A different councilmember who was accused of taking $5,000 in unreported donations from the same developer, pleased guilty to a misdemeanor campaign finance violations and resigned from office.
  • Former Mayor and a Juvenile Court Judge and an ordained clergyman Pled guilty to a misdemeanor conflict of interest charge in connection with his acceptance of a $500,000 loan through a city housing program. (He created, voted and approved a law that would give himself a loan). Misappropriation of public funds (Penal 424 and 1090) It was alleged that some of the funds were used to pay off his house and the rest of the funds went into his bank account.
    Councilmember pled guilty to 1 felony count of perjury stemming from a false campaign report he filed. Lujan, 33, is accused of failing to report money from a December 2008 fund-raiser. He also failed to report how his campaign account spent the money, according to the criminal complaint. After the hearing, Lujan's attorney, Glen Jonas said his client was singled out for a minor infraction. "If there was ever a benign form of perjury, this was it," Jonas said.
  • Former Mayor and a Juvenile Court Judge and an ordained clergyman Pled guilty to a misdemeanor conflict of interest charge in connection with his acceptance of a $500,000 loan through a city housing program. (He created, voted and approved a law that would give himself a loan). Misappropriation of public funds (Penal 424 and 1090) It was alleged that some of the funds were used to pay off his house and the rest of the funds went into his bank account.
    Councilmember pled guilty to 1 felony count of perjury stemming from a false campaign report he filed. Lujan, 33, is accused of failing to report money from a December 2008 fund-raiser. He also failed to report how his campaign account spent the money, according to the criminal complaint. After the hearing, Lujan's attorney, Glen Jonas said his client was singled out for a minor infraction. "If there was ever a benign form of perjury, this was it," Jonas said.
  • So many messages.
    Unfortunate incident. It is July 30th 2003.
    Mayor of Carson DARELL SWEENEY. Stood at front steps of courthouse.
    Pled GUILTY to soliciting bribes, with two other council members in exchange for votes on a waste hauling project.
    Some things to note:
    Headline. No one wants to ever be associated with corruption
    SECOND: Wife. She is shattered and hurt. – a symbol of the family toll of unethical behavior. When you are involved in corruption, your family and friends suffer. There is so much SHAME associated with these activities. She was dragged though so many proceedings.. Name will have a stigma.
    THIRD: . It is also a symbol of the community toll as well – Community. Carson suffers. City name is tainted. This affects $$$.
    This city actually has had periodic scandals. Carson’s reputation affects business activities. No one wants to do business with them after a while. Less business, less revenue..which affects how many programs and activities can
  • These principals are from the Josepson Institute of Ethics.
    One key point is let the public see what you are doing and why—transperency. Secrecy makes it look like you’re hiding something – and that you have reason to do so. If you et the public see what you’re doing and why. They’ll have greater confidence in the decision.
    Another point is is appearance. You safeguard public confidence by avoiding the appended of impropriety. However, appearance equals reality. Many of the laws in California regarding conflicts of interest emphasize the avoidance of the appearance of impropriety. It cares about appearance as much as actual behavior.
    We need to instill confidence in the public. We need to avoid situations where it may appear that there is misconduct.
    This is a common theme. You will see it over and over again in the law.
    You may be skeptical. You don’t need laws that focus on avoiding impropriety. You can make the right decision. You shouldn’t have to stay out of a decision just because there is a POTENTIAL for misconduct. You have a moral compass and you can do the right thing.
    However, the law is set up so that we avoid the appearance of misconduct. Where there is an appearance of misconduct, the fact of whether any actually occurs is immaterial.
  • Press cares We have seen clippings.
    FURTHER PROOF PRESS CARES. Every day, crimes are committed in LA. Rape, murder, theft….many proceedings. The press doesn’t cover these. They cover political scandals, however. ALWAYS. We certainly are seeing that.
    Why does the Press care?
    Because people care.
    Stores of political scandal sell. But the bottom line: We want to know. SO…
    If people care, the Legislature cares. Reportings of misconduct was the very reason AB 1234 was adopted that requires elected officials to have 2 hours of ethics training.
    We also care because violations can result in three things:
    ONE: Invalidating agency actions.
    TWO: There may be civil penalties.
    THREE: There may be criminal penalties.
  • So what is the relationship between the law and ethics.
    Ethics are aspirational. We hope to get to it. Law is enforceable. It is a set of rules with penalties for violation.
    In other words, law is the FLOOR, or minimum.
    We can’t always attain ethical conduct– we reach for it.
    Legal ALSO does not always mean right. In other words, just because it is legal does not mean that it is right.
    Perception matters. In politics, perception = reality. If there is a perception of UNFAIRNESS, unethical conduct, it snowballs into a stronger perception.
    Thus, we need to make sure we create a perception of fairness and open government, honest and integrity
  • So what are the lessons learned from this situation and the others that are following in the wake of Bell? Is it NOT ABOUT THE OBVIOUS.
    For example Bribes…Everyone knows YOU CANNOT TAKE BRIBES. It is against the law.
    The Carson City Council members all pled guilty to federal charges of soliciting and accepting bribes of about $100 k each for their votes on a waste hauling contract.
    Interesting thing is they accepted a promise that they would be paid $100,000 over a 6 year period (not even up front) so for about $15,000 a year—allegedly, they threw away their lives and families and are doing prison time and they were arrested at home in the pajamas in front of their families.
  • What we take away, is that it’s all about the basics. In general what we are reading about (although it happens) are not about bribes but about THE BREAKDOWN of the public’s trust in its government. The basics are about integrity, trust, honesty and open government. So what I would like to do is go through quickly through the laws that touch upon these basic principals.
    It is also important to point out that the law is aimed not just at actual misconduct, but at the perception of misconduct, as well as temptation
    Actions that seem “right” may still be illegal
    As public officials we cannot afford to be inattentive- This is risky from both a legal perspective and a political perspective.
  • We are hearing a lot about contracts-the Rizzo’s contracts, other employment or consultant contracts, and who signed them and why that matters. According to reports, the contracts had a signature line for the Mayor but were signed by a councilmember.. It is not clear whether that signature was forged. They may not have been approved by the council or placed on an agenda. So the lesson here revolve around basic procedures for approving contracts.
    First it is important to strictly comply with the applicable procedures for approving and executing contracts. It is well established law, that cities must comply with the law specifying the method of entering into contracts.
    Contracts approved by the Council must be approved in open session. You may not approve a contract in closed session. This includes City Manager contracts.
    Who executes a contract? For general law cities, Government Code 40602 provides the method by which a general law city can enter into a contract. The Mayor is to sign all written contracts unless the council adopts an ordinance that the contract can be signed by an officer other than the mayor. General law cities can use this authorization to adopt ordinances authorizing the city manager or some other designated official to approve binding contracts without specific city council approval. However, the ordinance should provide both the procedure and the types of contracts to which it applies. Any ordinance authorizing a person other than the mayor to sign a contract should make it clear whether that authority applies merely to signing contracts approved by the city council or also includes the authority to enter into the actual contract without city council approval.
    There is also a government code section 54202 which requires a local agency to adopt policies and procedures, including bidding regulations, governing purchases of supplies and equipment by the local agency. Purchases of supplies and equipment by the local agency shall be in accordance with said duly adoptedpolicies and in accordance with all provisions of law governing same.
  • For general law cities there are legal limits on public official compensation and elected public officials may only receive such compensation that the law allows. Council compensation is set by ordinance established to baselines parameters depending on the size of the City. General law cities may increase their baseline salary by up to 5 percent per year from the date of any prior adjustments. When the council votes to increase compensation, the increase takes effect in the future not during the deciding council members’ current term. Elected mayors may receive additional compensation
    This amount compensates city council members for their service on the council,including any commission, committees, boards, etc unless state law authorizes additional compensation.
    If you have a community deveopment commission, commissioner compensation may not exceed $75 per meeting with a maximum of two meetings per month. If tehCD oversees both redeevelopment and housing, then compensation may not exceed $150 per meeting with a max of two meetings per month.
    If you receive compensation as a council member, you must receive 2 hours of ethics training every two years.
  • It is tempting to look at the opportunity to travel and incur expenses as a perk of public office. However, this perk leads to very serious consequences as we have seen by the news headlines. Also, those headlines then tend to give all public officials a bad name and further add to the distrust of public officials.
    AB 1234 provides that a city may reimburse its city officials for actual and necessary expenses incurred in the performance of official dutiesPursuant to AB 1234 a local agency is required to adopt a reimbursement policy for its elected officials and any appointed commissions if the council chooses to reimburse them for actual and necessary expenses. This policy must be in writing and adopted in at a public meeting, specifying the types of occurrences that qualify a city official to receive reimbursement of expenses relating to travel, meals, lodging and other actual and necessary expenses. It is important that the AB 1234 policy is adopted in compliance with the law and once adopted comply with the policy.
    The reimbursement policy specify the reasonable reimbursement rates for travel, meals and lodging, and other actual and necessary expenses. If the city’s reimbursement policy does not specify such reimbursement rates, the city must use the Internal Revenue Service (“IRS”) rates for reimbursement of expenses.
    All expenses that do not fall within the adopted travel reimbursement policy or the IRS reimbursement rates must be approved by the city council in a public meeting before the expense is incurred, except as provided in Government Code
    The city must provide expense report forms to be filed by city officials and this report is a public record. Expenses need to be documented with receipts.
  • AB 1234 requires you to report on your activities for which you received reimbursement at a public meeting either through a written or oral report.
    A question that often comes up is whether your spouses expenses are included. This is somewhat common in the private sector. There is an attorney general opinion that concludes that reimbursement of expenses for your spouse would constitute a gift of public funds because there is no direct and substantial public purpose in paying for the expenses of a public official’s spouse.
    Penalties for misuse of public resources or falsifying expense reports includes civil penalties and criminal prosecution and lifetime bar from holding public office.
    For one of my clients I will randomly review the expense reports of councilmembers –I don’t know if they know that I do that—
    and I work closely with the council secretary and makes sure that she knows the AB 1234 policy. Also, training is imperative that councilmembers understand what expenses are reimbursable.
    When someone starts down the slope of ohh just this once will I seek reimbursement for my manicure—I deserve it—, at some point that snowballs and personal use of public resrouces becomes embezzlement—a form of theft.
  • Some of the headlines involved the use of agency credit cards. The risk of credit card misuse whether intentional or inadvertent is very high. There are some agencies that do not issue credit cards to employees or elected officials. The Association of California Water Agencies has recomened against issuuance of credit cards to water agency board members.
    The best practice if you have a credit card is to NEVER use it for personal expenses even if you will reimburse the agency.
    The law here is the misuse of public funds pursuant to Section 424 of the penal code which provides that if a city officer without authority of law appropriates public money to his or her own use or the use of another or uses public money for purposes not authorized by law, this is a crime and is punishable by imprisionement and disqualifiecation from holding public office.
    In one of the headlines where several officials were charged and found guilty of misuse of public funds had to do with the use of a city credit card for what was found to be personal expenses. That city had a policy that the city credit card was to be used for business related expenses.
    At trial a public official took the stand and stated that golf fees were business related because they reduced his stress and he considered in-room movie charges to be an aspect of his per diem. As for expenses such as car rentals for a friend or dentures for his brother, the testimony was that the public official believed that to the extent they were not City related they were covered on the city’s “Charge on Badge” program which allowed city employees to charge up to a maximum of $500 at participating city businesses by showing their badge and having the City deduct $50 from the employee’s paycheck. The jury did not believe the official’s explaination
    On appeal, the defendants contended that the trial court erred in instructing the jury that restitution or reimbursement for the charges was not a defense. On appeal the court disagreed with this contention and stated that the “crimes were complete when the City credit card was used to make a personal purpose or pay for a personal item or when the defendants failed to promptly rutnr advance funds that were not used.”
    This case has been granted review by the Supreme Court, however, there is another unpublished decision that states reimbursement is not a defense and that statute making it a crime to misuse public resources must be strictly construed.
  • Other headlines discuss charges regarding the use of campaign funds. In general, money raised to support a person’s election may only be used for political, legislative or governmental purposes. It is not okay to spend these monies in a way that confers a personal benefit on a candidate. If there is a personal benefit, it must be directly related to a political, legislative or governmental purpose.
    There is a list of prohibitions regarding use of campaign funds. For example, cannot use campaign funds for business or casual clothes except for speciality clothing like formal wear if this attire is to be worn by the candidate and is directly related to a political, legislative or governmental purpose.
    Cant use funds for gifts unless the gift is directly related to a political, legislative or governmental purpose.
  • There are a number of restrictions regarding use of public resources. Using Public resources for personal or political purposes is illegal. What does this mean?
    Public resources include staff time, office equipments, fax machines, copy machines, computers, office supplies like paper, stamps. Personal use means use of public resources for personal enjoyment, private gain or advantage. And Use means the use of public resources that is substantial enough to result in a gain in advantage for the user—it can be estimated as a monetary value.
    There is a narrow exception for incidential and minimal use of resouces such as an occassional phone call. However, running a phone bank from City Hall for a campaign is prohibited, asking a staff person to mail campaign letters is also prohibited, and asking a city employee to pick up your laundry or watch your children is also prohibited.
    You also cannot solicit campaign contributions from other officials or employees of the entity where you are an elected official.
    As for mass mailings, the law reflects the idea that it is unfair for public officials to use public resources to enhance their visability and name identification with voters. A mass mailing is sending more than 200 substantially similar pieces that contain the name, office or pictures of elected officials except as part of standard letterhead.
    The rule can be complex but one good example is that you cannot send holiday cards to all the residents of the City that were purchased with public money that have your signature or picture on it.
  • Many of you are aware of Government Code 1090. It is the law that states a public official cannot make a contract in which he or she is financially intererest.
    So if you own the local newspaper, you cannot be on the City Council and vote on a contract to advertise in your newspaper. This seems obvious but still the DA is pursuing matters involving the violation of 1090.
  • Many of you are aware of Government Code 1090. It is the law that states a public official cannot make a contract in which he or she is financially intererest.
    So if you own the local newspaper, you cannot be on the City Council and vote on a contract to advertise in your newspaper. This seems obvious but still the DA is pursuing matters involving the violation of 1090.
  • 1 minute
  • 1 minute
    No project area.
    Revolving door – officials can’t lobby City within 1 year
    No local nepotism
  • In conclusion, everyone of us in this room are in leadership roles and we therefore are held accountable not only for our conduct but for the conduct of the organization in which we serve. The Institute for Local Government has a guide to ethics and in it, it states that Leaders need to be able to answer the following time honored questions
    What did you know? When did you know it? What did you do about it? What could you have done to prevent it.
    They quoted Vince Lombardi who once observed that individual committement to a group effort is what makes a team work, a company work, a society work, a civilization work.
    The challenge for any organization’s leaders is to have strategies to inform, inspire and encourage individuallys to act ethically and also hold them accountable when they do not.
  • Some final thoughts about ethics one from the President and the other from the King.
  • I like this picture because of the irony of it. The Political Reform Act (which are the FPPC regulations regarding conflicts of interests) are laws in California because of the Watergate Scandal during the 1970s. Nixon was from CA, many of those associated with the scandal were from CA. There is also irony between the quote and the story regarding the meeting between the President and the King.
    On December 21, 1970, Elvis Presley paid a visit to President Richard M. Nixon at the White House in Washington, D.C. The meeting was initiated by Presley, who wrote Nixon a six-page letter requesting a visit with the President and suggesting that he be made a 'Federal Agent-at-Large' in the Bureau of Narcotics and Dangerous Drugs. He stated in a letter to the President his great concern for our country. He stated “The drug culture, the hippie elements, the SDS, Black Panthers, etc. do NOT consider me as their enemy or as they call it The Establishment. I call it America and I love it. Sir, I can and will be of any service that I can to help The Country out. I have no concern or Motives other than helping the country out.”
    He went on to state
    So I wish not to be given a title or an appointed position. I can and will do more good if I were made a Federal Agent at Large and I will help out by doing it my way through my communications with people of all ages. The President did give him an honorary badge and they had to tell Elvis there was no Federal Agency at Large Badge. The badge is displayed at Graceland.
    In the PS he stated:
    P. S. I believe that you, Sir, were one of the Top Ten Outstanding Men of America also. I have a personal gift for you which I would like to present to you and you can accept it or I will keep it for you until you can take it.
  • Transcript

    • 1. REPRESENTING CALIFORNIA CITIES AND PUBLIC AND PRIVATE ENTITIES SINCE 1954 Roxanne Diaz October 30, 2010 California Contract Cities Association Fall Seminar
    • 2. For Whom the “Bell” Tolls
    • 3. For Whom the “Bell” Tolls
    • 4. For Whom the “Bell” Tolls
    • 5. For Whom the “Bell” Tolls
    • 6. For Whom the “Bell” Tolls
    • 7. For Whom the “Bell” Tolls
    • 8. For Whom the “Bell” Tolls
    • 9. For Whom the “Bell” Tolls
    • 10. Principles of Ethics “Public office is a trust; use it only to advance public interests, not personal gain.” “Safeguard public confidence in the integrity of government by avoiding appearances of impropriety and conduct unbefitting a public official.” “Make decisions on the merits, free from partiality, prejudice or conflicts of interest.”
    • 11. Principles of Ethics “Conduct government openly, efficiently, equitably, and honorably so the public can make informed judgments and hold public officials accountable.” “Honor and respect democratic principles; observe the letter and the spirit of the law.” Source: Josephson Institute of Ethics
    • 12. Why Should You Care?
    • 13. The Relationship Between Ethics and the Law The law is enforceable, while ethical principles are aspirational. The law is the floor for ethical conduct, not the ceiling. Just because it’s legal, doesn’t mean the public will see it as being right. In politics, perception = reality.
    • 14. Not About the Obvious
    • 15. Back to the Basics
    • 16. Contracts  Approved in Open Session  Executed by Mayor  Can Adopt Ordinance for Alternative Authorization  Ordinance to be Clear on Authority  Contracts Approved by Council  Authority to Enter Into Contracts without Council Approval
    • 17. Council Compensation Legal Limit on Public Official Compensation (General Law Cities) Set by Ordinance Increases are Prospective
    • 18. Reimbursements
    • 19. Reimbursements
    • 20. Credit Cards
    • 21. Use of Campaign Funds
    • 22. Do Not Use Public Resources for Political/Personal Purposes
    • 23. Government Code Section 1090 A public official may not “make” a contract in which he or she is “financially interested”
    • 24. Other Laws Conflict of Interest Laws (Form 700) Gift Limit ($420) Gift of Public Funds Prohibition of Incompatible Offices No Free or Discounted Transportation
    • 25. Penalties for the Misuse of Public Funds No reimbursement Restitution to the agency Monetary penalties Own attorneys fees Others’ attorneys fees (for private actions to enforce law) Jail Time
    • 26. Resources Institute for Local Government  Your City Attorney Fair Political Practices Commission 1-800-ASK-FPPC
    • 27. Everyone is Responsible for Ethics What did you know? When did you know it? What did you do about it? What could you have done to prevent it?
    • 28. Thoughts About Ethics in Government “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” — Abraham Lincoln “I don't like people who are in politics for themselves and not for others. You want that, you can go into show business.” — Elvis Presley