Ethics: Advisory Opinion No. 1994-6

Advisory Opinion No. 1994-6
Advisory Opinion No. 1994-6

Outside Teaching By Senior Staff Of The Real Estate
Division Provided To Individuals Subject To
Regulation By The Real Estate Commission

The Honorable Gloria Schaffer, Commissioner of Consumer Protection, has asked the State Ethics Commission to review two prior Rulings (Declaratory Ruling No. 84-A and Advisory Opinion No. 86-6) which allowed senior employees of the Department’s Real Estate Division to teach courses which either serve as a necessary prerequisite to Real Estate licensure or provide required continuing education credit for licensees.  At present, two Division employees, Director Lawrence Hannafin and Assistant Director John Charters, are engaged in teaching both types of courses.

With regard to the licensure prerequisite courses, the State Ethics Commission held that the employees’ apparent total lack of substantive involvement in the process whereby the Real Estate Commission approved the schools and courses, and the removal, in 1982, of the Commission’s statutory authority to approve the instructors, obviated any potential conflict of interests.  State Ethics Commission Declaratory Ruling 84-A (June 8, 1984).

With regard to the continuing education courses, the Ethics Commission held that the Commissioner of Consumer Protection’s stated willingness to assign non-Real Estate Division employees to administer the continuing education program would, again, avoid any potential conflict.  State Ethics Commission Advisory Opinion No. 86-6.  47 Conn. L.J. No. 52, p. 1C (June 24, 1986).

Before this Commission may review, and possibly modify, a prior decision, there must be a change of conditions or other considerations which have intervened and materially affected the merits of the matters previously decided.  Grillo v. Zoning Board of Appeals of the City of West Haven, 206 Conn. 362 at p. 367 (1988).  Applying this standard to the relevant Agency and Real Estate Commission policies and procedures, it is readily apparent that a review of the State Ethics Commission’s earlier Rulings is required.

Specifically, the 1984 Prerequisite Education Ruling was based, in substantial part, on the fact that the Real Estate Division staff, including its most senior members, played no evaluative or discretionary role in the review of schools or course offerings.  Rather, the citizen-commissioners who served on the Real Estate Commission reportedly performed all necessary oversight functions, except strictly clerical duties.

Since the issuance of the 1984 Ruling, however, written information received by the State Ethics Commission clearly indicated that, during the mid-1980s, the Division’s Deputy Director was involved in evaluating the prerequisite education program offered by a college in competition with one of his outside employers.

At present, according to Real Estate Commission Chairperson David D’Amore, the Commission does not rely upon the substantive assistance of its Director and Assistant Director concerning such accreditation decisions.  Chairperson D’Amore stated that the Commissioners made all final determinations, and further emphasized that any perceived staff attempt to favor an outside employer or disadvantage a competitor would be totally counterproductive.  A Division staff member, directly subordinate to the Director and Deputy Director, is, however, involved in the process.  It is unarguable, under State Ethics Commission precedent, that staff involvement in the decision making process, by the individual or a subordinate, constitutes impermissible conduct when one’s outside employer, or its competitors, are under review.  See e.g., Ethics Commission Advisory Opinion Nos. 80-11, 41 Conn. L.J. No. 42, p. 30 (April 15, 1980) (“If the initial review has any value at all, it is bound to shape action at higher levels in a number of cases”); 81-18, 43 Conn. L.J. No. 23, p. 43A (December 8, 1981) (“By taking official action affecting a competitor of a firm or individual, a public official or state employee can favor the interests of the Firm or individual.”); and 86-6, 47 Conn. L.J. No. 52, p. 1C (June 24, 1986) (“If members of the Bureau of Licensing and Regulation are allowed to teach continuing education courses, they and their subordinates should not be involved in handling applications for approval, even though their actions may be merely clerical.”  Discussed infra.)

Additionally, although the Real Estate Commission’s authority to approve course instructors was removed in 1982, the Commission retains regulatory authority to “…, without prior notice, visit the school and observe the instruction given to insure proper standards as to method and content of any approved courses.”  Regulations of Conn. State Agencies Sec. 20-314a-11.  Consequently, the Real Estate Division’s staff is placed in the ethically unacceptable position of having the responsibility to review the outside compensated work of the Division’s Director and Assistant Director.

Based on the above facts and cited Opinions and Regulation, a reversal of the Ruling arrived at in D.R. No. 84-A would seem appropriate.

Turning to the 1986 Continuing Education Opinion, that Ruling was based, in large part, on then Commissioner of Consumer Protection Mary Heslin’s stated intention to assign non-Real Estate Division personnel to perform all required duties in support of the Real Estate Commission’s administration of the program.   Current Commissioner Schaffer, however, does not share the opinion that, obviously less qualified, non-Division employees should assist in the administration of the continuing education program in order to allow senior Real Estate Division staff to earn outside income teaching continuing education courses.  To the contrary, in response to an State Ethics Commission request for her views on the matter, Commissioner Schaffer stated that “It is very possible that the passage of time and change in circumstances have caused a need for a change in policy concerning this issue.”  Letter of February 23, 1994 to Commission Counsel Alan S. Plofsky.

Additionally, according to Chairperson D’Amore, in this instance the Division Director and Assistant Director are involved in the approval of entities offering continuing education courses.  And finally, it is uncontroverted that at present (and apparently for a significant period of time) the Real Estate Division employee who is responsible for performing all clerical and technical work required in administration of the program is directly subordinate to the senior staff teaching continuing education courses.  Such conduct directly contravenes the guidelines set forth in A.O. No. 86-6.

In addition to the above enumerated changes in policy and procedure, another significant reason for overruling the Commission’s decision in A.O. No. 86-6 has come to light during our Counsel’s research into the matter.  Specifically, in addition to their outside employment as continuing education instructors, Director Hannafin and Assistant Director Charters also teach an annual continuing education course as part of their official duties.  Consequently, they are in an ethically untenable position.  As the Ethics Commission has previously held, a public servant may not be paid privately for providing educational services he is also providing as part of his State duties.  To do so would clearly impair the individual’s independence of judgment concerning the issue of how extensively to disseminate the free, public educational service; a violation of Conn. Gen. Stat. 1-84(b).  See e.g., State Ethics Commission Advisory Opinion No. 90-15.  51 Conn. L.J. No. 51, p. 2D (June 19, 1990).

That the State Ethics Commission’s staff review of this matter revealed an additional conflict of interest is not surprising.  As long as the Director and Assistant Director continue to teach in areas directly regulated by the Real Estate Commission, conflicts between their outside employment and State responsibilities will undoubtedly continue to arise.  (For example, Chairperson D’Amore has articulated a long-term goal of restructuring the Real Estate Licensure Examination, currently administered by a national testing service, to make the test more relevant to the actualities of real estate work.  However, the Commission’s senior staff would be barred from assisting in this effort, because “inside”, perhaps confidential, knowledge regarding the restructured examination could well provide an advantage to these individuals in their outside teaching.  Similarly, senior staff would often be unable to perform their official responsibilities in support of Agency or Commission proposals to amend the statutes governing the licensure prerequisite or continuing education requirements, because of the potential for a resultant financial effect on their outside employment.)

That it is a relatively easy task to identify multiple current and potential conflicts of interest between the Real Estate Division’s senior staff’s official responsibilities and outside employment is a clear indication of the breadth and depth of the ethical dilemma at issue.  There is, however, an even more fundamental ethical concern that requires reversal of D.R. No. 84-A and A.O. No. 86-6.

In the original Rulings issued in this matter, the Ethics Commission focused exclusively on the possible conflicts of interest created by the Division staff’s outside teaching and the Real Estate Commission’s statutory and regulatory authority over the schools and course offerings related to that teaching.  There is, however, a more far reaching and basic conflict of interest that precludes the outside employment in question, even absent any state regulation of real estate education.

Specifically, on numerous occasions the State Ethics Commission has held that it is an impermissible conflict of interest for state regulatory personnel to accept outside employment in or within the industry or profession they are authorized to regulate.  See, e.g. State Ethics Commission Advisory Opinion No. 88-16, 50 Conn. L.J. No. 15, p. 5D (October 11, 1988).  (The Commission on Human Rights and Opportunities’ Fair Housing Coordinator may not accept outside employment teaching fair housing courses to those she regulates without violating 1-84(b) & (c) of the Code of Ethics.); and Regulations of Conn. State Agencies 1-81-17.  (“Generally, subsection (b) and (c) of Section 1-84 are violated when the public official or state employee accepts outside employment with an individual or entity which can benefit from the state servant’s official actions…”)

In this instance, the Real Estate Commission has broad statutory authority over real estate practices in Connecticut, including the power to suspend or revoke licenses.  Conn. Gen. Stat. 20-311b.  In the exercise of this authority the eight member citizen Commission is, of course, aided in various substantive ways by its full-time senior staff.  Most particularly, in investigating and sanctioning possible violations of the State’s Real Estate statutes the Commission utilizes the Division’s Director and Assistant Director to investigate and present its most sensitive and complex cases.  (Senior Staff also oversees the Division’s Real Estate Examiners’ work on all other cases of possible misconduct.)

As the State Ethics Commission has previously ruled, such authority precludes the public servant from simultaneously offering his services for profit to those he regulates.  Advisory Opinion No. 88-16, supra.  Regardless of the public servant’s honesty or expertise, he is in a position where inadvertent use of office for financial gain in violation of Conn. Gen. Stat. 1-84(c) is, quite literally, inevitable.  It is impossible to ignore, or counteract, the obvious advantage such a person has in offering his compensated services to those whose careers he oversees.  And it is equally impossible to ignore, or counteract, the obvious possibility that Real Estate license applicants or practitioners will select a course offered by the Real Estate Division’s Director or Assistant Director in order to ingratiate themselves with those state officials who possess such significant authority over their profession.  Lastly, allowing the employment at issue creates a situation where many of those coming before the Real Estate Commission will either have chosen or declined the senior staff’s outside, compensated services; thereby unavoidably impairing these regulatory employees’ independence of judgment in the performance of their official duties in violation of Conn. Gen. Stat. 1-84(b).

In summary, major alterations in both policy and practice at the Department of Consumer Protection and the Real Estate Commission dictate a reversal of the holdings in D.R. No. 84-A and A.O. No. 86-6.  Additionally, State Ethics Commission staff inquiry has identified a substantial, additional conflict of interest (regarding the provision of continuing education) and has also identified the clear potential for future significant conflicts.  Finally, even absent these numerous specific conflicts of interests, State Ethics Commission precedent and State Regulations bar the outside employment at issue based on the unavoidable impairment of independence of judgment and the inevitable, however unintended, misuse of office engendered when senior state regulatory officials offer their services for compensation to those they regulate.

State Ethics Commission Declaratory Ruling No. 84-A and Ethics Commission Advisory Opinion No. 86-6 are hereby overruled; and the Director and Assistant Director of the Real Estate Division, Department of Consumer Protection, are to cease and desist the outside employment sanctioned by those prior Rulings as soon as their current contractual obligations are fulfilled.

By order of the Commission,

Christopher T. Donohue

Content Last Modified on 9/7/2005 8:00:43 AM