An opinion has been requested from a Grants Administrator in the Department of Public Safety and Correctional Services (DPSC) concerning whether a tax firm partially owned by him may offer services to the residents of pre-release units in the Division of Correction (DOC).

The Requestor's job involves the administrative aspects of applying for, monitoring, and coordinating Federal grants within DPSC. His job occasionally involves coordination with grant administration staff in various Departmental units, including the Division of Correction. The Requestor indicates, however, that there are now no Federal grants specifically involving the pre-release units; these facilities, which were originally Federally funded, are now fully assumed State operations. He states that he does not in his official duties deal with the Pre-release Warden or with the managers of the particular facilities.

The Income Tax Service (the Tax Firm) is a private entity owned by the Requestor and a relative, and has been operating in the Baltimore area for many years. The firm proposes to coordinate with the pre-release units to provide on-site tax services to inmates. The pre-release units are minimum security facilities housing inmates for approximately six months prior to release. Inmates apparently may have outside employment, but may be out of touch with income tax filing requirements. The Requestor indicates that contacts with the pre-release facilities would be by letters from his partner and he would not be involved in the general arrangements. Actual tax preparation, however, would be handled by the tax-preparers employed by the firm, including the Requestor himself. Also, he states that he has, as a partner, substantial management responsibility in the firm, especially in recent years as his partner's involvement has decreased.

The DPSC Director of Administration is the Requestor's immediate supervisor, and is aware of this proposal. He expressed his concern that employees working in the Office of the Secretary should not engage in private business activities involving inmates. He states that though there may be no direct "involvement" between specific employees in the Secretary's Office and specific facilities such as the pre-release units, there is nevertheless a relationship between these facilities and the Secretary's Office. He is therefore concerned about potential problems, based on appearances that would result from an individual in the Office of the Secretary being involved in such an activity. The Commission concurs in this concern. He states that everyone who works in the Office of the Secretary reports to the Secretary, as do all the managers of the various units of the Department, including DOC. He indicates further that the agency is not a large one and it is unlikely that the circumstances of the proposed arrangement, including the Requestor's involvement in it, would not be generally known.

The issue here involves the application of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). This section prohibits an official or employee from being employed by or having an interest in an entity that is subject to the authority of or contracts with his agency. (§3-103(a)(1)(i). The Tax Firm in this situation would not appear to be contemplating a contract with DPSC or DOC; its contractual relationship would apparently be directly with the inmate taxpayer. However, some arrangements with the DPSC (either through DOC or the particular facility) will have to be made for the activity to proceed. The Requestor notes that the firm would be "asking the staff of the pre-release units to announce the availability of the service, monitor the response in order for us to schedule our appearance and provide an office for consultations." Further, if the Tax Firm is approved to provide tax services to inmates it would presumably do so only subject to the conditions, etc. set out by the Department in its rules and regulations governing access to correctional facilities.

We believe that the relationship resulting between DPSC (or the appropriate unit thereof) and the Tax Firm, if the Firm's proposal is accepted, must be viewed as an "authority" relationship as contemplated by §3-103(a)(1)(i), whether or not it strictly speaking constitutes "regulation." No entity may have access to correctional facilities without strictly adhering to the access conditions established by DOC. Further, we believe that these circumstances must be evaluated in light of our Opinion No. 80-19, which involved a private entity not subject to the general regulatory authority of the official's agency. We noted there, however, that the official's private interest would be barred by §3-103(a) if the entity took voluntary action (by filing an appeal) to bring itself within the agency's authority. Here, though the Tax Firm is not an entity generally regulated by DOC or DPSC, we think that it brings itself within the agency's authority by virtue of its coming on-site, necessarily in accordance with DOC's rules and regulations.

In our view these circumstances represent the type of situation intended to be addressed in §3-103. A relationship plainly would exist between the Requestor's private firm and his agency; further, his agency, if it approves this activity, could be viewed as conferring a benefit on the firm. We therefore conclude that implementation of the Requestor's proposal would result in a relationship with an entity under authority of his agency which is prohibited by §3-103(a) of the Ethics Law.

Herbert J. Belgrad, Chairman
   Jervis S. Finney
   Reverend John Wesley Holland
   Betty B. Nelson
   Barbara M. Steckel

Date: March 3, 1982