83.42

OPINION NO. 83-42

The State Ethics Commission has been asked to provide advice as to whether Maryland State Police (MSP) employees may be employed as couriers by a corporation whose organizers, owners and managers are similarly affiliated with a private detective agency licensed by MSP.

This request is presented by the Superintendent of the Maryland State Police, and involves Unitas & Associates, a private detective agency licensed by MSP pursuant to Article 56, §75, Annotated Code of Maryland (the Detective Agency). A private detective business is defined to include a business "making for hire or reward any investigation or investigations for the purpose of obtaining information with reference" to certain identified matters. These include, for example, crimes, missing persons, credibility of witnesses, and the location or recovery of lost or stolen property. The term does not specifically include providing courier services. Though it does include "the furnishing for hire or reward of watchmen or guards or private patrolmen or other persons to protect persons or property, either real or personal," MSP's Deputy Superintendent indicates that this provision has not been interpreted to apply to courier operations. Entities such as Wells Fargo, Purolator, and the Detective Agency's courier operation are therefore not licensed by MSP under this provision, or according to the Deputy Superintendent, otherwise under the agency's authority.

Section 76 of Article 56 prohibits any person or firm from engaging in a private detective business without first obtaining a license from the Superintendent of State Police. This section and other provisions in Article 56 establish requirements regarding maintenance of an office, management by a supervising licensee, license qualifications and bonding, employment of assistants, disclosure of information by employees or licenses, and revocation and enforcement procedures. Article 56, §89 provides that the Superintendent of the State Police is to carry out and enforce the private detective licensing provisions, and that he is authorized to use such members of his Department as he may deem necessary to do this. Section 90 provides that an MSP officer at the rank of lieutenant or above must be appointed to conduct investigations of misrepresentation or misconduct under the law. The private detective licensing program is administered by MSP's Licensing Division, which has eight employees; one uniformed officer is assigned to private detective agencies. Investigations and enforcement may be done by any qualified officer in the agency.

Unitas & Associates is a corporation formed in May 1983, its purposes described in its Charter as:

To transport money, securities, jewelry, precious stones and metals, valuable papers and other articles of value and to guard and do all things necessary to protect the same; to act as a consultant to individuals and businesses with respect to security and the protection of valuables; to furnish and provide the services of plain clothes or uniformed special agents, guards, watchmen, body guards and other protective and/or security personnel; and to do all things necessary, desirable or appropriate in connection with the aforegoing businesses, or any of them.

The Vice President and principal manager of the company indicates that under this Charter the Detective Agency conducts both private detective and courier activities. The corporation holds a license as a private detective business under Article 56, §75. The Vice President, who is a former State Trooper, holds an individual license and is the supervising licensee. He indicates that the firm employs several former troopers as investigators, but has hired no current MSP employees in any capacity. (Note that the extensive use of former police officers in this business appears to be recognized in Article 56, §78(a)(1), which identifies service as a police officer or a police detective as eligible qualifying criteria.)

The courier activity conducted by the corporation is a plain car, non-uniformed service. Use of troopers as couriers is viewed as beneficial because their experience helps them to have a sense of how to act in the types of situations that may arise in courier activities; it is believed that this caliber of person is not generally available from the general public. Troopers hired as couriers would not be using MSP automobiles, uniforms or firearms. Though the company's couriers are required to carry firearms, the ability of police officers to do this would not be viewed as a special benefit, as others could be hired who either hold or would be eligible to hold a valid permit. Also, apparently the company's bond insurance circumstances would not necessarily be enhanced by use of troopers, since the bonding company charges a single flat rate and does not bond individual couriers.

This situation arose because some current troopers wanted to be employed as couriers, and requested approval through MSP's secondary employment process. The original reaction of MSP management was that since employment as couriers would not involve detective activities regulated by the agency, it would be allowable. Subsequently, however, it was determined that this employment would still involve work for an entity, Unitas & Associates, Inc., that was licensed by MSP as a detective agency, and that this type of affiliation is specifically barred by the MSP regulations. The Detective Agency has suggested, however, that another corporation could be organized that would employ individuals solely to do courier work. Though this would be a separate corporation not owned by or directly affiliated as a corporate entity with the Detective Agency, it would be organized, owned and managed by the same individuals. The courier service would continue to be managed by the Vice President.

This request raises outside employment issues under §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). Subsection (a)(1)(i) of this provision bars employees and officials from being employed by or having an interest in an entity that is under the authority of or has contractual relationships with their agency.1 Subsection (a)(1)(ii) further forbids any other employment that would impair an individual's impartiality or independence of judgment. The preliminary question under the strict provision of subsection (a)(1)(i) is whether the employment would be with an entity under the authority of MSP. Unitas & Associates, as a licensed detective agency, would be under the agency's authority, and employment with it under the current circumstances is thus clearly barred under §3-103(a)(1)(i). The question is whether employment by the proposed new corporation would also come within this proscription.

The new corporation would not as a technical matter be owned by Unitas & Associates or otherwise corporately affiliated with it. The company's Vice President believes that his proposed use of troopers solely for courier work, and separation of the courier and detective duties, assures avoidance of a conflict of interest in compliance with the spirit of the Ethics Law. He says he is prepared (if it is economically feasible) to do whatever is required to assure technical compliance also, in terms of organizational structure, accounting, etc. Arguably, the establishment of a new entity technically separate from the Detective Agency would take this situation out of subsection (a)(1)(i). On the other hand, it could be viewed as a strictly paper transaction specifically designed to avoid the application of the Ethics Law.

We believe that in circumstances such as this we must look behind the technicalities of the corporate structure, as we have on other occasions. For example, our Opinion No. 82-122 involved an MSP trooper who proposed to avoid a conflict of interest by transferring to his spouse his interest in a company which they had established together and operated together in the past. Since his spouse would have continued to operate the business on the premises of the family residence, we concluded that a transfer merely to comply in a technical way with the Ethics Law provisions was not adequate divestiture. (See also Opinion No. 81-29 for a similar result.) We believe that the same principle must be applied here. While we do not in any way seek to interpret the particular provisions of MSP's secondary employment regulations, it is our view that, for purposes of the Ethics Law, employment by MSP employees with the proposed new corporation would be with an entity under their agency's authority as contemplated by §3-103(a)(1)(i).

Our conclusion that the employment would be covered by §3-103(a)(1)(i), however, does not mean that it must necessarily be forbidden in all cases, as authority for exception from the outside employment prohibition is established in the introduction to §3-103(a). This language provides that the prohibition applies "except as permitted by regulation of the Commission where such interest is disclosed or where such employment does not create a conflict of interest or appearance of conflict." This exception provision was added to the Ethics Law in 1981 partly based on our recommendation that flexibility be added to the absolute prohibitions in §3-103(a). The purpose was to avoid situations where a violation would result from purely technical application of the elements of §3-103(a), even where there is no conflict or appearance of conflict between the private interest or employment and agency activities.

In developing exception criteria implementing this provision (COMAR 19A.02.01 and 19A.02.02), we sought to define circumstances where the relationship between an employee's agency's activities and the private employment or financial interest is so remote that the possibility of a conflict of interest or the appearance of conflict is unlikely. If all of these regulatory standards of remoteness are met then the employment could be allowed, despite the existence of authority or contractual links between an individual's State employer and the outside employer. The criteria include findings that:

A) The State duties do not significantly impact on the outside employer or a contract between the outside employer and the agency.

B) The employee is not directly supervised by a person whose duties significantly impact on the outside employer or a contract between the outside employer and the agency.

C) The employee does not supervise a person whose duties significantly impact on the outside employer or a contract between the outside employer and the agency.

D) The employee is not affiliated with the specific unit in the agency that exercises authority over or contracts with the outside employer.

E) The employee has complied with other relevant sections of the Ethics Law.

F) The outside employment involves no non-ministerial duties significantly relating to the agency's authority over the employer.

G) The employee's private duties do not involve negotiating or carrying out a contract between the agency and the outside employer (except for broad fixed reimbursement contracts).

H) The private compensation is not directly funded by the State contract.

I) The specific circumstances of the situation do not otherwise create a conflict of interest or the appearance of a conflict.

We cannot fully evaluate the application of these criteria to this request, as individual MSP employees are not specifically identified here. It would appear, however, that the exception could be applied to allow employment by some individuals, but only where their job duties and agency situation do not come within the criteria, and as long as certain other conditions are met to assure compliance with the Law. For example, individuals who are employed in the Licensing Division or involved in the process of issuing or processing detective licenses would come within some of the exception criteria and would not be sufficiently remote from the Detective Agency in their official duties to justify exception. (See items A through D.) Also, other employees who may be assigned investigative or enforcement duties involving the company could be barred by application of the non-participation provisions of §3-101 of the Law. (See item E.)

Also to be considered under item E are §3-104 of the Law, which prohibits employees from using the prestige of their office for their own economic benefit or that of another, and §3-107, which bars the use of confidential information (gained through employment) for one's own or another's economic benefit. State Police employees working as couriers would therefore have to take care not to use police uniforms, vehicles or other indicia of their official status in private activities, and should also not allow themselves to be in the position of using confidential MSP information in furtherance of any of their private employer's interests. The general appearance criteria in item I are also of concern. Thus, to assure that no appearance problems are presented, the MSP employees doing courier work should be handled separately from the Detective Agency; effort should be made to ensure that they work in different locations and on different payrolls than the company's detectives; and care should be taken to avoid any contact by the current MSP employees with the licensed private detective activities.

If all of these considerations are taken into account, then we believe the proposed employment would be allowable for some MSP employees. The agency should evaluate application of this Opinion to particular situations, keeping in mind that some employees would be flatly barred from such outside activities, even though the courier activity is not in itself viewed as presenting issues for the agency.3 Where issues are raised as to particular individual circumstances, and the application of this Opinion cannot be clearly ascertained, agency personnel may contact Commission staff for additional guidance.

Herbert J. Belgrad, Chairman
   Reverend John Wesley Holland
   Betty B. Nelson

Date: November 29, 1983

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1 Note that Unitas does not appear on the Ethics Commission list of entities doing business with the State during 1982.

2 Except as otherwise specifically cited to the Maryland Register, Opinion citations are to Commission Opinions published in COMAR Title 19A.

3 The inconsistent employment provision of §3-103(a)(1)(ii) should also be kept in mind. Outside employment could be barred by this section if the nature of the activity and the private employer's relationship to the agency could impair the individual's performance of his official duties.