89.05

OPINION NO. 89-5

An opinion has been requested from a State's Attorney regarding whether and how the provisions of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) would apply to his proposed involvement as a partner in a restaurant enterprise to be located in his County. We advise the Requestor that though the Law would not apply to flatly prohibit his affiliation with this undertaking, it would impose substantive restrictions relating to the development and operation of the business.

The Requestor states that the restaurant will be a partnership involving him and his son-in-law and one other person as general partners. His son-in-law manages a restaurant in a jurisdiction outside of the State of Maryland, and the third partner is an attorney who works full-time for the federal government. The restaurant will be centrally located in the downtown area of the jurisdiction, near the courthouse and other government offices. The restaurant lease was negotiated with the developer by the Requestor and his attorney partner. The lease calls for each of them to undertake potential personal liability for a five-year period, and in return for securing the lease and undertaking this liability, they are each to receive shares of the business. The third general partner has agreed to come and run the restaurant and in return will also receive stock in the business.

The Requestor advises that he will not be involved in the day-to-day management of the restaurant or in providing direct services to it. He will, however, function as a general partner, meeting with and advising the manager, and generally working to maintain the character of the restaurant and assuring its profitability. The partnership anticipates distributing the remaining shares through a private offering to limited partners, who may make a cash contribution or will receive shares based on provision of services or other contributions. These other partners will be solicited from among friends and business acquaintances in the area. This will be done on a person-to-person basis, and the Requestor indicates that he expects that he will be involved in this part of putting the business together.

As the elected State's Attorney for his County the Requestor is responsible for the State's legal services in the County. The position is one that carries with it significant discretion and responsibility covering the whole gamut of crimes in the State, including enforcement of the criminal portions of the liquor laws. We have issued two Opinions involving State's Attorneys that describe in detail the responsibilities and functions of the State Attorney's Offices.1 The Office of the State's Attorney is established in Article V of the Maryland Constitution, which provides for an attorney for the State in each county and Baltimore City, who is to perform the duties and receive the compensation prescribed by the General Assembly. Article 10, § 34, Annotated Code of Maryland, provides that the "State's Attorney for each county and the City of Baltimore shall, in each county or city, prosecute and defend, on the part of the State, all cases in which the State may be interested, subject to the provisions of *the State Prosecutor law*."

The State's Attorney is responsible for prosecuting all crime in the County, and has wide discretion to prosecute and investigate crimes. This view of this office as being one of wide and "largely unreviewable discretion," including the authority to decide not to prosecute a case, is reinforced by the Maryland Court of Appeals in Sinclair v. State (278 Md, 243 (1976)), a case dealing with a conflict of interest of a State's Attorney. Also, the subjects that could come within the mandate of the State's Attorney's office is very broad, including in the business area, for example, conspiracy, embezzling, credit card offenses, a variety of frauds, corporate misrepresentation, and bad checks.

The Requestor describes his proposed business as a "restaurant, not a bar," though it will have a bar. The operation would have a liquor license for on premises sale of liquor, which would be issued to the other general partners. No off-premises sales are anticipated. The Requestor indicates that the State's Attorney has some responsibility for prosecuting cases under the State liquor law (Article 2B, § 3(a)), which deals with off-premises sales to minors. He says that they have occasionally prosecuted these cases (he says possibly three a year). He says, however, that to his knowledge the Office has not prosecuted violations relating to on-premises sales. Also, according to the Requestor, though restaurants are subject to a variety of legal requirements, violations tend to be of local ordinances within the purview of the County Attorney, or more likely civil matters subject to the licensing authority of the liquor board. According to the Requestor, in this County the State's Attorney's Office has never been involved in appearance or proceedings before the liquor board, nor would he ever expect this to be the case.

This County's State's Attorney's Office has more than 50 employees, including more than 25 attorneys. It is organized into several units that handle different classes of cases, and includes a Deputy State's Attorney, who in addition to service as Deputy, is responsible in two substantive prosecution areas, and for the group that investigates and prosecutes white collar crime. The Requestor indicates that case decisions are delegated, with the day-to-day activity of trying, negotiating and settling cases being done by Assistant State's Attorneys. He recognizes, however, that particularly difficult, sensitive, or novel cases are discussed in executive meetings where policy is developed, and that the final responsibility is his as the State's Attorney. He indicates that he is not significantly involved in actual trial of cases.

This request involves the outside employment and interest provisions of § 3-103(a) of the Public Ethics Law. This section prohibits officials and employees from being employed by or having a financial interest in an entity that contracts with or is subject to the authority of their agency (subsection (a)(1)(i)), and from having any other employment relationship that would impair their impartiality or independence of judgment (subsection (a)(1)(ii)). More particularly, the situation presented here involves implementation and application of the legal principles regarding this section discussed in our prior Opinions dealing with State's Attorneys, especially Opinion No. 87-23.

That Opinion involved an individual State's Attorney who requested general guidance regarding limitations of the Ethics Law on his private investments and activities. In it we noted the substantial discretion in this position and its sensitivity, especially given the authority to make prosecution decisions. We advised that generally once an entity with which a State's Attorney is affiliated is identified in an investigation or otherwise within the Office's specific workload, then his affiliation with it as an officer, owner or employee would be barred by the employment provisions of §3-103(a)(1)(i) and would have to be terminated.

Based on these concerns, the Requestor was advised that relationships should be avoided with entities that interact frequently with the State's Attorney's Office. This included, for example, partnership affiliations with individuals that have frequent contacts with the State's Attorney's Office, and affiliations with businesses that frequently want action taken by the Office. We concluded:

We do not believe that the Ethics Law flatly prohibits employment or interest affiliations as to any or all categories of business enterprise by incumbents in the State's Attorney's Office. We do, however, advise that great care should be taken to evaluate the specific circumstances of any potential private affiliation, taking into account the principles discussed above, and recognizing that to a considerable extent the type of affiliation allowed would be based on the likelihood of enforcement involvement with the State's Attorney's Office.

We believe that these and other constraints in the Ethics Law would apply to the Requestor's plans, not to limit his ability to enter into this transaction as it now stands, but to limit the persons with whom he would affiliate as limited partners. There do not appear at this time to be any contractual or authority relationships anticipated between the restaurant and the State's Attorney's Office. As long as this is the case, and there is no enforcement action or other relationship between the restaurant and the Office, there would not be any application of the strict prohibition of subsection (a)(1)(i). However, since the Requestor Requestor would be providing services as a general partner to the business, he would be viewed as having an employment relationship with it that could be subject to the impairment provision of subsection (a)(1)(ii) of the Law. Though this provision would not, in our view, apply to flatly prohibit his involvement in the business (provided that it is not doing business with the Office or subject to enforcement action), it could, we think, be the basis for constraints of the individuals or entities with which the Requestor affiliates as partners in the business.

In applying this provision we have generally looked to the potential relationships between private and official duties to determine if there would be clear and serious concerns as to whether a person could be impacted in their official duties by the private activity. In this situation, the Requestor as a general partner providing general management direction and services to the business would have an economic obligation to the other partners in his performance of this role. We believe that this relationship must be considered to impair or impact on his performance of his functions as the elected State's Attorney if these other partners are individuals or businesses that are parties frequently involved in matters pending in the Office, or are attorneys involved in cases being prosecuted or investigated by the Office. This concern would apply, for example, to bar a partnership relationship with any attorney frequently involved in the criminal practice of law in this jurisdiction.

We recognize that there are some attorneys whose practice is more general, but who may infrequently handle "driving while intoxicated," or other criminal cases being prosecuted by the State's Attorney's Office, possibly as a convenience to a person who is a client for other types of matters. While engaging in the restaurant business with an attorney partner who handled these types of cases on an infrequent basis would be acceptable (assuming the Requestor excuses himself from any official involvement in the case), such a partnership relationship would be unallowable if the potential partner's activity is more frequent. By this we mean that the potential partner is actively handling or seeking to handle a sufficient number of criminal cases that it would be likely that the attorney would have one or more cases of any kind pending with the Office at most times during the year.

In addition, in the solicitation of partners as well as in operation of the business, the Requestor should keep in mind the nonparticipation provisions of § 3-101 of the Law and the concerns of § 1-102(b) that the conduct of the State's business not be subject to improper influence or even the appearance of improper influence. This concern is particularly important where partners are solicited or there is other involvement with persons that have contacts with the State's Attorney's Office. This will include not participating in matters involving persons who are his partners, and also using discretion to avoid any appearance that selecting a partner or making other business decisions is in any way related to matters that are pending or soon to be pending before the Office.

In summary, then, we reiterate our general advice of prior opinions that the employment and interest provisions of the Ethics Law do not flatly prohibit State's Attorneys from entering into private business relationships that do not involve economic undertakings with persons or entities that have matters pending before the State's Attorney's Office on a frequent basis. As to this particular situation, we advise the Requestor that this principle would not bar his undertaking to establish a restaurant business, or being involved in it, as long as the business itself is not the subject of or otherwise involved in investigations or prosecutions in the Office. In entering into partnership relationships with others, however, the Requestor should avoid affiliations with businesses or individuals that are frequently involved in cases before the agency.

M. Peter Moser, Chairman
   William J. Evans
   Rev. C. Anthony Muse
   Barbara M. Steckel

Date: April 20, 1989

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1 #032; Opinions No. 88-21 and No. 87-23.