Bereano v. State Ethics Commission (Ct. of Special Appeals)

Filed April 12, 2007. Opinion by Judge James A. Kenney, III (retired, specially assigned).

Upon consideration of Bereano's appeal of the judgment of the Circuit Court for Howard County, which had affirmed the finding of the State Ethics Commission (the Commission") that Bereano had knowingly and willingly violated Section 15-713(1) of the State Government Article of the Maryland Code by being engaged for lobbying purposes for compensation that was contingent upon executive or legislative action, and the sanctions of reprimanding him, suspending his lobbying activities for ten months, fining him $5,000 and requiring him to submit copies of all fee agreements for a period of three years, the Court AFFIRMED the judgment below. The Court also DENIED Bereano's motion for reconsideration to a court panel or in the alternative for an en banc hearing.

This case arose out of a contractual relationship between Bereano and a client ("Traina") for lobbying, political consulting and contract development services for Traina's company. The contract ("Fee Argeement") was proposed by Bereano on September 1, 2001 and accepted by Traina on September 13, 2001, and provided for a monthly retainer, reimbursement of expenses, and compensation of 1% of the first year's receivables for each facility opened for which Bereano was "involved in securing and participated in obtaining, and/or any contract or performance of services which is entered into by your company with any government entity, unit or agancy in the State of Maryland or and other sate of jurisdiction in which [Bereano] worked on the matter."

On November 13, 2001, Bereano filed a lobbying registration form with the Commission for executive and legislative action lobbying on behalf of one of Traina's company's subsidiaries. Subsequently, Bereano billed Traina for his services, including the monthly retainer and expense reimbursement.

In June of 2002, Traina sent a letter to Bereano, noting that the Baltimore Sun had questioned the Fee Agreement, claiming it contained an illegal "contingency agreement". Subsequently, the Fee Agreement was amended to remove the questioned language. The Commission subsequently initiated a complaint against Bereano in September, 2002, on matters including the Fee Agreement, and a hearing on the merits was held in June of 2003. At the hearing, Bereano claimed the additional fee was included at Traina's request, but did not call Traina to testify on this, and claimed that he had not in fact performed any lobbying on behalf of his client.

In its final decision and order, the Commission found that Bereano had knowingly and willfully violated Section 15-713(1), based upon the clear language of the Fee Agreement, finding Bereano's testimony less than credible in claiming not to be aware of Traina's public contracts and in not performing lobbying for Traina, and imposed a fine, a reprimand, a suspension for ten months, and supervision for three years thereafter.

The Court noted that Bereano's claim to have not done any actual lobbying was not relevant, since the prohibited activity was contracting for such contingent agreement and not actual performance, and he had in fact registered as a lobbyist, bringing him within the sanctions provided in the statute. Interpretation of the 'plain meaning' of the statute may include consideration of the context in which it was passed, and the evil intended to be addressed, and to prohibit only contracts for successful lobbying would not effect the purpose. Similarly, the 'plain language' of the Fee Agreement supported the Commission's conclusion that in fact it contained a prohibited contingency fee agreement.

Bereano also claimed that the statute's effective date, being November 1, 2001, was after the execution of the Fee Agreement, and to hold him liable would be to retroactively apply the statute. The Court disagreed, since it was not only the execution of the Fee Agreement, but the continued operation under it, that constituted the violation, distinguishing this situation from that in the Evans decision, which involved a prior criminal conviction. The Court also found that intentionally and voluntarily entering into the Fee Agreement and continuing to operate under its provisions satisfied the "knowingly and willingly" requirement of the statute.

Bereano also contended that the Commission erred in applying the "missing witness rule" to infer from Bereano's decision not to call Traina that Traina would not have supported Bereano's representations on several points. The Court found that it was up to the Commission, as trier of fact, to draw inferences from conflicting evidence, and that here Traina was "peculiarly available" to Bereano, based on their business relationship, that was not countermanded by the Commission's ability to subpoena Traina, had it chosen to do so. Since Bereano had himself highlighted what Traina would have said "if he were here under oath", it was incumbent upon him to explain Traina's absence, and no error for the Commission to apply the "missing witness rule", allowing it to draw a negative inference from that absence.

The opinion is available in PDF format.