Bereano v. State Ethics

• Decision Date: 12 April 2007
• Docket Number: No. 2412, September Term, 2004.,2412, September Term, 2004.
• Citation: 920 A.2d 1137,174 Md. App. 146
• Parties: Bruce C. BEREANO v. STATE ETHICS COMMISSION.
• Court: Court of Special Appeals of Maryland

920 A.2d 1137

174 Md. App. 146

Bruce C. BEREANO v. STATE ETHICS COMMISSION.

No. 2412, September Term, 2004.

Court of Special Appeals of Maryland.

April 12, 2007.

Timothy F. Maloney (Cary J. Hansel, Brian J. Markovitz, on brief), Greenbelt, for appellant.

Steven M. Sullivan (J. Joseph Curran, Jr., Atty. Gen., on brief), for appellee.

Panel ADKINS, SHARER, JAMES A. KENNEY, III (Retired, Specially Assigned), JJ.

KENNEY, J.

Bruce C. Bereano appeals the judgment of the Circuit Court for Howard County, affirming the finding of the State Ethics Commission (the "Commission") that Bereano knowingly and willingly violated Maryland Code (1984, 2004 Repl.Vol.), § 15-713(1) of the State Government Article ("S.G.") by being engaged for lobbying purposes for compensation that was contingent upon executive or legislative action. Premised upon its finding that Bereano knowingly and willfully violated S.G. § 15-713(1), the Commission, acting pursuant to its newly conferred authority under S.G. § 15-405(e), reprimanded Bereano, suspended his lobbying registrations for a period of ten months, prohibited him from engaging in lobbying activity for ten months, imposed a $5,000 fine, and required him to submit to the Commission for a period of three years copies of all fee agreements for lobbying activity.

Bereano presents four questions for our review, which we have slightly reworded as follows:

I. Was the Commission's decision that Bereano knowingly and willfully violated S.G. § 15-713 supported by substantial evidence on the record?

II. In sanctioning Bereano for his violations of S.G. § 15-713(1), did the Commission apply S.G. § 15-405 retroactively?

III. Did the Commission err in applying the "missing witness rule" and in concluding that a witness Bereano did not call to testify before the Commission would not have supported Bereano's testimony?

IV. Does S.G. § 15-713(1), which prohibits registered lobbyists from engaging in lobbying activity for compensation that is contingent upon legislative and executive action, constitute an unconstitutional restraint on free speech or the right to petition the government for redress of grievances in violation of the First Amendment to the United States Constitution and Article 40 of the Maryland Declaration of Rights?

For the following reasons, we shall affirm the judgment of the circuit court.¹

FACTUAL AND PROCEDURAL HISTORY

Chapter 15, Subtitle 7 of the State Government Article regulates lobbying activity. Section 15-713 of that Article, which was enacted by the 631st Act of the 2001 Session and became effective on November 1, 2001,² prohibits activities of regulated lobbyists. It provides, in pertinent part:

A regulated lobbyist may not:

(1) be engaged for lobbying purposes for compensation that is dependent in any manner on:

(i) the enactment or defeat of legislation;

(ii) the outcome of any executive action relating to the solicitation or securing of a procurement contract; or

(iii) any other contingency related to executive action or legislative action.

Bereano, formerly an administrative assistant and legal counsel to the Office of the Senate President, has been a lobbyist registered with the Commission since its creation in 1979. In September 2001, he contracted with Michael Traina, founder of the Mercer Group, Inc., parent company of Social Work Associates, Inc. (collectively "Mercer"), to provide lobbying, political consulting, and contract development services.

In a letter dated September 1, 2001, Bereano proposed a fee agreement for his services, the terms of which were accepted by Mercer on September 13, 2001 (the "Fee Agreement"). The Fee Agreement provided, in pertinent part:

Following up our discussions, I write this letter to present a fee proposal to you concerning your new business venture, Mercer Venture, Inc., d/b/a Social Work Associates, Inc. (hereafter referred to as Mercer Ventures). I propose to represent Mercer Ventures in the State of Maryland in a lobbying, political consulting, and strategy development capacity relative to the Company's plans to develop and obtain contracts and arrangements with various county, municipal, and State government agencies and departments in order to provide and perform on a privatized basis staffing agencies and case management functions. In addition, I would be willing and able to assist your company with any business development and activities in other states and jurisdictions outside of Maryland.

I propose commencing the month of September 1, 2001, a monthly retainer fee of $2,000.00 plus reimbursement for any necessary and reasonable expenses such as postage, duplicating costs, long distance telephone calls, mileage, fax expense, and legislative meals and entertainment. Any significant or unusual expenses would have to be approved and authorized by you before being incurred. These fees and expenses would be paid and continue on a regular basis once your company attains a financial cash flow, and ability to do so.

The nature and scope of my services for the monthly retainer would include and encompass performing lobbying services, giving advice, consultation, strategy and be a resource concerning legislative and political and government matters at both the State and local levels, attending and participating in all necessary and required meetings, monitoring and watchdogging on behalf of the Company, and providing information to your companies as to matters of concern and importance with its work and relationships with the State of Maryland, as well as any political subdivision in the State and generally performing any and all other such similar and related services and activities as you may request of me. In this regard, I also would register as a lobbyist and fully comply and conform with the State's applicable law.

It is further understood and agreed that in addition to and separate and apart from payment of the aforementioned monthly fee retainer fee and any further increase thereof, Mercer Ventures will compensate me one percent (1%) of the first year receivable for continuing representation and services be [sic] performed, provided, and made available when and after each separate facility and/or site or location that is opened in which I was involved in securing and participated in obtaining, and/or any contract and performance of services which is entered into by your company with any government entity, unit or agency in the State of Maryland or any other state or jurisdiction in which I worked on the matter.

As to and concerning any private contracts and business which I assist and help on obtaining for your company it is understood and agreed upon that separate from and in addition to any monthly fee arrangement as set forth herein I also will receive and be paid a monthly agreed upon bonus and reward for such private contract or business.

It is understood that this relationship and fee arrangement can be renegotiated and changed at any time by mutual agreement of the parties as they develop and experience this work relationship, and that except for the provision and understanding herein to compensate me when and after any contract is entered into a government unit, Mercer Ventures can terminate the same monthly fee relationship at the Company's discretion at any time after giving thirty days prior written notice.

On November 13, 2001, Bereano filed a lobbying registration form with the Commission, declaring, under oath, his intention to perform executive and legislative action lobbying on behalf of Social Work Associates, a subsidiary of Mercer. Bereano indicated that the effective date for lobbying on behalf of Social Work Associates for "any and all legislative and executive matters concerning staffing and case management foster care, children and social services issues" was November 1, 2001 to October 31, 2002.

Later, on December 1, 2001, Bereano sent an invoice to Mercer requesting a $2,000 retainer for the months of September, October, November, and December. He also requested payment for expenses that included long distance phone calls, mileage, duplicating, and $393.34 in "Legislative Meals [and] Expenses." Again, in an invoice dated January 16, 2002, Bereano requested payment in the amount of $24,000 for "professional [s]ervices [r]endered," and a $2,000 retainer for January. He also sought reimbursement for expenses, including $454.39 in "legislative meals and expenses." Bereano sent similar invoices to Mercer billing for his monthly retainer fee and seeking reimbursement of "legislative expenses," meals and entertainment, mileage, duplicating, and long distance telephone calls on February 6, 2002, March 1, 2002, April 1, 2002, May 1, 2002, and June 1, 2002.

Traina sent Bereano a letter dated May 17, 2002, detailing Mercer's recent projects. The letter was accompanied by an "Organizational Capability" statement, listing among Mercer's "major clients" the following State Agencies: the Department of Public Safety and Correctional Services; the Department of Assessments and Taxation; the Department of Health and Mental Hygiene; the Department of Business and Economic Development; and the Department of Human Resources.

Approximately one month later, in a letter dated June 12, 2002, Traina stated the following with regard to the Fee Agreement:

Following our recent conversation, I understand someone from the Baltimore Sun has reviewed our letter agreement from September 2001 and has misinterpreted part of the letter stating that he believes that it contains a "contingency agreement." As you and I are aware, the intention of any portion of the fee agreement was not a contingency fee, but instead additional compensation for ongoing services that we were going to budget at 1%.

Clearly, this was not a contingency arrangement because you were to be paid additional compensation for additional services that would be required under any new contract. You would not have been paid if you...