Beychok, In re

• Decision Date: 25 February 1986
• Docket Number: No. 85,85
• Citation: 484 So.2d 912
• Parties: 31 Ed. Law Rep. 343 In re Sheldon D. BEYCHOK and Wolf Baking Company, Inc. CA 0903.
• Court: Court of Appeal of Louisiana — District of US

Page 912

484 So.2d 912

31 Ed. Law Rep. 343

In re Sheldon D. BEYCHOK and Wolf Baking Company, Inc.

No. 85 CA 0903.

Court of Appeal of Louisiana First Circuit.

Feb. 25, 1986.

Charles S. McCowan, Jr., Pamela C. Walker, Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Baton Rouge, Leslie J. Schiff, Sandoz, Sandoz & Schiff, Opelousas, for appellants.

R. Gray Sexton, Peter G. Wright, Commission on Ethics for Public Employees, Baton Rouge.

Before CARTER, SAVOIE and LANIER, JJ.

CARTER, Judge.

Sheldon D. Beychok (Beychok) and Wolf Baking Company, Inc. (WBC, Inc.) appeal from a decision of the Commission on Ethics for Public Employees (Commission) which held that Beychok violated LSA-R.S. 42:1111 C(2)(d) and LSA-R.S. 42:1112 B(2) and (3) and that WBC, Inc. violated LSA-R.S. 42:1113 B. The Commission ordered that Beychok, WBC, Inc. and Louisiana State University and Agricultural and Mechanical College (LSU) cancel all existing contracts, discontinue the purchase of goods pursuant to all previous contracts, and refrain from entering into any future contractual relationships. The Commission, however, specifically found that neither Beychok nor WBC, Inc. were guilty of any intentional wrongdoing or act of corruption and that Beychok had not used his office of public trust for personal gain. Further, it is uncontradicted that LSU benefited by several thousand dollars as a result of the contracts.

FACTS

Beychok has served as a member of the Board of Supervisors of LSU (Board of Supervisors) since his appointment in 1978. Beychok also serves, and at all pertinent times hereto did serve, as President, Chief Executive Officer, director, and majority stockholder of WBC, Inc., a Louisiana corporation engaged in the production and sale of bread and bakery products. As an employee of WBC, Inc., Beychok receives a salary for services he renders to WBC, Inc.

Between January 1, 1981, and December 31, 1984, WBC, Inc. entered into a series of contracts with LSU for the sale of food products to the university, awarded after receipt of sealed competitive bids.

These contracts authorized purchases of $219,088.00 by the University from WBC, Inc. during the contract periods, though actual purchases were for slightly lesser amounts. In January of 1985, approximately six months after their inception, some of these contracts were renewed and, as a result of these renewed contracts, it was estimated that the University would purchase from WBC, Inc. during the period January 1, 1985, through June 30, 1985, products costing a total of $27,758.00.

Additionally, WBC, Inc. contracted with the director of the LSU Athletic Department for advertising on the "end zone countdown clocks" in LSU's football stadium. This occurred after repeated unsuccessful attempts by the Athletic Department to lease advertising space to other parties.

The Athletic Director of LSU, Robert E. Broadhead, offered to lease space on one of the clocks to WBC, Inc. for the 1984 football season at a price of $5,000.00. The agreement was later amended to lease advertising space on both end zone clocks for $6,500.00. In a letter dated September 12, 1984, Beychok accepted this offer on behalf of WBC, Inc. The Board of Supervisors took no part in the advertisement or award of this advertising contract. It was a negotiated contract and not awarded as the result of a sealed competitive bid as were the contracts for bakery items.

By correspondence dated August 23, 1984, Beychok and other members of the Board of Supervisors sought from the Commission an advisory opinion as to the propriety of members of the Board entering into contracts for the sale of goods and services to LSU.

The Commission considered this request at its September 14, 1984, meeting and concluded that LSA-R.S. 42:1111 C(2)(d), 1112 B(2) and (3), and 1113 B prohibit members of the Board from entering into business transactions with LSU.

Prior to publication of the Commission's opinion, Beychok sought to enjoin implementation of the Commission's interpretation of the Code of Governmental Ethics by instituting civil proceedings in the Nineteenth Judicial District Court entitled "Wolf Baking Company, Inc. v. Louisiana Commission on Ethics for Public Employees, Board of Supervisors, Louisiana State University and Various Purchasing Agents" (Docket No. 281,335-K). The trial judge rendered judgment in favor of the Commission and against WBC, Inc. granting the Commission's declinatory, dilatory and peremptory exceptions pleading the objections of lack of jurisdiction, prematurity and no cause of action, respectively. This judgment is now final. The trial court subsequently issued a preliminary injunction prohibiting the cancellation of any contract for the supply of bread previously awarded WBC, Inc. or any advertising previously purchased by WBC, Inc.

On October 2, 1984, the Commission adopted a resolution calling for a staff investigation of the events referred to in the petition filed by Beychok and WBC, Inc. in district court.

At its November 2, 1984, meeting and on the basis of the information contained in its investigation report, the Commission, by a majority vote of its membership, ordered that a public hearing be conducted for the purpose of exploring the following charges:

That Mr. Sheldon D. Beychok has violated Section 1111C(2)(d) of the Code of Governmental Ethics (LSA-R.S. 42:1111C(2)(d)) by having received a thing of economic value in the form of compensation for services rendered by him to Wolf Baking Company, Inc. at a time and under circumstances such that he was prohibited from receiving a gift from Wolf Baking Company, Inc., for the following reasons and in the following manner, to wit:

1. The Board of Supervisors, Louisiana State University and Agricultural and Mechanical College, of which Mr. Beychok is and has been a member since June, 1978, has supervision and jurisdiction over contracts entered into by Louisiana State University and Agricultural and Mechanical College.

2. Louisiana State University and Agricultural and Mechanical College has the following contracts with Wolf Baking Company, Inc.:

(a) A contract entered into in response to LSU--A Bid No. 1233;

(b) A contract entered into in response to LSU--A Bid No. 1236;

(c) A contract entered into in response to Bid B3DRP1411, dated January 24, 1983;

(d) A contract entered into in response to Bid B3DRP1573, dated January 13, 1984;

(e) A contract entered into in response to Bid B3BGR2363, dated May 9, 1984;

(f) Purchase Order No. 54242, dated July 1, 1984, for the LSU Union Food Service;

(g) Purchase Order No. 54245, dated July 1, 1984, for the LSU Union Food Service;

(h) A contract entered into in response to Bid B4BGR3118, dated July 9, 1984;

(i) Purchase Order No. S105774, dated July 11, 1984, for the Faculty Club;

(j) Purchase Order S105777, dated July 11, 1984, for the Residence Food Service, Food Service Store;

(k) Purchase Order No. S105779, dated July 11, 1984, for the University High Cafeteria;

(l) Purchase Order No. S105913, dated July 17, 1984, for Athletic Concessions;

(m) Purchase Order No. S103214, dated July 23, 1984, for the Residence Food Service, Food Service Store; and

(n) A contract for advertising on the "end zone countdown clocks" at Tiger Stadium for the 1984 football season.

3. As a result of said contracts Wolf Baking Company, Inc. had interests that may have been substantially affected by Mr. Beychok's performance or nonperformance of his official duties as a member of the Board of Supervisors.

4. Mr. Beychok had knowledge of the fact that Wolf Baking Company, Inc. was seeking to obtain and in fact obtained these contracts with Louisiana State University and Agricultural and Mechanical College.

5. Because Wolf Baking Company, Inc. had and was seeking to obtain contractual and other business or financial relationships with Louisiana State University and Agricultural and Mechanical College and because, by virtue of these contractual and other business or financial relationships, Wolf Baking Company, Inc. had interests which may have been substantially affected by the performance or nonperformance of Mr. Beychok's official duties as a member of the Board of Supervisors, Mr. Beychok was prohibited by reason of Section 1115 A(1) and B of the Code from receiving as a gift anything of economic value from Wolf Baking Company, Inc.

6. At all times material hereto, Mr. Beychok was a compensated officer, director, and employee of Wolf Baking Company, Inc. and, accordingly, was prohibited by Section 1111C(2)(d) of the Code from receiving anything of economic value, including compensation, in consideration of any services he rendered or renders to Wolf Baking Company, Inc.

II.

That Mr. Sheldon D. Beychok has violated Section 1112 B(2) and (3) of the Code of Governmental Ethics (LSA-R.S. 42:1112 B(2) and (3)) by having 'participated,' both by virtue of his membership on the Board of Supervisors, and in fact, in particular transactions in which Wolf Baking Company, Inc. (an entity in which he owned a majority of the stock and in which he was an officer, director, and employee) had a substantial economic interest, in the following manner, to wit:

1. The Board of Supervisors, Louisiana State University and Agricultural and Mechanical College, has a statutory responsibility to supervise and exercise jurisdiction over contracts to which Louisiana State University and Agricultural and Mechanical College is a party, including those contracts listed in the preceding Charge.

2. As a member of the Board of Supervisors Mr. Beychok has 'participated,' as that term is defined in the Code of Governmental Ethics, in the Board of Supervisors' supervision of and exercise of jurisdiction over the above-referenced contracts between Louisiana State University and Agricultural and Mechanical College and Wolf Baking Company, Inc.

3. At an August 10, 1984 meeting the Board of Supervisors received a report titled 'Transactions with...