CN 1995-257
Created By: Diane Simon on 10/17/2000 at 10:57 AM
Category: Ethics Rulings
Caption:

THE LOUISIANA BOARD OF ETHICS

DATE: March 16, 1998 OPINION NO: 95-257

RE: In the matter of G. Paul Marx, individually and as agent for Acadiana Lodging Corporation

The Louisiana Board of Ethics (“the Board”), at its October 16-17, 1997 meeting, ordered that a public hearing be conducted for the purposes of exploring the following:
CHARGES
1.

That Acadiana Lodging, Inc., a corporation owned by G. Paul Marx, may have violated Section 1111C(2)(d) of the Code of Governmental Ethics (LSA-R.S. 42:1101 et seq.) By receiving rents from April of 1993 until November of 1994, totaling approximately $121,000 which, pursuant to a contractual agreement, were administered by Mr. Marx’s agency, the Broussard Housing Authority.
2.

That Acadiana Lodging, Inc., a corporation owned by G. Paul Marx, may have violated Section 1113B of the Code of Governmental Ethics (LSA-R.S. 42:1101 et seq.) by entering into contracts, or other transactions, including but not limited to those which were administered by and therefore under the supervision or jurisdiction of the Broussard Housing Authority, at a time when Mr. Marx served as attorney for the Broussard Housing Authority.
3.

That G. Paul Marx, individually and through G. Paul Marx, A Professional Law Corporation, a corporation owned by Mr. G. Paul Marx, may have violated Section 1121B(2) & (3) of the Code of Governmental Ethics (LSA-R.S. 42:1101 et seq.) by virtue of Mr. Marx’s participation as Broussard Housing Authority attorney in transactions including a lawsuit involving Belnue, Inc., a corporation which Mr. Marx controlled by power of attorney and involving Acadiana Lodging, Inc., a corporation owned by Mr. Marx, and at times when both corporations had a substantial economic interest in said transactions.
4.

That G. Paul Marx may have violated Section 1111C(2)(d) of the Code of Governmental Ethics (LSA-R.S. 42:1101 et seq.) by having performed compensated services for Acadiana Lodging Corporation at a time when Acadiana Lodging, Inc. was a prohibited source of income to Mr. Marx.
5.

That G. Paul Marx may have violated Section 1121A of the Code of Governmental Ethics (LSA-R.S. 1101 et seq.) By virtue of Mr. Marx’s participation as Broussard Housing Authority’s attorney and otherwise, in a lawsuit bearing Docket No. 90-5096, in the 15th Judicial District Court; Docket No. 92-783, at the Third Circuit Court of Appeal; and Docket No. 93-C-1555, at the Supreme Court of Louisiana; and involving Belnue, Inc. and Acadiana Lodging, Inc., corporations which Mr. Marx either controlled or owned, and at times when these two corporations had an economic interest in said transactions.
6.

That G. Paul Marx may have violated Section 1121A & B of the Code of Governmental Ethics (LSA-R.S. 42:1101 et seq.) by assisting Acadiana Lodging, Inc. for compensation in a federal lawsuit which involved the Broussard Housing Authority and in which he had previously participated, less than 2 years following the termination of his service as attorney for the Broussard Housing Authority.
7.

That G. Paul Marx may have violated Section 1121A of the Code of Governmental Ethics (LSA-R.S. 42:1101 et seq.) by assisting Acadiana Lodging, Inc. for compensation in transactions involving the Broussard Housing Authority and in which he had previously participated, and with respect to the management and supervision of
a housing complex involving the Broussard Housing Authority less than 2 years following the termination of his services as attorney for the Broussard Housing Authority.

For the purpose of resolving these concerns and stated charges without an adjudication hearing, the Respondent, G. Paul Marx, has consented to alternative resolution in the forms of this consent opinion and has stipulated to the following essential:
I.
FINDINGS OF FACT
1.

G. Paul Marx, through the G. Paul Marx, A Professional Law Corporation, entered in a personal services contract with the Broussard Housing Authority (BHA) to act as its attorney on an as needed basis to provide legal services included but not limited to legal research, consultation, telephone conferences, office conferences and court appearances. The contract began approximately July 19, 1989.
2.

This contract was the basis for legal advice to the Executive Director from time to time until November, 1994 when the Supreme Court denied a Writ Application prepared by Mr. Marx and filed in June or July of that year.
3.

When a Judgment of Garnishment was issued against BHA, Mr. Marx participated in and assumed significant authority and responsibility with respect to the legal and transactional aspects of the administration by BHA of rental subsidies to an apartment complex owned by a corporation designated as Belnue, Inc. This activity was part of the settlement of a Civil Suit against BHA which resulted in the seizure of rents payable to Belnue, Inc.
4.

From the early part of 1992 through the fall of 1994 Mr. Marx was actively involved in representing the interests of BHA with respect to the garnishment action initiated by a creditor of Belnue. This suit went to Judgment and the seizing creditor gained legal title to any rents payable to Belnue, Inc.
5.

By instrument dated September 4, 1992 Mr. Marx entered into an “escrow agreement” to which BHA and Belnue, Inc. were both parties and by virtue of which Mr. Marx assumed responsibility for certain administrative aspects of the maintenance of the apartment complex then owned by Belnue, Inc.; rentals were deposited into an escrow account managed by Mr. Marx and against which charges were made by Mr. Marx for accounting, receiving and disbursement of funds and for reasonable expenses of operation including legal expenses and administrative expenses paid to Mr. Marx.
6.

In March of 1993 Mr. Marx formed a Louisiana business corporation named Acadiana Lodging, Inc.
7.

In April of 1993 Belnue, Inc. transferred its interest in the apartment complex under consideration to the corporation formed by Mr. Marx and of which he was the owner and chief operating officer, Acadiana Lodging, Inc. At the time of this transfer, the seizing Creditor’s record Judgment and the first mortgage far exceeded the value of the apartment complex.
8.

In the months that followed and during the course of which time Mr. Marx continued to serve as counsel for BHA and through Acadiana Lodging, Inc. Mr. Marx continued to administer the interest of the apartment complex, to collect the rentals and to otherwise engage in the host of related activities and responsibilities.
9.

Mr. Marx took no action on behalf of BHA after the Writ Application was filed with the Louisiana Supreme Court. The complex was seized by the First Mortgagee in foreclosure, during which time Mr. Marx acted as Court Appointed Keeper without compensation.
10.

During the period of time between January 1, 1993 and December 22, 1994 disbursements were made from accounts maintained by Acadiana Lodging, Inc. or Belnue, Inc. to Mr. Marx for the provision of legal and other related professional services in the approximate sum of $26,964.40. Disbursements in excess of that amount were used for maintenance, payments to the seizing creditor, and the first mortgagee.
II.
APPLICABLE LAW

G. Paul Marx has been charged with violating Section 1111C(2)(d), Section 1113B, 1112A and Section B(2) and (3) and Section 1121A and B of the Code.

Section 1111C(2)(d) provides as follows:

Section 1111. Payment from nonpublic sources
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C. Payment for nonpublic service.
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Section 1115 provides the following:

Section 1115. Gifts

A. No public servant shall solicit or accept, directly or indirectly, any thing of economic value as a gift or gratuity from any person or from any officer, director, agent, or employee of such person, if such public servant knows or reasonably should know that such person: financial relationships with the public servant’s agency.
* * * *

Section 1112A, B(2) and (3) provide as follows:
* * * *

Section 1121(A) and (B) provide:

Section 1121. Assistance to certain persons after termination of public service

A. No former agency head or elected official shall, for a period of two years following the termination of his public service as the head of such agency or as an elected public official serving in such agency, assist another person, for compensation, in a transaction, or in an appearance in connection with a transaction, involving that agency.

Section 1113B provides as follows:

Section 1113. Prohibited contractual arrangements
* * * *
III.
OPINION

It is the opinion and the conclusion of the Board that Mr. Marx, both directly and through the professional law corporation, violated Section 1111C(2)(d) by receiving income from a proscribed source; Section 1111C(2)(d) prohibits public servants, such as Mr. Marx, from receiving income from any person, such as Acadiana Lodging, Inc., which has “contractual or other business or financial relationships” with the BHA or which otherwise has “substantial economic interest which may be substantially affected by the performance or nonperformance” of Mr. Marx’s official duty. See LSA-R.S. 42:1115A(1) and B(2).
Furthermore, it is the opinion of the Board that Mr. Marx violated Section 1112A and B(2) and (3) of the Code by virtue of his having consistently participated as the attorney for BHA in transactions in which both he, as well as a corporation in which he was both an owner and an employee had a substantial economic interest. Despite the creation of this Corporation as part of the settlement pending litigation, the Board is of the opinion that Mr. Marx was prohibited from taking the position as owner under the applicable provisions of the Code.
Likewise, violations of the Code have occurred by virtue of the events involving Acadiana Lodging, Inc.; Acadiana likewise received income from tenants who had contractual and other business relationships with BHA; Acadiana Lodging, Inc. entered into a transaction under the supervision and jurisdiction of the agency of Mr. Marx and therefore was proscribed by reason of the application of Section 1113B of the Code.
Lastly, it is the opinion of the Board that a violation of Section 1121A and B of the Code may have occurred as Mr. Marx continued to assist other persons in transactions involving his former agency, subsequent to the termination of his pubic service and in which such transactions he had previously participated.
However, the Board recognizes that Mr. Marx may not have considered himself a “public employee” at the time of this conduct. Further, Mr. Marx has no history of prior offenses, there was no intent to defraud any party to these transactions, there is no evidence of loss or damage to any government entity (other than the proscribed receipt of compensation from Acadiana Lodging, Inc.) and the conduct is not ongoing. The Board finds that the circumstances in this case were unusual and unlikely to recur. Mr. Marx has cooperated with the staff in the course of the investigation. Acadiana Lodging, Inc. is essentially out of business.
For these reasons, and pursuant to the provisions of Section 1153 of the Code, the Board enforces a fine of $5,000 on Mr. G. Paul Marx and on Acadiana Lodging, Inc., jointly, severally and in solido and payable to the Treasurer of the State of Louisiana.
IV.
DECREE
For the reasons given:
IT IS ORDERED AND DECREED that the Acadiana Lodging, Inc., a corporation owned by G. Paul Marx, is found to have violated Section 1111C(2)(d) of the Code of Governmental Ethics;
IT IS ORDERED AND DECREED that the Acadiana Lodging, Inc., a corporation owned by G. Paul Marx, is found to have violated Section 1111C(2)(d) and Section 1113B of the Code of Governmental Ethics;
IT IS ORDERED AND DECREED that G. Paul Marx is found to have violated Section 1112A and B(2) and (3) of the Code of Governmental Ethics;
IT IS ORDERED AND DECREED that G. Paul Marx is found to have violated Section 1121A and B of the Code of Governmental Ethics;
IT IS FURTHER ORDERED AND DECREED that G. Paul Marx and Acadiana Lodging, Inc. are ordered and commanded jointly, severally and in solido to pay the State of Louisiana through the office of the State Treasurer the sum of $5,000 as a civil fine.
BY ORDER OF THE BOARD this 16th day of March, 1998.

/s/ Robert L. Roland /s/ Harry Blumenthal, Jr. Robert L. Roland, Chairman Harry Blumenthal, Jr.,Vice Chairman


Absent and did not participate. s/ E. L. Guidry, Jr.
Robert P. Bareikis E. L. Guidry, Jr


/s Virgil Orr s/ Revius O. Ortique, Jr.
Virgil Orr Revius O. Ortique, Jr.


s/ T. O. Perry, Jr. s/ Ronald L. Sawyer
T. O. Perry, Jr. Ronald L. Sawyer


Absent and did not participate Absent and did not participate
Nathan J. Thornton, Jr. Edwin O. Ware


s/ Carole Cotton Winn
Carole Cotton Winn


C O N S E N T


G. Paul Marx and G. Paul Marx, A Professional Law Corporation, through their duly authorized agent and representative:

(a) stipulate to the facts found by the Board;

(b) waive the procedural requirements contained in LSA-R.S. 42:1141 et seq.;

(c) consent to the publication of this opinion;

(d) agree to comply with the conditions and order set forth therein; and

G. Paul Marx and G. Paul Marx, A Professional Law Corporation

/s/ G. Paul Marx
Agent and Authorized Representative

C O N S E N T


Acadiana Lodging, Inc., a corporation owned by G. Paul Marx, through its duly authorized agent and representative:

(a) stipulate to the facts found by the Board;

(b) waive the procedural requirements contained in LSA-R.S. 42:1141 et seq.;

(c) consent to the publication of this opinion;

(d) agree to comply with the conditions and order set forth therein; and

(e) agree not to seek judicial review of the findings and actions taken by the Board in this opinion.

Acadiana Lodging, Inc.

/s/ G. Paul Marx
Agent and Authorized Representative
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