2003-704 DeWitt
Created By: Sylvia Scott on 12/15/2003 at 09:31 AM
Category: Ethics Rulings
Caption:


LOUISIANA BOARD OF ETHICS

DATE: December 11, 2003 OPINION NO.: 2003-704

RE: In the matter of Charlie DeWitt
The Louisiana Board of Ethics (the “Board”), pursuant to the provisions of Section 1141 of the Code of Governmental Ethics (the “Code”), conducted an investigation concerning information received that violations of Sections 1115A(2) and 1112B(5) of the Code may have occurred by virtue of Representative Charlie DeWitt’s acceptance of an interest in a racehorse through Redneck Racing, L.L.C. from the officers/directors of the Fair Grounds, at a time when the Fair Grounds employed the services of lobbyists and participated in transactions involving legislation that affected the Fair Grounds.
On the basis of the information obtained during the course of the investigation and with the consent of Rep. DeWitt, the Board now makes the following essential:
I.
FINDINGS OF FACT
1.
Rep. DeWitt has served as a member of the Louisiana House of Representatives since 1979.
2.
On or about September 27, 2000, Rep. DeWitt, Randall Womack and Paul Gallagher, formed Redneck Racing, L.L.C. in which each of the three members owned an equal interest and in which the profits and losses were allocated equally between the three members. An examination of the records of Redneck Racing, L.L.C. showed that there were no profits and the losses were in fact shared equally between the members.
3.
At all pertinent times, Bryan and Vickie Krantz owned 78% of the Fair Grounds and served as officers/directors of the Fair Grounds. The Fair Grounds has employed the services of lobbyists Paul Gallagher and Randall Womack.
4.
On October 4, 2000, the Krantzes and Redneck Racing, L.L.C. entered into an agreement concerning the ownership of a racehorse named Noinbetweeners, in which Redneck Racing, would own 49% of the horse and the Krantzes would own the remaining 51% interest in the horse. The parties agreed that Redneck Racing, L.L.C. was responsible for 50% of the $15,000 purchase price of the horse, and that to this amount, 50% of the winnings would be credited and 50% of the expenses of the horse would be debited. The parties agreed that the account would be settled at the end of the racing season.
5.
The expenses of Noinbetweeners totaled $10,327.50 and the winnings of the horse totaled $10,145. Noinbetweeners was sold on March 26, 2001 for $7,500. Accordingly, a net loss of $7,682.50. was realized on the horse and Redneck Racing’s share of the loss was $3,841.25.
6.
On November 7, 2003, Redneck Racing, L.L.C. paid the Krantzes $3,720.82; this sum purportedly represented the portion of Redneck Racing’s share of the loss sustained by Noinbetweeners.
7.
On or about April 11, 2002, applications for licenses filed with the Kentucky Racing Commission reflected that a horse named Voodoo Princess, which was previously owned and raised by the Krantzes, was owned 49% by Redneck Racing, L.L.C. and 51% by Vickie L. Krantz. There was no agreement as to the purchase price by Redneck Racing of its interest in this horse. The Board has been informed that it was the intention of the Krantzes and Redneck Racing to “settle up” on the profits and losses with respect to the horse at the end of the racing season. Voodoo Princess ran one race and did not finish in the money, and subsequently died after that race in November 2002.
8.
On September 9, 2003, Redneck Racing, L.L.C. paid the Krantzes $2,800 to cover its share of the expenses incurred in connection with its ownership interest in Voodoo Princess.
9.
During the 2001 Regular Legislative Session, Rep. DeWitt played an integral role in the passage of legislation which allowed certain forms of electronic wagering at riverboat casinos, as well as racetracks; however, the Fair Grounds was excluded from the legislation.
II.
APPLICABLE LAW
Section 1115A(2) of the Code prohibits an elected official from receiving a thing of economic value as a gift from the officers/directors of a company that employs the services of paid lobbyists. This section provides in pertinent part:
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:
* * *
(2) Is seeking, for compensation, to influence the passage or defeat of legislation by the public servant's agency.

Sections 1112B(5) of the Code prohibits a public servant from participating in a transaction in which a person with whom the public servant (or his company) has a contractual agreement and can by virtue thereof, affect the economic interest of the public servant. This section provides in pertinent part:
1112. Participation in certain transactions involving the governmental entity
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B. No public servant, except as provided in R.S. 42:1120, shall participate in a transaction involving the governmental entity in which, to his actual knowledge, any of the following persons has a substantial economic interest:
* * *
(5) Any person who is a party to an existing contract with such public servant, or with any legal entity in which the public servant exercises control or owns an interest in excess of twenty-five percent, or who owes any thing of economic value to such public servant, or to any legal entity in which the public servant exercises control or owns an interest in excess of twenty-five percent, and who by reason thereof is in a position to affect directly the economic interests of such public servant.
* * *
The following terms are defined in Section 1102 of the Code and are relevant to an analysis of the above Sections:
(15) “Participate” means to take part in or to have or share responsibility for action of a governmental entity or a proceeding, personally, as a public servant of the governmental entity, through approval, disapproval, decision, recommendation, the rendering of advice, investigation, or the failure to act or perform a duty.
(16) “Person” means an individual or legal entity other than a governmental entity, or an agency thereof.
(21) “Substantial economic interest” means an economic interest which is of greater benefit to the public servant or other person than to a general class or group of persons. . .
(22)(a) “Thing of economic value” means money or any other thing having economic value, except promotional items having no substantial resale value; food, drink, or refreshments consumed by a public servant, including reasonable transportation and entertainment incidental thereto, while the personal guest of some person, and, with reference to legislators and employees in the legislative branch of state government only, reasonable transportation when organized primarily for educational or informational purposes, including food and drink incidental thereto, and includes but is not limited to:
(i) Any loan, except a bona fide loan made by a duly licensed lending institution at the normal rate of interest, any property interest, interest in a contract, merchandise, service, and any employment or other arrangement involving a right to compensation.
(ii) Any option to obtain a thing of economic value, irrespective of the conditions to the exercise of such option.
(iii) Any promise or undertaking for the present or future delivery or procurement of a thing of economic value.
III.

OPINION
No evidence was obtained that the Fair Grounds had a substantial economic interest in the legislation introduced during the 2001 Regular Legislative Session. Section 1112B(5) of the Code prohibits a public servant from participating in a transaction in which a person has a substantial economic interest, when that person has a contract with the public servant or his company and, by virtue of that contract, can affect the economic interest of the public servant or his company. “Substantial economic interest” is defined as an economic interest that is of greater benefit to the person than a group or class or persons. The business relationship between Redneck Racing, L.L.C. and the Krantzes existed between October 4, 2000 and March 26, 2001 and April 11, 2002 and November 2002. During that time, no evidence was obtained that the Fair Grounds had a substantial economic interest in a matter before the Legislature. Accordingly, it is the opinion of the Board that Rep. DeWitt did not violate Section 1112B(5) of the Code by using the power of his office or position to influence the passage of legislation in which the Fair Grounds had a substantial economic interest.
Section 1115A(2) of the Code not only prohibits a public servant from receiving a gift or gratuity from a lobbyist who is compensated by his principal to influence the passage or defeat of legislation, but also from the principal, or any officer, director, agent, or employee of the principal. The Fair Grounds employs the services of lobbyists to assist it in influencing the passage or defeat of legislation. The Krantzes are officers/directors of the Fair Grounds. Therefore, it is the opinion of the Board that the acceptance by a legislator of a gift from the Krantzes presents a violation of the Code.
The Louisiana Board of Ethics is authorized to impose a penalty of up to $10,000 for the violation of a provision of the Code. In this particular situation, given the facts outlined above, it is the conclusion of the Board that a $5,000 penalty should be imposed.
IV.
DECREE AND ORDER
For the foregoing reasons:
IT IS ORDERED, ADJUDGED AND DECREED that the Board finds as a matter of fact and as a conclusion of law that Rep. DeWitt did not violate Section 1112B(5)of the Code of Governmental Ethics by reason of his legislative conduct.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Board finds as a matter of fact and as a conclusion of law that by virtue of the transaction between Redneck Racing, L.L.C. and the Krantzes, Representative DeWitt violated Section 1115A(2) of the Code.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that a civil penalty of $5,000, payable to the Treasurer of the State of Louisiana, be and is hereby imposed on Charlie DeWitt.
By Order of the Board this 11th day of December 2003.

s/Robert L. Roland s/T. O. Perry
Robert L. Roland, Chairman T. O. Perry, Jr., Vice-Chairman

s/Janice Martin Foster s/John W. Greene
Janice Martin Foster Judge John W. Greene



s/E. L. Guidry, Jr. s/R. L. Hargrove, Jr.
Judge E. L. Guidry, Jr. R. L. Hargrove, Jr.



s/Michael J. Kantrow, Sr. s/Joseph Maselli
Michael J. Kantrow, Sr. Joseph Maselli



s/Hank Perret s/A Delgado Smith
Henry C. Perret, Jr. Ascension Delgado Smith



s/Edwin O. Ware
Edwin O. Ware

CONSENT

The undersigned (a) stipulates to the facts found by the Board; (b) waives the procedural requirements contained in Section 1141 of the Code; (c) admits that his conduct, as described above, violated Section 1115A(2) of the Code; (d) consents to the publication of this opinion; (e) agrees to comply with the conditions and orders set forth in this opinion; and (f) agrees not to seek judicial review of the findings and actions taken in this opinion.


s/Charlie DeWitt 12/10/03 Charlie DeWitt Date
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