Ethics rules require Crosby recusal
Commissioner is ‘gaming’ the new code
The Boston Globe published stories on November 21 and December 8 revealing that Steve Crosby, chairman of the Gaming Commission, had a previous seven-year business partnership with Paul Lohnes, part-owner of a land parcel in Everett that is the proposed site of a casino in competition to win the sole casino license in Eastern Massachusetts. According to the Globe stories, Crosby and Lohnes have had a 40-year relationship and Lohnes had provided crucial investment money to Crosby’s company when it was struggling. According to the Globe stories, a partnership including Crosby’s former business partner purchased the Everett site in 2009 at a price of $8 million. Subsequently, according to the Globe stories, the property was put under a land option agreement at a price of $70 million, contingent on the awarding a casino license for the site.
Crosby responded to the Globe by posting on the Gaming Commission’s website two “Disclosure[s] of Appearance of Conflict of Interest Disclosure in accordance with G.L c. 286(A), & 23(b)(3)” that he had filed on Aug. 22, 2013 with the governor’s office and on Oct. 25, 2013 with the State Ethics Commission. Crosby also issued a written statement announcing his intention to recuse himself from the commission’s decision-making process involving the Everett land option but stating that he will continue to participate in the licensing process for Eastern and Western Massachusetts.
Crosby’s response doesn’t do justice to the “Enhanced Code of Ethics” that the Gaming Commission adopted on Feb. 13, 2013 that governs his conduct as a commissioner. Given Crosby’s and Lohnes’s relationship, the “Enhanced Code of Ethics” prohibits Crosby from participating in the licensing process for Eastern Massachusetts.
The 2011 state law authorizing casino gambling in Massachusetts specifically mandates that the Gaming Commission adopt a code of ethics for its commissioners and employees more restrictive than the one applicable to other state employees. The Legislature did this to address the heightened vulnerability of gaming commissioners to conflicts-of-interest in the awarding of casino licenses worth hundreds of millions of dollars, and to protect public confidence in the awarding process.
The Gaming Commission complied with the statutory requirement by adopting an “Enhanced Code of Ethics” on Feb. 13, 2013, stating: “No Commissioner, employee, or consultant may participate in a particular matter, as defined by G.L. c.268A, §1, pending before the Commission that may affect the financial interest of . . . a person with whom they have a ‘significant relationship.’” The “Enhanced Code of Ethics” adopted by the commission defines “a significant relationship” as “anyone with whom a person shared an influential or intimate relationship that could reasonably be characterized as important.” Thus, the Gaming Commission fulfilled its statutory requirement by establishing an outright ban on a commissioner’s participating in matters that may affect the financial interest of persons with whom the commissioner shares a present or prior influential relationship. This outright prohibition provision is much stricter than the conflict-of-interest established by G.L c. 286(A), & 23(b)(3) pertaining to other state employees.
Given the facts reported by the Globe and by Crosby’s own disclosures, it is evident that Crosby and Lohnes “shared an influential . . . relationship that could reasonable be characterized as important.” Had the Legislature not required the Gaming Commission to adopt stricter ethics standards, including the outright prohibition provision, Crosby would have fallen under the regular ethics laws applicable to other state employees that would have allowed him to participate in the Eastern Massachusetts licensing process by simply making a disclosure to his appointing authority and agreeing to perform his official duties objectively and fairly. In fact, this is exactly what Crosby has chosen to do, acting as if his conduct is subject to G.L c. 286(A), & 23(b)(3) instead of to the “Enhanced Code of Ethics” including the outright prohibition provision.
Crosby is attempting to game the Gaming Commissions’ tough, new Enhanced Code of Ethics. The legislatively mandated Enhanced Code of Ethics prohibits Crosby from participating in a matter affecting the financial interest of people like Lohnes, with whom Crosby had a significant relationship as defined by the new ethics code. Lohnes has a financial interest in the licensing process for Eastern Massachusetts, since the value of his land interest is dependent on a land option triggered by casino license approval.
Crosby’s decision to recuse himself from deliberations about the Everett land but not from deliberations about the casino license for the land makes a mockery of the new ethics rules. The value of the land to Lohnes’ company is dependent on whether the Gaming Commission selects Everett as the approved casino site for Eastern Massachusetts. If the Gaming Commission selects Everett for the casino license, Lohnes and his partners in FBT Everett Realty stand to make a windfall profit; if not, they don’t. Crosby has already acknowledged that his prior relationship with Lohnes requires him to recuse himself from the land deliberations; it should be obvious to any objective observer that the casino licensing decision, and not the land deliberations, represents the trigger to windfall profits for his former business partner.To protect the public trust and safeguard the ethical integrity of the Gaming Commission, Crosby should recuse himself from further deliberations about the Eastern Massachusetts casino license as the new, enhanced ethics rules require.
Greg Sullivan is research director of the Pioneer Institute and the former state Inspector General.