Understanding the Gift Ban: Ethics Conference Overview

1. The gift ban 2019 Ethics Officer Conference Barbara K. Myers Assistant Counsel, Executive Ethics Commission

2. Overview of the Gift Ban • Who is subject to the Gift Ban? • What is a gift? • Who/what is a prohibited source? • Exceptions/Penalties/Disposal • The Gift Ban in action • Questions introduction

3. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions OVERVIEW • Purpose of the Gift Ban • Article 10 of the Ethics Act • “Except as otherwise provided in this Article, no officer, member, or State employee shall intentionally solicit or accept any gift from any prohibited source or in violation of any federal or State statute, rule, or regulation. This ban applies to and includes the spouse of and immediate family living with the officer, member, or State employee. No prohibited source shall intentionally offer or make a gift that violates this Section.” 5 ILCS 430/10-10

4. Who is subject?

5. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Who is subject? • 5 ILCS 430/10-10 • [N]o shall intentionally solicit or accept any gift from any prohibited source or in violation of any federal or State statute, rule, or regulation. This ban applies to and includes the officer, member, or State employee spouse of and immediate family living with the officer, member, or State employee.

6. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Who is subject? • 5 ILCS 430/1-5 • Member • of the General Assembly • Officer • Executive Branch constitutional officer • Legislative Branch constitutional officer • Employee • Full-time, part-time, contractual “subject to direction and control” • Appointed or elected commissioner, trustee, director, board member • Agency = everything except the judicial branch

7. What is a “gift”?

8. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions What is a “gift”? • 5 ILCS 430/1-5 • [A]ny gratuity, discount, entertainment, hospitality, loan, forbearance, or other tangible or intangible item having monetary value including, but not limited to, cash, food and drink, and honoraria for speaking engagements related to or attributable to government employment or the official position of a [MOE]

9. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions What is a “gift”? • Nearly any benefit is a “gift” • Could include fee waivers • Does NOT include compensation/fees for services • Does NOT include legitimate reimbursement for damages to MOE’s property

10. Prohibited sources

11. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • 5 ILCS 430/1-5 • Any person/entity who • Seeks official action • Does business or seeks to do business • Conducts activities regulated • Has interests that could be substantially affected • Is a State-registered lobbyist • Is an agent, spouse, or immediate family member of ↑

12. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • Any person/entity who • Seeks official action • By MOE or • Agency/supervisor directing E • Official action = ?

13. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • Any person/entity who • Does business or • Seeks to do business • With MOE • Or agency/supervisor directing E • Vendors/would-be vendors

14. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • Any person/entity who • Conducts activities regulated by MOE • Or agency/supervisor directing E • Can source give to agency Es who don’t make regulatory decisions?

15. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • Any person/entity who • Has interests that may substantially be affected • By performance or non-performance of duties • Of MOE or agency/supervisor directing E • Covers non-licensing/regulatory decisions • Agency attorneys/ALJs • University professors/State HS teachers

16. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • Any person/entity who • Is registered or required to be registered w/ SOS under Lobbyist Registration Act • Entity does not become prohib’d source merely because lobbyist is member or serves on board of directors

17. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • State lobbyists = prohib’d source for ALL MOEs • Vendors/regulated persons and entities can be prohib’d sources for some MOEs but not others • Does not apply to federal lobbyists or lobbyists registered in other states

18. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Prohibited sources • Prohib’d source may not launder gifts through non-prohib’d sources • Gift Ban prohibits MOEs from receiving and soliciting gifts from prohib’d sources • Exercise caution when soliciting for charity • No known prohib’d sources • Not on State letterhead or time

19. Exceptions

20. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • 5 ILCS 430/10-20 • Opportunities, benefits and services available on same conditions as general public • Anything for which MOE pays market value • Generally advertised offers • Widely available industry discounts

21. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • Gifts from relatives • Spouse, fiancé or fiancée • Father, mother, son, daughter, brother, sister • Uncle, aunt, great uncle, great aunt, first cousin, nephew, niece • Grandfather, grandmother, grandson, granddaughter • FIL, MIL, SIL, DIL, BIL, SIL • Steps, halfs • Spouse’s father, mother, grandfather, grandmother

22. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • Gifts from personal friends • UNLESS MOE has reason to believe the gift was based on MOE’s position, not personal friendship • Circumstances to consider • History of relationship, including gift-giving • Whether giver paid for gift or sought tax deduction/business reimbursement • Whether MOE actually knew giver gave same or similar gifts to other MOEs at the same time

23. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • Political contributions • “Any (i) contribution that is lawfully made under the Election Code or under this Act or (ii) activities associated with a fundraising event in support of a political organization or candidate.”

24. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • Benefits related to outside employment • Food, refreshments, lodging, transportation • If not offered/enhanced bc of MOE’s State position • And are customarily provided to others in similar circumstances • But-for test

25. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • Intra- and inter-governmental gifts • Intra = same agency • Inter = any other unit of government at any level

26. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions exceptions • Bequests, inheritances, and other transfers at death

27. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Exceptions with exceptions • Executive Order 15-09 • January 13, 2015 • Mostly eliminated four major exceptions for most State Es • Purports to apply to all State Es • These exceptions still exist for MOs

28. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Exceptions with exceptions • Any item(s) from any one prohibited source during any calendar year having a cumulative value of <$100 • Food or refreshments <$75 per person per calendar day IF consumed where purchased or catered • EO15-09: “De minimis meals” • Travel expenses for meeting to discuss State business • Except a few expenses if paid directly & approved by EEC Director • Educational materials and missions

29. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Exceptions with exceptions • Agencies and officers can adopt policies that are more strict than the Gift Ban and eliminate exceptions

30. penalties

31. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions PENALTIES • 5 ILCS 430/50-5 • Business offense, fine of $1,000 - $5,000 (50-5(c)) • Employee’s intentional violation can mean discipline or discharge (50-5(f)) • Ethics commission may levy additional fine of up to $5,000 for intentionally obstructing or interfering with investigation or intentionally making false, frivolous, or bad faith allegation (50-5(e)) • Accepting gift could also constitute bribery, a Class 2 felony (720 ILCS 5/33-1) • Could also be a federal crime • Martin and Hernandez, OEIG Case No. 15-02081

32. disposal

33. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions DISposal • 5 ILCS 430/10-30 • A MOE does not violate the Ethics Act if the MOE promptly takes action to • Return the prohibited gift to its source • Give the gift to an “appropriate” 501(c)(3) charity • Give an amount equal to the gift’s value to an “appropriate” 501(c)(3) charity • What’s “prompt”? • Undefined; waiting several months has been found not to be prompt • What’s an “appropriate” charity? • ¯\_(ツ)_/¯ • Lumping donation in with a pre-existing regular donation doesn’t count

34. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions DISposal • Things to consider: • Let’s assume you’re a MOE who accepted a gift of baseball tickets worth $150 from a prohibited source. • What’s the best course of action if... • You haven’t already gone to the game? • Don’t go! Return the tickets • Give the tickets to 501(c)(3) charity :-/ • You have already gone to the game? • Donate $150 to 501(c)(3) charity ASAP • Above and beyond regular gift amount • If MO, do not stack $50 on top of your $100 “freebie” • Probably do not deduct the $150 donation from your taxes

35. The gift ban in action

36. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Best practices • Do not accept non-prohibited gifts if it could lead to appearance that giver will receive unfair benefit • Do not accept from vendors if possible • Solicitations for charity are better off coming from non-employees • “Stringing” (e.g., ten $90 gifts from ten different company employees) is not appropriate • Ethics Officers might consider sending Gift Ban reminders around holidays

37. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Questions to ask: • Does the Gift Ban apply to the recipient? • Is he or she a MOE or a family member living with a MOE? • Is the gift a “gift”? • Tangible or intangible benefit? • Is the source prohibited? • Seek official action from the MOE/MOE’s agency? • Have or seek contract with the MOE’s agency? • Conduct activities regulated by the MOE’s agency? • Other “interests that may substantially be affected”? • State-registered lobbyist?

38. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Questions to ask: • Do any exceptions apply? • Offered to general public on same terms? • Paid FMV? • From family member? • <$75 on-site or “de minimis” meal? • If MO, <$100? Any other gifts from that source during last calendar year? • Did the recipient return the gift? • Did the recipient legally dispose of the gift?

39. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #1: Bewarebnb • The owner of a food company offers to let a State university’s athletics director stay in the owner’s empty apartment in California when the athletics director and his wife are on vacation there. • The athletics director accepts and spends three nights at the apartment with his wife. • What additional facts do we need?

40. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #1: Bewarebnb • The owner of a food company offers to let a State university’s athletics director stay in the owner’s empty apartment in California when the athletics director and his wife are on vacation there. • The athletics director accepts and spends three nights at the apartment with his wife. • Additional facts: • Sponsorship agreement with the University • Owner not related to or friends with the athletics director • Owner offered apartment exclusively to the athletics director • Owner let the athletics director use the apartment for free

41. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #1: Bewarebnb • The owner of a food company offers to let a State university’s athletics director stay in the owner’s empty apartment in California when the athletics director and his wife are on vacation there. • The athletics director accepts and spends three nights at the apartment with his wife. • Did the athletics director violate the Gift Ban? • Yes. • In re: Levinson, OEIG Case No. 11-00391. • Real facts were more complicated; involved sports tickets, additional university Es, and procurement irregularities • Did the food company violate the Gift Ban?

42. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #2: Fly the Weirdly Friendly Skies • A State employee whose job entails licensing a certain type of business is planning a trip overseas. She wants to take her daughter with her, but neither she nor her daughter can afford the airfare. • Somehow, this situation comes up during a phone call between the State employee and someone who owns the kind of business the employee licenses. • The business owner offers to pay for the daughter’s airfare, which costs about $3000. • The State employee accepts the offer. The business owner pays for the daughter’s airfare and the daughter joins the State employee on the trip. • The State employee pays the business owner back nine months later. • What additional information do we need?

43. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #2: Fly the Weirdly Friendly Skies • A State employee whose job entails licensing a certain type of business is planning a trip overseas. She wants to take her daughter with her, but neither she nor her daughter can afford the airfare. • Somehow, this situation comes up during a phone call between the State employee and someone who owns the kind of business the employee licenses. • The business owner offers to pay for the daughter’s airfare, which costs about $3000. • The State employee accepts the offer. The business owner pays for the daughter’s airfare and the daughter joins the State employee on the trip. • The State employee pays the business owner back nine months later. • Additional facts: • Daughter lives with the State E • Biz owner is not related to the State E; never met her in person until State E repaid the loan • Biz owner sought license renewal from the State agency

44. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #2: Fly the Weirdly Friendly Skies • Did the employee violate the Gift Ban? • Yes. This hypothetical is based on Hickey v. Perriman, 16-EEC-005. • “Loans” are defined as gifts • Agency imposed 30-day unpaid suspension, EEC levied $1,000 fine • Did the business owner violate the Gift Ban? • Yes.

45. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions The gift ban in action • Hypothetical #2: Fly the Weirdly Friendly Skies • What if we change a few facts? • The daughter is an adult and does not live with the State employee. The business owner gave the money directly to the daughter. • The business owner is the State employee’s mother. • The business owner is the State employee’s Internet boyfriend. • The business owner lives and operates her business in Missouri.

46. Questions?

47. Overview • Who is subject to the Gift Ban? • What is a “gift”? • Who/what is a “prohibited source”? • Exceptions/ • Penalties/ • Disposal • The Gift Ban in action • Questions Questions? • Questions? • I can’t answer questions about specific, extant situations in this forum  • Call Chad Fornoff