Separation of Powers Leads Court To Narrow Criminal Conflict of Interest Statute

Government Code Section 1090 forbids state and local legislators and other officials from having a financial interest in a contract approved by them, or by a legislative body of which they are members. Can a legislator be convicted of aiding and abetting a section 1090 violation if he or she votes to approve a contract in which another public official has a financial interest? The Court of Appeal for the Fourth Appellate District, Division Three, has said "no," at least where (a) the legislator himself or herself has no economic interest in the contract; and (b) the alleged criminal activity consists entirely of acts connected to the legislative process--i.e., urging the passage of, or voting on, proposed legislation. The court based its ruling squarely on the separation of powers embodied in Article III, Section 3 of the California Constitution, while simultaneously acknowledging that that provision does not literally apply to local legislators.

The decision in D'Amato v. Superior Court (available here) grew out of the following facts. D'Amato was a member of the Plascentia City Council. In 2000, the council approved the formation of a Joint Powers Authority known as ONTRAC. D'Amato became one of the three ONTRAC board members. Becker was the City's Public Works Director, but he also wanted to be ONTRAC's general manager. The ONTRAC board hired Becker's company to be the general manager. Becker was indicted for violating Section 1090 and D'Amato was indicted for aiding and abetting Becker's Section 1090 violation. The trial court denied a motion to quash the indictment and D'Amato filed a writ petition to overturn that decision.

The court granted the writ. The court based its decisions on separation of powers principles that forbid courts from scrutinizing the motives of individual legislators. No such scrutiny is required for a "direct" Section 1090 violation, because the statute criminalizes the holding of a financial interest in a contract that is approved by the legislative body of which the defendant is a member regardless of whether the individual legislative defendant votes to approve the contract. However, such scrutiny is required for aiding and abetting someone else's violation of the statute. For example, one of the counts in the indictment was based on the fact that D'Amato voted to approve the JPA that created ONTRAC. But that's a quintessentially legislative act. So was approval of the contract between ONTRAC and Becker. In the absence of a showing that the legislator himself had a financial interest in the contract, there could be no aiding and abetting liability. As the court explained, a contrary ruling could place county district attorneys in a supervisorial role over all local legislators--a result the court found untenable: "Given the broad reach of criminal and civil liability under sections 1090 and 1097, applying aider and abettor liability to the financially-interested official’s fellow public servants would turn a powerful tool against financial conflicts of interest into a dangerous weapon enabling a prosecutor to seek removal of an entire legislative body, both duly elected officials and staff members, based on a single official’s financial interest. Equally troubling, a prosecutor could influence a public agency’s future legislative path by picking and choosing which officials and staff members to prosecute, and which to leave alone."

This is a fascinating decision and seems entirely correct. Indeed, the opinion stated that its interpretation of Section 1090 was consistent with all of the 423 cases listed in Shepard's as citing the statute, other than dicta in one opinion dating from 1952. No doubt the prosecutor will file a petition for review, claiming that the decision hampers his ability to safeguard the integrity of local officials. Even if that is untrue, the importance and novelty of the case may well lead the Supreme Court to grant review.