Mixing Business With Pleasure?
Mr. James Franzoni, a principal at SF&C Insurance Associates, Inc., purchased a house at 5021 Brooks Road in Woolford, MD, in June of 2001.
Less than three years later, in January 2004, the property appears to have been transferred to a limited liability corporation, Windmill Place LLC for a price of $0.
Windmill Place LLC had as its address, Suite 201, 7400 York Road, Towson, MD, 21204.
Suite 201, 7400 York Road was also the address of SF&C Insurance Associates, Mr. Franzoni’s firm.
Some may be familiar with SF&C or Mr. Franzoni as the IAFF has a substantial financial relationship with SF&C since they sell insurance and other services to our union.
(Nationwide paid IAFF-FC $1,268,750 as an “endorsement fee” in 2012. The IAFF receives that hefty sum because of our “ongoing evaluation and review of the products and services offered by Nationwide”, whatever that means.)
In December of 2010, Windmill Place LLC sold the 3856 sq. ft., 4.5 bath, house along with 14.05 acres to Harold Schaitberger for $1,100,000, apparently for use as a second residence.
Windmill Place LLC now appears to be a defunct entity as it was “forfeited” for failure to file a property return for 2011 with the state of Maryland.
Conflicts and Impropriety
The presence of a conflict of interest is independent of the occurrence of impropriety. A widely used definition of a conflict of interest is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest.
Indeed, the United States Code of Federal Regulations (5 CFR 2635.502) example on Business and Personal Relationships is eerily similar to the Windmill transaction:
“An employee of the General Services Administration [Harold Schaitberger, IAFF-GP] has made an offer to purchase a restaurant [house] owned by a local developer [ Windmill LLC]. The developer [Windmill LLC] has submitted an offer in response to a [Harold Schaitberger, IAFF-GP] solicitation for lease of office space [insurance]. Under the circumstances, the employee would be correct in concluding that a reasonable person would be likely to question her impartiality if she were to participate in evaluating that developer’s or its competitor’s lease proposal.”
People who really care about ethics and conflict of interest, including judges and others in government service, employ a commonsense standard that has become part of federal law. Quite simply, when engaging in any activity it is ethically proper to “avoid even the appearance of impropriety.”
In a nutshell, stay away from actions or situations that might even appear improper. Most of us when confronted with such a situation can hear a voice in our head, probably a parent, saying, “You know better.”
It’s hard to believe that any ethics officer, when briefed on such a potential deal and given the existing business relationship and fiduciary responsibility of IAFF officers, would approve it.
Lawyers are often tasked with advising on such ethical matters and indeed the IAFF has a law firm, Woodley and McGillivary. In the very unlikely event that they would be asked to provide an ethical opinion, they would also be subject to a conflict of interest as one of their attorneys assigned to the IAFF is the son of the one-time owner of the house, James Franzoni.
It is at least amazing, if not downright extraordinary, given all of the thousands of homes for sale in the Washington metropolitan region, that IAFF General President Harold Schaitberger just happens to make his million dollar second-home purchase from a company owner the IAFF does substantial business with.
One truly has to wonder about the judgment of someone who would engage in such a deal since it is his job to set the ethical standard for the entire IAFF, including the Executive Board and affiliate locals.
And, speaking of the Board, it once again raises the question of whether or not ethical and fiduciary standards are in place at the IAFF and why the IAFF Executive Board does not take its governance and ethics role seriously?
‘Tis all very cozy, indeed.
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