State of New Jersey

OFFICE OF ADMINISTRATIVE LAW

INITIAL DECISION
OAL DKT. NO. CFB 16273-16
AGENCY DKT. NO. LFB 15-026

DAVID MIZRAHI,
Petitioner,
v.
LOCAL FINANCE BOARD,
Respondent.

__________________________________

David Mizrahi, petitioner, pro se

Valentina M. DiPippo, Deputy Attorney General, for respondent (Christopher S.

Porrino, Attorney General of New Jersey, attorney)

Record Closed: September 28, 2017 Decided: October 19, 2017

BEFORE SARAH G. CROWLEY, ALJ:

STATEMENT OF THE CASE AND PROCEDURAL HISTORY

Respondent, Local Finance Board (LFB) asserts that petitioner, David Mizrahi was
involved in a conflict of interest and thereby violated N.J.S.A. 40A:9-22.5(d) by
simultaneously holding positions as the fire commissioner on the Board of Fire
Commissioners of the Lakewood Fire District and as the president of a Local Volunteer
Fire Company within the Lakewood Fire District. On May 11, 2016, the LFB issued a

New Jersey is an Equal Opportunity Employer

OAL DKT. NO. CFB 16273-16

Notice of Violation finding that petitioner violated N.J.S.A. 40A:9-22.5(d). A $100 fine was
imposed.

Petitioner requested an administrative hearing on June 3, 2016. On October 26,

2016, the matter was transmitted to the Office of Administrative Law (OAL) as a contested
case. N.J.S.A. 52:14B-1 to -15 and N.J.S.A. 52:14F-1 to -13. A motion for summary
decision was filed by the respondent on June 8, 2017. The petitioner requested an
extension of time to file and answer, which was granted. A response to the motion was
filed on September 28, 2017.

For the reasons discussed below, the LFB’s motion for summary decision charging
that petitioner violated N.J.S.A. 40A:9-22.1 to -22.25, when he simultaneously held the
positions of fire commission on the Board of Fire Commissions of the Lakewood Fire
Department and president of the Local Volunteer Fire Company within the Lakewood Fire
District is GRANTED, and the fine of $100 is AFFIRMED.

UNDISPUTED FACTS

David Mizrahi (Mizrahi) is an elected Commissioner on the Board of Fire

Commissioners (Fire Commission) for the Lakewood Fire District No. 1.1 Mizrahi’s term
on the Fire Commission began on March 3, 2015, and runs through February 2018. At
the time Mizrahi was elected to the Fire Commission he also held the position of president
of Station 64, a volunteer fire company that operates within the Lakewood Fire District
No. 1. Mizrahi’s term as president of Station 64 ran from October 2014 through
September 2015. Thus, from the beginning of March 2015 through September 2015,
Mizrahi was both a commissioner on the Fire Commission and president of Station 64.

On March 30, 2015, David Mizrahi sought the advice of the Fire Commission’s
counsel as to whether there was an ethical conflict with holding both the position of
commissioner and president of Station 64. On May 6, 2015, the lawyer advised him that

1
Mizrahi is, in fact, the Chairperson of the Fire Commission.

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two statutory provisions governing dual office holding, N.J.S.A. 40A:9-4(6) and N.J.S.A.
40A:14-68, permitted him to serve in both positions so long as he recused himself from
financial matters related to Station 64. Mizrahi thereafter continued to serve as both
commissioner and president.

On June 15, 2015, the Local Finance Board (the Board) received a Local
Government Ethics Complaint which asserted that Mizrahi had violated the Local
Government Ethics Law, N.J.S.A. 40A:9-22.1 to -22.25, by simultaneously holding both
positions. The Board investigated, and on May 11, 2016, issued a notice of violation and
assessed a fine of $100. Specifically, the Board found that Mizrahi’s dual service violated
N.J.S.A. 40A:9-22.5(d), which states that “[n]o local government officer or employee shall
act in his official capacity in any matter where he has a direct or indirect financial or
personal involvement that might reasonably be expected to impair his objectivity or
independence of judgment,” and N.J.S.A. 40A:9-22.5(e), which provides that “[n]o local
government officer or employee shall undertake any employment or service, whether
compensated or not, which might reasonably be expected to prejudice his independence
of judgment in the exercise of his official duties.”

LEGAL DISCUSSION AND ANALYSIS

The sole issue in this case is whether the Board has established that Mizrahi
violated the Local Government Ethics Law by simultaneously serving as a commissioner
for the Fire Commission and as the president of a local fire company within the Fire
Commission’s jurisdiction and, if so, that a $100 fine is appropriate for such a violation.

Summary Decision

The rules governing practice in the OAL provide that a motion for summary
decision may be granted if there is no genuine issue of material fact and the moving party
is entitled to prevail as a matter of law. This provision mirrors the language of Rule 4:46-
2 and the Supreme Court’s decision in Judson v. Peoples Bank and Trust Co. of
Westfield, 17 N.J. 67 (1954). Under N.J.A.C. 1:1-12.5(b), the determination to grant

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Summary Judgment should be based on the papers presented as well as any affidavits,
which may have been filed with the application. In order for the adverse, i.e., the non-
moving party to prevail in such an application, responding affidavits must be submitted
showing that there is indeed a genuine issue of fact, which can only be determined in an
evidentiary proceeding. The Court in Brill v. Guardian Life Insurance Co. of American,
142 N.J. 520, 523 (1995), set the standard to be applied when deciding a Motion for
Summary Judgment. Therein the Court stated:

The determination whether there exists a genuine issue with

respect to a material fact challenged requires the Motion
Judge to consider whether the competent evidential materials
presented, when viewed in the light most favorable to the non-
moving party are sufficient to permit a rational fact finder to
resolve the alleged disputed issue in favor of the non-moving
party.

If the non-moving party’s evidence is merely colorable, or is not significantly

probative, Summary Judgment should not be denied. Bowles v. City of Camden, 993 F.
Supp. 255, 261 (D.N.J. 1998).

Based on the Briefs and Affidavits presented by the parties I FIND that there are
no genuine issue of material fact and the motion can be decided summarily.

Local Government Ethics Law

The Local Government Ethics Law, N.J.S.A. 40A:9-22.1 to -22.25, is designed “to
make ethical standards in state and local government 'clear, consistent, uniform in their
application, and enforceable on a statewide basis.’” Grabowsky v. Twp. of Montclair, 221
N.J. 536, 552 (2015) (citing Wyzykowski v. Rizas, 132 N.J. 509, 531 (1993) (quoting
N.J.S.A. 40A:9-22.2) (emphasis omitted)). As stated above, N.J.S.A. 40A:9-22.5(d) and
(e) provide that:
d. No local government officer or employee shall act in his
official capacity in any matter where he, a member of his
immediate family, or a business organization in which he has
an interest, has a direct or indirect financial or personal
involvement that might reasonably be expected to impair his
objectivity or independence of judgment;

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e. No local government officer or employee shall undertake

any employment or service, whether compensated or not,
which might reasonably be expected to prejudice his
independence of judgment in the exercise of his official duties;
[Ibid.]

The New Jersey Supreme Court has described four circumstances under which
the Local Government Ethics Law requires disqualification:

(1) ‘Direct pecuniary interests,’ when an official votes on a

matter benefitting the official's own property or affording a
direct financial gain; (2) ‘Indirect pecuniary interests,’ where
an official votes on a matter that financially benefits one
closely tied to the official, such as an employer, or family
member; (3) ‘Direct personal interest,’ when an official votes
on a matter that benefits a blood relative or close friend in a
non-financial way, but in a matter of great importance, as in
the case of a councilman's mother being in the nursing home
subject to the zoning issue; and (4) ‘Indirect [p]ersonal
[i]nterest,’ when an official votes on a matter in which an
individual's judgment may be affected because of
membership in some organization and a desire to help that
organization further its policies.
[Grabowsky, supra, 221 N.J. at 553 (quoting Wyzykowski,
supra, at 525.]
Further,
[a] court's determination ‘whether a particular interest is
sufficient to disqualify is necessarily a factual one and
depends upon the circumstances of the particular case.’ Van
Itallie v. Bor. of Franklin Lakes, 28 N.J. 258, 268 (1958) (citing
Aldom v. Bor. of Roseland, 42 N.J. Super. 495, 503
(App.Div.1956)). To determine whether there is a disqualifying
interest, a court need not ascertain whether a public official
has acted dishonestly or has sought to further a personal or
financial interest; the decisive factor is ‘whether there is a
potential for conflict.’ Wyzykowski, supra, 132 N.J. at 524
(citing Griggs v. Bor. of Princeton, 33 N.J. 207, 219 (1960)). If
there is a disqualifying conflict, an inquiry into an official's
motive is unnecessary; ‘[i]f there is “interest,” there is
disqualification automatically, entirely without regard to actual
motive, as the purpose of the rule is prophylactic[.]’
McNamara v. Bor. of Saddle River, 64 N.J. Super. 426, 429
(App.Div.1960).
[Id. at 554 (internal citations edited for clarity).]

Therefore, the question here is whether there was a potential conflict of interest
created by the fact that Mizrahi simultaneously served as both a fire commissioner and

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as the president of a Local Fire Company within the Fire Commission’s jurisdiction, and
not whether there was an actual conflict. See Donahue v. Local Finance Bd., CFB 2573-
09, Initial Decision (August 23, 2010)
<https://njlaw.rutgers.edu/collections/oal/html/initial/cfb2573-09_1.html> (finding that a
fire chief of a local company who also served on the fire commission violated N.J.S.A.
40A:9-22.5(d) and (e)).2

In support of its motion, the Board points to Advisory Opinion # 92-004 and
Advisory Opinion # 93-019, which the Board issued on February 8, 1995. Board’s Motion,
Ex. N. Therein, the Board addressed the issues of whether “publicly elected Board of
Fire Commission Members, who handle the budget and expenditures of fire tax dollars,
[can] also serve as elected officials of the fire companies in their own districts, when they
handle company monies raised or contributed privately” and “whether holding these
positions would require the individual to act in an official capacity in a matter where he
has a direct or indirect financial or personal involvement that might reasonably be
expected to impair his objectivity or independence of judgment.” The Board concluded in
the negative and found that “holding the positions of Commissioner of a fire district and
elected or ranking officer of a fire company in that district” would violate N.J.S.A. 40A:9-
22.5(d) and (e). Specifically, the Board reasoned that:

The appearance of conflict is more than apparent in the

situation where a Fire Commissioner may act preferentially or
antagonistically toward the fire company where he is also an
officer [chief, deputy chief, president, or vice president].
Additionally, the information he gathers as a result of his
position with the fire company can be used for or against that
company when the Commissioners set their budget and policy
priorities. One person should not be privy to both sides of this
information. All budget decisions of the Fire Commission
would impact on how the fire company is being run and would,
in turn, affect the priorities of the individual companies.
[Ex. N at p. 4.]

The circumstances considered by the advisory opinion are substantially similar to

those herein. Mizrahi, as president of Station 64, was an officer of the fire company while

2
A final decision for that case is not publicly available and it is unclear whether the Board ever issued a final decision.

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he also served as a fire commissioner. As such, he exercised supervisory authority over

Station 64, see N.J.S.A. 40A:14-70.1(b) (stating that “[t]he members of the company shall
be under the supervision and control of the Board of fire commissioners and in performing
fire duty shall be deemed to be exercising a governmental function”), and he was
responsible in part for approving the budget of all local fire companies, including Station
64. See N.J.S.A. 40A:14-78.1 (providing that “[t]he Fire Commissioners of any fire district
shall introduce and approve the annual budget [for the fire district]”). Thus, the Board
properly relies on the 1995 advisory opinions, and correctly concluded that Mizrahi’s dual
service created a potential conflict of interest in violation of N.J.S.A. 40A:9-22.5(d) and
(e).

Contrary to the legal advice given to Mizrahi, N.J.S.A. 40A:9-4 and N.J.S.A.
40A:16-68 do not exempt Mizrahi from liability for violations of N.J.S.A. 40A:9-22.5(d) or
(e). As noted above, N.J.S.A. 40A:9-4(6) states that:

It shall be lawful for a member of a volunteer fire company. .

., including an officer of the company. . ., to serve as an
elected official on the governing body of the municipal
government wherein the emergency services are provided;
however, the volunteer shall recuse himself from any vote
concerning the emergency services provider of which he is a
member.
[Ibid. (emphasis added).]

And, under, N.J.S.A. 40A:14-68(b),

[a] member of a volunteer fire company. . . shall not be
precluded from holding elected public office on the governing
body of the municipal government where the fire company
operates, provided that the volunteer recuse himself from any
vote involving or concerning the volunteer fire company.
[Ibid. (emphasis added).]

According to the legislative history of N.J.S.A. 40A:9-4 and N.J.S.A. 40A:14-68,

the statutory provisions “appl[y] to those volunteers serving as elected officials in the
municipal government, and [do] not include service in a fire district or other local unit.”
See Assembly Regulated Professions Committee Statement to A4338 (January 4, 2010).
Indeed, “governing body” is defined in N.J.S.A. 40A:9-22.3 as “in the case of a
municipality, the commission, council, board or body, by whatever name it may be known,

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having charge of the finances of the municipality. . . ” Certainly, a board of fire

commissioners does not control the finances of an entire municipality and is not a
governing body of a municipality. As such, N.J.S.A. 40A:9-4(6) and N.J.S.A. 40A:14-68
do not exempt Mizrahi from liability for violations of N.J.S.A. 40A:9-22.5(d) or (e).

Finally, while advice of counsel is a possible defense to a violation of the Local

Government Ethics Law, In re Zisa, 385 N.J. Super. 188, 198-99 (App.Div.2006), one of
the prerequisites for such a defense is “[t]hat the approval or advice was received prior to
the action being taken” and, here, Mizrahi did not receive advice from counsel until two
months after his dual service began. Thus, he is not entitled to a defense on that basis. 3

Under N.J.S.A. 40A:9-22.10, “[a]n elected local government officer or employee

found guilty by the Local Finance Board or a county or municipal ethics board of the
violation of any provision of P.L.1991, c.29 (C.40A:9-22.1 et seq.) . . . shall be fined not
less than $100 nor more than $500. . .” Ibid. Since $100 is the minimum fine required for
violations of the Local Government Ethics Law, there is no basis for finding that the $100
fine assessed by the Board against Mizrahi is inappropriate.

The Local Government Ethics Law, N.J.S.A. 40A:9-22.1 et seq., was enacted in
1991 to establish a statewide code of ethics for the officers and employees of local
governments. The standards of conduct prescribed by the Law are applicable to all local
government officers and employees, including individuals such as the petitioner in his
newly elected position as a freeholder. N.J.S.A. 40A:9-22.3(f) and (g).

The law recognizes that public office and public employment are a public trust, and
that the democratic form of government depends upon the public’s confidence in the
integrity of its elected and appointed representatives. N.J.S.A. 40A:9-22.2. Even the
perception of unethical conduct can seriously damage that public trust and confidence.
N.J.S.A. 40A:9-22.2. Thus, proof of actual dishonesty, or an actual conflict of interest,
need not be shown to establish a breach of the Law.” Shapiro v. Mertz, 368 N.J. Super.

3
Mizrahi took office as a fire commissioner on March 3, 2015, but did not request advice until March 30, 2015, and
did not receive advice until May 6, 2015.

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46, 51 (2004), citing, Wyzkowski v. Rizas, 132 N.J. 509, 524 (1993). In each case, the
decisive question is “whether the circumstances could reasonably be interpreted to show
that they had the likely capacity to tempt the official to depart from his sworn public duty.”
Itallie v. Franklin Lakes, 28 N.J. 258, 268 (1958); See also Griggs v. Borough of Princeton,
33 N.J. 207, 219 (1960).

CONCLUSION

For the reasons stated above, I CONCLUDE that the LFB has demonstrated that
as a matter of law petitioner violated N.J.S.A. 40A:9-22.5(d) when he held dual positions
of Fire Commissioner and President of Station 64, and that the imposition of the minimum
fine of $100 is AFFIRMED. There are no general issues of material fact in dispute.

ORDER

I hereby FILE my initial decision with the LOCAL FINANCE BOARD, DIVISION
OF LOCAL GOVERNMENT SERVICES, for consideration.

This recommended decision may be adopted, modified or rejected by the LOCAL

FINANCE BOARD, DIVISION OF LOCAL GOVERNMENT SERVICES, which by law is
authorized to make a final decision in this matter. If the Local Finance Board, Division of
Local Government Services, does not adopt, modify or reject this decision within forty-
five days and unless such time limit is otherwise extended, this recommended decision
shall become a final decision in accordance with N.J.S.A. 52:14B-10.

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Within thirteen days from the date on which this recommended decision was
mailed to the parties, any party may file written exceptions with the LOCAL FINANCE
BOARD, DIVISION OF LOCAL GOVERNMENT SERVICES, 101 South Broad Street,
PO Box 803, Trenton, New Jersey 08625-0803, marked "Attention: Exceptions." A
copy of any exceptions must be sent to the judge and to the other parties.

October 19, 2017

DATE SARAH G. CROWLEY, ALJ

Date Received at Agency: October 19, 2017 (emailed)

Date Mailed to Parties:

/mel

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APPENDIX

DOCUMENTS RELIED UPON

For Petitioner:

September 28, 2017, letter submission

For Respondent:

June 8, 2017, Motion, Certification and Exhibits

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