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OPINION NO. 83

 

This is in response to your disclosure that you qualify for a real estate salesman's license and your present position with the City is as a member of the uniform patrol division of the Honolulu Police Department.

 

We recommend that you pay your $100.00 license fee and thereafter place your real estate salesman's license on an inactive status.

 

We understand the facts to be as follows:

 

      1.   At present you are a member of the uniform patrol division of the Police Department of the City.

 

      2.   You recently took a real estate salesman 's license examination, and you have been notified that you passed the examination and therefore qualify for a real estate salesman's license.

 

      3.   When you become an active real estate salesman, you may find criminal violation arising out of the use of the real property which you are actively trying to sell. Under such circumstances, the question is what would you do: File a criminal complaint for violation of state statute or City Ordinances, or forego the criminal complaint and consummate the sale so that you may realize your statutory commission as a real estate salesman?

 

Under the foregoing circumstances, the standards of conduct which may be breached are RCH Section 10-102.3 and RCH Section 10-104.  RCH Section 10-102.3 provides that no officer or employee shall:

 

Engage in any business transaction or activity or have a financial interest, direct or indirect, which is incompatible with the proper discharge of his official duties or which may tend to impair his independence of judgment in the performance of his official duties. [Emphasis added]

 

At the outset the facts surrounding your case give rise to the classic triangle of a typical conflict of interest situation.  See M 78-56, attached. In your case one square may be represented by your personal interest as a real estate salesman, while the second block may be represented by your official duties as a police officer, and the third block is represented by the real property. The conflict arises because your financial interest as a real estate salesman and your official capacity as a police officer merge into the third block. Viewed in this light, you may be placed in an incompatible situation or cause to make errors in judgment because you would have to make a choice between the salesman's fee you would receive arising out of the sale of the real property or to enforce the laws against the subject real property which is up for sale.

 

For example, the real estate broker for which you are working during your off duty hours may give you a list of properties which are up for sale. You also have a buyer who is interested in one of the properties that is up for sale. You take the prospective buyer to show him a real property that is on your list. In the course of showing the prospective buyer the subject real property, you find that the present owner is in violation of a zoning ordinance for residential district because he has an additional dwelling in his basement.  Under this circumstance, what would you do?  Would you uphold the law as you have sworn to do when you became a police officer and file a criminal complaint to prosecute the prospective seller or ignore the violation so that you can make a sale to earn a commission in four figures.1

 

Another example is where you may take a prospective buyer to a particular residential property situated somewhere on the North Shore of Oahu. In the process of showing the prospective buyer the residential property which is a subject of sale, you observe that the owner of the property is raising marijuana among some of the plantings he has on the rear of his lot. Once again, you are placed in a position to make a choice whether to enforce the law against the property owner who has committed a crime or because of the lucrative commission you may overlook the criminal activities of the property owner.

 

There also may be examples arising out of enforcement of traffic laws. For instance, you may be following a vehicle which may have gone through a red light at an intersection; and upon stopping the vehicle, you learn that the driver of the vehicle is a prospective client of yours who is interested in purchasing valuable commercial property for which you are in a position to receive commissions in five figures because of the value of the commercial property. Once again, do you issue the traffic citation to your prospective client who has violated a traffic law, or do you ignore the violation that was committed.

 

There may be other examples too numerous to relate herein. As such, this Commission believes that you should not be placed in a position to compromise your position between your duties as a police officer and pecuniary benefits you may derive out of your private activity as a real estate salesman.

 

Another standard of conduct which generally goes hand in hand with RCH Section 10-102.3 is RCH Section 10-104, which reads as follows:

 

No elected or appointed officer or employee shall use his official position to secure or grant special consideration, treatment, advantage, privilege or exemption to himself or any person beyond that which is available to every other person.

 

As a general rule, when an employee is in a situation which is incompatible with his official position or in a situation which impairs his judgment in carrying out his official duties, he generally is in a situation where he may be applying two separate standards upon two individuals in similar circumstances arising out of his activity as an employee of the private employer and as an employee of the City. It follows because if there is no incompatibility or error in judgment, you need not secure or grant special consideration, treatment, advantage, privilege or exemption to any person beyond that which is available to every other person .

 

Perhaps you have never considered your private employment as viewed by this Commission. However, this Commission believes that to permit such private employment to continue may undermine the confidence of the public in your department and thereby adversely affect the operations of your department from the standpoint of your department's duty to enforce all laws in this State and City equally upon every resident of this City.

 

Furthermore, when one is engaged in selling, it generally involves an element of "puffing." "Puffing" is known in salesmanship as stressing the good points of the product on sale and minimizing the bad points. In so doing, the purchaser may rely on such "puffing" and purchase the product. Subsequently, he finds that the product does not come up to expectations as "puffed." When the buyer is disappointed with the product, he generally will question the

honesty, creditability and integrity of the salesperson. This attitude of the purchaser generally includes the principals with whom the salesperson may be employed or associated.  As such, when your honesty, creditability and integrity are under suspicion, they may affect your performance as well as the performance of the Police Department because the public generally believe that police officers are honest and can be relied on for their integrity.  The lowering of the high esteem the public has of the Police Department, we believe, should not be jeopardized.

 

In summary, we conclude that your outside employment as a real estate salesman may result in violations of RCH Sections 10-102.3 and 10-104 because you may be placed in situations which are incompatible with the proper discharge of your official duties or which may tend to impair your independence of judgment as a police officer. Therefore, we recommend that you inactivate your real estate salesman's license.

 

Dated: Honolulu, Hawaii, September 28, 1978.

ETHICS COMMISSION

 

Rev. William Smith, Chairman

 

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1 We state that your commission would be in four figures because we are well aware that the average cost of a single family dwelling is reported to range from $75,000 and up. We further understand that the real estate commission ranges from 5 to 7% for each sale depending upon the sale price. In your case, a real estate salesman receives 1/2 of the commission while his broker retains the other half.  When 5% is multiplied against $75,000 the amount is $3, 750.  This amount divided by 2 gives you a commission amounting to $1,875 or as high as $2,625 if the 7% fee commission is applied to the $75,000.

Last Reviewed: Tuesday, January 03, 2012