ON STANDARDS OF JUDICIAL CONDUCT
OPINION NO. 09 - 2013
RE: Propriety of a part-time Municipal Court judge becoming a member of and managing funds for an investment group business and to working as a distributor for a fund-raising company.
A part-time Municipal Court judge is exploring the possibility of managing funds for an investment group business. The business will be local, and the judge will serve as the treasurer/manager for a small business with 15 investors. The investment group will primarily invest in real estate and special events.
The judge also inquires as to the propriety of serving a distributor for a fund-raising company. As a distributor, the judge would market through media and contact a variety of groups with fund-raising interests and provide them with details about projects. The groups will handle the solicitation and collection of funds and send them in to the fund-raising company directly. The judge would earn a commission as a distributor.
A part-time Municipal Court judge may manage funds for a local investment group.
A part-time Municipal Court judge may not serve as a distributor for a fund-raising company.
The Code provides that a judge may serve as an officer, director, manager, general partner, advisor or employee of a business entity if that service does not conflict with the judge’s judicial duties. Rule 501, SCACR, Canon 4D(3). A part-time magistrate falls into the category of a “part-time judge” for purposes of the Code of Judicial Conduct. As such, the Code excepts them from the business prohibitions of Canon 4. See, Rule 501, SCACR, Application of the Code of Judicial Conduct. Thus, there is no prohibition against the judge managing the funds for a local investment group.
As to the second inquiry, this Committee has issued many opinions on the propriety of fund-raising. Generally, those opinions involve the judge’s service on behalf of a charitable organization and ability to participate in fund-raising for that charity. The Code of Judicial Conduct provides that a judge may “assist such an organization in planning fund-raising and may participate in the management and investment of the organizations funds, but shall not personally participate in the solicitation of funds or other fund-raising activities.” Canon 4C(3)(b)(i), Rule 501, SCACR. The Commentary states, “[s]olicitation of funds for an organization and solicitation of memberships similarly involve the danger that the person being solicited will feel obligated to respond favorably to the solicitor if the solicitor is in a position of influence or control.”
While the inquiry here does not involve a charitable organization, the same logic applies. The judge would be in direct contact with media and other groups about “fund-raising activities.” Even if the part-time Municipal Court judge does not use the prestige of the office in addressing the media or the fund-raising groups in order to solicit funds, there is still a danger that the person being solicited will feel obligated to the judge. In addition, because the judge would earn a commission, the appearance that the judge is using the judicial office to advance private interests could arise.
Under Canon 2, the mere appearance of impropriety must be avoided. Thus, the judge should not accept a position as a fund-raising distributor.
October 4, 2013