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Alaska Public Offices Com'n v. Stevens

Supreme Court of Alaska

April 17, 2009

ALASKA PUBLIC OFFICES COMMISSION, Appellant,
v.
Ben STEVENS, Appellee.

Page 322

Margaret A. Paton Walsh, Assistant Attorney General, Anchorage, Talis Colberg, Attorney General, Juneau, for Appellant.

James E. Torgerson, Andrew F. Behrend, Heller Ehrman LLP, Anchorage, for Appellee.

Before : FABE, Chief Justice, MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.

OPINION

WINFREE, Justice.

I. INTRODUCTION

The Alaska Public Offices Commission (APOC) imposed a civil penalty against Alaska State Senator Ben Stevens for failing to report certain income on his 2006 Legislative Financial Disclosure Statement (LFD) for calendar year 2005. Stevens appealed to the superior court, which reversed APOC's decision. APOC now appeals the superior court's decision. Because APOC's reporting requirements were ambiguous and must be strictly construed in favor of Stevens, we affirm the superior court's decision that APOC may not impose a civil penalty against Stevens.

II. FACTS AND PROCEEDINGS

SEMCO Energy, Inc. owns Enstar Natural Gas Company, which provides natural gas to the Municipality of Anchorage and to the Matanuska-Susitna Borough. In December 2004 SEMCO's board of directors elected Alaska State Senator Ben Stevens to fill a vacancy on that board beginning in January 2005. At a May 2005 SEMCO shareholder meeting Stevens was elected to a two-year term on the board.

When Stevens joined the SEMCO board he chose to defer his 2005 director compensation and have it invested in SEMCO common stock for distribution to him over a three-year period after the end of his directorship. Stevens's 2005 director compensation was $37,000 plus shares of SEMCO common stock worth a similar amount.

The SEMCO Deferred Compensation and Stock Purchase Agreement for Non-Employee Directors (Agreement) provided that SEMCO would " establish a bookkeeping account ... to evidence the Company's liability to the Director." The Agreement stated that: (1) the decision to defer income was irrevocable; (2) assets allocated to pay Stevens's compensation would " always be subject to claims of [SEMCO]'s general creditors and be available for [SEMCO]'s unfettered use" ; (3) Stevens would have " no property interest in [SEMCO] assets whether or not earmarked to make payments pursuant to this Agreement" ; and (4) neither Stevens nor his beneficiaries would have " any right to transfer or encumber any right to receive any payment." Finally the Agreement stated its purpose " to accomplish the deferral of the incidence of federal income tax ... until such time as [Stevens] ... actually receives payment."

Consistent with the terms of the Agreement, Stevens did not actually receive in hand any director compensation in 2005, and SEMCO did not issue Stevens any IRS forms for 2005 reportable income. On his 2006 LFD form for 2005 financial information, Stevens disclosed his positions as director and shareholder of SEMCO on Schedule B, Business Interests. He did not list SEMCO on Schedule A, Sources of Income Over $5,000.

Page 323

In April 2006 APOC received a complaint alleging that Stevens had violated AS 24.60.200[1] and AS 39.50.030[2] by failing to disclose 2005 income from SEMCO. APOC sent Stevens a copy of the complaint on May 1, 2006, and opened an investigation. Two days later APOC mailed Stevens an LFD amendment form, explaining that if he had been paid by SEMCO in 2005 he was obligated to report the income on his 2006 LFD. ...


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