U.S. Department of Justice

                                   Office of Legal Counsel
__________________________________________________________________________

Office of the Assistant Attorney General     Washington, D.C. 20530

November 2, 2001

MEMORANDUM FOR MARILYN L.GLYNN
GENERAL COUNSEL 
OFFICE OF GOVERNMENT ETHICS

From:  M. Edward Whelan III Acting Assistant Attorney General

Re:    The Nature of the Financial Interest of a Trustee of a Private Trust and
the Scope of the Definition of Serving in an "Organization" as a "Trustee" Under
18 U.S.C.  208(a)

You have asked for our opinion whether, under 18 U.S.C.  208 (1994), a trustee
of a private trust inevitably has a personal financial interest in the trust and
whether the trustee of a private trust serves in an "organization" within the
meaning of  208(a). We believe that, in general and with the qualifications
discussed in more detail below, a government officer or employee will not have a
personal financial interest in a matter, as defined in  208(a), as a result of
his position as trustee of a private trust. We believe, however, that a trustee
of a private trust   is a "trustee" serving in an "organization" for purposes of
 208(a).

                     I. Personal Financial Interest of a Trustee

You ask, first, whether a trustee has a personal financial interest under 18
U.S.C.  208 in all particular matters affecting the trust property. Section
208(a) disqualifies an officer or employee of the executive branch or any
independent agency from participating in a particular matter

	in which, to his knowledge, he, his spouse, minor child, general
	partner, organization in which he is serving as officer, director,
	trustee, general partner or employee, or any person or organization with
	whom he is negotiating or has any arrangement concerning prospective
	employment, has a financial interest ....

18 U.S.C.  208(a). We have previously noted that "the statute recognizes and
gives effect to two distinct types of disqualifying `financial interest' -
personal and organizational." Memorandum for Fred F. Fielding, Counsel to the
President, from Charles J. Cooper, Assistant Attorney General, Office of Legal
Counsel, Re. Interpretation of the "financial interest " requirement of 18
U.S.C. 208 as applied to a spouse trustee at 2 (Jan. 6, 1986). Because of this
separate treatment by the statute, we concluded that "Congress did not intend
personal 'financial interest' in an organization to arise solely from one's
status as trustee of the organization." Id. As we observed, "[i]ndeed, a
contrary conclusion would render entirely redundant the express language of
section 208 that bars an official's participation in matters affecting the
financial interest of an organization in which the official serves as a
trustee." Id.[1] See also Connecticut Nat'l Bank v. Germain, 503 U. S. 249, 253
(1992) (interpretations of statutes that render language superfluous are
disfavored). We adhere to this conclusion. We, therefore, agree with the
analysis set forth in your March 30, 2001 letter that:

	If ... the trustee has no beneficial interest, receives no fees affected
	by the performance of trust investments, and there are no facts
	suggesting any potential fiduciary liability as a direct and predictable
	result of the particular matter, then one would not necessarily find any
	real potential for gain or loss to the trustee personally.

Letter to Daniel L. Koffsky, Acting Assistant Attorney General, Office of Legal
Counsel, from Marilyn L. Glynn, General Counsel, Office of Government Ethics at
6 (Mar. 30, 2001) ("Glynn Letter"). We note that those types of trustee
interests giving rise to a personal financial interest on the part of a trustee
(e.g. certain fee arrangements, a beneficial interest in the trust property or
potential fiduciary liability of the trustee) could be identified by regulation.

                      II. Trustees Serving in an Organization

Your second question is whether the trustee of a private trust serves as
"trustee" "in" an "organization" for purposes of  208(a). You suggest that the
term "trustee" might best be construed only "to describe a position on the
governing body or board of an organization, particularly, but not exclusively, a
non-profit organization." Glynn Letter at 8. You also suggest that a private
trust might not be an "organization." Id. at 10-11.

The plain and ordinary meaning of the term "trustee" encompasses the trustee of
a private trust. Eg., Webster's Third New International Dictionary 2457 (1993)
(a trustee is "one to whom something is entrusted: one trusted to keep or
administer something"). You propose an alternative reading under which the term
"trustee" would be confined to a member of an organization's board of trustees.
Such a reading, you contend, would render "trustee" more compatible with the
terms that immediately precede it - "officer" and "director" - both of which
positions are typically present in organizations that have boards of trustees.
Glynn Letter at 8-9. We find this argument unpersuasive. The term that
immediately follows "trustee" - "general partner" - is not typically associated
with organizations that have boards of trustees.  We therefore find far more
compelling your alternative suggestion that what these terms have in common is
that they identify persons who "have certain fiduciary duties to the
organizations in which they serve." Id. at 8. In any event, we find nothing in
the terms "officer" and "director" to suggest that the term "trustee" should be
confined to a member of a board of trustees.

On the issue whether a private trust is an "organization," we first note that we
have long held that a private trust is an "organization" for purposes of  208.
See Memorandum for Dudley H. Chapman, Associate Counsel to the President, from
Leon Ulman, Deputy Assistant Attorney General, Office of Legal Counsel, Re.
Conflict of Interest Review. H. Gregory Austin at 3(Nov. 26, 1975) ("Ulman
Memorandum").

You correctly point out that 18 U.S.C.  18 (1994) defines the term
"organization" to mean "a person other than an individual." Based on this
definition, you question whether a trust in which the beneficiary is an
individual can be an "organization." This question, we believe, conflates a
trust with the beneficiaries of the trust. As the comment to section 2 of the
Restatement (Third) of Trusts (Tentative Draft No. 1, 1996) explains, "[i]
ncreasingly, modern common law and statutory concepts and terminology tacitly
recognize the trust as a legal `entity,' consisting of the trust estate and the
associated fiduciary relation between the trustee and the beneficiaries." Id. 
2 cmt. a  In any event, whether or not the trust is a legal entity, it is
distinct from its beneficiaries. See G. Bogert & G. Bogert, Law of Trusts and
Trustees  1 (rev. 2d ed. 1984)("A trust may be defined as a fiduciary
relationship in which one person holds a property interest, subject to an
equitable obligation to keep or use that interest for the benefit of another.")
Therefore, the fact that the beneficiary or beneficiaries may be individuals has
no bearing on whether the trust satisfies the definition of "organization" in 
18.

Although the legal term "person" in isolation is often ambiguous on whether or
not it includes unnatural persons (i.e., persons other than individual human
beings), the plain terms of  18 dispel any such ambiguity. In suggesting that a
trust is not "a person other than an individual" for purposes of  208, you note
that the Dictionary Act definition of "person" contained in 1 U.S.C. 1 does not
specifically include "trusts." We find this omission insignificant in this
context. Section 1, by its very terms, is illustrative, not exhaustive: in
identifying various things that the word "person" "include[s]," it does not
thereby exclude other things from qualifying as persons. Moreover,  1 expressly
provides that its definition applies "unless the context indicates otherwise." 1
U.S.C.  1 (2000). Because inclusion of a private trust within the meaning of
the term "organization" would promote the conflict-of-interest objectives of 
208, we see no reason to disturb our longstanding position that a private trust
is an "organization."

You also raise the question whether, consistent with the language of  208, a
trustee can fairly be said to be serving "in" a trust. Glynn Letter at 9, 10.
You suggest that the awkwardness of this phrasing supports the conclusion that
the trustee of a private trust is not a "trustee" and that a private trust is
not an "organization" for purposes of  208. We do not believe,however, that it
is any more awkward to speak of a trustee serving "in" a trust than to speak of
-- to use two examples indisputably within the scope of  208 -- a general
partner serving "in" a general partnership or an officer serving "in" a
corporation. We therefore do not believe that the preposition "in" sheds
meaningful light on the terms "trustee" and "organization."

For the above reasons, we conclude that a trustee of a private trust is a
"trustee" serving in an "organization" for purposes of  208(a).

We believe that the courts would come to the same conclusion that we do. The
Supreme Court has explained that "we begin with the understanding that Congress
`says in a statute what it means and means ... what it says there,"' Hartford
Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000)
(quoting Connecticut Nat'l Bank v. Germain, 503 U.S. at 254), and that, in
construing a statutory provision, "[f he plain meaning of legislation should be
conclusive, except in the `rare cases [in which] the literal application of a
statute will produce a result demonstrably at odds with the intentions of its
drafters."' United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989)
(alteration in original) (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S.
564, 571 (1982)). For the reasons discussed above, a court would conclude that
reading the terms "trustee" and "organization" to include the trustee of a
private trust accords those terms their plain meaning and is neither absurd nor
in conflict with Congress' objective in enacting  208(a).

Even if a court were to find that the statutory language, context, and purpose
were insufficient to enable it to determine the meaning of the terms
"organization" and "trustee," its conclusion would not change. Where the
language of a term contained in a statutory provision is ambiguous, courts may
look to the legislative history of that provision, Green v. Bock Laundry Machine
Co., 490 U.S. 504, 511 (1989), and construe the provision in a manner that
furthers the purpose of the statute. Watt v. Western Nuclear, Inc., 462 U.S. 36,
56 (1983). We have previously examined the legislative history of  208 for
indications as to what types of entities Congress intended to encompass within
that term. See, e.g., Memorandum for Sheldon M. Guttman, Associate General
Counsel and Alternate Designated Agency Ethics Official, Federal Communications
Commission, from Richard L. Shiffrin, Deputy Assistant Attorney General, Office
of Legal Counsel, Re: Applicability of 18 U.S.C.  208 to the Federal
Communications Commission's Representative on the Board of Directors of the
Telecommunications Development Fund at 3 (June 12, 1997). Here, a court would
find sufficient legislative history to guide it in the proper construction of
the term "organization."

In analyzing the precise issue of whether  208's use of the term "organization"
includes the trustee of a private trust, we previously concluded that the
legislative history shows that  208 does apply to the trustee of a private
trust. Ulman Memorandum at 3. In the Ulman Memorandum, we observed that 18
U.S.C.  434, the predecessor "conflict of interest" provision to  208, was
viewed as being broad enough to include an estate even though it spoke in terms
of a "business entity," and therefore we viewed it as also capable of embracing
a testamentary trust. Id. at 2 (citing B. Manning, Federal Conflict of Interest
Law 118 (1964)). We noted the absence of any indication that the use of the term
"organization" in  208 was intended to narrow the scope of the earlier
provision. We also noted that one of the primary substantive changes made in
enacting  208, in 1962, was to remove the references to "business" or
"corporation" that were contained in  434, thereby making it clear that the new
section restricts the activities of employees who are trustees or officers in
non-profit corporations or foundations not engaged in commercial activities. Id.
at 3. We then concluded that "[t]he fiduciary responsibilities of ... [a]
trustee for a private trust are analogous to those of an officer in a non-profit
organization and could cause the same kind of divided loyalty on governmental
policy questions that section 208 was intended to prevent." Id.

The final point of our 1975 Ulman Memorandum was that, in his analysis of the
proposed bill before Congress in 1961, Nicholas Katzenbach, then the Assistant
Attorney General for the Office of Legal Counsel, asserted that  208, in its
substantive prohibitions, was "almost the counterpart" of section 3 of H.R.
3050, which was the proposed bill based on recommendations prepared by the New
York City Bar Association. Id. (citing Federal Conflict of Interest Legislation.
Hearings Before the Antitrust Subcomm. of the House Comm. On the Judiciary, 87th
Cong. (1961) ("House Hearings")). We regarded this as significant because
section 3 of H.R. 3050 contained language making its prohibition expressly
applicable to a government employee who was the trustee of an ordinary trust.
Id. (citing House Hearings at 6-7). Section 3 of H.R. 3050 provided that:

       No Government employee shall participate in a transaction involving the
       Government in the consequences of which he has a substantial economic
       interest of which ... to his actual knowledge, any of the following
       persons has a direct and substantial economic interest ... (3) Any person
       of which he is an officer, director, trustee, partner, or employee ....

House Hearings at 7 (emphasis added). "Person" was defined in section 2(h)(i)(2)
of that bill as including any "trust." Id. at 6. Furthermore, that the
definition of "person" listed "individuals" and "trusts"as distinct categories
of "person" demonstrates an assumption on the part of the drafters of that
legislation that a "trust" was something different from an "individual." Compare
 2(h)(i)(1) to  2(h)(i)(2), House Hearings at 6.

Moreover, in asserting that  208, "in its substantive prohibitions is almost
the counterpart of section 3 of H.R. 3050," Mr. Katzenbach explained his use of
the term "almost" by adding the qualification "with the exception that under the
latter bill a `substantial economic interest' would be defined by Presidential
regulations and the President could provide for exemptions." Id. at 41. This
distinction has nothing to do with the scope of the term "organization" or
"person."

Mr. Katzenbach's view was communicated again to Congress in a letter he wrote,
as Deputy Attorney General, to Senator Henry Jackson, the chairman of the Senate
Armed Services Subcommittee examining divestment of securities by civilians
nominated to statutory positions in the Department of Defense. Deputy Attorney
General Katzenbach concluded that

only in an exceptional case would a financial interest of a spouse or child be
deemed to be a disqualifying financial interest within the purview of section
208. Ownership by a spouse of a controlling interest in a corporation
transacting business with the Department of Defense could not, perhaps, be
ignored. Also, in a situation in which the nominee exercises legal control over
the property of the spouse, the interest of the spouse could be considered a
financial interest within the contemplation of section 208 unless excluded by
the exception of nonsubstantial interests.

Conflicts of Interest. Hearing on H. R. 8140 Before the Senate Comm. on the
Judiciary, 87th Cong. 98 (1962) (emphasis added). In responding to Senator
Jackson's inquiry concerning when a spouse's property interest would be
considered to fall within scope of  208, Deputy Attorney General Katzenbach's
explanation specifically relies on a trustee-like relationship between the
government official and the property at issue as the type of relationship that
would fall within the ambit of the statute.[2]

Moreover, including the trustee of a private trust within the scope of  208 is
consistent with, and furthers the purpose of, the Act. As one of the authors of
the bill passed by the House, Representative John V. Lindsay, explained in
testimony before the Senate Judiciary Committee, the Act's purposes included
ensuring that "[p]ersons occuping [sic] a position inside Government must not be
allowed to help an individual or entity on the outside, where the latter is
seeking to make the wheels of government move in a particular way." Id. at 41.
The policy behind such a concern applies to the trustee of a private trust where
his decision, as a government official or employee, could affect the value or
profitability of the trust assets to which he owes a fiduciary duty. As the
Supreme Court has explained:

       To deter the trustee from all temptation and to prevent any possible
       injury to the beneficiary, the rule against a trustee dividing his
       loyalties must be enforced with "uncompromising rigidity." A fiduciary
       cannot contend "that, although he had conflicting interests, he served
       his masters equally well or that his primary loyalty was not weakened by
       the pull of his secondary one."

NLRB v. Amax Coal Co., 453 U.S. 322, 329-330 (1981) (citations omitted).

Therefore, even if a court were to look to the legislative history of the Act,
we believe that it would hold that trustees of private trusts are included
within the scope of the provision prohibiting officers and employees of the
federal government from participating in matters in which an organization in
which they serve has a financial interest.

                                          Conclusion

Although a trustee of a private trust, solely by virtue of his capacity as a
trustee, should not be deemed to have a personal financial interest in the
property of the trust, a trustee of a private trust may have such an interest
under certain circumstances. Further, a trustee of a private trust also should
be considered to be serving in the capacity of a "trustee" of an "organization"
for purposes of 18 U.S.C.  208(a).

___________________________________

[1] As we also noted in that memorandum, this does not mean that "there are no
conceivable circumstances in which a spouse's status as a trustee of an
organization could in fact give rise to a personal financial interest, thus
triggering the disqualification requirement of section 208." Id. at 3 n.2.

 [2]  Although the Supreme Court has cautioned that "[w]e ought not to attribute
 to Congress an official purpose based on the motives of a particular group that
 lobbied for or against a certain proposal," Circuit City Stores, Me. v. Adams,
 121 S. Ct. 1302, 1311(2001), in this case the statements were made by the
 Department of Justice, which was involved in drafting and sponsoring the
 legislation in question and was testifying in that capacity at the time. In
 Circuit City, the statement at issue had been made by a private special
 interest group that was criticizing a particular provision of the proposed
 legislation. Id.