Did Maine State Treasurer Bruce Poliquin's ownership of the Popham Beach Club and his real estate development company Dirigo Holdings, LLC violate the Maine Constitution's prohibition on the Treasurer engaging in 'any business of trade or commerce'?

Subject

Whether Maine State Treasurer Bruce Poliquin's ownership of the Popham Beach Club (a private membership club in Phippsburg, Maine) and his ongoing real estate development activities through Dirigo Holdings, LLC violated Article V, Part 3, § 3 of the Maine Constitution, which prohibits the State Treasurer from engaging in "any business of trade or commerce" while in office.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Plain-English summary

Representative Mark Dion asked Attorney General William Schneider in January 2012 whether then-State Treasurer Bruce Poliquin's continued ownership of the Popham Beach Club violated Article V, Part 3, § 3 of the Maine Constitution. Section 3 provides: "The Treasurer shall not, during the treasurer's continuance in office, engage in any business of trade or commerce, or as a broker, nor as an agent or factor for any merchant or trader." The question expanded to cover Poliquin's real estate development activities through Dirigo Holdings, LLC.

The AG faced a difficult interpretive task: very little case law existed on Section 3. The Maine courts had never addressed it. Only two prior AG opinions had considered Section 3, and both were abstract; neither had applied it to actual conduct. The closest precedent was a 1929 U.S. Attorney General opinion (36 U.S. Op. Atty. Gen. 12) about Treasury Secretary Andrew Mellon's stock holdings under a federal statute with similar language.

The AG's tentative conclusions (the opinion repeatedly noted predictive uncertainty):

1. Passive stock ownership is likely permissible. Holding stocks during the Treasurer's tenure does not by itself violate Section 3. The 1929 federal opinion treated Mellon's continued stock ownership favorably. Section 3 and Maine statutes governing the Treasurer support continued holdings, provided the Treasurer doesn't undertake activity on behalf of any entity in which he owns stock.

2. The Treasurer cannot accept other employment or actively manage a business. The opinion concluded it is "clear that the Treasurer cannot accept other employment or provide services to others while in office," and that during his term he "should take steps to disassociate himself from the active management of any of the entities in which he is invested." Mellon had ceased being an officer or director before becoming Treasury Secretary, and the U.S. AG commented favorably on that.

The AG did not separately resolve whether the Popham Beach Club or Dirigo Holdings, as actually operated, crossed the line. The opinion laid out the facts for each (Poliquin is sole owner of the Club and sole member of Dirigo, holds sole signatory authority on both bank accounts, periodically funds Dirigo's expenses, and periodically consults its manager and bookkeeper) but stopped at the general rule. It expressly acknowledged that "[t]here is no language, history or precedent identifying any activities the Treasurer may engage in with respect to his personal investments and business ventures without violating Section 3," and that active management "should be handled by third persons in the absence of any authority suggesting that such activities are acceptable when undertaken directly."

Common questions

Q: What does Article V, Part 3, § 3 actually say?

The relevant prohibition provides: "The Treasurer shall not, during the treasurer's continuance in office, engage in any business of trade or commerce, or as a broker, nor as an agent or factor for any merchant or trader."

Q: Why is there so little case law?

The AG's 2012 opinion said there was little case law applying the provision and that the prior Maine opinions were abstract. It did not identify a detailed prior application to the facts presented.

Q: What was the Popham Beach Club?

A private membership club on the coast of Maine in the town of Phippsburg, owned by then-Treasurer Bruce Poliquin.

Q: What's Dirigo Holdings, LLC?

A real estate development company through which Treasurer Poliquin had been developing properties in Maine.

Q: Did Treasurer Poliquin divest?

The opinion does not say whether Treasurer Poliquin later divested the interests.

Q: Does Section 3 apply to other state officers?

The quoted Section 3 prohibition addresses the State Treasurer. This opinion does not analyze restrictions on other officers.

Background and statutory framework

Maine Constitution, Article V, Part 3. Establishes the office of State Treasurer. Section 3 contains the unusual business-prohibition language that prompted this opinion.

5 M.R.S. § 122. Maine statutory provision governing the Treasurer's official duties.

36 U.S. Op. Atty. Gen. 12 (April 18, 1929). The U.S. AG opinion on Treasury Secretary Andrew Mellon's stock holdings. Considered the closest analogue to Section 3 because it interprets parallel language in federal law. Concluded that Mellon's continued stock ownership did not violate the federal statute, but that he properly resigned from director and officer positions.

The opinion is unusual in its candor about predictive uncertainty. The AG repeatedly emphasized that Section 3 had not been tested in any meaningful way, and that "it is difficult to predict how a court would address the question."

Citations

• Maine Constitution, art. V, pt. 3, § 3 (Treasurer business prohibition)
• 5 M.R.S. § 122 (Treasurer's powers and duties)
• 36 U.S. Op. Atty. Gen. 12 (April 18, 1929) (Mellon stock holdings as Treasury Secretary)
• Two prior abstract Maine AG opinions on Section 3 (cited in the body)

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/2012/ag_20120210.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

MAINE STATE LEGISLATURE

The following document is provided by the LAW AND LEGISLATIVE DIGITAL LIBRARY at the Maine State Law and Legislative Reference Library http://legislature.maine.gov/lawlib

Reproduced from scanned originals with text recognition applied (searchable text may contain some errors and/or omissions) REGIONAL OFFICES:
2012-02
84 HARLOW SI., 2ND FLOOR
BANGOR, MAINE 04401
TEL: (207) 941-3070
FAX: (207) 941-3075
William J. Schneider
415 CONGRESS ST., STE. 301
ATTORNEY GENERAL
PORTLAND, MAINE 04101
TEL: (207) 822-0260
FAX: (207) 822-0259

STATE OF MAINE
14 ACCESS HIGHWAY, STE. 1
TEL: (207) 626-8800 OFFICE OF THE ATTORNEY GENERAL CARIBOU, M..AINE,04736
.TEL: (207) 496-3792
TTY: 1-800-577 -6690 6 STATE HOUSE STATION FAX: (207) 496-3291
AUGUSTA, MAINE 04333-0006

February 10, 2012

Representative Mark Dion
2 State House Station
Augusta, Maine 04333-0002

Dear Representative Dion:

I am writing in response to your letters of January 17, 2012 and January 30, 2012, in which you inquired whether the State Treasurer has engaged in "any business of trade or commerce" within the meaning of the Maine Constitution, art. V, pt. 3, § 3 ("Section 3"). Your question focuses on the Treasurer·' s ownership of the Popham Beach Club located in Phippsburg, Maine. 1 Subsequent to our receipt of your letters, we became aware that a similar question has been raised concerning the Treasurer's real estate development activities through his company Dirigo Holdings, LLC.

There is very little guidance concerning the proper application of Section 3. The Maine courts have never addressed it. The two Attorney Gener~l opinions that have been issued consider the broad question of what is prohibited by Section 3 but do not apply it to any actual fact pattern. The United States Attorney General issued an opinion in 1929 in which he concluded that Secretary of the Treasury Andrew Mellon's ownership of stock was not in violation of a federal statute with language very similar to that of Section 3, but there do not appear to be any subsequent opinions or any judicial analysis of this language. 36 U.S. Op. Atty.
Gen. 12 (April 18, 1929).

As a result, it is difficult to predict how a court would address the question before us.
1
The federal authority, as well as the language of Section 3 and Maine statutes governing the Treasurer, supports his ability to continue to hold stocks during his tenure in office, provided that he does not undertalce activity on behalf of any entity in which he owns stock. In this regard, we note that in the U.S. Attorney General's 1929 opinion, he commented favorably on Andrew Mellon's ceasing to be an officer or director before he became Secretary of the Treasury and

1
While the focus of your inquiry is art. V, pt. 3, § 3 of the Maine Constitution, Title 5, Section 122, of the Maine Revised Statutes, is also relevant to the issue you have raised. This section provides in relevant part: "The condition of the Treasurer of State's bond shall be for the faithful discharge of all the duties of his office, and that during his continuance in office he will not engage in trade or commerce, or act as broker, agent or factor for any ( merchant or trader ... " We note that the bonds now in effect do not expressly address engagement in trade or \ commerce.

PRlNfED 01'- RECYCLED PAPER further noted that although he owned stock in a number of corporations, in none of them did he own a majority interest nor did "he give bis time or attention to the active conduct of any incorporated business." Id. at 3.

FACTS

A. Popham Beach Club. Our inquiry into the Popham Beach Club (the "Club") reveals the following: The Treasurer, Bruce Poliquin, is the owner of the Club, which is located on a parcel of land located in Phippsburg, Maine. The real estate on which the Club is located also is ovi'lled by the Treasurer. All revenues and expenses of the Club are attributed personally to Mr. Poliquin.

The Club employs a manager who is responsible for the day-to-day operation of the Club.
The manager's duties include the hiring of persom1el, arranging for work at the Club with private contractors and maldng decisions on membership applications. The manager is not involved with the finances of the Club and does not have a role ·with regard to local permit applications. The Club has three employees, including a groundskeeper and a bookkeeper. According to the manager, she rarely spealcs with Mr. Poliquin and he does not give her direction with regard to
. the management and operation of the Club. Mr. Poliquin states that he visits the Club infrequently, that he considers the Club to be a "passive investment" and that he has no active involvement in the management of the Club. He has further stated that he does review financial records of the Club.

The Club maintains. a checking account; Mr. Poliquin alone has signatory authority for the account. All invoices for the Club are paid from the Club checking account. The real estate taxes on the property are paid from the Club account; all utilities for the Club are in the name of Jvfr. Poliquin. For any Club initiative, work or invoice not in the ordinary course of business, the booldceeper or the manager contacts Mr. Poliquin. The Club is not organized as a separate entity and does not file a separate tax return. All expenses of the Club are paid by Mr. Poliquin.

B. Dirigo Holdings, LLC. Dirigo Holdings, LLC, is a Domestic Limited Liability Company organized under the laws of Maine and registered in Maine (the "Company"). Documents on file with the Maine Secretary of State indicate that Bruce L. Poliquin is the Clerk/Registered Agent and that the management of the Company is vested in the members. Mr. Poliquin has stated that he is the sole member of the Company.

_ The primary business of the Company is the development of the Popham Woods Condominiums located in Phippsburg, Maine. The Phippsburg Real Estate Tax Commitment Book for 2012 lists five properties in the.name of the Company, "ATTN: Bruce L. Poliquin, 186 Ledgemere Rd.,Georgetown, Maine." Properties at the Popham \Voods Condominium are currently being marketed by Allen & Selig Reality. A Site Location Development Order issued by the Maine Department of Environmental Protection issued in April 2007 states that Dirigo Holdings (the "Applicant") planned to develop a 183 acre parcel with a 69-unit condominium development; that the estimated project cost is $17,279,000; and that the Applicant intended to self-finance the proposed project.

2
J

Mr. Poliquin has stated that he periodically provides funds for payment of expenses of Dirigo Holdings and Popham Woods Condominium and that Dirigo Holdings employs a manager and bookkeeper who are responsible for the operation and management of the Company. Mr. Poliquin further states that he periodically consults with the manager -and bookkeeper. The bookkeeper for the Company is the booldceeper for the Popham Beach Club.
As is the case with the Popham Beach Club, there is a Company bank account for which Mr.
Poliquin alone has signatory authority. Mr. Poliquin is the president of the Popham Woods Condominium Unit Owner's Association.

ANALYSIS

Article V, part 3, section 3 provides in its entirety as follows:

The.Treasurer shall not, during the treasurer's continuance in office, engage in any business of trade or commerce, or as a broker, nor as an agent or factor for any merchant or trader.

There is no judicial decision construing this provision of the Constitution, which has ' remained the same since its adoption in 1820. An opinion of the Attorney General dated January 23, 1923 sought to define the key tenns in Section 3 with reference to the dictionary and court decisions construing "trade" or "business" in other contexts·, and reached this conclusion:

... [O]ne holding the office of treasurer of the State of Maine is prohibited from engaging during his term of office in any business, and by that is meant any occupation or employment pursued as a calling, not of course including the learned professions, in which a person is engaged for procuring subsistence or for profit.

Op. Me. Att'y Gen. (January 23, 1923).

_T11e only other Attorney General opinion we have found on the proper construction of Section 3 was issued in response to a general question from the Treasurer; neither opinion seeks to apply the language of Section 3 to a specific set of facts. This 1978 opinion notes that the original statute authorizing the office of Treasurer contained language similar to that of Section 3 prohibiting engagement in any business of trade. The original laws governing the office of the - Treasurer also provided for his removal from office if he was absent from the State or from the duties of his office; these provisions were both grounded in the requirement that the Treasurer give full time to the duties of his office. Op. Me. Att'y Gen. (December 1, 1978) at 2. The language prohibiting the Treasurer from engaging in business was then adopted as part of the Maine Constitution. The opinion concludes:

... [W]e must conclude that the position of Treasurer, by operation of the provisions of Article V, Part 4 [sic], Section 3, requires a full-time commitment and full fidelity to the job such that other employment or the seeking of income through the regular practice

)
3 of a profession outside of the office of Treasurer would not appear . to be consistent with the intent of the original Constitution.
)
Op. Me. Att'y Gen. (December 1, 1978) at 2.

The opinion also considers the ability of the Treasurer to receive income from other sources during his tenure in office.

The laws and constitution of the State do not bar the Treasurer from receiving income from other sources during his tenure in office. However, the practices which result in receipt of that income and sources of the income would have to be examined on a . case-by-case basis to detennine whether the Treasurer was engaging in business to gain the income or whether the source of the income created a conflict of interest for the Treasurer ...

Id.

The 1929 opinion of the U.S. Attorney General construes language in federal law that is
similar to that of Section 3.
·

No persons appointed to the Office of Secretary of the Treasury, or Treasurer, or Register, shall directly or indirectly be concerned or · interested in carrying on the business of trade or commerce ...
)
5 U.S.C. § 243 (formerly), see now 31 U.S.C. § 329. 2

Unlike Section 3, at the time of the U.S. Attorney General's opinion, the·federal prohibition applied to direct or indirect interests, and might therefore be read as stricter than the provision in the Maine Constitution. However, the only issue considered in this context was the ability of the Treasurer to own stock, given that before becoming Secretary of the Treasury Mr.
Mellon had ceased to be an officer or a director in any corporation, did not own a majority of the stock, and he did not give his time or attention to the active conduct of any incorporated business. 36 U.S. Op. Atty. Gen. 12 (April 18, 1929) at 3, The U.S. Attorney General concluded that the Treasurer could receive income from stocks under these circumstances. We believe it is reasonable to read the language of Section 3 to be consistent with that conclusion.

2
Current 31 U.S.C. § 329 reads in pertinent pait:
Limitations on outside activities
(a)(l) The Secretary of the Treasury and the Treasurer may not-- (A) be involved in trade or commerce;
(B) own any part of a vessel (except a pleasure vessel);
(C) buy or hold as a beneficiary in trust public property;
(D) be involved in buying or disposing of obligations of a State or the United States Government; and (E) personally talce or use a benefit gained from conducting business of the Department of the Treasury except as authorized by law.
)
4
 CONCLUSION

The prohibition in Section 3 of the Constitution is general and without limitation. The history of Section 3 and its predecessor statute demonstrates the intent to require the Treasurer to malce a full-time commitment, to give full fidelity to the job of Treasurer, and to preclude him. from engaging in or carrying on a trade or business that would divert his .attention from this commitment. It is reasonable to conclude that Section 3, like the comparable federal statute, permits the Treasurer to continue to hold personal investments, such as stocks and bonds, while . in office, given that there is nothing in the Maine Constitution or in statute that requires divestiture. It is also clear that the Treasurer cannot accept other employment or provide services to others while in office. There is no language, history or precedent identifying any activities the Treasurer may engage in ·with respect to his personal investments and business ventures without
violating Section 3.
··

With respect to the Treasurer, any activities related to the active management of stock or other ownership interests should be handled by third persons in the absence of any authority suggesting that such activities are acceptable when undertalcen directly. Dilling the Treasurer's term in office he should talce steps to disassociate himself from the active management of any of the entities in which he is invested and any entities in which he is the sole owner or principal or agent. Furthermore, he should not appear before any governmental bodies on behalf of entities · that he owns.

)
I hope that this informatism and analysis proves to be useful.

s4A'
~!"J. S.. hneider
Attorney General

cc: Bruce, Poliquin, State Treasurer
Paul LePage, Governor
Senator Kevin Raye, Senate President
Representative Bob Nutting, Spealcer of the House Senator Barry Hobbins, Senate Minority Leader Representative Emily Cain, House Minority Leader

)
5