By RUSS OLIVO

PROVIDENCE — The state Ethics Commission decided Tuesday there are sufficient grounds to proceed with a formal hearing on charges that Mayor Susan D. Menard violated the state ethics code by authorizing no-bid leases with her son-in-law’s company to supply motorcycles for the Police Department.

The commission voted 6-0 to return a finding of probable cause on three separate violations of the ethics code after a closed-door hearing at commission headquarters that lasted nearly three hours.
The decision was based on a complaint that Menard had violated the code of ethics by leasing motorcycles from Paramount Harley Davidson of Framingham, Mass., a company owned mostly by James Pilavin, the mayor’s son-in-law. Edward M. Roy, a retired detective for the Woonsocket Police Department who ran unsuccessfully for City Council in 2007, filed the complaint in March.
Although the ethics code is a civil statute, a finding of probable cause on such a complaint is akin to an indictment on a criminal charge. At this point, it is a mere allegation, though it sets the stage for a hearing, similar to a criminal trial, with the introduction of testimony from witnesses and other evidence, to determine whether the allegations are true.
“I’m thrilled,” Commission Prosecutor Dianne Leyden told a waiting throng of reporters in reaction to the commission’s vote. “I believe a violation of the code took place and that is why I’m prosecuting this case. I believe we will prevail after a hearing.”
One violation of the ethics code Menard is accused of alleges that she was in “substantial conflict with the proper discharge of her duties” by leasing motorcycles from Paramount, a company in which Pilavin is the majority owner, Leyden said. Menard also violated the code by using her public office to obtain financial gain for a family member and by entering into no-bid contracts with a company owned by a family member.
There is no prohibition on doing business with family members as long as the services adhere to legal requirements for competitive bidding and public advertising of the selection process, said Leyden. In this case, neither happened.
“They did not go out for public bid, there were no competitive bids taken, and they did not provide public notice,’ she said.
A hearing on the charges remains unscheduled and could be several months away, said Leyden. Menard faces a fine of up to $25,000 for each violation.
Menard’s lawyer, meanwhile, said it was entirely unlikely any of the allegations against Menard would ultimately hold water, flatly contradicting Leyden on some points. Glen Whitehead told reporters the commission’s entire case was weak, at one point dismissing it as little more than a political vendetta advanced by a disgruntled candidate for City Council.
“There was no violation of the ethics code here,” he said. “We look forward to a hearing. Once the full story comes out, there will be a finding of no violation of the code of ethics.”
Whitehead said the leases did not violate competitive bidding requirements because other offers were considered and the effort to procure the vehicles was the subject of advance notification in a newspaper and a public hearing.
Contrary to the inference of the finding, Whitehead said there was no financial gain to Pilavin’s company in the case at hand. He said the city had four $10,000 leases with Pilavin’s company dating back to 2002, each of them for four Harley Davidson motorcycles. The city saved between $3,600 to $4,800 on each lease compared to the prices provided by its usual supplier, Boston Harley Davidson. Meanwhile, he said, Pilavin lost money on the deal, which Whitehead likened to charity.
Why would Pilavin get involved in a money-losing deal with the city?
“The owner of Paramount testified it was his affection for the city and he wanted to do something for the city,” said Whitehead, who did not elaborate.
A 21-page memorandum on the investigative findings, made public after the commission voted, shed additional light on Pilavin’s rationale. Pilavin, who dealt with former Deputy Chief Richard Dubois in firming up the leases, told commission investigators he was a reserve police officer for the city from 1991 to 1993, and had known Dubois as a captain on the force.
Pilavin said he gave the city “a below-market price” not only because of his affection for the city, but because his wife, Karrie Menard, the mayor’s daughter, had come from Woonsocket and “Woonsocket had been good to him.” Pilavin claimed he only spoke to Menard once during the years the leases were in effect and that all she wanted was “good customer service.”
When pressed, however, Pilavin provided investigators with another reason for giving the city such favorable treatment.
“It’s real simple,” he is quoted as saying. “I don’t want to hear any bull---- from my mother-in-law.”
Menard was not present for Tuesday’s hearing and could not be reached for comment later. Whitehead, who was accompanied by law partner Steve DeLuca, said he believed that mayor was traveling. Last week Menard said she would be in Utah to celebrate her grandson’s birthday on the day of the hearing. The mayor since 1995, Menard has never faced an ethics complaint before.
In addition to Pilavin, commission investigators interviewed Dubois, former Police Chief Herve Landreville and former Finance Director Robert Strom about the history of the Police Department’s use of motorcycles.
Dating back to 2000, Dubois said the city bought two Kawasaki motorcycles from a local dealership, but a year later Landreville told him he wanted the department to begin leasing two Harley Davidsons from Boston Harley Davidson for $3,400. When the lease expired, around 2002, he said the department wanted to switch to a larger Harley Davidson model and he began looking around for other companies that leased them.
Around that time, he testified, he got a call from the mayor, saying “she understood he was looking to lease four new motorcycles.” He said the mayor pointed him to Paramount, “a new dealership” in Framingham, to find out what kind of a deal he could get. Dubois said he had never heard of the company.
When he called Paramount’s financial officer, Robert DiGangi, he learned that Pilavin, the mayor’s son-in-law, was the owner of the firm, according to the investigative report. After that initial phone call, Dubois said he called the mayor back and told her “the police department was going to enter into a lease with Paramount because it was the best deal that the city could get.”
The first of four leases, for four Harley Davidson Road King bikes, came in 2002. Each bike was costing the city $2,500 for the one-year term of the lease, a price Dubois assured investigators was “such a great deal” because of Menard’s relationship to the owner of Paramount. Although Dubois claimed he had the authority to terminate the lease if he wanted to, he said the mayor could override him at any time because “she was the boss.”
Landreville recalled that the mayor informed him the city was getting new Harley Davidson motorcycles after she saw the old Kawasakis in a parade and told him “she was not happy with them.” Landreville said he had no involvement in the subsequent lease of the four Harleys. Similarly, Strom told investigators he was uninvolved in securing the leases.
Strom also told investigators, however, he believed the city was paying for the motorcycles with grant funds, or that it was “piggybacking” on a Greater Boston Police Council bid, making competitive bidding unnecessary. Strom also provided documents showing Menard had signed off on voucher payments for the leases in her capacity as public safety director.
According to the investigative reports, the city renewed the leases, either orally or in writing, four times between October 2002 and March 2007. The city used a federal Local Law Enforcement Block Grant of $40,726 to pay for the leases. While the motorcycles were an allowable use of the grant, the city did not follow the proper procurement procedures in tapping the funds, Leyden concluded.
 The mayor, her report said, violated not just the code of ethics, but the competitive bidding requirements of Department of Justice grant. Regulations for the program say that “all procurement transactions must be conducted in a manner to provide, to the maximum extent practical, open and free competition,” the report says.