The airline CEO grounded in his bid to become governor

September 17, 2013: 10:10 AM ET

Cape Air's Dan Wolf faces a tough choice: Give up his business or give up politics.

By David Whitford, editor-at-large

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FORTUNE -- Say you're 55 years old. You're a successful, public-spirited entrepreneur. You know about leadership, job creation, and operating within a budget. You're no stranger to politics, either, having served in the state legislature. Now you want to run for governor. Is that so unreasonable?

That's what Dan Wolf would like to know. He's a pilot who founded Cape Air in 1989 and built it into the largest commuter airline in the country, serving Cape Cod, Nantucket, Martha's Vineyard, and points north and west in New England, not to mention St. Louis and half a dozen Midwestern burgs plus Fort Myers and Key West in Florida and seven Caribbean islands. Three years ago he won a seat in the Massachusetts state senate representing Cape Cod and the islands. This summer he launched a bid to succeed Deval Patrick as governor of Massachusetts in 2015.

Onward and upward. Except that Wolf has a sticky little problem he needs to resolve first with the Massachusetts State Ethics Commission. Wolf, you see, still owns 23% of Cape Air. Cape Air has contracts with Massport, the state agency that runs Logan Airport. Massachusetts law deems that a conflict of interest: You can't be a state employee and a business owner with a financial stake in a state contract.

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Wolf probably should have seen this coming. It's been an unresolved issue since he first ran for office. Still, the commission's formal advisory opinion, issued August 2, two weeks after he announced his candidacy, was quite a blow. It left him with three choices, none good: "terminate the Cape Air contracts with Massport; entirely and permanently divest his holdings in Cape Air; or resign his current public office and discontinue his campaign for Governor." He was given 30 days to comply.

"Too prickly, too strict, too everything," is how one former Massachusetts lawmaker sums up his former colleagues' view of the ethics commission. His personal opinion is more charitable; he thinks the commission is generally fair. But this, he says, is "an extraordinary leap of authority. I'm not aware of any instance where the ethics commission has jumped in so deeply and told a member of the senate he has to give up his seat and can't run for governor."

Days before the deadline, Wolf issued a fiery press release quoting Thomas Jefferson on "how successful citizens need to find time later in life to 'put down the plow,' move into public service, contribute to a vital democracy, and then return to the field and private life." The commission's ruling, he continued, "would force me to forsake and jeopardize the modern equivalent of my farm, a business built by many hands, and leave me nothing to return to after my time in public service." Unless the commission reverses itself, Wolf wrote, "I will be submitting my resignation from the Massachusetts Senate on August 29."

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The commission blinked, agreeing to extend its deadline long enough to consider a petition for exemption, which Wolf promptly filed.

Basically, the exemption would allow Wolf and other business owners to pursue sidelines as public servants as long as they meet certain disclosure requirements and otherwise comply with the state's already strict conflict-of-interest law.

Endorsing Wolf's petition is a bipartisan who's who of Massachusetts luminaries, including two former attorneys general, a former Democratic congressman, a Republican state rep who was chief counsel to former Governor Mitt Romney, and Pam Wilmot, executive director of the public interest lobbying group, Common Cause Massachusetts. "We believe that this proposal addresses real problems without opening new loopholes in the law," Wilmot told the Cape Cod Times.

The commission will consider the petition at its next regularly scheduled meeting on September 19. May reason prevail.

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