Minutes for April 15, 2015 MeetingPosted in Minutes
Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
April 15, 2015
William Snipes, Tina Gomes, Gregory Shoda, Adrienne Yoshihara
Excused – Eldon Ching
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Ellen Kojima
Deputy Attorney General Valri Kunimoto
Call to Order:
Meeting convened at 10:06 a.m. with Chair Snipes presiding.
Consideration and Approval of Minutes of 3/11/2015 Meeting:
Vice Chair Gomes moved to approve the minutes of March 11, 2015 as amended.
Amendment proposed by Commissioner Yoshihara –
Page 5 – Docket No. 15-100 – Paragraph 4 amended to read: “Respondent Ferguson stated that since the end of the election, she and her treasurer had not been in communication with each other and that neither of them had checked the post office box. So, she was not aware of the Commission’s notices and complaints, but when she became aware of the notices and complaints, she immediately contacted Commission staff and made every effort to promptly bring her committee into compliance including filing the outstanding reports. The fine for the Final Election Period Report was paid with remaining campaign and personal funds. With compliance of the previous violation and with the intent to terminate the committee’s registration, she asked that the fine of $750 not be enforced.”
Motion seconded by Commissioner Shoda. Motion carried (4-0).
Docket No. 15-89 – In Re the Matter of Forward Progress
Commissioner Yoshihara noted her recusal because her firm, Chun Kerr, LLP, represents Pacific Resource Partnership (“PRP”) in related matters before the Commission.
General Counsel Kam reported that staff was informed that Jonathan Berkon of the Washington, D.C. law firm of Perkins Coie, would be handling this matter. Mr. Berkon emailed staff requesting a continuance. Mr. Berkon further informed staff in an email received this morning that Hawaii attorney Leroy Colombe, who has been appearing on behalf of Respondent Forward Progress and PRP before the Commission, will not be representing Respondent Forward Progess in this matter. Perkins Coie is in the process of looking for a Honolulu representative.
Executive Director Izumi-Nitao added that staff is recommending withdrawal of the complaint as a result of new information recently brought to the staff’s attention which staff believes impacts the facts contained in the complaint and requires further investigation.
Chair Snipes moved to accept staff’s recommendation to withdraw the complaint. Motion seconded by Vice Chair Gomes. Motion carried (3-0) with Commissioner Yoshihara recusing.
Docket No. 15-125 – In Re the Matter of John White, Stacey Katakura, and Friends of John White
Commissioner Yoshihara, in an abundance of caution recused herself, as her firm Chun Kerr, LLP represents PRP.
Executive Director Izumi-Nitao reported that a complaint was filed alleging the late filing of the Supplemental Report and the nonpayment of the assessed fine of $200.
Respondents have been informed in a letter from Commission staff of the violation. They have been notified of today’s meeting and have been provided a copy of the complaint. Payment of the fine was received on 4/13/15. Staff recommended that the complaint be dismissed.
Chair Snipes moved to dismiss the complaint. Motion seconded by Vice Chair Gomes. Motion carried (3-0) with Commissioner Yoshihara recusing.
Proposed Conciliation Agreements
Executive Director Izumi-Nitao reported that the following proposed conciliation agreements are a result of investigations initiated in January and February 2015 pursuant to HRS §11-314(7) to determine whether there has been a violation of the Hawaii campaign spending laws.
Proposed Conciliation Agreement No. 15-67 – In Re the Matter of Hawaii Opthalmological Society PAC
Proposed Conciliation Agreement No. 15-68 – In Re the Matter of Debralynn DeSilva Carveiro
Respondents have been informed in a letter from Commission staff of the violation. Further, they have been notified of today’s meeting and received a copy of the proposed conciliation agreement. Staff recommended that the Commission make a preliminary determination of probable cause that a violation has been committed, waive further proceedings, and approve the settlement amounts as stated in each of the proposed conciliation agreements.
Vice Chair Gomes moved to make a preliminary determination that probable cause exists that a violation has been committed and to accept the settlement terms and amounts as stated in each of the proposed conciliation agreements. Motion seconded by Commissioner Yoshihara. Motion carried (4-0).
Docket No. 15-111 – In Re the Matter of Hanalei Aipoalani, Angelita Aipoalani, and Friends of Hanalei
Executive Director Izumi-Nitao reported that a complaint was filed alleging the Respondents’ failure to file the Supplemental Report. On 3/11/15, the Commission issued a Preliminary Determination of Probable Cause and assessed a fine of $500.
Executive Director Izumi-Nitao reported that on 3/12/15 Respondent Aipoalani called Commission staff and stated that he would not pay the fine because he terminated his committee. On 3/19/15, Associate Director Baldomero received an email from Respondent Aipoalani requesting reconsideration of the Commission’s order and dismissal of the fine issued on 3/11/15. Respondent Aipoalani asserts that he was not a candidate in the 2014 election, that he had no financial activity, that he received guidance from staff in submitting a closing report, and that he was under the impression that his committee’s registration had been terminated.
Executive Director Izumi-Nitao stated that a review of Respondent Aipoalani’s candidate committee file shows that the request to terminate registration did not occur until 3/12/15, that the closing bank statement was received on 3/5/15, that it was not until the filing of the Supplemental Report on 3/9/15 that his committee showed no surplus or deficit, and therefore, he was not eligible to terminate before the Supplemental Report deadline of 2/2/15. She further stated that it is not evident in the committee file nor with conversations with staff that Respondent Aipoalani’s committee registration was terminated before the 2/2/15 deadline.
Staff recommended that the Commission not reconsider the Order issued at the 3/11/15 meeting and enforce the $500 fine.
Chair Snipes moved to accept staff’s recommendation that the Order not be reconsidered and that the $500 fine be enforced. Motion seconded by Commissioner Yoshihara. Motion carried (4-0).
In response to Vice Chair Gomes’ question regarding Respondent Aiopalani’s bank balance, Associate Director Baldomero responded that Respondent Aiopalani closed the committee’s bank account on 10/17/14.
Executive Director Izumi-Nitao stated that even if the committee’s bank account had been closed, Respondent Aipoalani was not eligible to terminate its registration until after the filing of the last Supplemental Report was due.
Docket No. 15-94 – In Re the Matter of Julia Allen, Valrie Griffith, and Committee to Elect Julia Allen
Present – Michael Palcic, Chairperson
Executive Director Izumi-Nitao reported that a complaint was filed alleging the late filing of the Supplemental Report and the nonpayment of the assessed fine. On 3/11/15, the Commission issued a Preliminary Determination of Probable Cause and assessed a fine of $200.
Mr. Palcic stated that he is requesting that the Commission reconsider the Preliminary Determination of Probable Cause issued on 3/11/15. He stated that the calculation of the fine was erroneous because actual expenditures for the supplemental reporting period were only $112.04. He argued that the law is clear that the retirement of an unpaid expenditure which occurred in a previous reporting period does not constitute an expenditure during the reporting period in which it was paid and should not be used for computing the fine for a late report. The law states that an expenditure is deemed to be made or incurred when services are rendered or when the product is received. Further, he argued that the law provides that in aggregate a fine shall not exceed 25% of contributions or expenditures whichever is greater for the period covered by the report. For the supplemental reporting period at issue here, contributions were $50 and expenditures were $112.04, and therefore, the maximum fine that can be imposed is $28.01.
General Counsel Kam stated that HRS §11-337 refers to reporting of expenditures only and that it is HRS §11-302 that defines an expenditure as a transfer of campaign funds used for a campaign related reason. Fines are related to the amount of activities for a reporting period and, in this case, the payment of an unpaid expenditure for the reporting period is at issue for the purpose of calculating a fine for a late repot.
Associate Director Baldomero explained that HRS §11-337 requires reporting on an accrual basis which means when a service is rendered or a product is delivered. If reporting was on a payment basis, candidates could intentionally delay reporting expenditures until after an election and frustrate the disclosure and transparency requirements of the statute. On 10/31/14, an unpaid expenditure for printing was reported in the Final Election Period Report which was treated as a liability or an accounts payable. Payment was subsequently made on this unpaid expenditure in the Supplemental Report which was the next report due after the Final Election Period Report. The cash on hand for the candidate committee was not reduced until this payment was made.
General Counsel Kam stated it is clear when an expenditure is reported, but the definition in HRS §11-302 more broadly defines expenditure. Mr. Palcic claims that there is no further definition for an expenditure and an expenditure is deemed to be made when goods are received or services rendered. If Respondents had filed late the report in which the unpaid expenditure was first reported, the amount of the unpaid expenditure would not have been used to calculate the fine. Respondents cannot have it both ways where an unpaid expenditure is not used to compute a fine and later payments of the unpaid expenditures are also not used to compute fines if the subsequent reports are filed late.
At the request of Commissioner Yoshihara, General Counsel Kam read the definition of expenditure as provided under HRS §11-302(1)(A), (B), and (C). Commissioner Yoshihara asked when was the expenditure reported. General Counsel Kam responded that the expenditure was incurred on 10/31/14 and was paid during the supplemental reporting period. The fine for late reports is not based on when the unpaid expenditure was incurred but when the unpaid expenditure is paid.
Executive Director Izumi-Nitao explained an unpaid expenditure as an obligation to pay. The unpaid expenditure for printing campaign material was properly reported in the Final Election Period Report because it was an expense incurred during that reporting period, and it was paid during the Supplemental Report period. Because the Supplemental Report was filed late, for purposes of computing the fine, staff looks at monies the campaign used to pay the prior debt and at the total amount of expenditures for the reporting period for the calculation of the fine.
Mr. Palcic argued that reporting is done on an accrual basis and that an expenditure is deemed to be made when services are rendered or products delivered. If an expenditure is made and reported in an earlier period, it cannot be deemed an expenditure in a subsequent period.
Associate Director Baldomero explained that treating expenditures on an accrual basis, products delivered or services rendered, comes from HRS §11-337 and that expenditures are treated in this way for reporting purposes. In the Final Election Period Report, the 10/31/14 expenditure was reported as an unpaid expenditure, following HRS §11-337. HRS §11-340, the fine statute, states that a fine is not to exceed 25% of contributions or expenditures, whichever is greater. The term “expenditures” as used in this section is a defined term in HRS §11-302.
Mr. Palcic stated that HRS §11-302 does not include retirement of a debt, a loan payment, or paying off an unpaid expenditure as an expenditure. He argued that an expenditure is narrowly defined and that disbursal of funds to retire a debt is not an expenditure under the law, and thus, should not be considered for purposes of computing the late report fine.
Commissioner Yoshihara stated that HRS §11-302 provides that an expenditure means any purchase or transfer of monies or anything of value for the purpose of, in this case, to influence the nomination or election of a candidate.
Chair Snipes moved to reconsider the Preliminary Determination of Probable Cause issued in Docket No. 15-94. Motion seconded by Vice Chair Gomes. Motion carried (4-0).
Chair Snipes commented that the actual definition of expenditure is not the first sentence of HRS §11-337, but the first paragraph of HRS §11-302 and subsection (A). Further discussion on expenditures made and how a fine is calculated.
Commissioner Yoshihara stated that when there is a conflict between laws, you go with the interpretation that is reasonable and avoids nullifying either law. In this case staff’s computation of the fine is fair and reasonable.
Associate Director Baldomero explained that the report was filed 4 days late so the daily fine of $50 x 4 days resulted in a $200 assessed fine. Calculation of the 25% on expenditures would be $112.04 in expenditures made and $1,981.28 in unpaid expenditures paid for total expenditures of $2,093.32 for a $523.33 maximum fine for this reporting period. Because the 25% cap is more than the daily fine computation, the $200 daily fine was assessed. If Mr. Palcic’s computation is used, then the 25% would be calculated on $112.04 for a fine of $28.01.
Mr. Palcic argued that the report shows disbursement of funds, which includes expenditures made, unpaid expenditures paid or forgiven, and loans repaid. Repayment of a loan is a disbursement of campaign funds, but it is not an expenditure. Expenditure is narrowly defined and reported on line 16 of the Disclosure Report as $112.04.
Commissioner Shoda moved to uphold the Preliminary Determination of Probable Cause issued in Docket No. 15-94 and that the $200 fine be enforced. Motion seconded by Commissioner Yoshihara. Motion carried (4-0).
Mr. Palcic stated that HRS §11-337 refines what is meant by expenditure for the purpose of reporting, and that nothing in the law changes the timing of an expenditure for purposes of calculating a fine.
He informed Commissioners that he has been in discussion with the Ombudsman’s Office and the Attorney General regarding this matter.
Docket Nos. 15-74 and 15-97 – In Re the Matter of Tracy Arakaki, Karen Arakaki, and Friends of Tracy Arakaki for Aiea
Present – Tracy Arakaki
Executive Director Izumi-Nitao reported that a complaint was filed alleging Respondents’ failure to file the Final Election Period Report (Docket No. 15-74) and the Supplemental Report (Docket No. 15-97). On 1/14/15, the Commission issued a Preliminary Determination of Probable Cause in Docket No. 15-74 and assessed a fine of $500, and on 3/11/15, the Commission issued a Preliminary Determination of Probable Cause in Docket No. 15-97 and assessed a fine of $750.
A 3/23/15 letter to the Commission from treasurer Karen Arakaki was received by staff. On 3/31/15, Executive Director Izumi-Nitao spoke with Karen Arakaki who said that she would file the reports, request reconsideration of the Commission’s prior decisions, and request an abatement of the fines. On 4/2/15, the Final Election Period Report and the Supplemental Report were filed which showed a deficit of $1,409.42.
Karen Arakaki was unable to attend today’s meeting, but the candidate is present to address the committee’s request to reconsider the Commission’s prior decisions. Mr. Arakaki stated that there has been no activity since July 2014 and because he was a first time candidate, he was not aware that they needed to continue filing reports. He also stated that the campaign post office box where the Commission has been sending notices, was not being checked on a regular basis.
Commissioner Yoshihara noted her sympathy to the family issues. Mr. Arakaki indicated that he planned to run again in the future.
Chair Snipes moved that the Commission not reconsider the Preliminary Determination of Probable Cause issued in Docket Nos. 15-74 and 15-97 and that the fines assessed in each docket (i.e., $500 in Docket No. 15-74 and $750 in Docket No. 15-97) be enforced. Motion seconded by Vice Chair Gomes. Motion carried (4-0).
Docket No. 15-118 – In Re the Matter of Ronald Strode, Antasia Keliikoa, and Ohana to Elect Ronald Strode
Executive Director Izumi-Nitao reported that a complaint was filed alleging Respondents’ failure to file the Supplemental Report. On 3/11/15, the Commission issued a Preliminary Determination of Probable Cause in Docket No. 15-118 and assessed a fine of $500.
On 3/12/15, Respondent Strode contacted staff and informed staff that he intends to run for Mayor of Honolulu in 2016. Staff determined that Respondents prematurely registered with the Commission since he had not filed nomination papers nor had the committee raised or spent more than $100. In fact, they have not opened a campaign bank account. On 3/20/15, staff received Respondents’ request to terminate his registration and Respondent’s 3/16/15 letter requesting termination.
Staff recommended that the Commission reconsider the Preliminary Determination of Probable Cause issued on 3/11/15 and dismiss the complaint based on the fact that Respondent prematurely registered as a 2016 candidate for the Honolulu mayoral race.
Chair Snipes moved to reconsider the Preliminary Determination of Probable Cause issued in Docket No. 15-118 and dismiss the complaint. Motion seconded by Commissioner Yoshihara. Motion carried (4-0).
Docket No. 15-55 – In Re the Matter of Rida Cabanilla vs. Matthew LoPresti
Present – Rida Cabanilla, Complainant
General Counsel Kam reported that a complaint was filed against Respondent LoPresti alleging his failure to report expenditures for campaign mailers. This matter was deferred from the 3/11/15 meeting because of new mailers received at the meeting. After review of the mailers, it was found that the new material was for the general election, which is not relevant to this complaint, and even if they were, these expenses were reported by Respondent LoPresti. Staff recommended that the complaint be dismissed.
Complainant Cabanilla requested a continuance to review General Counsel Kam’s response and present an answer if necessary.
General Counsel Kam stated that there is nothing to review and reiterated that the new material received at the 3/11/15 from Complainant Cabanilla meeting was for the general election which was not encompassed in the complaint. At any rate, a review of Respondent LoPresti’s disclosure reports showed that the expenditures for the printing of the mailers were reported in the Preliminary General Report period and postage for the mailings were reported in the Final Election Period Report by Respondent LoPresti.
Complainant Cabanilla stated that the issue is that if the expenditures were timely reported during the primary period then the Respondent exceeded the expenditure limit. She also noted that the new mailers were not her complaint, but that they were provided to her by a person she had asked to be a witness.
Commissioner Yoshihara moved to accept staff’s recommendation that the complaint be dismissed. Motion seconded by Vice Chair Gomes. Motion carried (4-0).
Consideration and Discussion of Commission Legislation and/or Other Campaign Finance Related Bills/Resolutions for the 2015 Legislative Session
General Counsel Kam reported that the bills listed in the updated 2015 Legislation handout have been heard and passed out of both the Senate and House and will be scheduled for conference committee hearings. He asked if Commissioners had any questions about the bills. No questions were asked.
General Counsel Kam discussed SCR 40, SD 1. The resolution requests that the Campaign Spending Commission do a study and recommendation regarding a $250 camp on campaign contributions and establishing a process of refunding contributions.
He further reported that testimony was submitted for SCR 40 for a House Judiciary hearing scheduled on 4/16/15 which suggested a need to obtain an attorney general’s opinion regarding the constitutional issue concerning contribution limits. Also, he reported that he did a review of other state laws and found that there is no other state that has an across the board contribution limit of $250 cap.
Report from Executive Director
Report on Compliance of Filing Timely Disclosure Reports
Executive Director Izumi-Nitao reported that staff has met with the Attorney General’s Office in pursuing First Circuit Court applications for those committees that are noncompliant with Commission orders. Presently waiting to hear how to proceed with the process.
Discussion on Succession Planning of Commissioners
Executive Director Izumi-Nitao reported that Chair Snipes’ and Vice Chair Gomes’ terms will be ending on June 30, 2015, and Chair Snipes has indicated that he will not be reapplying.
Discussion deferred until the May meeting.
Report on Common Cause Hawaii Opinion Editorial Issued on March 25, 2015 in the Star Advertiser
Executive Director Izumi-Nitao reported that Common Cause Hawaii wrote an editorial on the $3 tax check-off which appeared in the 3/25/15 Star Advertiser. General Counsel Kam emailed Christine Trecker and Corie Tanida thanking them for the piece, and Executive Director Izumi-Nitao followed up with a formal thank you letter to the Chair of Common Cause Hawaii acknowledging their support.
Discussion of New “What We Do” Page on the Commission Website
Executive Izumi-Nitao acknowledged the direction and assistance of Christine Trecker from Common Cause Hawaii regarding the new “What We Do” page on the Commission’s website. This is a summary/promotional page about what the Commission does and was posted on the Commission’s website on 4/2/15.
Report on Training Conducted at the Attorney General’s Office
Executive Director Izumi-Nitao reported that at the request of the Chief Investigator of the Attorney General’s Office, the Commission staff conducted training on 4/13/15 for about 50 investigators and about 10 prosecutors.
Chair Snipes recessed meeting at 11:30 a.m. (HRS Chapter 91 proceeding)
Meeting reconvened – 11:52 a.m.
Chair Snipes moved to convene executive session to consult with attorney pursuant to HRS §92-5(a)(4). Motion seconded by Vice Chair Gomes. Motion carried (4-0).
Public session reconvened – 12:15 p.m.
Scheduled for May 20, 2015 at 10:00 a.m.
Chair Snipes moved to adjourn meeting. Motion seconded by Commissioner Yoshihara. Motion carried (4-0). Meeting adjourned at 12:15 p.m.