Minutes for December 19, 2018 Meeting

Posted on Jan 9, 2019 in Minutes

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
December 19, 2018
10:00 a.m.

Commissioners Present
Bryan Luke, Kenneth Goodenow, Gregory Shoda, Stanley Lum, Maryellen Markley, Ph.D.

Staff Present
Tony Baldomero, Gary Kam, Yayoi Tumamao
Deputy Attorney General Valri Kunimoto

Excused
Kristin Izumi-Nitao

Call to Order
Chair Luke called the meeting to order at 10:15 a.m.

Consideration and Approval of Minutes of Meeting on 11/14/18

Chair Luke asked for comments or changes to the minutes.  There were none.  Chair Luke called for a motion to approve the minutes.

Commissioner Lum moved to approve the minutes of the 11/14/18 meeting.  Motion seconded by Commissioner Markley.  Motion carried (5-0).

New Business
Associate Director Baldomero stated that the eleven (11) Conciliation Agreements were a result of investigations initiated by Commission staff pursuant to HRS §11-314(7) to determine whether there had been a violation of the Hawaii campaign spending laws.  He stated that Respondents have been informed in a letter from Commission staff of the violation and have been notified of today’s meeting as well as received a copy of the proposed conciliation agreement.  He recommended that the Commission make a preliminary determination of probable cause that a violation had been committed, waive further proceedings, and approve the settlement amounts stated in each of the proposed agreements.

*Proposed Conciliation Agreement No. 19-122 – In Re the Matter of S.A.F.E. Sustainable Action Fund for the Environment
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the Statement of Information for Electioneering Communications and requests that they assess a reduced fine from $250 to $83.33.  Chair Luke asked if there were any comments or questions.

Vice Chair Goodenow moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-123 – In Re the Matter of Hawaii Psychological Association Political Action Committee
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the 2nd Preliminary General Report and requests that they assess a reduced fine from $300 to $100.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Lum moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-124 – In Re the Matter of Friends of Jen Mather
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the Statement of Information for Electioneering Communications and requests that they assess a reduced fine from $250 to $83.33.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Markley moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-125 – In Re the Matter of Dowling Company, Inc.
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the 1st Preliminary General Report and the 2nd Preliminary General Report and requests that they assess a reduced fine from $2,800 to $933.33.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Ms. Sandra Wong, Esq., was present on behalf of Dowling Company, Inc. and was asked if she had any comments. Ms. Wong responded that she had no comment, but thanked Associate Director Baldomero for his assistance.

Vice Chair Goodenow moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-126 – In Re the Matter of Friends of Kelly Kitashima
Associate Director Baldomero explained that this proposed conciliation agreement concerns the failure to file and the late filing of the Preliminary General Report and requests that they assess a reduced fine from $300 to $100.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Lum moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

Respondent Kelly Kitashima was present and thanked the Commission for their consideration to the reduction of the fine.

*Proposed Conciliation Agreement No. 19-127 – In Re the Matter of Friends of Ray L’Heureux
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the Final Primary Report and requests that they assess a reduced fine from $626.31 to $208.77.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Vice Chair Goodenow moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-128 – In Re the Matter of Shidler Pacific Advisors, LLC
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the 1st Preliminary General Report and requests that they assess a reduced fine from $2,500 to $833.33.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Lum moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-129 – In Re the Matter of Team Fevella
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the Statement of Information for Electioneering Communications and requests that they assess a reduced fine from $1,000 to $333.33.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Lum moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-130 – In Re the Matter of Retail Merchants of Hawaii
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the 1st Preliminary General Report and the 2nd Preliminary General Report and requests that they assess a reduced fine from $1,550 to $516.67.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Vice Chair Goodenow moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-131 – In Re the Matter of Pfizer Inc.
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2nd Preliminary General Report and requests that they assess a reduced fine from $300 to $150.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Vice Chair Goodenow moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Lum. Motion carried (5-0).

*Proposed Conciliation Agreement No. 19-132 – In Re the Matter of Shidler Pacific Advisors, LLC
Associate Director Baldomero explained that this proposed conciliation agreement concerns the late filing of the 2nd Preliminary General Report and requests that they assess a reduced fine from $300 to $150.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Markley asked how this Agreement was related to Conciliation Agreement No. 19-128 which was previously discussed and approved. Associate Director Baldomero explained that this agreement concerned the late filing of a different report that resulted in separate Conciliation Agreements.

Commissioner Markley moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

*Docket No. 19-22 – In Re the Matter of Jessica Wooley, Eliza Wilcox, and Friends of Jessica Wooley
Associate Director Baldomero reported that a complaint by the Executive Director had been filed against Respondents Jessica Wooley, Eliza Wilcox, and Friends of Jessica Wooley for the late filing of the Statement of Information for Electioneering Communications.

Respondent Wooley filed nomination papers to be a 2018 candidate for the State House of Representatives, District 48.  Pursuant to Respondents’ last amended Organizational Report filed with the Commission, Respondent Wooley is listed as the candidate and Respondent Eliza Wilcox is the treasurer of the candidate committee called Friends of Jessica Wooley.

On 7/21/18, a contract with Service Printers for $2,498.43 was executed and the Statement of Information for Electioneering Communications (“Statement”) was not filed within 24 hours of the disclosure date as required under HRS §11-341.  Respondents filed the Statement on 8/3/18.

On 8/6/18, Commission staff sent Respondents a letter (Notice of Fine for the Late Filing of the Statement of Information for Electioneering Communications) via first class mail informing them of the late filing of the Statement and that a fine of $250 would be imposed pursuant to HRS §11-410.  Respondents did not voluntarily pay the fine amount.

On 8/30/18, Commission staff contacted Respondents about payment of the fine.  Respondent Wooley informed staff that she thought she timely filed the Statement on 7/21/18 or 7/22/18.  She further stated that she had concerns about whether the law was discriminatory.  Commission staff looked into the matter and had no record of Respondents timely filing the Statement on those dates.  Respondent Wooley was informed of the conciliation agreement process to which Respondent Wooley requested time to think about it.

On 9/4/18, Commission staff contacted Respondent Wooley regarding whether she wanted to proceed with a conciliation agreement.  Respondent Wooley said that needed more time and that she would call the Commission back on 9/17/18 with a decision.  Respondent Wooley did not contact Commission staff on 9/17/18.

On 9/20/18, Commission staff contacted Respondent Wooley who said that she wanted a conciliation agreement which would reduce the fine from $250 to $83.33.  Proposed Conciliation Agreement No. 19-87 was heard and approved by the Commission at its meeting on 10/17/18.  Respondents had until 10/30/18 to sign the agreement and remit payment.  Respondents did not comply.

On 11/13/18, Commission staff contacted Respondents about the agreement and the fine.  Respondent Wooley informed Commission staff that she would pay the fine, but would not sign the agreement because it was inaccurate and did not represent her position.  Commission staff informed her that a complaint would be generated and that the matter would be set for the 12/19/18 Commission meeting.

On 11/15/18, Commission staff sent Respondents a copy of the Complaint and set the matter on the 12/19/18 Commission Agenda.

On 12/17/18, Respondent Wooley faxed her response to the Complaint which was distributed to the Commissioners at the meeting.

Associate Director Baldomero recommended that the Commission make a preliminary determination, pursuant to HRS §11-405(a), that probable cause exists to believe that a violation of the campaign spending law has been committed, assess an administrative fine of $250, order that the fines be paid from the candidate’s personal funds including if the candidate committee funds are insufficient to pay the fine, and order that any and all administrative penalties be deposited into the general fund pursuant to HRS §11-410(e).

Chair Luke asked what the maximum amount of fine was for this type of violation under the fine guidelines. General Counsel Kam answered that the fine for this violation can go up to $1,000 under HRS §11-410.

Respondent Jessica Wooley was present and addressed the Commission. She stated that she closed her campaign account and that she is not planning to run for office again. She further stated that she had ran four campaigns in the past and this is the first time she had a complaint with the Commission.

Respondent Wooley explained that this was a self-reported mistake. She also acknowledged that she knew about the rule for electioneering communications and had told her Treasurer Eliza Wilcox that she will take care of the reporting of electioneering communications herself.  Since it was her first time dealing with this requirement, she made sure she understood what needed to be done to be compliant.

Respondent Wooley stated that she went to the Commission’s website within the 24-hour period of executing a contract with Service Printers, and at the time, she thought she submitted the Statement on time. When she found out that it was not submitted, she first thought it was a mistake made by the Commission staff. However, upon going through committee records, Treasurer Wilcox pointed out to her that the Statement may not have been filed. That was when Treasurer Wilcox immediately reported the mistake. Therefore, Respondent Wooley asked the Commission to waive the fine given that it was a first time, and a self-reported mistake.

Chair Luke asked why Respondent Wooley thought the law was discriminatory as stated in Respondent Wooley’s written response. Respondent Wooley answered that she believed it was discriminatory to candidates who are not well-funded and to those who self-report. She stated that she realized that they are not a protected class, but hoped that the Commission considers how the rule is being enforced because it is an extreme rule that does not have any beneficial effect.

Chair Luke commented that the Commission does not write the law.  Respondent Wooley responded that she understands that and acknowledged that the Commission is just trying to do its job.

Chair Luke asked whether Respondent Wooley or any of her committee officers attended trainings that the Commission staff offered to candidate committees.  Respondent Wooley responded that she was not sure, but that she reviewed training videos posted on Commission website.

Discussion ensued about Respondent Wooley’s communication with the Commission staff.  Respondent Wooley responded that she spoke to Executive Director Izumi-Nitao on multiple occasions and expressed her perspectives to which she ultimately agreed to the Conciliation Agreement. She had decided that she would pay the fine with her personal funds. However, when she reviewed the Agreement, she felt that it made it seem like she did something terribly wrong.

General Counsel Kam informed Respondent Wooley that the Conciliation Agreement does not constitute an admission of wrongdoing.

Discussion ensued about why Respondent Wooley refused to sign the Agreement.  Respondent Wooley explained that the Agreement does not state that she self-reported. General Counsel Kam asked to clarify whether by “self-reporting” she means submitting the Statement late to report that the contract was executed.  Respondent Wooley affirmed that that was what she meant. General Counsel Kam explained that committees who submitted their Statement late which was the same way Respondent Wooley did were fined for the same violation and that this was not an issue of self-reporting.

Vice Chair Goodenow commented that the Commission made efforts to change this law and that it is doing all that they can.

Discussion ensued about whether Respondent Wooley would consider signing the Agreement. Respondent Wooley stated that she would only do so if the Agreement would acknowledge that she self-reported her mistake. Commissioner Markley asked if there was a way to include an additional line in the Agreement that read Respondents self-reported. Chair Luke disagreed because there were a lot of other committees that filed late Statements just like Respondent Wooley who were fined and that this was not an issue of self-reporting.  General Counsel Kam further asserted that Respondent Wooley stated earlier that by “self-reporting” she meant submitting the Statement late which was already mentioned in the Agreement.

Vice Chair Goodenow moved to make a preliminary determination that probable cause exists that a violation had been committed and to accept the fine and terms stated in the complaint.  Motion seconded by Chair Luke.  Motion carried (4-1) (Commissioner Markley opposed).

*Docket No. 19-23 – In Re the Matter of William Budd Dickinson, Jeff Turner, and Green Party of Hawaii
Associate Director Baldomero reported that a complaint by the Executive Director had been filed against William Budd Dickinson, Jeff Turner, and Green Party of Hawaii for the late filing of the Final Primary Report and for failing to timely report a contribution in the Preliminary Primary Report.

In an email dated 12/18/18, Respondents requested that the matter be continued to the January 9, 2019 Commission meeting to permit them time to address the Complaint.  Commission staff had no objection.

Vice Chair Goodenow moved to accept Respondents’ request to continue the matter to the next meeting.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

Old Business
*Docket No. 19-18 – In Re the Matter of Ray L’Heureux and Friends of Ray L’Heureux
Associate Director Baldomero recommended that this complaint be dismissed as a result of Proposed Conciliation Agreement No. 19-127 which was approved under New Business.

Chair Luke moved to dismiss Docket No. 19-18.  Motion was seconded by Vice Chair Goodenow.  Motion carried (5-0).

*Consideration, Discussion, Approval, and Update of Commission Legislation for the 2019 Legislative Session
General Counsel Kam reported that meetings with the legislature have commenced concerning the Commissions four (4) bills. Commission staff met with Representative Christopher Lee (House Judiciary Chair) on 11/28/18 and Senator Karl Rhoads (Senate Judiciary Chair) on 12/17/18.  General Counsel Kam commented that both Representative Lee and Senator Rhoads seemed to be receptive to the bills.  Commission staff will be meeting with Senator Breene Harimoto, Senate President Ron Kouchi, and House Speaker Scott Saiki in the coming weeks.  A meeting with House Finance Committee Chair Representative Sylvia Luke was scheduled for 12/20/18 but was postponed.

Associate Director Baldomero further reported that Commission’s budget briefing with Senate Ways and Means and House Finance has been set for 1/14/19.  He explained that the Commission staff will attend the briefing to keep the budget at a status quo.

Chair Luke asked whether an increase in the budget was possible to accommodate the need for investigative services.  Associate Director Baldomero responded that the request was submitted but was rejected by the administration.

Report from the Executive Director
Report on Compliance of Filing Timely Disclosure Reports
Associate Director Baldomero reported the following:

  • Final Election Period Report (reporting period 10/23/18 to 11/6/18 or 8/12/18 to 11/6/18 or 1/1/18 to 11/6/18) due on 12/6/18 for candidate committees running in the 2018 election
    • For Governor, Lt. Governor, Kauai, & Big Island, this report was due on 11/28/18
    • Candidate Committees
      • 271 candidates were expected to file
      • 237 (88%) filed on time
      • 3 (1%) filed late
      • 31 (11%) did not file (*Note: 14 are $1,000 or less candidates and 17 are candidate who lost in the Primary Election)
      • To date, 11 (4%) have not filed
    • Noncandidate Committees
      • 267 were expected to file
      • 246 (92%) filed on time
      • 1 (1%) filed late
      • 20 (7%) did not file
      • To date, 8 (3%) have not filed
  • Expenditure of Public Funds Report (reporting period 1/1/8 to 11/6/18)
    • 9 candidate committees were expected to file
    • 9 (100%) filed on time
  • Upcoming Reports
    • Supplemental Report (reporting period 7/1/18 to 12/31/18 or 11/7/18 to 12/31/18) due on 1/31/19 for both candidate and noncandidate committees.

Report on the 2018 COGEL Conference

Associate Director Baldomero reported that Executive Director Izumi-Nitao, General Counsel Kam, Commissioner Lum, and Commissioner Markley attended the December 9-12, 2018 COGEL Conference in Philadelphia, Pennsylvania.  He made the following comments on behalf of Executive Director Izumi-Nitao:

– There were 445 attendees (171 of whom were first-time attendees).
– The attendees represented 37 states, 6 Canadian provinces, Guam, Australia, and Ireland.
– There were 10 people who attended from Hawaii:  4 from the Commission; Daniel Gluck, Executive Director of the Hawaii State Ethics Commission; Bonita Chang and Kee Campbell, Staff Attorneys at the Hawaii State Ethics Commission; and Chair Reynaldo Graulty and Commissioners Melinda Wood and Wesley Fong.
– At the conference, the Commission’s attendees were involved with breakfast roundtables, hosting dine-arounds, and participated on the Steering Committee as well as the Nominating Committee.
– The conference continues to be an invaluable opportunity to learn about other campaign finance offices, litigation, legislation, enforcement, and new developments/trends as well as measure Hawaii’s performance in these areas.
– The Commission continues to be well placed in the campaign finance world and excels in the areas of data visualization as well as enforcement actions.
– The Commission needs to monitor and be aware of the following areas:

  • Donations to an elected official’s (or his/her spouse) non-profit or charitable organization at the behest of the candidate as an alternative channel of payment to obtain support and access to the elected official.
  • Increases in modifying or upgrading public financing programs (EX: Seattle, WA – voucher program).
  • Varying forms of Governor groups (501(c)(4) organizations) being formed to fund allies or disparage enemies, push legislative agendas, fund inaugurations, or fund legal defenses.
  • Elections being vulnerable to foreign spending – despite the ban on foreign spending, the rapid development of the Internet and the deregulation of campaign finance have weakened protections so that foreign money is able to influence elections via political ads or 501(c)(4) groups.
  • Online political advertising is expanding and is less accountable than other media outlets.
  • The ability to microtarget online political ads makes them less transparent because they are often seen by a pre-selected audience who are sympathetic to the ad content and less likely to report false claims.

– In summary, believes that Hawaii is performing well on a national and global level and that we have a strong team built with General Counsel Kam in the area of law, Associate Director Baldomero with regard to technology and data, and Commissioners Lum and Markley who took the time to attend the conference to learn more about campaign finance.
– The 2019 COGEL Conference will be on 12/15/19 to 12/18/19 in Chicago, IL.

Commissioner Markley reported that the discussion about Dark Money was very interesting. The information shared was not just about what it was but also about how to recognize Dark Money. The presentation seemed to indicate that Hawaii had not been significantly affected by Dark Money up to this point. However, the stories shared about the actual incidents involving Dark Money were frightening. Commissioner Markley provided examples of negative ads that have targeted small-time candidates and how foreign monies have been disguised and integrated elections across the country.  She also shared the significance of social media influence in elections. She further commented that the general feeling is that Hawaii is so far away that no one is going to care – but she does not think that is true.  Overall, she felt that the knowledge she had gained from attending the conference was valuable and beneficial.

Commissioner Lum reported that the COGEL Conference was absolutely phenomenal.  He shared that the subject matter was intriguing and was inspired to learn more about campaign spending.  He further commented that the experience confirmed a lot of the statements made about Hawaii being at the forefront of campaign spending, and that he is proud of being a part of the Commission.

Commissioner Markley mentioned that Executive Director Izumi-Nitao was a very good representative for the Commission.  She explained that Executive Director Izumi-Nitao was part of the major committees related to the development of this conference and was clearly well-respected.  She continued that people paid attention to everything that Executive Director Izumi-Nitao had said and that she was proud to have her as the Executive Director of Hawaii Campaign Spending Commission.

General Counsel Kam reported that sessions on coordination and social media were most interesting. The speaker for the session on social media owned a social media firm and shared how he was able to sway votes for a particular candidate with absolutely no coordination with any candidate.  All he needed to do was to convince more registered voters of his client’s political party to vote and to convince more registered voters of his client’s opponent’s political party to not vote and stay home on election day.  General Counsel Kam also shared that the movie, Dark Money, truly presented how things are like for agencies that regulate campaign finance law violations.

Update on Certification with Office of Elections and County Clerks
Associate Director Baldomero reported that Commission staff has been in communication with the Office of Elections and the county clerks concerning certification of elected officials.  Beginning the week of 11/20/18, Commission staff has been emailing weekly memos to the Office of Elections and the county clerks certifying which elected officials have turned in their campaign spending reports and paid their fines (if any).  To date, Governor, Lieutenant Governor, County of Kauai, County of Hawaii, and Office of Hawaiian Affairs trustees have been certified by the Commission and were sworn into office.  The next batch of candidates will include Offices of Maui County Council and Honolulu City Council to be sworn in on 1/2/19.  The remaining Senate and House candidates will be sworn in on 1/16/19.

Update on the 2018 Election
Associate Director Baldomero reported that with respect to Candidate Committees:

  • Governor David Ige raised about $3 million and spent about $3 million.
  • Governor Josh Green raised about $764,000 and spent about $1 million.
  • Maui Mayor Mike Victorino raised about $458,000 and spent about $424,000.
  • Kauai Mayor Derek Kawakami raised about $518,000 and spent about $459,000.
  • Senator Kurt Fevella raised about $17,000and spent about $19,000, while his opponent, Matt LoPresti, raised about $54,000 and spent about $60,000.
  • Honolulu Councilmember Trevor Ozawa raised about $551,000 and spent about $530,000, while his opponent, Tommy Waters raised about $175,000 and spent about $212,000.

In the area of Super PACs, the most active was Be Change Now, which raised about $6 million and spent about $3 million.  In the area of Ballot Issue Committees, the following activity was notable:  Preserve Our Hawaii which was in support of Con Con raised about $740,000 and spent about $622,000 ; Affordable Hawaii Coalition PAC which was in opposition of Con Am raised about $1 million and spent about $962,000; and, HSTA for Schools Our Keiki Deserve which was in support of Con Am raised about $877,000 and spent about $536,000.

Associate Director Baldomero further reported that 18 out of 294 candidates who ran in 2018 received public funding totaling about $105,000.  Eight (8) of the candidates who received public funding won the 2018 election.  Moreover, there were about 480 fundraiser notices filed for fundraisers held by candidates running in the 2018 election.

Ms. Kelly Kitashima commented that while listening to the discussion on the COGEL conference, she was relieved to hear that there is a collaboration between the Campaign Spending Commission and the State Ethics Commission.  She shared her experience during the 2018 election that involved false advertisements against her campaign which is now under review by the State Ethics Commission.

EXECUTIVE SESSION
Chair Luke asked for a motion to convene Executive Session to consider and approve Executive Session minutes from the Commission meeting on 11/14/18.

Vice Chair Goodenow moved to convene in Executive Session for the aforementioned reason(s).  Motion seconded by Commissioner Lum.  Motion carried (5-0).

Public Session reconvened at 11:25 a.m.

Vice Chair Goodenow moved to adjourn the meeting.  Motion seconded by Chair Luke.  Motion carried (5-0).  Meeting adjourned at 11:26 a.m.

Next Meeting:
Scheduled for Wednesday, January 9, 2019 at 10 a.m.