Minutes for June 20, 2018 Meeting

Posted on Jul 25, 2018 in Minutes

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
June 20, 2018
10:00 a.m.

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

Commissioners Excused
None

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Yayoi Tumamao
Deputy Attorney General Valri Kunimoto

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

Consideration and Approval of Minutes of Meeting on 5/23/18
Time:    10:10 a.m.
Chair Luke asked for comments or changes to the minutes.  There were none.  Chair Luke called for a motion to approve the minutes.

Time:    10:10 a.m.
Vice Chair Goodenow moved to approve the minutes of the 5/23/18 meeting.  Motion seconded by Commissioner Lum.  Motion carried (5-0).

New Business – None

Old Business
*Docket No. 18-08 – In Re the Matter of Mark K. Ing and Friends of Kaniela Ing
Time:    10:10 a.m.
General Counsel Kam stated that this matter was continued from 5/23/18 upon request from Respondent Ing to obtain an attorney to respond to the complaint.  Respondent Ing however was unable to retain an attorney.

General Counsel Kam stated that he had 2 amendments to the complaint:  (1) Amend Count XXVIII to recommend personal reimbursement of $2,000 from Respondent Ing to Respondent Friends; and (2) Amend second Count XXVI to Count XXVI(A).  Respondents were notified of these amendments prior to the meeting.

General Counsel Kam discussed the 32 counts in the complaint and recommended the following relief:

  • Counts I & II – Failure to Amend Organizational Report → $50 fine/each
  • Count III – Unauthorized Handling of Campaign Funds → $100 fine
  • Counts IV – XXVI – 23 False Reports (2011-2016) → $500 fine/each and file an amended report for 23 reports
  • Counts XXVI(A) – Failure to Timely Deposit Contributions → $300 fine
  • Count XXVII – Excess Contribution → $2,000 escheat
  • Count XXVIII – Commingling of Campaign and Personal Funds → $1,000 fine and $2,000 personal reimbursement to candidate committee
  • Count XIX – Prohibited Use of Campaign Funds / Use of Campaign Funds for Personal Use → $1,172 fine and $2,344.55 personal reimbursement to candidate committee
  • Count XXX – Exceeding Expenditure Limit as a Publicly Funded Candidate → $500 fine
  • Count XXXI – Failure to File Late Contributions Report → $750 fine and file report

In summary, General Counsel Kam recommended that pursuant to HRS §11-405(a), the Commission make a preliminary determination of probable cause that the Hawaii campaign finance laws were violated and (1) assess a fine of $15,422 against Respondents and order Respondent Ing to use personal funds to pay the fine if Respondent Friends does not have sufficient campaign funds; (2) order that any and all administrative fines be deposited into the general fund within 20 days of Respondents’ receipt of the order; (3) order Respondents to escheat $2,000 to the Hawaii Election Campaign Fund; (4) order Respondent Ing to personally reimburse $4,344.55 to Respondent Friends within 20 days of receipt of the order; (5) order Respondents to amend 23 disclosure reports referenced in Counts IV through XXVI, within 20 days of receipt of the order; and (6) order Respondents to file the 2012 Late Contributions Report within 20 days of receipt of the order.  In the alternative, General Counsel Kam recommended that the Commission refer the complaint for prosecution if it finds that Respondents intentionally, knowingly, or recklessly violated the Hawaii campaign finance laws.

Respondent Ing and Deputy Treasurer Ryan Akamine were present and had filed a response to the complaint on 6/19/18.  Deputy Treasurer Akamine stated that he is a CPA and was retained by Respondent Ing to assist with the bookkeeping.  Deputy Treasurer Akamine stated that Respondent Ing’s actions were a pattern of bookkeeping errors and that it is difficult to nail down how he could have benefitted from his actions.

Respondent Ing stated that he took full responsibility for the mistakes he made in his campaign finance reports.  He apologized to the Commission, his campaign team and volunteers, his campaign donors, his constituents, and the public for his mistakes.  He proceeded to go through his response to the complaint.  He maintained that there were 3 extenuating circumstances that warranted a reduction in the relief set forth in the complaint in lieu of referring the matter for prosecution.  The extenuating circumstances were:  (1) Opening the wrong type of campaign bank account with Bank of Hawaii which meant the non-usage of debit cards and the automatic closure of the account; (2) Unable to make P.O. Box payments for Respondent Friends which meant mail, including contribution checks, were returned and the P.O. Box closed; and (3) phone where he kept photos of his committee checks/receipts was stolen and car was vandalized on 6/3/16.

With respect to extenuating circumstance #1, Chair Luke asked if Respondent Ing attended Commission training or looked at the candidate committee manuals.  Respondent Ing stated that he read the candidate committee manual and the Treasurer’s Guidebook as well as attended the Commission’s last training on 6/8/18 on Oahu.  He said that he did not attend any other Commission trainings before 6/8/18 and did not know about the Commission training on Maui.

Commissioner Markley asked when Respondent Ing was notified of the problems in the complaint.  Respondent Ing stated that General Counsel Kam told him on 11/21/17.  General Counsel Kam stated that subpoenas for Respondents’ bank records issued in 2016 were also sent to Respondents which provided notice that Commission staff was looking at Respondents’ monthly statements, checks, and deposits.  General Counsel Kam also reported that the bank subpoenas were sent to the addresses listed in Respondents’ Organizational Report, but most were returned in April 2018 which meant that Commission staff had to send them to Respondent Ing’s place of business.

With respect to extenuating circumstance #2, Chair Luke asked about the other committee members in Respondent Friends’ Organizational Report who could check the committee’s P.O. Box.  Respondent Ing stated that they were not checking the P.O. Box.

Respondent Ing said that he repeated unrecognized mistakes that added up to significant discrepancies over time.  For example, he said that for physical checks from contributors, he would report the date on the check rather than the date he deposited the checks into his campaign account.

Respondent Ing then addressed each count in the complaint.

With respect to Counts I and II, Respondent Ing stated that it was difficult to change the treasurer or bank account in Respondent Friends’ Organizational Report.  Associate Director Baldomero said that Respondents could change the bank account online by amending the Organizational Report, but a change in the treasurer would require Respondents to file an electronic filing form to change the treasurer’s name.  Respondent Ing commented that Respondent Friends’ bank account was expiring and that he did not think about updating this information on his Organizational Report.  He further commented that while the Commission’s Treasurer’s Guidebook says committees need to update their bank account information on their Organizational Report, the candidate committee manual does not mention this.  Deputy Treasurer Akamine commented that it is difficult to open bank accounts for noncandidate committees.

With respect to Count III, Associate Director Baldomero commented that this count concerns the time period when someone other than Respondent Ing was listed as the campaign treasurer or deputy treasurer (i.e., Naomi Kusachi or Sara Ohashi), and thus, Respondent Ing was not authorized to handle campaign funds.

With respect to Counts IV-XXVI, Respondent Ing acknowledged that he filed false reports and asked that the fine be lowered because he was agreeing to other counts in the complaint.  Discussion ensued on whether the violations were subject to fines  as if the reports were substantially defective or deficient, but General Counsel Kam said that this is not applicable as where fixing reports within days before an election when the fixing of a defective repot would actually benefit the public. The reports in these counts concern past elections, and therefore, this approach does nothing for transparency.

Discussion ensued on conciliation agreements.  General Counsel Kam reported that in 2016, the Commission approved the Administrative Fine Guidelines which described the conditions for which conciliation agreements are negotiated.  He stated that these conditions did not exist in this matter (i.e., the complaint asserts multiple violations and is not limited to one type of violation, and concerns more than fines including an excess contribution which has a statutory escheat as well as other violations that require personal reimbursement).

Vice Chair Goodenow asked whether there was an effort to settle the matter.  Respondent Ing said that he contacted General Counsel Kam to ask about their options and whether a Romy Cachola conciliation agreement might be worked out.  Respondent Ing commented that he was unable to retain an attorney who was knowledgeable about campaign finance laws and that he could not afford an attorney because his account is empty.  Commissioner Shoda stated that he was not happy with the large amount of charges and that he would like to refer the case for prosecution.  Commissioner Shoda stated that none of Respondents’ reports were correct and that prior Commission matters were referred for prosecution for lesser offenses.  He commented that he did not want to discuss the possibility of a conciliation agreement.

With respect to Count XXVI(A), Respondent Ing stated that Respondent Friends’ P.O. Box was closed, and thus, he did not receive these checks until later.  He further restated that he would report the dates on the checks rather than the date he deposited the checks which he later learned was the proper practice from the Commission’s candidate committee training on 6/8/18.

With respect to Count XXVII, Respondent Ing stated that when he registered with Act Blue, he had to input the maximum amount of his contribution limit.  Therefore, he thought the excess contribution would have been rejected by Act Blue.  He further commented that the check from Act Blue does not have the donors’ name on it.  Chair Luke questioned whether this was Respondents’ responsibility to check for excess contributions to which Respondent Ing replied in the affirmative.

With respect to Count XXVIII, Respondent Ing stated that he did not know how this check was deposited into his personal bank account.  Deputy Treasurer Akamine stated that the bank teller assisted Respondent Ing and that he relied upon her to deposit the check (Exhibit #25) into the proper account.  General Counsel Kam commented that Respondent Ing confirmed that the deposit slip had his writing on it, that Respondent Ing wrote the bank account numbers on the deposit slip, that there were just 2 checks deposited on that day, and that, but for Act Blue (a registered noncandidate committee with the Commission) reporting this contribution as well as confirming that Respondent Ing cashed the check, the Commission would not have known about the check because it was never reported by Respondents.  General Counsel Kam said that on the same date, Respondent Ing wrote a $1,000 check to another person from his personal bank account that was cashed on that date and that if the check from Act Blue had not been deposited into his personal bank account, the $1,000 check would have bounced.  Commissioner Markley commented that she found it odd that the bank would deposit this check into Respondent Ing’s personal account when it was written to Respondent Friends.  Respondents said that the bank teller might have crossed out Respondent Friends’ name and wrote Respondent Ing’s name to deposit the check into his personal bank account because the bank teller recognized him and automatically thought that he was depositing his checks into his personal account.  Chair Luke questioned whether Respondents were blaming the bank teller.

With respect to Count XXIX, Respondent Ing stated that he meant to pay his rent and credit card payments through his personal bank account and that he reimbursed the expenses with a legislative check in the amount of $1,504.55 (Exhibit #19).  Additionally, Respondent Ing distributed a Bank of Hawaii deposit slip dated 4/29/18 which he found in his records which showed an $800 deposit to Respondent Friends.  Respondent Ing argued that he has thus reimbursed Respondent Friends for these personal expenses but is short $40 which he intends to repay.  Despite the reimbursement, Commissioner Shoda stated that it was still a campaign finance violation.

With respect to Count XXX, Respondent Ing stated that he was not alerted of exceeding the expenditure limit as a publicly funded candidate because his expenditures were off.  Chair Luke said that Respondents are sending the wrong message to publicly funded candidates.  Commissioner Markley asked when Respondent Ing learned that he exceeded the expenditure limit.  Respondent Ing replied that he learned of it when he got the Commission’s complaint.

With respect to Count XXXI, Respondent Ing stated that the $2,000 check was dated 10/24/12 and that he did not deposit the contribution until later.  General Counsel Kam said that Respondents did not report the check at all.  Associate Director Baldomero stated that the check date and the deposit date by Respondents fell within the period of time that they would have had to file the Late Contributions Report.

Respondent Ing stated that Respondent Friends’ bank account is zero or close to zero.  General Counsel Kam commented that Respondents’ current cash on hand in their latest disclosure report (i.e., the Supplemental Report covering the period 1/1/18 to 6/30/18) which is not due until 7/31/18 but was filed early on 4/29/18, shows a surplus of $48,096.93.  Respondent Ing said that the report was wrong and that it was his understanding that he could amend it since it was not yet due.  General Counsel Kam questioned Respondent Ing why he would file a disclosure report showing a surplus given this on-going investigation.

General Counsel Kam stated that since the investigation commenced in 2016, Respondent Ing has amended his reports numerous times, and to date, only one schedule was accurate, that is, one Schedule B which showed zero expenditures which was also reflected in Respondent Friends’ bank records for the corresponding period.  Associate Director Baldomero said that Respondent Ing has only amended the contributions in his reports and that the $87,559.89 in unreported expenditures remains the same.

Chair Luke stated that Respondents’ reports are still inaccurate.  Respondent Ing replied that to amend the reports would take hundreds of hours and that the bank was not able to access his old accounts.  General Counsel Kam stated the Commission has the bank records and that numerous offers were made to Respondents to look at their bank records received as a result of the subpoenas.

Respondent Ing referred back to the timeline set forth in his response.  He said that he received a request for information from General Counsel Kam dated 11/21/17 and obtained the bank records that same day.  Respondent Ing said that he and Deputy Treasurer Akamine reached out to General Counsel Kam and was informed that all of the relevant bank records were included as exhibits in the complaint, but that Respondents could come to the Commission’s office to access any of the subpoenaed bank records.  Chair Luke asked Respondents if they went to look at the bank records.  Respondent Ing replied no and that he decided to spend his time preparing the response to the complaint instead because he anticipated more time later to make amendments to his reports once the Commission made a decision concerning the complaint.

Respondent Ing asked for the relief set forth in his response.  He said that his account is at zero or close to zero, that he has no money in his personal account; that his mistakes hurt him unlike other incumbents with money in the campaign accounts who could afford to pay the penalties; that the fine amounts are out of range for him to pay (including the amount he set forth in his suggested relief), and that he is a young parent with $50,000 in student loans.

Chair Luke asked Executive Director Izumi-Nitao about payment plans.  Executive Director Izumi-Nitao responded that there are candidates who are on payment plans as far back as the 2012 election.

Commissioner Markley asked Respondent Ing what advice he would give to new candidates.  Respondent Ing replied that they should spend time on campaign finance reports and not be their own treasurer.  Chair Luke stated that Respondent Ing is serving as his own treasurer right now.

Respondent Ing stated that he could not retain an attorney for this matter and that he would probably request a public defender if this matter would be pursued criminally.

Chair Luke called for a brief recess.

*Recess 12:22 p.m.

Public Session reconvened at 12:30 p.m.

Chair Luke asked if there was anyone else present who would like to testify in the matter.  There was none.

Time:    12:30 p.m.
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 Commissioner Markley.  Discussion ensued.

Commissioner Shoda stated that there are other cases with other candidates with similar violations who were referred for prosecution.  He said that there are 23 incorrect reports and campaign funds being used for personal purposes.  He stated that this was a gross injustice to others who were referred for criminal prosecution and that the level as well as number of violations are astounding and that it would be unfair to not refer the case for criminal prosecution.  Commissioner Shoda commented that although what Respondent Ing has achieved is remarkable and he says the right things, he broke all of the campaign finance laws.

Commissioner Markley stated that she has followed political campaigns and candidates, and that a prosecution could end Respondent Ing’s career.  She stated that there are not enough good people to go into politics; that she respected Respondent Ing for taking responsibility; that the Commission should accept Respondents’ recommendation; that it would be valuable for Respondent Ing to talk to other candidates in Commission trainings, and that this would destroy Respondent Ing moving forward.

Commissioner Shoda stated that he disagreed with Commissioner Markley.  He stated that Respondent Ing agreed to follow the campaign finance laws in his first campaign and that he violated this agreement including abiding by the expenditure limit and receiving an unfair advantage.

Vice Chair Goodenow stated that this case was different than the other matters referred for criminal prosecution while he has been on the Commission to the extent that the other candidates had notice.  He stated that the Commission must be impartial, consistent, and treat everyone the same.  Although he appreciated that Respondent Ing was a new father and that new people should get involved in politics, he supported Commission staff’s recommendation and that the background work conducted by staff was good.  Vice Chair Goodenow said that if this were to go to trial, he believed that it was very possible that proof beyond a reasonable doubt would be found that campaign finance violations occurred.

Commissioner Markley asked to discuss the fines and recommended that they be reduced to $100/each for filing a false report (i.e., Counts IV-XXVI).  Chair Luke stated that the recommended fine of $500 was consistent with the Administrative Fine Guidelines which the Commission had approved.  Executive Director Izumi-Nitao commented that if the fine is reduced for filing a false report, she recommended that the mitigating factors for the reduction be articulated for the minutes.

Commissioner Markley stated that if the mistakes in the bank records were caught early, Respondents would have had an earlier opportunity to fix their problems.

General Counsel Kam stated that Respondents are required by law to certify that everything reported is true, complete, and accurate when they file their report.

Chair Luke stated that the $15,000 fine seems small considering that Respondent Ing only went to Commission training 3 weeks ago.  He further stated that he supports staff’s recommendation since Respondents did everything wrong and that the reports are still wrong.

Vice Chair Goodenow concurred with Chair Luke.

Chair Luke stated that there are other candidates who are still paying their fines and are on a payment plan.

Commissioner Markley asked whether there were other penalties besides cash.  General Counsel read the contents of HRS §11-409 as to the other remedies.

Discussion ensued as to extending the time to amend the reports from 20 days to 90 days.  Commissioner Shoda suggested 120 days.

Time:    1:05 p.m.
Chair Luke 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 with the exception of allowing Respondents to amend their reports and file the Late Contributions Report within 120 days of receiving the order.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

Respondent Ing asked for clarification regarding the amounts he reimbursed his campaign account with respect to Count XIX.  General Counsel Kam explained that Respondents will receive credit for the reimbursed amounts, but that the original amount of what Respondents owe will be left in the order.

Chair Luke stated that a payment plan should be discussed with Commission staff if the fines cannot be paid within 20 days of receiving the order.

Executive Director Izumi-Nitao stated that Respondents should arrange a time to pick up their bank records to assist with the filing of amended reports.  Respondent Ing and Deputy Treasurer Akamine responded that they will follow-up.

*Consideration, Discussion, Approval, or Update of Commission Legislation/Testimony and/or Other Campaign Finance Related Bills/Resolutions for the 2018 Legislative Session
Time:    1:08 p.m.
General Counsel Kam addressed the Commission bills that are before the Governor for approval:

  • S.B. 2153, H.D. 1, C.D. 1 – Repeals the requirement that candidate committee organizational reports include the name and address of each contributor who contributed an aggregate amount of more than $100 to the candidate committee since the last election.  Takes effect on 7/1/18.
  • S.B. 2154, H.D. 1, C.D. 1 – Repeals the requirement that noncandidate committee organizational reports include contributions.  Takes effect on 7/1/18.

As for other bills, General Counsel Kam reported the following:

  • S.B. 2992, S.D. 1, H.D. 1, C.D. 1 – Exempts signs and banners from the advertisement disclaimer requirement. Makes clear that ballot issue committees will need the advertisement disclaimer on their signs and banners.  Takes effect upon approval.

General Counsel Kam stated that the Governor has until 7/10/18 to approve or veto the bills.

General Counsel Kam reported that he met with the Governor’s policy staff members on 6/7/18 to discuss the bills.  He stated that concerns were raised regarding S.B. 2992 by the DAGS Comptroller.

Report from the Executive Director
Report on Compliance of Filing Timely Disclosure Reports
Time:    1:10 p.m.
Executive Director Izumi-Nitao reported no new updates from the last meeting.

As for upcoming reports, Executive Director Izumi-Nitao reported the following:

  • 1st Preliminary Primary Report (reporting period 1/1/18 to 6/30/18) due on 7/12/18 – expected approximately 230 candidate committees to file. Notably, the last day to file nomination papers for Senate District 19 is 6/22/18 so Commission staff will not know the final number of candidates running in the 2018 election until after that date.
  • Supplemental Report (reporting period 1/1/18 to 6/30/18) due on 7/31/18 – expected approximately 150 candidate committees to file
  • 2nd Preliminary Primary Report (reporting period 7/1/18 to 7/27/18) due on 8/1/18 – expected approximately 230 candidate committees to file
  • Preliminary Primary Report (reporting period 1/1/18 to 7/27/18) due on 8/1/18 – expected approximately 260 noncandidate committees to file

Report on Campaign Spending Training to Committees
Time:    1:12 p.m.
Executive Director Izumi-Nitao reported that there were 38 people who attended the candidate committee training and 13 people who attended the noncandidate committee training on Oahu on 6/8/18.

Update on the 2018 Election
Time:    1:12 p.m.
Associate Director Baldomero distributed a handout entitled “2018 Election Snapshot” and went over the seats up for election, number of candidates filing nomination papers, number of qualified political parties, number of candidates by party, 2018 story lines (i.e., year of the unopposed seats, open seats, incumbent candidates running for higher office, comeback candidates, republican party candidates missing from legislative races), number of legislative races, races to watch, fundraiser notices, top 20 candidates with highest cash on hand, candidates receiving public funding, number of noncandidate committees, number of SuperPACs, and number of ballot issue committees.

Report on New 2018 Election Tool Sets
Time:    1:20 p.m.
Associate Director Baldomero reported that the Commission is working with Socrata to build new dashboards for the 2018 Primary Election for the public to visualize the candidate’s data.  He reported that it is anticipated that the cost for these new tool sets would be $19,000.

EXECUTIVE SESSION
Chair Luke asked for a motion to convene Executive Session to consider and approve Executive Session minutes from the Commission meeting on 5/23/18.

Time:    1:22 p.m.
Commissioner Markley moved to convene in Executive Session for the aforementioned reason(s).  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

Public Session reconvened at 1:23 p.m.

Time:    1:23 p.m.
Vice Chair Goodenow moved to adjourn the meeting.  Motion seconded by Commissioner Lum.  Motion carried (5-0).  Meeting adjourned at 1:24 p.m.

Next Meeting:
Scheduled for Wednesday, July 25, 2018.