Campaign Spending Commission

Campaign Spending Commission Meeting
Leiopapa A Kamehameha Building, Room 204
February 13, 2008
10:00 a.m.

Members Present:
Paul Kuramoto, Steven Olbrich, Gino Gabrio, Dean Robb, Michael Weaver

Staff Present:
Barbara Wong, Tony Baldomero, Grant Tanimoto, Ellen Kojima

Call to Order:
Meeting convened at 10:05 a.m. with Chairperson Kuramoto presiding.

Consideration of Minutes:
Commissioner Robb moved to accept the minutes of January 9, 2008.  Motion seconded by Commissioner Gabrio.  Motion carried.

Old Business:
No old business.

New Business:
Docket 07-02  Barbara Hale vs. Emily Naeole, Friends of Emily Naeole
Parties present:  Ms. Barbara Hale, Mr. Stan Roehrig and Mr. Gerard Lee Loy, representing Ms. Emily Naeole, and Ms. Emily Naeole.  Witnesses: Ms. Donna Walker and Ms. Gwen Kupahu.

Chair Kuramoto requested that persons wanting to testify to sign-in so that their names will be recorded correctly in the minutes.  Further explained that this is not a contested case hearing and that only the commissioners will ask questions of the witnesses. Commissioners will be making one of the following determinations regarding Docket 07-02: to dismiss, further investigate, a preliminary determination of probable cause or referral to an appropriate prosecuting authority.

Executive Director Wong presented the staff.s investigation and recommendations regarding Docket 07-02.  Ms. Hale filed a complaint against Ms. Naeole with 18 separate allegations relating to unreported contributions, unreported expenditures, an unreported loan and use of campaign funds for personal use.  Director Wong suggested hearing 13 allegations first, for which she will be recommending dismissal.  As to the remaining five allegations, she will be recommending assessment of a fine.  Chair Kuramoto told Director Wong to proceed.

Director Wong began with some background information leading up to the complaint filed with the Commission.  Ms. Naeole ran her first campaign for the office of Hawaii county council and was elected in 2006.  During her campaign her husband passed away, also during the campaign her Treasurer.s (Ms. Walker) father passed away and Ms. Kupahu filled in for Ms. Walker temporarily.  Ms. Hale, who helped Ms. Naeole on her campaign, was hired to be her legislative assistant, but eventually Ms. Naeole dismissed Ms. Hale.  The Hawaii County Board of Ethics initiated an investigation into allegations by Ms. Hale against Ms. Naeole on the Hunter Bishop blog.  The Board of Ethics dismissed the allegations.  Ms. Naeole then filed a complaint with the Campaign Spending Commission.

Allegations 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 17 and 18 involved allegedly unreported contributions and expenditures, as well as using campaign funds for personal expenses.  Recommended that the allegations be dismissed as there was no violation or insufficient evidence.

Chair Kuramoto, based on the presentation by Executive Director Wong, entertained a motion to dismiss Allegations 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 17 and 18.

Commissioner Olbrich moved to dismiss Allegations 1, 2 3, 4, 5, 6, 7, 9, 11, 12, 13, 17 and 18.  Motion seconded by Commissioner Robb.  Motion carried.

Commissioner Robb commented on the time spent on the investigation.  Mr. Roehrig, commented on the time and thoroughness of the investigation and that he was pleased with the assistance received.  Also that the recommended dismissal of the noted allegations is appropriate.

Ms. Hale commented that she wasn.t very prepared because she was told she didn.t need to be at the meeting and that she did not receive much assistance from the staff regarding this matter.  Also that she supported Ms. Naeole.s campaign, but felt that there was no accountability regarding recordkeeping for the campaign and that she objected to the dismissal of the allegations.

Director Wong clarified that a standard notice, that is sent to all complainants and respondents, says that they are not required to attend the meeting but they may attend if they wish.

Mr. Roehrig and Mr. Lee Loy had numerous questions about calling witnesses, introducing evidence at the meeting, etc. and she responded to their questions.

Executive Director Wong presented staff investigation and recommendations on the remaining 5 allegations:

Allegation 10 . Ms. Naeole.s campaign collected $1,216 in contributions at a fundraiser held on October 22, 2006 and failed to deposit contributions within 7 days of receipt.  Review of the bank statement for that period did not reflect a deposit in that amount, and that some of the funds were expended before the funds were deposited.  However, there were appropriate expenditures reported.  Recommending a fine of $50 for failure to deposit funds within 7 days of receipt.

Commissioner Weaver moved to assess a fine of $50 for failure to deposit contributions within 7 days of receipt.  Motion seconded by Commissioner Gabrio.  Motion carried.

Ms. Walker, Treasurer for the Naeole campaign admitted that some of the funds were expended  before deposit, and that most errors were due to this being her first time working on a campaign.

Allegation 14 . Ms. Naeole.s campaign did not report the receipt of a pig from her uncle contributed for a fundraising event.  Review found that Ms. Walker was not sure how to report the pig, and was going to check with the Commission, but forgot to follow-up.  Recommending a fine of $50 for failure to report receipt of a non-monetary contribution.

Commissioner Robb moved to assess a fine of $50 for failure to report receipt of a non-monetary contribution.  Motion seconded by Commissioner Olbrich.  Motion carried.

Ms. Naeole clarified that her uncle did give her 6 pigs, but that only 1 was used for the campaign fundraiser and the other 5 were used for the birthday party she had for herself.

Allegation 15 . Ms. Naeole.s campaign did not report an expense to Maave Enos, a campaign volunteer.  This is an expenditure that should have been reported as a gift for a volunteer, instead of an educational expense.   Recommending a fine of $50 for failure to report an expenditure.

Commissioner Gabrio moved to assess a fine of $50 for failure to report expenditure in Allegation 15.  Motion seconded by Commissioner Weaver.  Motion carried.

Ms. Kupahu reported giving the money to Maave Enos with the understanding that the monies would be repaid to the campaign.

Ms. Walker clarified that the expenditure was not reported initially because it was to be paid back.  But after discussions with the Commission staff, Ms. Walker was informed that they must report it as an expense.  Also, that Ms. Naeole did not know about this transaction until the complaint was filed.

Ms. Naeole reiterated what was presented by Ms. Walker.

Ms. Hale, commented that she knew nothing about the $150, and that it was $80 that was given to Maave Enos, and that Ms. Hale gave back $85 as a donation to the campaign.

Allegation 16 . Ms. Naeole.s campaign did not report $484.37 of a $584.37 expenditure for radio ads.  Review found that the order was placed by Ms. Hale, a $100 check from the Friends of Emily Naeole was paid, and a receipt was given to Ms. Hale, but the receipt was not given to Ms. Walker or the campaign.  Recommending a fine of $50 for failure to report the full cost of the radio ad.

Ms. Walker reiterated that she provided a check for $100, then awaited a receipt to show the remaining expenditure, but did not receive one.  She said she could not balance the books until she was provided with a copy of the receipt from the radio station.

Ms. Hale maintains that she has a copy of the receipt that was given and that both Ms. Walker and Ms. Naeole were present when the original receipt for the ad was provided.

Commissioner Weaver moved to assess a fine of $50 for failure to report full cost of the radio ad.  Motion seconded by Commissioner Olbrich.  Motion carried.

Allegation 8 – Ms. Naeole received a $1,000 loan from Ms. Hale, which she spent $100 for herself and loaned $900 to her campaign.  Ms. Hale maintains that the loan was a campaign contribution and not a personal loan to Ms. Naeole.  Recommending a fine of $350 for reporting a loan in the name of someone other than the source of the money.  The loan should have been reported in the name of Ms. Hale, as she is the one who provided the money to Ms. Naeole.

Commissioner Robb moved to assess a fine of $350 for failure to report the loan in Ms. Hale.s name. Motion seconded by Commissioner Weaver.

Mr. Roehrig and Mr. Lee Loy, said there is no law prohibiting a personal loan to a candidate and the candidate loaning it to the campaign.  This loan was always discussed as a personal loan and that it would be an alternative to Ms. Naeole making a bank loan.

Commissioner Gabrio said that Hawaii Revised Statutes section 11-205.6 requires that the lender.s name be disclosed.  He also questioned whether a determination needs to be made as to the intent of the person who wrote the check when the check was written, as to whether it was a contribution or a loan.  Director Wong stated that whether it was a contribution or loan, either way it needed to be reported in the name of the source of the money, Ms. Hale, and not Ms. Naeole.  Commissioner Robb pointed out that when a candidate receives a loan from a financial institution, the financial institution.s name must be disclosed.  Further discussion took place on whether the intent of the person writing the check needs to be determined to find a violation.

Mr. Roehrig requested that Ms. Naeole be assessed a modest fine and not $350 because of a technical violation.

Ms. Hale maintains that the loan was a campaign contribution and not a personal loan to Ms. Naeole. She continued with background as to the intent of the loan.  Commissioner Gabrio questioned whether a determination of the intent of the checkwriter needed to be made and if not, then the information was not necessary.

Commissioner Robb maintained that a loan was made and that the violation is a reporting violation and that a modest fine be assessed.

Commissioner Robb moved to amend the previous motion to asses a fine of $100 for failure to report the correct source of the loan.  Motion seconded by Commissioner Weaver.  Motion carried.

Ms. Hale expressed disappointment with the finding and that the Commission should accept the Executive Director.s recommendation of a $350 fine for Allegation 8.

Draft Advisory Opinion 08-01 / Rescind Advisory Opinion 03-05
Deferred until the next meeting.

Communication to Commission:
Legislative Update
Deferred until the next meeting.

Executive Session:
Deferred until the next meeting.

Next Meeting:
Scheduled for Wednesday, March 12, 2008.

Commissioner Robb moved to adjourn meeting.  Motion seconded by Commissioner Weaver.  Motion carried.

Meeting adjourned at 1:45 p.m.