Campaign Spending Commission

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
December 7, 2016
10:00 a.m.

Commissioners Present
Bryan Luke, Adrienne Yoshihara, Gregory Shoda, Eldon Ching, Kenneth Goodenow

Commissioners Absent
None

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Jessica Richey
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 on 11/16/16
Chair Luke asked for comments or changes.  Vice Chair Yoshihara sought the following amendments:

• Page 6, 4^th paragraph, 1^st sentence, to read: “Vice Chair Yoshihara stated that these expenses do not conform to the statutory definition of advertising.”

• Page 6, 5^th paragraph, 3^rd sentence, to read: “Vice Chair Yoshihara disagreed with the application of subsection (7) to these expenditures and requested to discuss with the Commission’s attorney questions regarding the priority and proper application of the laws regarding advertising, sponsorship, and personal use.” 

• Page 6, 7^th paragraph, 1^st sentence, to read: “Chair Luke disagreed with Respondent Arakawa and stated that the Commission is there to make sure committees’ expenditures are transparent.”

• Page 12, 2^nd paragraph, 3^rd sentence, to read: “Vice Chair Yoshihara expressed the fact that this proposal was in contrast to the Commission’s decision in the Julia Allen contested case matter.”

Mr. Michael Palcic offered the following amendment:

• Page 3, 1^st paragraph, 1^st sentence, to read: “Mr. Michael Palcic commented that the statute provides that the fine may be assessed, if any.”

Chair Luke called for a vote to approve the minutes as amended.

Commissioner Ching moved to approve the minutes of 11/16/16 as amended.  Motion seconded by Commissioner Shoda.  Motion carried (4-0) (Commissioner Goodenow was excused).

New Business
Executive Director Izumi-Nitao stated that the next three (3) matters concern the late filing of the 2^nd Preliminary General Report or the Preliminary General Report which were due on October 31, 2016.  These proposed Conciliation Agreements were a result of investigations pursuant to HRS §11-314(7) to determine whether there had been a violation of the Hawaii campaign spending laws.  The committees in all matters have been informed of the violation(s) in a letter from Commission staff.  Further, they have been notified of today’s meeting and received a copy of the proposed Conciliation Agreement.  Executive Director Izumi-Nitao 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. 17-43 – In Re the Matter of Hawktree International, Inc.
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary General Report and requests that the Commission 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.

Vice Chair Yoshihara moved to approve proposed Conciliation Agreement No. 17-43.  Motion seconded by Commissioner Ching.  Motion carried (4-0) (Commissioner Goodenow was excused).

*Commissioner Goodenow arrived at the meeting.

*Proposed Conciliation Agreement No. 17-44 – In Re the Matter of Friends of Kaiali’i Kahele
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Preliminary General Report and requests that the Commission  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 Ching moved to approve proposed Conciliation Agreement No. 17-44.  Motion seconded by Vice Chair Yoshihara.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-45 – In Re the Matter of Shioi Construction, Inc.
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary General Report and requests that the Commission 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.

Vice Chair Yoshihara moved to approve proposed Conciliation Agreement No. 17-45.  Motion seconded by Commissioner Goodenow.  Motion carried (5-0).

*Docket No. 17-25 – In Re the Matter of Mark Ing and Friends of Kaniela Ing
Executive Director Izumi-Nitao reported that a complaint had been filed against Mark Ing and Friends of Kaniela Ing (“Respondents”) for the late filing of the Preliminary General Report and the failure to amend the Organizational Report.

Respondent Ing ran in the 2016 election for House District 11.  Pursuant to HRS §11-334(a), Respondents were required to timely file the Preliminary General Report for the period covering 8/14/16 through 10/24/16 no later than 11:59 p.m. Hawaii standard time on 10/31/16.  Respondents did not electronically file this report until 11/1/16 which was one day late resulting in a fine of $300 which Respondents were informed to pay no later than 11/17/16 otherwise a complaint would ensue.

In notifying Respondents of the late report and fine, one of the two addresses listed on the Organizational Report (i.e., the candidate committee’s address) appeared to be incorrect because the Commission’s notifications were returned as “undeliverable mail.”  HRS §11-322 requires all candidate committees to report to the Commission any change of information in the Organizational Report such as the candidate committee’s address within 10 days.  The Commission sent Respondents a letter via first class mail to Respondent Ing and to Respondent candidate committee on 11/10/16 notifying them to amend their Organizational Report to reflect the correct address of their candidate committee.  Further, the letter informed them that failure to do so by 11/25/16 may result in an administrative fine pursuant to HRS §11-410.

Commission staff spoke with Respondent Ing multiple times to inquire about the status of the fine payment as well as amending the Organizational Report.  The deadlines set forth in the Commission’s letters to Respondents expired and the fine payment of $300 was never paid nor was the Organizational Report amended.

Respondent Ing emailed the Commission on 11/29/16 after business hours indicating his intention to pay the fine but that he was in Los Angeles and did not have campaign checks on hand.

For these reasons, Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination of probable cause that the Hawaii campaign spending law has been violated pursuant to HRS §11-405(a), assess an administrative fine of $350 for the 2 violations, order that the fines be paid from the candidate’s personal funds if the candidate committee’s funds are insufficient to pay the fines, order that any and all fines be deposited in the general fund pursuant to HRS §§11-340(g) and 11-410(e), and order that Respondents file an amended Organizational Report within 2 weeks of receipt of the Order.

Chair Luke asked whether Respondents were eligible for a conciliation agreement to which Executive Director Izumi-Nitao responded no because Respondents have filed late reports more than three times in the past.

Commissioner Goodenow moved to make a preliminary determination that probable cause exists that violations had been committed and to accept the fines and terms stated in the complaint.  Motion seconded by Commissioner Ching.  Motion carried (5-0).

Old Business
*Consideration, Discussion, and Approval of Commission Legislation for 2017 Legislative Session
General Counsel Kam presented proposed Commission legislation for the 2017 Legislative Session which were continued from the last meeting to consider comments made by the Commissioners and the Attorney General’s Office.

Mr. Michael Palcic asked for copies of the bill proposals prior to the meeting which staff gave to him.  He further commented that he felt that staff was initially reluctant to give him a copy of the draft minutes.  There was discussion on the production of minutes and  Mr. Palcic commented that he should be able to receive draft minutes even if they have not been approved by the Commission.

• CSC-02 (17) – Amends HRS §11-340 to require the Commission to publish the names of noncandidate committees who fail to file a report on its website. The Commission is already required to publish the names of candidate committees who fail to file a report.

Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Goodenow moved to approve CSC-02 (17).  Motion seconded by Commissioner Shoda.  Motion carried (5-0).

• CSC-04 (17) – Amends HRS §11-410 by raising the amount of fine that can be assessed against a Super PAC (who receives at least one contribution of more than $10,000 from one person or has made expenditures of more than $10,000 in aggregate, in an election period) from $1,000 to $5,000 and to permit the fine to be up to three times the amount of the unlawful contribution or expenditure. Also, allows the Commission to recover its costs of investigative services and bank fees for subpoenaed records from violators.

Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Shoda moved to approve CSC-04 (17).  Motion seconded by Vice Chair Yoshihara.  Motion carried (5-0).

• CSC-05 (17) – Amends HRS §11-341 (electioneering communications) by changing “disclosure date” to when the electioneering communication is publicly distributed rather than when the contract for the electioneering communication is executed. This is in line with federal law and makes more sense.  Also, deletes “communications that constitute expenditures by the expending organization” from the exceptions to the definition of “electioneering communications” to make it clear that candidate and noncandidate committees are required to file statements of information.

General Counsel Kam stated that the Attorney General’s Office recommended changing the language to combine the initial disclosure date with any subsequent disclosure dates of the public distribution of an electioneering communication, and that the suggested change did not alter the purpose of the proposal.

Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Goodenow moved to approve CSC-05 (17).  Motion seconded by Commissioner Ching.  Motion carried (5-0).

• CSC-06 (17) – Amends HRS §11-412(b) to provide that the applicable statute of limitations for criminal prosecution of campaign spending violations shall not commence until the Commission’s discovery of the offense. This amendment was recommended by the Attorney General’s Office – Criminal Justice Division and the First Deputy Attorney General.

Commissioner Goodenow commented that it seemed like there would be no time limit to bring a criminal action.  General Counsel Kam responded that there are similar extensions of time in the penal code for crimes regarding fraud.  Commissioner Goodenow asked how long the Commission keeps records to which Associate Director Baldomero responded 10 years.  Commissioner Goodenow asked how long committees are required to keep records to which General Counsel Kam replied 5 years.

Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Vice Chair Yoshihara moved to approve CSC-06 (17).  Motion seconded by Commissioner Ching.  Motion carried (5-0).

Report from Executive Director
Update on Gubernatorial Appointment of New Commissioners
Executive Director Izumi-Nitao reported that she has been in communications with Boards & Commissions and that they are working with the Governor’s office to identify the next 2 Commissioners to fill Commissioner Shoda’s and Commissioner Ching’s appointments.

Report on Compliance of Filing Timely Disclosure Reports
With respect to the Commission orders that were referred to the Attorney General’s Office – Civil Recoveries Division (“AG-CRD”), AG-CRD generated a spreadsheet with the status of each case.  There appear to be 3 referrals which were resolved and 10 referrals that are outstanding of which 3 are pending or before First Circuit Court (Robertson Properties Group – Petition set for 12/22/16 before Judge Crandall; Nora Pajimola – Petition set for 12/28/16 before Judge Nacino; and Green Leaf Group – Petition will be finalized and sent to court for filing).

As for the report on compliance of filing timely disclosure reports in 2016, Executive Director Izumi-Nitao reported that tomorrow is the deadline for the Final Election Period Report for which 251 candidate committees and 254 noncandidate committees are expected to file.  Tomorrow is also the deadline for the Expenditure of Public Funds Report for which we expect 16 candidate committees will file.  The next report will be the Supplemental Report for all registered candidate and noncandidate committees which is due 1/31/17.

Commission staff has not yet determined whether committees failed to file the Late Contributions Report covering the period 10/25/16 to 11/4/16 which was due on 11/7/16.  Staff will be able to assess this upon review of the Final Election Period Report.

Update on the Issuance of Certification of Compliance with Office of Elections & County Clerks
Commission staff is in communication with the Office of Elections and the county clerks concerning certification of elected officials.  Beginning the week of 11/21/16, CSC staff will send 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).  By law, certification is necessary for the elected official is to be sworn into office.

Update on the Amendments to the Commission’s Administrative Rules
Executive Director Izumi-Nitao reported that the Governor’s office delivered our administrative rules to the Lieutenant Governor’s office on 11/29/16.  The rules with stay with the Lieutenant Governor’s office for 10 days.  Sometime around 12/9/16, the Commission should get our copy of the approved rules, at which point we will send copies in standard and Ramseyer formats to the Legislative Reference Bureau.

Chair Luke asked for a motion to convene Executive Session to:  (1) Consider and approve Executive Session minutes from the Commission meeting on 11/16/16; (2) Pursuant to HRS §92-5(a)(4), to consult with the Commission’s attorney on questions and issues pertaining to the Commission’s powers, duties, privileges, immunities, and liabilities concerning Docket No. 17-24 – In Re the Matter or Alan Arakawa and Friends of Alan Arakawa for the prohibited use of campaign funds.

Commissioner Shoda moved to convene Executive Session for the aforementioned reasons.  Motion seconded by Commissioner Goodenow.  Motion carried (5-0).

Public session reconvened at 11:34 a.m.

Chair Luke moved to adjourn the meeting.  Motion seconded by Commissioner Goodenow.  Motion carried (5-0).  Meeting adjourned at 11:35 a.m.

Next Meeting:
Scheduled for Wednesday, January 11, 2017.