Campaign Spending Commission

Campaign Spending Commission
Zoom Video Conference
February 9, 2023
10:00 a.m.

Commissioners Present
Stanley Lum, Neal Herbert, Vic Bonfiglio

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam (joined at 10:38 a.m.), Janelle Tanna
Deputy Attorney General Candace Park (joined at 10:18 a.m.)

Guests
NakoaforCouncil (Philip Kaleo Nakoa) (joined at 10:07 a.m.) and Mark Kaniela Ing (joined at 10:26 a.m.)

Excused
Bryan Luke

Call to Order
Chair Lum called the meeting to order at 10:00 a.m.

Chair Lum went over the procedures for this meeting via Zoom and introduced the Commissioners and Commission staff who were present.  He also asked the Commissioners if anyone else was with them.  All Commissioners present stated that no one else was with them.

Consideration and Approval of Minutes of Meeting on 1/11/23
Chair Lum called for approval of the 1/11/23 meeting minutes.  Commissioner Bonfiglio moved to approve the minutes of the 1/11/23 meeting.  Motioned seconded by Vice Chair Herbert.  Motion. carried (3-0).

New Business
Executive Director Izumi-Nitao stated that the Conciliation Agreements on the agenda were a result of an investigation initiated by Commission staff pursuant to HRS §11-314(7) to determine whether there had been a violation of the Hawaii campaign spending laws.  She stated that the 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 agreements.  She 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 the proposed agreements.

*Proposed Conciliation Agreement No. 23-42 – In Re the Matter of Team Kaululaau – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requests that they assess a reduced fine from $1,100 to $366.67 as it is Respondents’ first violation.  Chair Lum asked if there were any comments or questions.

Commissioner Bonfiglio moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Herbert.  Motion carried (3-0).

*Proposed Conciliation Agreement No. 23-43 – In Re the Matter of Paulo Faleafine – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns an excess contribution of $7,450 to a candidate committee which was not returned within thirty days and requests that they assess a reduced fine from $1,000 to $333.33 as it is Respondent’s first violation.  Chair Lum asked if there were any comments or questions.

Commissioner Bonfiglio moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Herbert.  Motion carried (3-0).

*Proposed Conciliation Agreement No. 23-44 – In Re the Matter of Julian Frost – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns an excess contribution of $6,000 to a candidate committee which was not returned within thirty days and requests that they assess a reduced fine from $1,000 to $333.33 as it is Respondent’s first violation.  Chair Lum asked if there were any comments or questions.

Commissioner Bonfiglio moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Herbert.  Motion carried (3-0).

*Proposed Conciliation Agreement No. 23-45 – In Re the Matter of La Hui of Kaleo Nakoa – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requests that they assess a reduced fine from $287.50 to $95.83 as it is Respondents’ first violation.  Chair Lum asked if there were any comments or questions.

Respondent Nakoa thanked the Commission for the opportunity to reconcile his matter.

Commissioner Bonfiglio moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Herbert.  Motion carried (3-0).

*Proposed Conciliation Agreement No. 23-46 – In Re the Matter of Committee to Elect Robert Peters – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requests that they assess a reduced fine from $200 to $66.67 as it is Respondent’s first violation.  Chair Lum asked if there were any comments or questions.

Commissioner Bonfiglio moved to approve the proposed conciliation agreement.  Motion seconded by Vice Chair Herbert.  Motion carried (3-0).

Commission recessed at 10:10 a.m. and reconvened at 10:20 a.m.

Deputy Attorney General Candace Park joined the meeting at 10:18 a.m.

Chair Lum asked for a motion to take “Report from Executive Director” out of order because General Counsel Kam was not present due to testifying before the State Legislature on a Commission bill.

Commissioner Bonfiglio motioned to take “Report from Executive Director” out of order.  Motioned seconded by Vice Chair Herbert.  Motion carried (3-0).

Report from Executive Director
*Report on Compliance of Filing Timely Disclosure Reports – Executive Director Izumi-Nitao reported the following:

• Supplemental Report (due 1/31/2023)
• CC (512 required to file)
  • Filed on time – 394 (77%)
  • Filed late – 5
  • Not file – 113 (as of today, 57)
• NCC (268 required to file)
  • Filed on time – 248 (93%)
  • Filed late – 0
  • Not file – 20 (as of today, 6)

Executive Director Izumi-Nitao stated that she suspects that there may be a lot of conciliation agreements or potential complaints given the number of candidates committees that did not file on time.

Vice Chair Herbert asked if there was a particular reason why there was such a high number of unfiled reports.  Associate Director Baldomero responded that 30 of the remaining 57 committees ran in the 2022 election and lost.  Commission staff mailed out a memorandum to all committees after the election concerning next steps and encourages them to call the Commission if they need help or to consider terminating their registration if they are eligible.  Further, he reported that the remaining 27 candidate committees ran in a prior election and the 6-month gap between reports creates problems for both the Commission and the committees because they tend to forget.  The Commission sent out 5 notifications about the Supplemental Report – 1 in the January newsletter and 4 eBlasts.

Vice Chair Herbert asked if the percentage was typical or was it particularly excessive.  Associate Director Baldomero responded that the number of non-filers was high.  Reports due during the 2022 election averaged in the 90^th percentile of filing on time in contrast to the 77% for this report.

Vice Chair Herbert asked how many of the committees were first time candidates and Associate Director Baldomero responded that he was unsure, but none of the remaining 57 candidates were elected officials.

With regard to the committees that have not filed prior election reports, Executive Director Izumi-Nitao reported that Commission staff continues to work with AG-CRD to obtain full compliance.

Chair Lum asked if there were any questions or comments.  There were none.

*Update on the Appointment of a New Campaign Spending Commissioner – Executive Director Izumi-Nitao reported that in conjunction with the Judicial Council, she is in communication with Wendy Kondo who is the new Executive Director of Boards & Commissions.  She also verified that Vice Chair Herbert’s letter of interest for another 4-year term was with the Judicial Council.

Chair Lum asked if there were any questions or comments.  There were none.

*Update on the Hiring of an Administrative Assistant – Executive Director Izumi-Nitao reported that staff is reviewing applicants and scheduling interviews.

Chair Lum asked if there were any questions or comments.  There were none.

Commission recessed at 10:33 a.m. to check on the status of General Counsel Kam’s availability.  Commission reconvened at 10:38 a.m.

General Counsel Kam joined the meeting at 10:38 a.m.

*Back to the order of business

New Business (continued)
*Docket No. 23-29 – In Re the Matter of Mark Ing and Friends of Kaniela Ing – General Counsel Kam stated that Respondent Ing was a member of the Hawaii House of Representatives from 2012 to 2018.

Respondent Friends is Respondent Ing’s candidate committee, which was registered with the Commission on November 9, 2011.  Respondent Ing is the chairperson and treasurer of Respondent Friends.

On May 15, 2018, the Executive Director filed Docket No. 18-08 – a complaint containing 31 counts (violations), and supported by 80 exhibits, against Respondents.  Among other things, the complaint contained 23 counts of filing false reports.  At the Commission’s public meeting on June 20, 2018, the Commission made a preliminary determination of probable cause that Respondents violated campaign spending laws, and on June 28, 2018, filed its Preliminary Determination of Probable Cause (“PDPC”) which became a final order when Respondents failed to request a contested case hearing within twenty days of receipt of the PDPC.  In the PDPC, the Commission ordered Respondent Ing to pay an administrative fine in the total amount of $15,422, to escheat $2,000 of excess contribution to the Hawaii Election Campaign Fund, to personally reimburse Respondent Friends $4,344.55, to file the 2012 General Election Late Contributions Report, and to amend the 23 false disclosure reports.

Along with the PDPC, Commission staff provided copies of Respondents’ subpoenaed bank records to Respondent Ing.

Respondent Ing filed amended reports on October 27, 2018 and November 2, 2018.  Sometime thereafter, Commission staff reviewed the amended reports.  Commission staff determined that all of the amended reports were still inconsistent with the Respondents’ bank records.

Further, staff identified over 150 expenditures in the amended reports that may have been for Respondent Ing’s personal use.  These questionable expenditures were in several categories including food and beverages (largest category), vehicle maintenance (gas), taxi/ride share, car rental, cell phone/electronics, travel, and other things.

On July 2, 2021, Commission staff sent a letter to Respondents requesting copies of committee records to justify each of the questioned expenditures.  The letter also informed Respondents that the amended reports were still inconsistent with the activity contained in the bank records.

On or about July 19, 2021, attorney William Harrison, called Commission staff and informed staff that he represented Respondent Ing in a federal investigation into the same matters raised in the Commission’s July 2, 2021, letter.  Mr. Harrison informed staff that he had advised Respondent Ing to hold off on responding to the Commission’s request for records until the federal investigation was completed.  Having not received any response from Respondent Ing, on October 4, 2021, Commission staff checked with Mr. Harrison about the status of the federal investigation of Respondent Ing.  He informed staff that he would follow-up with the federal attorney assigned to the investigation.

On October 6, 2021, Mr. Harrison informed Commission staff that the federal investigation has not been concluded.

On September 2, 2022, Commission staff sent a letter to Mr. Harrison (with a copy to Respondent Ing) informing him that the federal attorney assigned to the investigation of Respondent Ing had informed Commission staff that Respondent Ing was no longer under federal investigation for state campaign spending matters.  Thus, staff requested a written response from Respondent Ing to the Commission’s July 2, 2021, letter by September 19, 2022.

Respondent Ing did not provide a response by September 19, 2022.  Commission staff called Mr. Harrison about the response.  Mr. Harrison informed staff that he had assumed Respondent Ing would have submitted his response by the due date.  Mr. Harrison asked for a continuance until October 19, 2022, for Respondent Ing’s response.  Commission staff agreed to the continuance of the due date for Respondent Ing’s response.

Just prior to the Commission meeting on November 18, 2022, Mr. Harrison informed Commission staff that he was not representing Respondent Ing on any state matters.  On November 28, 2022, Commission staff sent a letter to Respondent Ing, providing a final request for a response to matters raised in the Commission’s July 2, 2021 letter.

As of the date of the filing of this complaint, Respondent Ing has not responded to the Commission’s July 2, 2021 letter, and thus, has not provided the Commission with any records to justify the questionable expenditures identified in the July 2, 2021 letter to Respondent Ing.

General Counsel Kam went over the 24 counts in the complaint – specifically, Count 1 for failure to keep records and make available for inspection in violation of HAR §3-160-23; and, Counts 2-24 for filing false reports in violation of HRS §11-331, §11-333, and HAR §3-160-23.

General Counsel Kam stated that Respondent Ing had possession of his committee’s bank records when he filed the amended reports and they were all inconsistent with the bank records; therefore, by failing to accurately report his committee’s activities, Respondent Ing may have recklessly, knowingly, or intentionally violated the law.

General Counsel Kam recommended that the Commission make a finding that it believes that Respondent Ing may have recklessly, knowingly, or intentionally committed a violation of law and refer the complaint in Docket No. 23-29 to a prosecuting authority for further investigation and potential prosecution pursuant to HRS §§11-404(4), 11-411, and 11-412(b).

Chair Lum asked Respondent Ing if he would like to respond.  Respondent Ing thanked the Commission for the opportunity to testify and for the Commission’s support on the public financing measure, which he is passionate about.

Respondent Ing told Commissioners that he received the Commission’s letter on Wednesday night and logged into the meeting on Wednesday not realizing that the meeting had been moved to this morning.  He stated that the complaint is hundreds of pages long and he was not able to read it or obtain counsel given the 1-day notice since he received the letter.  He commented that he corrected his reports to the best of his ability 5 years ago in 2018 and was confounded if and where he went wrong.  He was under the impression he was doing it right as CSC staff did not point out that any mistakes were made.

Respondent Ing stated that the Commission should look to the best practices of the FEC who typically flag when a mistake is made early and give the candidate the opportunity to correct it, so they do not repeat it.  He assumed that this is what General Counsel Kam was doing during the time he was a candidate.  He said he would call General Counsel Kam often to see if business trips would be a permissible expenditure of his campaign funds.

Respondent Ing wanted to remind the Commissioners that in 2018 he was in the middle of a congressional campaign and was ordered to amend hundreds of pages of records, had no savings, had an infant, and had to find a way to fund thousands of dollars for the fines.  He stated that he had hired an accountant who ended up botching the reports worse than he did in the past.

Respondent Ing stated that he had the bank records as CSC has noted, so did the Commission, so did the public at large (but redacted), so he had no incentive to knowingly report it incorrectly or to be reckless.  He spent every free moment he had working on his amended reports.  Knowingly falsifying any of it would be unwise and be completely irrational behavior since CSC already knew what was accurate and where the funds were used.  As for record keeping, it is meant to last for 5 years legally speaking and he does not hold the records beyond that per the legal requirement and a common practice.  He has moved eight times since then and has new phones.  The questions raised on the expenditures were available since the time of the subpoenaed bank records.  He commented that his 2018 reports did not reveal any information that was not already available to the CSC staff since at least from 2016.

Respondent Ing said that some of the information listed in the statement of facts was the first time he has ever seen it.  There was mention of information request deadlines that were communicated with Mr. Harrison, that was never communicated with him.  Mr. Harrison was not representing him on state matters and Respondent Ing was not in communication with him at that time.  Without hearing about these deadlines from CSC staff directly, he had no idea that they existed.

Respondent Ing stated that he understands that staff has a recommendation and that he believes he has little power to influence what the Commissioners will do but he wanted to offer his thoughts.  He is no longer a candidate and is not looking to run again.  Respondent Ing would like the Commissioners to understand that it makes no sense whatsoever for him to intentionally or recklessly file an incorrect amended report, let alone 23, given the fact that CSC already had the accurate information.  He was shocked to see the brick of documents appear in his mailbox and is still processing the intention behind it.  He did all he could do at the time with the time and resources he had.  Respondent Ing told Commissioners to please do what they needed to do with the docket.  He would find counsel and he was not asking for a continuance.

Chair Lum asked if Respondent Ing was disputing any of the allegations against him.  Respondent Ing replied that he did not have the time to look at why the reports were wrong, he thought that he did them right, he had tried his best, and he had no guidance where he was wrong.  Respondent Ing is disputing that he knowingly or recklessly made any mistakes, and he does not even know what the mistakes were because he thought he did them right.

Chair Lum asked if General Counsel Kam would like to respond.

General Counsel Kam stated that as far as count 1, CSC was requesting from Respondent Ing records to justify the expenditures that were laid out in CSC’s July 2, 2021 letter.  Respondent Ing never responded to that letter and by law he is required to keep those records and make them available for audit, and he never did that.  He stated that if Respondent Ing is claiming he never got those letters, the fact that Mr. Harrison called General Counsel Kam and told him that he was advising his client not to respond because of a federal investigation suggests that Respondent Ing did get the letters.

Respondent Ing confirmed that he received the July 2, 2021 letter, but he was not included in any conversations General Counsel Kam and Mr. Harrison may have had in 2022.

General Counsel Kam stated that after Mr. Harrison received the September 2, 2022 letter regarding the termination of the federal investigation and the need for Respondent Ing to provide a response to the July 2, 2021 letter, Mr. Harrison told General Counsel Kam that he assumed that Respondent Ing would answer since Respondent Ing got the September 2 letter also.  When Mr. Harrison told General Counsel Kam a second time that he was not representing Respondent Ing in state matters, General Counsel Kam sent Respondent Ing a final letter on November 28, 2022, again asking for a response to the July 2, 2021 request for records.  The November 28 letter was not returned to CSC as undeliverable.

Chair Lum encouraged Respondent Ing to retain counsel so he can resolve this matter.  Chair Lum asked Executive Director Izumi-Nitao for some direction with regard to where the CSC stands at this point.

Executive Director Izumi-Nitao told Chair Lum that the Commissioners have quorum so they could proceed with a motion towards decision making.  She stated that the Commissioners have the staff’s recommendation to refer the docket to a prosecuting authority for further investigation and potential prosecution or they could vote for another statutory option.

Chair Lum asked if any of the Commissioners had any questions or comments.  Vice Chair Herbert recommended that the matter gets postponed to the next meeting to allow Respondent Ing one final chance to do what he needs to do to respond to this complaint.

General Counsel Kam responded to Vice Chair Herbert’s comments saying that if this matter is referred for prosecution, the prosecutor would conduct an investigation and would be faced with a deadline to file any kind of criminal action.  General Counsel Kam recommended that the Commissioners take action today and that Respondent Ing could continue to search for an attorney.

Commissioner Bonfiglio moved to approve staff’s recommendation to refer Docket No. 23-29 to a prosecuting authority for further investigation and potential prosecution.  Motion seconded by Vice Chair Herbert.

Executive Director Izumi-Nitao asked Respondent Ing if postponing the matter another month would permit him the opportunity to review and respond to the complaint, or in the alternative, does he not need or want more time so the Commission should just make a decision today.  Respondent Ing stated it would help him digest the contents of the complaint but did not think it would change General Counsel Kam’s position.

Executive Director Izumi-Nitao clarified to Respondent Ing that the question was being asked on his behalf.  She explained that Vice Chair Herbert was proposing continuing the hearing to the next Commission meeting on 3/15/23 to permit Respondent Ing time to digest the complaint.  Respondent Ing stated that he appreciated Vice Chair Herbert’s accommodation but did not want to waste anyone’s time for having to revisit the docket if the staff’s recommendation was not going to change.  Respondent Ing stated that he felt like this docket was personal.

Executive Director Izumi-Nitao replied that this docket was not personal and is based on law.  For purposes of clarification, she stated that the docket is a 20-page complaint and the rest of it is exhibits.

Chair Lum stated that Commissioner Bonfiglio had previously moved to approve staff’s recommendation to refer Docket No. 23-29 to a prosecuting authority for further investigation and potential prosecution and the motion was seconded by Vice Chair Herbert.  Chair Lum asked if there were any objections or reservations to approve the referral to the prosecuting authority.  Motion carried (3-0).

Chair Lum thanked Respondent Ing for his testimony.

Old Business
*Consideration, Discussion, Approval, and/or Update of Commission Legislation and Other Campaign Finance Related Bills/Resolutions for the 2023 Legislative Session – Executive Director Izumi-Nitao reported that there are 1,514 House bills and 1,618 Senate bills that were filed for the 2023 Legislative Session.

General Counsel Kam provided an update on the status of the Commission’s 11 bills and CISC bills.  In addition, he reported on the 16 bills in the House and the 27 bills in the Senate that staff is currently tracking as they impact campaign finance.

At the request of General Counsel Kam, the Commission recessed at 11:49 a.m. and reconvened at 11:54 a.m.

General Counsel Kam asked if there were any questions or comments.

With regard to SB 167 which establishes an investigator position with the Commission and appropriates funds, Vice Chair Herbert asked if the Commission knew about this bill before it was proposed.  General Counsel Kam stated that staff learned of this when they met with Senator Rhoads before session.  Vice Chair Herbert asked General Counsel Kam how Senator Rhoads came up with the idea and commented that it would be great if we could get the investigator position.  General Counsel Kam responded that Senator Rhoads is a supporter of CSC and he looks for areas to assist us. Vice Chair Herbert asked about the prospect of the bill being passed and General Counsel Kam stated that it is hard to say.

Executive Director Izumi-Nitao stated for purposes of brevity, staff will provide Commissioners with an update only on the bills that are moving at the Legislature going forward in Commission meetings.

Chair Lum asked if there were any questions or comments.  There were none.

Chair Lum asked for a motion to adjourn the meeting.  Commissioner Bonfiglio moved to adjourn.  Motion seconded by Vice Chair Herbert.  Motion carried (3-0).  Meeting adjourned at 12:31 p.m.

Next Meeting:
Scheduled for Wednesday, March 15, 2023, at 10 a.m. via Zoom.