Campaign Spending Commission

Campaign Spending Commission Meeting
Zoom Video Conference
January 10, 2024
10:00 a.m.

Commissioners Present
Stanley Lum, Neal Herbert, Vic Bonfiglio, David Chee, Jon Itomura

Staff Present
Kristin E. Izumi-Nitao, Tony Baldomero, Gary Kam
Deputy Attorney General Candace Park

Excused
Anthony Diep

Guests
Karl Dicks, Hope Alohalani Cermelj (late)

Call to Order
Chair Lum called the meeting to order at 10 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, except Commissioner Itomura, stated that no one else was with them.  Commissioner Itomura stated that he was at his office with one other staff member also in the office.

Consideration and Approval of Minutes of Meeting on 11/8/23
Commissioner Bonfiglio moved to approve the minutes of the meeting held on 11/8/23.  Motion seconded by Vice Chair Herbert.  Motion carried (5-0).

New Business
*Selection of Campaign Spending Commission Leadership – Chair Lum stated that in consideration of the Commissioners’ terms of appointment, it was time for them to consider transitioning and selecting a new Chair and Vice-Chair.

Commissioner Bonfiglio moved for the selection of Neal Herbert as Chair and David Chee as Vice Chair of the Commission to commence at the next Commission meeting on February 14, 2024.  Motion seconded by Commissioner Itomura.  Motion carried (5-0).

*Docket No. 24-02 – In Re the Matter of Hope Alohalani Cermelj vs. Gene Ward
Chair Lum asked General Counsel Kam to state the claims of the complaint and staff’s recommendation, then he would like Complainant Cermelj to state her case, and finally, if present, permit Respondent Ward to respond.  He stated that if the Commissioners need to consult with their attorney at the end of this presentation, he would ask for a motion to go into executive session.  Otherwise, Commissioners would be free to make a determination through a motion.

General Counsel Kam stated that the complaint in this case was filed with the Commission by Hope Cermelj on 11/14/23 against Respondent Gene Ward, a State Representative, alleging that: (1) he improperly used his State Capitol office telephone number as his candidate committee’s business telephone number in the committee’s organization report filed with the Commissions; (2) he provided inaccurate telephone numbers for the committee’s treasurer in the organizational report; and (3) he failed to provide the address of the depository institution in the committee’s organizational report.

General Counsel Kam further stated that:

• On 11/27/23, Commission staff mailed the complaint to Respondent Ward and requested a written response within 30 days of the mailing of the complaint or by 12/27/23.
• On 12/2/23, Respondent Ward amended his organizational report by (1) replacing his State Capitol telephone number with his personal cell phone number and (2) provided an address for his committee’s depository institution.
• On 12/6/23, Commission staff received Respondent Ward’s 12/2/23 written response to the complaint. In that response, Respondent Ward indicated the use of his Capitol telephone number was a mistake.  He stated that he misinterpreted the meaning of “business phone.”  He assumed that the Commission needed an additional number to reach him if his personal cell phone was not working.  Since he is essentially a full-time legislator, his Capitol office would be a good alternative to reach him.  He insisted that he has never used his Capitol telephone number for campaign purposes.  Respondent Ward also acknowledged that his organizational report did not include the address of his committee’s depository institution; but, that had been the case for the past 17 years and, until this complaint was filed, the matter was never brought to his attention as being a significant omission on the part of his committee.
• In a telephone conversation with Commission staff, Respondent Ward confirmed that the telephone numbers listed for his treasurer in the organizational report were correct. In fact, staff was able to reach the treasurer using one of the numbers in the report.

General Counsel Kam stated that under HRS §11-404, “[t]he commission shall promptly determine, without regard to chapter 91, to:  (1) Summarily dismiss the complaint; (2) Investigate further; (3) Make a preliminary determination; or (4) Refer the complaint to an appropriate prosecuting attorney for prosecution under section 11-411.”

He recommended that the Commission grant in part the complaint and make a preliminary determination of probable cause that a violation of HRS §11-322 occurred since Respondent Ward agreed that the address of his committee’s depository institution was missing from the organizational report and assess an administrative fine in the amount of $50 against Respondent.  Since Respondent has already amended his committee’s organizational report, the Commission does not need to order Respondent to do so.  He further recommended that the Commission summarily dismiss the remaining claims in the complaint.

Complainant Cermelj and Respondent Ward were not present.

Commissioner Itomura asked if Complainant Cermelj responded to Respondent Ward’s response.  General Counsel Kam responded in the negative.

Commissioner Chee moved to accept staff’s recommendation and, in part, make a preliminary determination that probable cause exists that a violation had been committed and to fine Respondent $50 for the organizational report violation in accordance with the Commission’s Standard Fine Guidelines as well as summarily dismiss all other claims.  Motion seconded by Vice Chair Herbert.  Motion carried (5-0).

 *Docket No. 24-04 – In Re the Matter of Alohalani Hope Cermelj vs. Oahu League of Women PAC
Chair Lum asked General Counsel Kam to state the claims of the complaint and staff’s recommendation, then he would like Complainant Cermelj to state her case, and finally, if present, permit Respondent Oahu League of Republican Women PAC (“OLRW PAC”) to respond.  He stated that if the Commissioners need to consult with their attorney at the end of this presentation, he would ask for a motion to go into executive session.  Otherwise, Commissioners would be free to make a determination through a motion.

General Counsel Kam stated that the complaint in this case was filed with the Commission by Hope Cermelj on 11/14/23 against Respondent OLRW PAC, a noncandidate committee alleging that its organizational report filed on 8/3/22 was not amended in a timely fashion and did not contain certain information required by law.   The complaint sought that Respondents “make good on OLRW filing” as a remedy.  Specifically, the complaint set forth the following claims or issues against Respondent:  (1) The organizational report did not list the committee’s Bank of Virginia account in section 2 (Committee Depository (Bank)); (2) The address for the committee’s American Savings Bank account is a post office box, not a “local address;” (3) The organization report does not identify the “committee[’s] depositor (treasurer);” (4) No one answers when the business telephone number listed in section 4 (Chairperson) of the organization report, (808) 261-1146, is called and the business telephone number listed in section 5 (Treasurer), (619) 339-6575, is an “out-of-state number;” (5) The organizational report identifies Mary Monohon as the chairperson and treasurer of OLWR PAC, with a different address for each office; (6) The organizational report does not identify the “place of residence” or telephone number for Jennifer Anderson, deputy treasurer; and (7) The organizational report fails to identify Shirlene Ostrov as an officer of OLRW PAC.

General Counsel Kam further stated that:

–     On 11/27/23, Commission staff mailed the complaint to Mary Monohon, OLRW PAC’s Chairperson and Treasurer, and requested a written response within 30 days of the mailing of the complaint or by 12/27/23.

–     On 11/30/23, OLRW PAC’s organizational report was amended.  In the amended report, the address of the Chairperson was changed from 1189 Akamai Street to 275 Aikane Place and the phone number of the Chairperson was changed from (808) 261-1146 to (619) 339-6575.  The amended report also removed Carol Thomas as Deputy Treasurer 1 and removed Jennifer Anderson as Deputy Treasurer 2.

–     On 12/4/23, Commission staff received Mary Monohon’s written response to the complaint which explained that Ms. Monohon replaced Carol Thomas as Chairperson of OLRW PAC in the fall of 2022 when Ms. Thomas retired and moved to Hilo.  Ms. Monohon admitted to making a mistake when amending the organization report when she assumed the role of Chairperson in 2022 and inadvertently left Ms. Thomas’ address and business telephone number in the Chairman section of the report.  She further acknowledged that she does not have two residence addresses, that Jennifer Anderson had also resigned from her position as Deputy Treasurer 2 so she should have been removed from the organizational report too, that the only bank account used by OLRW PAC is the American Savings Bank account identified in the organizational report, that she is not aware of an account with the Bank of Virginia referenced in the complaint, and that although Shirlene Ostrov is currently the President of the Oahu League of Republican Women, she is not an officer of OLRW PAC which is a different organization. She stated that only OLRW PAC is a noncandidate committee that is required to, among other things, identify its officers in an organizational report filed with the Commission.  The Oahu League of Republican Women is not a noncandidate committee.

–     In a telephone conversation with Commission staff, Ms. Monohon indicated that Ms. Anderson resigned from her position with OLRW PAC about the same time that Ms. Thomas retired from the noncandidate committee.  She also informed staff that Ms. Anderson was not working while she was a Deputy Treasurer thus no business number, occupation, or principal place of business information was provided in the organizational report for her.

General Counsel Kam stated that under HRS §11-404, “[t]he commission shall promptly determine, without regard to chapter 91, to:  (1) Summarily dismiss the complaint; (2) Investigate further; (3) Make a preliminary determination; or (4) Refer the complaint to an appropriate prosecuting attorney for prosecution under section 11-411.”

He recommended that the Commission grant in part the complaint and make a preliminary determination of probable cause that a violation of HRS §11-323 occurred since Respondent admitted that their 8/3/22 organizational report was inaccurate because the Chairperson section still contained the former Chairperson’s address and business telephone number and still identified Ms. Thomas and Ms. Anderson as Deputy Treasurers, when they were no longer in those position, and assess an administrative fine of $50 against Respondents.  Since Respondent has already amended its organizational report, the Commission does not need to order Respondent to do so.  Further, that the Commission summarily dismiss the remaining claims in the complaint.

Mr. Karl Dicks commented regarding suspicious activity with Respondent OLRW PAC and the Hawaii Republican Party (e.g., behind on fees, money issues, acquisition of building).  He has information of inappropriate money transfers from the Virginia bank account which he shared with Commission staff, but understands that these may be federal issues.  He disclosed he has a lawsuit in the First Circuit Court against the Hawaii Republican Party.  He stated that he agrees with Hope.

Complainant Cermelj present at 10:25 a.m., but had problems with audio and visual connectivity.

*Move to “Old Business – Consideration, Discussion, and/or Approval of Commission Legislation for the 2024 Legislative Session” until Complainant Cermelj could participate.

*Commission returned back to “New Business – Docket No. 24-04 – In Re the Matter of Alohalani Hope Cermelj vs. Oahu League of Women PAC” at 10:40 a.m. when Complainant Cermelj’s audio was restored.

Chair Lum informed Complainant Cermelj of General Counsel Kam’s recommendation.  She stated that she has been a candidate numerous times and that there are rules to follow.  She further stated that she asked Mr. Dicks to be present to comment on the problems with the Hawaii Republican Party.

Executive Director Izumi-Nitao stated that Mr. Dicks is testifying as a member of the public and is not a party to the complaint.

Respondent OLRW PAC was not present.

Commissioner Chee moved to accept staff’s recommendation and, in part, make a preliminary determination that probable cause exists that a violation had been committed and to fine Respondent $50 for the organizational report violation in accordance with the Commission’s Standard Fine Guidelines as well as summarily dismiss all other claims.  Motion seconded by Commissioner Itomura.  Motion carried (5-0).

Complainant Cermelj asked about the outcome of Docket No. 24-02 – In Re the Matter of Hope Alohalani Cermelj vs. Gene Ward.  Chair Lum informed her that the Respondent in that case was fined $50.

Old Business
*Consideration, Discussion, and/or Approval of Commission Legislation for the 2024 Legislative Session – General Counsel Kam reported that the Commission is submitting five (5) bills for the 2024 legislative session which were slightly amended by the Legislative Reference Bureau.  He noted that the Commission had earlier agreed to submit six proposals but at staff’s request, LRB consolidated CSC-02 and CSC-06 into one bill.  He asked if there were any questions.  There were none.

General Counsel Kam reported that staff has been meeting with legislative leadership and subject matter chairs to discuss the Commission’s bills.  Thus far, staff has met with House Speaker Saiki, House JUD Chair Yamashita, and Senate GVO Chair McKelvey. The 2024 legislative session will start on January 17, 2024.

Executive Director Izumi-Nitao reported that she met with Senator Angus McKelvey yesterday and that he agreed to submit a bill that would give the Commission two (2) new positions and funding to address the increased number of committees.  She asked the Commission for their approval of this bill which is in the process of being drafted and would need to be submitted by the end of the month.  The bill will be presented to them for their ratification at the 2/14/24 Commission meeting.

Commissioner Bonfiglio moved to accept a bill that would request two (2) new full-time employees and funding to the Commission.  Motion was seconded by Commissioner Chee.  Motion carried (5-0).

*Move back to “New Business – Docket No. 24-04 – In Re the Matter of Alohalani Hope Cermelj vs. Oahu League of Women PAC” because Complainant Cermelj’s audio was restored.

Report from Executive Director
*Report on Compliance of Filing Timely Disclosure Reports – Executive Director Izumi-Nitao provided an update on compliance of past disclosure reports. She stated that many of the non-filers represent the same committees that have failed to file prior reports and have been brought to the attention of the Attorney General’s Office – Civil Recoveries Division.

 *Report on the 2023 COGEL Conference – Executive Director Izumi-Nitao reported that Associate Director Baldomero, Chair Lum, and Commissioner Chee attended this year’s COGEL Conference in Kansas City, Missouri.

Executive Director Izumi-Nitao stated that there were 450 attendees this year of which 40% were first-time attendees which is a record high.  Disciplines covered in this conference included campaign finance, ethics, elections, freedom of information, and lobbying.  She further reported that she participated on the program committee, was a panelist for a session for strategic planning, and will be co-chairing the conference in December 2024 in Los Angeles, California.  She thanked Chair Lum for his participation at the Team Huddle session.

Executive Director Izumi-Nitao reported that she attended many sessions concerning campaign finance including pay-to-play, deep fake technology, artificial intelligence, coordinated spending, and legal updates.  She further stated that she arranged a Hawaii and Guam dinner on 12/4/23 which was well-attended at a local restaurant.

Associate Director Baldomero commented about the trends he took away from the conference including deep fake technology, artificial intelligence, and digital political ad archives.

Chair Lum commented about the Jason Kander plenary session.

Commissioner Bonfiglio asked for comment about whether returning to actual ballots for voting would be better in consideration of the technology and artificial intelligence concerns.

Commissioner Chee commented that the problem is not the method of voting, but rather an advertising issue in that misinformation is being created for purposes of misleading people when they vote.  He further commented that the conference was useful because it made him more aware of the types of issues jurisdictions are experiencing as well as that he was impressed with the ethics community at large.

Mr. Dicks commented that he has become an elections expert since getting involved in 2020 with local politics and that he believes that the Office of Elections has committed a series of elections violations.

*Presentation and Discussion of the January 2024 CSC Newsletter – Executive Director Izumi-Nitao reported on the contents of the January newsletter and stated that the target distribution date is on 1/11/24.  The newsletter will be distributed via eBlast and will be posted on the Commission’s website.

Mr. Dicks commented that he supports the increase in Commission staff and was grateful for their assistance and responsiveness.

*Update on FY 2025 & FY 2026-2029 Budget Request – Executive Director Izumi-Nitao reported that the Commission submitted the following budget request:  For FY 2025, a request for $115,000 + 2 Full-Time Employees (Investigator + Elections Assistant); for FY 2026-2029 = $95,000; and, for trust funds, keeping the ceiling of $1,043,732 as a recurring amount – by law, CSC must distribute public funds w/in 20 days from time candidate’s application is approved so need it for timely disbursement.  Currently, as of FY 2023, trust fund closed at $1,929,885.67.

She informed the Commission that the aforementioned budget request was not approved by Budget & Finance nor Governor Green because it did not meet executive branch priorities (i.e., Maui wildfire nor federal mandate), but that DAGS knows that the Commission will ask the Legislature to restore or reinstate our request. She further stated that there is a 2024 bill submitted by the Commission to increase partial public funding which has a general fund appropriation and a request for 2 full-time employees.

Executive Director Izumi-Nitao stated the justification behind this request:

• The number of candidate committees has grown from 300 to 550+ and the number of noncandidate committees has grown from 200 to 300+;
• The Commission has had no personnel increase since 1995 (it was for an Investigator $70K and sunset after 1 year);
• The Commission needs an Investigator so its General Counsel can conduct an investigation without conflict so he is not called as a witness should it proceed to a contested case hearing;
• The Commission needs an additional Elections Assistant to assist with number of candidates & noncandidate committees – especially since the Commission averages over 100+ new candidates with each election who require assistance;
• With the 2023 Legislative Session, there were 12 campaign finance bills enacted thereby adding to the volume and scale of duties for current personnel; and
• In comparison to sister agencies (e.g., Ethics – State of Hawaii & County of Honolulu, Elections, OIP), who have been able to increase staff, the Commission has remained static since its inception in 1972.

Lastly, she informed the Commission on the status of the legislative briefings with House Finance on 1/8/23 and Senate Ways & Means on 1/9/23.

Next Meeting:
Scheduled for Wednesday, February 14, 2024.

Chair Lum asked for a motion to adjourn the meeting.  Commissioner Bonfiglio moved to adjourn the meeting.  Motion seconded by Commissioner Chee.  Motion carried (5-0).

Meeting Adjourned at 11:30 a.m.