Campaign Spending Commission

Campaign Spending Commission
Zoom Video Conference
May 11, 2022
10:00 a.m.

Commissioners Present
Stanley Lum, Maryellen Markley, Ph.D., Bryan Luke, Neal Herbert, Vic Bonfiglio

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Yayoi Tumamao, Janelle Tanna
Deputy Attorney General Candace Park

Guests
Robert M. Armstrong, Kaiwi’ula Strategies, Tom George, KITV4 Island News

Call to Order
Chair Lum called the meeting to order at 10:13 a.m.

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

Consideration and Approval of Minutes of Meeting on 4/20/22
Chair Lum called for approval of the 4/20/22 meeting minutes.  He asked if there were any objections or reservations to approving the minutes.  There were none.   Minutes of the meeting on 4/20/22 were approved.

New Business
Executive Director Izumi-Nitao stated that the Conciliation Agreement on the agenda was 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 Respondent has been informed in a letter from Commission staff of the violation and has been notified of today’s meeting as well as received a copy of the proposed conciliation agreement.  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 amount stated in the proposed agreement.

*Proposed Conciliation Agreement No. 22-19 – In Re the Matter of Altria Client Services LLC & Its Affiliates – Philip Morris USA Inc., John Middleton Co., US Smokeless Tobacco Co. – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Preliminary Primary Report, Final Primary Report, and Preliminary General Report and requests that they assess a reduced fine from $7,700 to $2,566.67 as it is Respondent’s first violation.  She added that the Respondent wanted the Commission to know that the reason they did not file the reports was because they did not know that they were required to file them as they misinterpreted the Special Election $1,000 or less application.

Commissioner Bonfiglio moved to approve the proposed conciliation agreement.  Motion seconded by Commissioner Luke.  Chair Lum asked if there were any comments or questions.  There were none.  Motion carried (5-0).

*Docket No. 22-15 – In Re the Matter of Royal Enterprizes – Executive Director Izumi-Nitao reported that a complaint by the Executive Director had been filed against Royal Enterprizes for the failure to register with the Commission by filing an Organizational Report and failing to file the Preliminary Primary Report, the Final Primary Report, the Preliminary General Report, and the Final Election Period Report.

Pursuant to HRS §11-321, all noncandidate committees shall register with the Commission by filing an organizational report within 10 days of receiving contributions or making or incurring expenditures of more than $1,000, in the aggregate, in a two-year election period.  Respondents exceeded the $1,000 threshold on 12/3/21 when they made a second contribution of $1,000 to Josh Green for Hawaii, and thus, were required to file an organizational report by 12/13/21 which they failed to do.

HRS §11-321(b) provides that before filing the organizational report, a noncandidate committee shall mail or deliver an electronic filing form to the commission.  Respondents failed to complete and submit the electronic filing form.

On 2/18/22, Commission staff sent Respondents a letter via first class mail informing them that their failure to register by filing an organizational report violates campaign finance laws and of the imposition of an administrative fine if it was not filed by 3/4/22.

Respondents have not filed their organizational report nor their electronic filing form.

Commission staff sought the assistance from Josh Green for Hawaii for help contacting Respondents, but they had no information on how to reach Respondents.

Pursuant to HRS §11-336, Respondents were required to file:  (1) the Preliminary Primary Report for the period covering 7/1/21 through 12/3/21 by 11:59 p.m. Hawaii standard time on 12/8/21; (2) the Final Primary Report for the period covering 12/4/21 through 12/18/21 by 11:59 p.m. Hawaii standard time on 1/7/22; (3) the Preliminary General Report for the period covering 12/19/21 through 2/11/22 by 11:59 p.m. Hawaii standard time on 2/16/22; and (4) the Final Election Period Report for the period covering 2/12/22 through 2/26/22 by 11:59 p.m. Hawaii standard time on 3/28/22.

Respondents have not filed the aforementioned reports.

On 3/30/22, Commission staff sent Respondents a letter via first class mail notifying them that a fine of $150 would be assessed against them for failure to file the electronic filing form and the organizational report.  The letter informed Respondents that they could avoid the complaint process for their failure to file the electronic filing form and the organizational report by waiving their rights to written notice and an opportunity to be heard at a HRS chapter 92 public meeting and a HRS chapter 91 contested case hearing, and voluntarily paying the fine amount, submitting their electronic filing form, and filing their organizational report by 4/6/22.  The letter also informed Respondents that they could avoid the complaint process for their failure to file the 4 required reports by filing them by 4/6/22.

On 4/28/22, Commission staff sent Respondents a copy of the complaint and set the matter on the 5/11/22 Commission agenda.

Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination, pursuant to HRS §11-405(a), that probable cause exists to believe that a violation of the campaign spending law has been committed, assess an administrative fine of $50 for failing to file the electronic filing form, $100 for failing to file the organizational report, $500 for failing to file the Preliminary Primary Report, $500 for failing to file the Final Primary Report, $500 for failing to file the Preliminary General Report, $500 for failing to file the Final Election Period Report, order that any and all administrative penalties be deposited into the general fund pursuant to HRS §11-410(e), and order that Respondents file all reports within two (2) weeks of receipt of the order.

Commissioner Luke asked if the staff obtained the contribution check from Josh Green for Hawaii to get the Respondents’ contact information.  Executive Director Izumi-Nitao responded that a copy of the check was obtained from Josh Green for Hawaii to confirm that they were dealing with Royal Enterprizes as the contributor and made efforts to obtain compliance from them, but they did not respond.  Moreover, none of the letters mailed to them came back as undeliverable.

Commissioner Luke also asked what happens to the contributions and if Josh Green for Hawaii can still utilize the funds.  Executive Director Izumi-Nitao responded that Josh Green for Hawaii can use the funds as they were legitimate contributions, but the law requires organizations that contribute over $1,000 in contributions to register with the Commission as a noncandidate committee.  Respondents’ second contribution of $1,000 exceeded that threshold.  Elections Assistant Tanna confirmed that Respondents’ first contribution of $1,000 was in October 2021 and the second contribution of $1,000 was made in December 2021 which triggered the requirement to register.

Commissioner Herbert asked if Respondents made any other contributions.  Associate Director Baldomero responded that the two contributions to Josh Green for Hawaii were the only contributions made by Respondents.

Vice Chair Markley 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 Luke.  Motion carried (5-0).

Old Business
*Consideration, Discussion, and/or Update of Commission Legislation and Other Campaign Finance Related Bills/Resolutions for the 2022 Legislative Session – General Counsel Kam provided an update of the status of the Commission’s 5 bills as well as discussed other campaign finance bills introduced this session.  There are now a total of 2 House bills (HB 1427 was signed by the Governor as Act 3 and HB 2416 has been enrolled to the Governor for approval) and 3 Senate Bills (all are before the Governor for approval) that staff is currently tracking.

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

• 1A Preliminary Primary Report for the reporting period of 1/1/22 to 4/25/22 for candidates who filed nomination papers through 4/25/22 was due on 5/2/22:
  • 51 candidate committees were required to file
  • 49 (96%) filed on time
  • 2 (4%) failed to file on time
  • As of today, all candidate committees have filed

With regard to prior reports, Executive Director Izumi-Nitao reported that the number of committees that have not filed their reports remains the same.  She added that Commission staff continues to work with AG-CRD to obtain full compliance.

*Report on Commission to Improve Standards of Conduct – Executive Director Izumi-Nitao reported that she will be leading the CISC meeting on Campaign Finance Reform scheduled for 6/29/22.  She also went over the dates and the subject matter of the other CISC meetings.  All the CISC meetings will be accessible via YouTube from the House of Representative’s website.

*Report on 2022 Candidate Committee and Noncandidate Committee Training – Executive Director Izumi-Nitao reported that the training schedules have been posted on the Commission’s website and eBlasted to committees.  The trainings require pre-registration through the reservation link provided on the website.  Certified Public Accountants may earn 2 professional continuing education credits for the candidate committee training and 1 credit for the noncandidate committee training.

Associate Director Baldomero went over the training dates and the number of people currently registered:

• Hilo (In-person) on 5/17/22 – 5 people have registered so far.
• Kauai (In-person) on 5/20/22 – 3 people have registered so far.
• Maui (In-person) on 5/27/22 – 6 people have registered so far.
• Oahu (In-person) on 6/1/22 – 17 people have registered for the candidate committee training and 7 people have registered for the noncandidate committee training.
• Virtual trainings on 6/1/22 – 18 people have registered for the candidate committee training and 31 people have registered for the noncandidate committee training.

Commissioner Luke asked about the communications that have been sent out to the committees about the trainings.  He also shared his concerns about those who do not attend trainings and then say that they did not know that they violated campaign finance laws.  Associate Director Baldomero responded that two eBlasts have been sent to all candidate and noncandidate committees about the trainings.  He said he will include language urging people to attend on the next eBlast.  Commissioner Luke stated that if candidates are going to spend the time to run for office, they should also spend the time to understand how the process works.

Commissioner Herbert asked how the eBlasts are addressed when they are sent.  Associate Director Baldomero explained that eBlasts are addressed to the group in general terms.

Discussion ensued about mandatory trainings.  Commissioner Herbert asked if there are ways to forewarn committees about the consequences of violating the law and not taking the trainings.  Commissioner Luke suggested that if committees do not attend the trainings, they should not be eligible for conciliation agreements.  General Counsel Kam stated that if the Commission wants to do that as a matter of its fine process, then the Commission could amend its standard fine guidelines at a public meeting.  Commissioner Luke asked Mr. Robert Armstrong for his thoughts on this subject as a candidate running for office.  Mr. Armstrong stated that he likes Commissioner Luke’s idea about not being eligible for conciliation agreements if you do not attend the training because it does not hurt to spend an hour or two just to be informed.  He added that the Commission is on track with what is reasonable.

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

*Report on Timeline of the 2022 Election – Associate Director Baldomero reported that the Primary Election will be on 8/13/22 and the General Election will be on 11/8/22.  He went over the nomination paper filing deadline (6/7/22) and the disclosure report deadlines (next report due 7/14/22 for candidate committees and 8/3/22 for noncandidate committees).  Associate Director Baldomero further reported that there are currently 474 registered candidate committees of which 108 are new candidates (candidates that registered after the 2020 election).  So far, 98 candidates have filed nomination papers and a total of 317 candidates have picked up nomination papers.  As for noncandidate committees, there are currently 267 registered noncandidate committees of which 23 are Super PACS and 6 are political parties.  36 noncandidate committees are newly registered since the 2020 election.

As for fundraisers, there have been 83 fundraisers held so far in 2022.  58 fundraisers were held during the legislative session of which 11 fundraisers were held by elected officials.  Commissioner Luke asked what happens after a fundraiser notice gets filed with the Commission.  Associate Director Baldomero responded that all fundraiser notices are posted on the Commission’s website and tweeted.  The Commission has been tweeting fundraiser notices since 2013.

Associate Director Baldomero also reported that the Commission has not disbursed any public funding yet, but 11 candidates have filed the statement of intent to seek public funds.  He also reported that no statement of information for electioneering communications for noncandidate committees has been filed to date.  Candidate committees are not required to file the electioneering communication statement for the 2022 election.

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

Chair Lum asked for a motion to adjourn this meeting.  Commissioner Bonfiglio moved to adjourn.  Motion seconded by Commissioner Luke.  Motion carried (5-0).  Meeting adjourned at 11:00 a.m.

Next Meeting:
Scheduled for Wednesday, June 8, 2022, at 10 a.m.