Campaign Spending Commission

Campaign Spending Commission Meeting
Leiopapa A Kamehameha Building, Room 204
May 12, 2010
10:00 a.m.

Commissioners Present:
Chair Paul Kuramoto, Vice-Chair Steven Olbrich, Gino Gabrio, Dean Robb, Michael Weaver

Staff Present:
Barbara Wong, Tony Baldomero, Grant Tanimoto, Linda Takushi, Ellen Kojima
Deputy Attorney General Robyn Chun

Call to Order:
Meeting convened at 10:00 a.m. with Chair Kuramoto presiding.

Consideration of Minutes:
Commissioner Gabrio moved to approve the minutes of the April 14, 2010 meeting.  Motion seconded by Commissioner Weaver.  Motion carried unanimously.

New Business:
Docket No. 10-01  Lynne Matusow v. David Chang
Ms. Lynne Matusow filed a complaint against candidate Mr. David Chang.  Executive Director Wong presented allegations and recommendations as follows:

(1) Mr. Chang filed the Supplemental report covering the period 7/1/09 – 12/31/09 late.  Pursuant to Hawaii Revised Statutes (“HRS”) section 11-212 the first report required to be filed by new candidates is the First Preliminary Primary report due August 2, 2010.  As a new candidate, with no deficit and no surplus from a prior election, the Supplemental report is not required to be filed.  Recommendation is to dismiss, no violation.

(2) Pursuant to HRS section 11-199, prompt deposit of contributions and Hawaii Administrative Rules section 2-14.1-7, failure to deposit contributions into a depository institution within 7 days of receipt, complainant alleged Mr. Chang’s Supplemental report filed showed the receipt of contributions before his bank account was opened.

Mr. Chang voluntarily produced his bank records, which showed that he did open his account and deposited his contributions within 7 days.  Recommendation is to dismiss, no violation.

(3) Pursuant to HRS section 11-196, complainant alleges Mr. Chang’s Organizational report does not list bank, bank account number and website.  Mr. Chang filed his Organizational report on 10/27/09, but did not later amend his report within 10 days of change in information regarding his bank, bank account number and website address.  On 2/23/10, Staff asked that he file an amended Organizational report, which he did on the same day to add the missing information.  Recommendation is to assess a $50 fine for failure to amend the Organizational report within 10 days of changes.

Vice-Chair Olbrich moved to dismiss allegations 1 and 2 and to assess $50 fine for allegation 3, failure to amend the Organizational report within 10 days of change of information.  Motion seconded by Commissioner Weaver.  Motion carried unanimously.

Repeal of Hawaii Administrative Rules, Title 2, Chapters 14.1 and 14.2 and Adopt Hawaii Administrative Rules, Title 3, Chapters 160 and 161
Public hearing was held on April 19, 2010 and no written or oral comments were provided.  Prior to hearing, concern was expressed by some to Commission staff that there would be insufficient time for the Commission to educate candidates and for candidates to comply with section 3-160-10, specifications for advertising regarding the size and color of disclaimers.  Staff recommended rules be adopted and that section 3-160-10 be deleted.

Commissioner Gabrio moved to adopt Hawaii Administrative Rules, Chapters 3-160 and 3-161 with the deletion of section 3-160-10 regarding specifications for advertisements.  Motion seconded by Vice-Chair Olbrich.  Motion carried unanimously.

Docket No. 09-04  Eric Ryan v. Citizens for Carroll, John Carroll, Gayle Gardner, Pam Smith
Parties Present:  Mr. Eric Ryan, Mr. John Carroll, Ms. Pam Smith
Witness Present: Mr. Mark Piscioneri

Chair Kuramoto, noted for the record that he was a witness in a civil case, regarding a motor vehicle accident he observed, in which Mr. Carroll was representing the plaintiff.

Mr. Eric Ryan filed a complaint against Citizens for Carroll, John Carroll, Gayle Gardner, and Pam Smith alleging 19 violations of the campaign financing law.  Executive Director Wong first presented 16 allegations that she stated she would be recommending dismissal of as follows:

– Allegation 2, Failure to file Schedule A with Organizational report.  A candidate’s expenditure of the candidate’s own funds is not a contribution but is reportable as an “other receipt”, which is not reported on Schedule A.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 3, Failure to file Supplemental report.  As a new candidate, with no surplus or deficit from a prior election, first required report is the Preliminary report due August 2, 2010.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 4, Failure to file bank statement with Supplemental report.  A bank statement is required upon termination of a committee along with a Final or Supplemental report.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 6, Failure to disclose other receipts or loans.  Mr. Ryan alleges Mr. Carroll paid Mr. Ryan $6,000 in November, 2008 to run his campaign.  This is not required to be disclosed until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 7, Failure to disclose $18,000 in expenditures.  Disclosure not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 8, Failure to disclose $5,000 loan from law firm client to campaign. Disclosure not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 9, Failure to disclose $5,000 expenditure to Mr. Ryan.  Disclosure not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 10, False reporting by intentionally changing dates of expenditures.  Disclosure report not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, insufficient evidence.
– Allegation 11, Failure to disclose unpaid expenditures.  Mr. Ryan alleged that he is owed $36,000 for independent contractor services.  Recommendation is to dismiss as to all respondents, insufficient evidence to show that there were $36,000 in unpaid expenditures for independent contractor services.
– Allegation 12, Failure to disclose other receipts or loans.  Mr. Ryan alleged that Mr. Carroll expended $18,000 of his own funds.  Disclosure report is not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, no violation.
– Allegation 13, Failure to disclose other receipts.  Mr. Ryan alleged that Mr. Carroll provided use of a portion of his office for his campaign.  Disclosure report is not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, insufficient evidence.
– Allegation 14, Failure to disclose non-monetary contributions.  Mr. Ryan alleged that non-monetary contributions of his time and Daniel Brackins’ time were not reported.  Disclosure report is not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, insufficient evidence.
– Allegation 15, Failure to disclose non-monetary contributions.  Mr. Ryan alleged that Mr. Chad Allenbaugh assisted Mr. Carroll with fundraising in exchange for legal services. Disclosure report is not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, insufficient evidence.
– Allegation 16, Failure to disclose non-monetary contribution by Mr. Allenbaugh by paying or promising to pay Joseph Locatelli’s salary.  Disclosure report not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, insufficient evidence.
– Allegation 17, Failure to report Joseph Locatelli’s salary as an expenditure.  Disclosure report not required until August 2, 2010, the Filing of the Preliminary report. Recommendation is to dismiss as to all respondents, insufficient evidence.
– Allegation 19, Failure to disclose unspecified unreimbursed expenditures.  Disclosure report not required until August 2, 2010, the filing of the Preliminary report.  Recommendation is to dismiss as to all respondents, insufficient evidence.

Chair Kuramoto reminded Commissioners that the campaign law provides four options, which is to make a preliminary determination of probable cause, to dismiss the complaint, further investigate, or refer the complaint to the attorney general or the county prosecutor.  Chair Kuramoto also noted this is not a contested case hearing and only the Commissioners will be asking the questions.

Vice-Chair Olbrich moved to dismiss allegations 2-4, 6-17 and 19 as to all respondents.  Motion seconded by Commissioner Gabrio.

Chair Kuramoto asked if the respondents had any comments.  Mr. John Carroll provided Commissioners with a copy of the alleged contract and commented that he trusted Mr. Ryan with the responsibility of running his campaign and that he (Carroll) is at fault for not having monitored what Mr. Ryan was doing.

Chair Kuramoto asked Mr. Ryan if he had any comments.  Mr. Ryan said he was troubled that he was not able to rebut the insufficient evidence claims, that if he was asked he would have provided more information.  He requested at least 48 hours to provide the information for claims of insufficient evidence.  Mr. Ryan then asked why a theft report has not been filed regarding claims of his dipping into campaign funds and paying himself.  He asked about a contested case hearing.

Executive Director Wong informed Mr. Ryan that it is the respondents that can request a contested case hearing, not the complainant.

Mr. Ryan further commented that the Commission should have a problem with the campaign not having to provide a report until August.

Discussion on whether an offer is considered a contribution.

Ms. Pam Smith informed Commissioners that the committee did file a police report against Ryan for forgery and theft.

Motion carried unanimously.

Executive Director Wong presented allegations #1, #5 and #18:

– Allegation 1, Failure to register the committee within 10 days of receiving contributions or making expenditures more than $100.  Mr. Ryan alleged that on 11/20/08, Mr. Carroll paid him $6,000 to run his campaign.  Mr. Carroll filed his Organizational report on 07/01/09.  Mr. Carroll had admitted paying Mr. Ryan $6,000 to run his campaign in November, 2008.  Recommendation is to fine Mr. Carroll and Citizens for Carroll $50, which is the standard fine for late filing of an Organizational report and to dismiss the allegation against Mr. Gardner and Ms. Smith.

Vice-Chair Olbrich moved to fine John Carroll and Citizens for Carroll $50 for late filing of his Organizational report and dismissal against Mr. Gardner and Ms. Smith.  Motion seconded by Commissioner Robb.

Chair Kuramoto asked if there were any comments.  Ms. Smith stated that initially, Mr. Ryan was the only one with access to the Candidate Filing System and was responsible for filing the Organizational report.

Motion carried unanimously.

– Allegation 5, Failure to deposit contributions in a depository institution.  Mr. Ryan alleged that Mr. Carroll did not setup a campaign account until May, 2009.  Mr. Carroll contends that Mr. Ryan was paid to take care of reporting, setting up a bank account, and depositing of contributions.  Mr. Ryan stated in an interview that contributions made through Carroll’s website went into Mr. Ryan’s PayPal account and the contributions were kept in that account until Mr. Ryan used the money to pay himself for the alleged campaign’s unpaid expenditures to him.  Recommendation is to fine Mr. Carroll and Citizens for Carroll $100 for failing to deposit contributions received and to dismiss the allegation against Mr. Gardner and Ms. Smith.

Commissioner Robb moved to accept recommendation of a $100 fine and dismissal of the allegation against Mr. Gardner and Ms. Smith.  Motion seconded by Vice-Chair Olbrich.

Chair Kuramoto asked if there were any comments.  Mr. Carroll informed commissioners that money used in the campaign was primarily his own funds but he does not object to the fine.  Also, that Mr. Ryan filed a false document, as most of the complaint is not true.  Carroll stated that he filed a complaint with the police and is waiting for the prosecutor to act upon it, particularly the forgery of the contract which Mr. Ryan is using to extort money from the committee.

Mr. Ryan commented that the treasurer at the time should also be fined.

Commissioner Gabrio moved to amend motion to reduce the fine to $50.  Commissioner Robb withdrew his motion.

Commissioner Gabrio moved to fine John Carroll and his campaign $50 and to dismiss the allegation against Mr. Gardner and Ms. Smith.  Motion seconded by Vice-Chair Olblrich.  Motion carried unanimously.

– Allegation 18, False reporting, intentional reporting a non-resident contribution as a resident contribution.  Issue is whether there is sufficient evidence to determine whether David Wilson was a resident or not at the time he made a $3,000 contribution to the Carroll campaign.  Recommendation is to dismiss, due to insufficient evidence as to whether Mr. Wilson was a resident at the time the contribution was made.

Commissioner Robb moved to dismiss as to Mr. Gardner and Ms. Smith and to dismiss the allegation against Mr. Carroll and the committee, as there is insufficient evidence to determine whether David Wilson was a resident or non-resident at the time the contribution was made.  Motion seconded by Commissioner Gabrio.

Chair Kuramoto asked if there were any comments.

Mr. Ryan said the F.E.C. determined that Mr. Wilson is a California resident because a contribution from Mr. Wilson is listed on the F.E.C. website with a California address.

Executive Director Wong commented that the Federal Election Commission does not make a determination of the residency of the contributor when listed on the website.  That the computer entry is done by the candidate’s committee and they list the information they have for the contributor.

Ms. Smith commented she has a California checking account and yet is a Hawaii resident.

Mr. Mark Piscioneri, Mr. Carroll’s treasurer, commented that Mr. Wilson does business in Hawaii, California and Asia and that he usually lives where he has a project.  That at the time of the contribution, his primary residence was on Kauai.

Motion carried unanimously.

Update on Proposed Legislation 2010
Commissioners were provided a handout detailing the current status of HB 2003 and other bills of interest.

HB 2003 – (Recodification)  Bill passed and has been transmitted to the Governor, and we have received request for comments from the Governor’s office.
HB 2397 – (Primary election date) Bill passed and has been transmitted to the Governor
HB 1985 – (Act 59) Removes the tax deduction on political contributions

Commissioner Weaver moved to convene an executive session to discussion personnel matters.  Motion seconded by Vice-Chair Olbrich.  Motion carried unanimously.

Executive session convened at 12:30 p.m.  Public session reconvened at 1:08 p.m.

Next Meeting:
Scheduled for Wednesday, June 9, 2010 at 10:00 a.m.

Commissioner Gabrio moved to adjourn meeting.  Motion seconded by Commissioner Weaver.  Motion carried unanimously.

Meeting adjourned at 1:10 p.m.