Campaign Spending Commission

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
May 14, 2014
10:00 a.m.

Commissioners Present:
G. William Snipes, Tina Gomes, Eldon Ching, Gregory Shoda, Adrienne Yoshihara

Staff Present:
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Ellen Kojima

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

Consideration and Approval of Minutes on 4/9/2014:
Vice Chair Gomes moved to approve the minutes of April 9, 2014.  Motion seconded by Commissioner Shoda.  Motion carried unanimously.

New Business:
Docket No. 14-22 – In Re the Matter of Romy Cachola, Friends of Romy Cachola
A complaint was filed alleging Respondent Romy Cachola failed to reimburse his candidate committee for the personal use of the campaign committee vehicle and for improper expenditures.

General Counsel Kam reported that an investigation was started for the failure of Respondent Cachola to reimburse his campaign committee for the personal use of a vehicle the campaign purchased in 2008.  During the investigation process, expenses referred to as “public relations” (which are usually expenses for services from a public relations firm) and the committee’s food and beverage expenses were also questionable.  On 2/6/14, General Counsel Kam sent a letter to Respondent Cachola asking for an explanation regarding the committee’s vehicle expenses, public relation expenses, and food and beverage expenses by 2/28/14.  General Counsel Kam received a response on 4/4/14.  Respondent Cachola indicated that some of the food and beverage expenses was to pay for food for campaign workers, but that he did not have the receipts for the expenses.  His response did not address all of General Counsel Kam’s concerns set forth in the letter dated 2/6/14.

Staff recommendation:

-Count I – Vehicle expenses – Respondent reimburse campaign committee for all vehicle   expenses and a fine of $1,000;
-Count II – Public relation expenses – Respondent reimburse campaign committee for all public relation expenses and a fine of $693.52 (i.e., 25% of public relation expenses); and
-Count III – Food and beverage expenses – Respondent reimburse campaign committee for all food and beverage expenses and a fine of $2,298.61 (i.e., 25% of food and beverage expenses).

On 5/13/14, General Counsel Kam received a letter from attorney Michael Green stating that he had been retained by Respondent Cachola and requested a continuance.  And, on the morning of this meeting, General Counsel Kam received a letter and more documents from Respondent Cachola.  It appears that Respondent Cachola made vehicle reimbursements of $12,700 and other reimbursements of $1,800.  General Counsel Kam has not been able to review the new information and has not had any recent discussions with Respondent Cachola regarding the recent reimbursements.  He therefore recommends that Respondent’s request for a continuance be granted.

Attorney James Stone was present on behalf of Michael Green.  He stated that the 2/6/14 request for information was received after the start of the legislative session and because Respondent Cachola was involved during the session, he was not able to submit information by the requested 2/28/14 response date.  Mr. Stone further stated that Respondent Cachola and his accountant met with General Counsel Kam in April.  At this meeting, Respondent Cachola explained that his accountant was busy with the tax season and that because he was looking for records that go back a number of years, he requested a continuance.  Respondent Cachola was of the understanding that they were meeting with General Counsel Kam on 5/8/14 to submit remaining information to resolve the matter.  Respondent Cachola’s accountant called General Counsel Kam to confirm the 5/8/14 meeting, but was informed that there was a misunderstanding, that there was no meeting scheduled and that a complaint was going to be filed.  After receipt of the complaint, Respondent Cachola retained attorney Michael Green.  Mr. Green has not had the opportunity to fully review the complaint and requests a continuance.

Mr. Stone stated further that documents and an explanation of the expenses was submitted this morning to General Counsel Kam.  These documents would show that Respondent Cachola has made reimbursements to his campaign committee to show a good faith effort to comply with the charges set forth in the complaint while Respondent Cachola attempts to locate missing documents.  Mr. Stone represented that when Respondent Cachola locates the missing documents, they believe that they will claim reimbursement with campaign funds.  Mr. Stone requested that the matter be continued and further stated that they will continue to work with staff to resolve this matter.

In response to Mr. Stone’s statement, General Counsel Kam reiterated that the initial request for information was made in February with a response date of 2/28/14.  He did not received a response on 2/28/14.  Respondent Cachola’s accountant contacted General Counsel Kam in early March and they agreed to a 4/4/14 response date.  Shortly before 4/4/14, General Counsel Kam received a call from Mr. Smith, Respondent Cachola’s accountant, asking for another extension which was requested by Respondent Cachola.  Mr. Smith was informed that another extension would not be granted.  General Counsel Kam further clarified that there was no agreement to meet on 5/8/14.  In early May, Respondent Cachola’s accountant called General Counsel Kam and informed him that he would come in on 5/814 to deliver more documents.  On 5/7/14, the accountant called General Counsel Kam and informed him that he would not be coming in 5/81/4 to deliver the documents.  General Counsel Kam did not cancel any scheduled meeting with Respondent Cachola or his representatives.

In response, Mr. Stone clarified that Mr. Smith had been instructed by Mr. Green’s office to reschedule the 5/8/14 meeting because the documents he was planning to turn over to staff had not been reviewed by legal counsel.

Chair Snipes moved to continue matter until the June Commission meeting on 6/11/14.  Motion seconded by Vice Chair Gomes.  Motion carried unanimously.

Chair Snipes noted it is the Commission’s intention that cases be resolved in advance of the campaign season.  That it is the obligation of the Commission to provide the public with facts they may view as germane prior to the election.

Executive Director Izumi-Nitao clarified that the next meeting is scheduled for 6/18/14 because 6/11/14 is a state holiday.

Old Business:
Discussion and Update of Proposed Amendments to the Hawaii Administrative Rules Affecting Campaign Spending Commission
General Counsel Kam reported that the original request to procedure with public hearing needed to be amended.  The amended request is still pending with the Governor’s office.

Discussion and Update of Commission Related Legislation for 2014 Legislative Session
General Counsel Kam reported on the following:
– HB 1604, HD 2 / SB 2119 – Requires the filing of CSC disclosure reports and payment of all outstanding fines to obtain elections certification – Enrolled to the Governor for consideration.
– HB 1603 / SB 2118, HD 1 – If a candidate exceeds the expenditure limit, he/she must notify the Office of Elections, instead of the Chief Election Officer – Enrolled to the Governor for consideration.
– HB 1605 / SB 2120 – A candidate’s immediate family members are not subject to the candidate’s contribution limits – Governor signed on 4/23/14 (see, Act 48).

Report from Executive Director:
Executive Director Izumi-Nitao reported on the following items:

Report on Compliance of Filing Timely Disclosure Reports
Noralyn Pajimola – Preparing to file a Motion for Entry of Default in the First Circuit Court and preparing to file a First Circuit Court Application for Docket No. 14-04.

Adam Reeder – First Circuit Court Application has been served.  If he does not respond, General Counsel Kam will file a Motion for Entry of Default in the First Circuit Court.

General Counsel Kam noted that both parties have filed the disclosure reports, but they have not paid the fines.

Report on 2014 Committee Training Schedule
The deadline for filing nomination papers is June 3^rd.   Training sessions have been scheduled for Tuesday, June 24^th on Kauai; Wednesday, June 25^th on Oahu; Friday, June 27^th on Hawaii; and Wednesday, July 2^nd on Maui.

Honolulu training will include candidate committees, public funding, and noncandidate committees.  For Hawaii, Maui, and Kauai, training will be on candidate committees and partial public funding.

Schedule to be posted on the website, and as in the past, staff will be doing e-registration with a notice that if there is not enough participants registered for the training, the training will not be held.

Update on Civic*Celerator Project
On behalf of the Commission, at the follow-up meeting on May 7^th, Executive Director Izumi-Nitao presented a mahalo cake to thank everyone for their efforts.  Participants who developed apps with campaign finance data were given honorariums which were provided from the VOQUAL grant that Common Cause received.  Participants are working towards a 5/31/14 completion date of their apps.

Update on Data Visualization
Executive Director Izumi-Nitao and Associate Director Baldomero will be meeting with OIMT to discuss funding to develop data visualizations of the noncandidate committee reports.

Report on 2014 Election
Associate Director Baldomero presented a statistical snapshot of the 2014 election.  There are 128 elective seats in the State of Hawaii and its four counties with 102 seats up for election this year.  As of Friday 5/9/14, 77 new candidates and 25 incumbents have filed nomination papers.  Of the 102 candidates, 99 candidates are registered with the Commission, and staff is currently working with 3 candidates to get them registered with the Commission.

Seventy-nine candidates have filed the “Affidavit to Voluntarily Agree with the Campaign Expenditure Limit”, and of the 79 candidates, 9 incumbents have filed the Affidavit.  There are 2 benefits to filing the Affidavit: (1) a reduced filing fee; and (2) candidates are able to apply for public funding.

In 2012, we distributed $146,000 in public funds.  To date, 20 candidates have filed the “Statement of Intent to Seek Public Funds” and no applications for funds have been filed. The deadline to file an application is December 4, 2014.

To date, there have been 107 fundraisers held, and 49 fundraisers were held during the 2014 legislative session.  The Governor has held 27 fundraisers since his election in 2010, with 10 in 2014.

Associate Director Baldomero also noted that in terms of raising funds for this election year, super PACs will play a big role.  Super PACs are independent expenditure committees that can raise unlimited funds which they can spend on behalf of the candidate as long as there is no coordination between the candidate and the PAC.  PRP is an example of how a super PAC works in the 2012 election.  He is also watching “dark money” or 501(c)(4) organizations that raise monies but are not required to itemize where the money comes from. This is also monies that could be given to a super PAC, and when reported by the super PAC, it would be reported in the name of the 501(c)(4) and not where the money came from.

Chair Snipes moved to convene executive session to consult with attorney.  Motion seconded by Vice Chair Gomes.  Motion carried unanimously.

Public Session reconvened – 12 p.m

Chair Snipes reported that the Commissioners considered staff performances and approved compensation increases for certain staff members effective July 1, 2014.  Executive Director Izumi-Nitao will draft the appropriate memo for Chair Snipes’ signature with instructions to DAGS Personnel.

Next Meeting:
Next meeting scheduled for Wednesday, June 18, 2014, at 10:00 a.m.

Commissioner Yoshihara moved to adjourn the meeting.  Motion seconded by Commissioner Ching.  Meeting adjourned at 12 p.m.