Campaign Spending Commission

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
November 1, 2012
10:00 a.m.

Commissioners Present:
Michael Weaver, Tina Pedro Gomes, G. William Snipes

Staff Present:
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Ellen Kojima
Deputy Attorney General Robyn Chun

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

Consideration of Minutes:
Vice-Chair Snipes moved to approve the minutes of October 10, 2012.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.

New Business
Executive Director Izumi-Nitao stated that the following proposed conciliation agreement was a result of an investigation that she initiated in September 2012 pursuant to HRS §11-314(7) to determine whether there has been a violation of the Hawaii campaign spending laws.

Respondent Progressive Hawaii Now has been notified in a letter of the fine that Commission staff computed as a result of their late filed report.   Further, they have been notified of today’s meeting, received a copy of the proposed conciliation agreement, and waived the opportunity to explain or otherwise respond to the notice of violation.  She recommended that the Commission make a preliminary determination of probable cause that a violation has been committed, waive further proceedings, and approve the settlement amount as stated in the proposed agreement.

Commissioners noted that Proposed Conciliation Agreement No. 13-50 – In Re the Matter of Progressive Hawaii Now has been reviewed and that they had no additional questions.  Commissioner Gomes moved that the Commission make a preliminary determination that probable cause exists that a violation had been committed and accept the settlement terms and amount as stated in the conciliation agreement.  Motion seconded by Vice-Chair Snipes.  Motion carried unanimously.

Docket No. 13-09  In Re the Matter of John and May Mizuno
Present – Nacia Blom, John Mizuno, May Mizuno

General Counsel Kam reported that a complaint was filed by Nacia Blom against John and May Mizuno alleging the prohibited transfer of campaign assets to another candidate.  Respondent John Mizuno is a candidate in the general election for the District 28 House of Representative seat and May Mizuno is a candidate in the special election to fill the vacant District 6 City Council seat.

The complaint alleges that campaign signs purchased by Respondent John Mizuno’s campaign committee are being used by Respondent May Mizuno to promote her own candidacy.  The complaint further alleges that the use of another candidate’s signs by a candidate violates HRS §11-382(1) which provides that campaign funds shall not be used to support campaigns of candidates other than the candidate for which they are directly related.

On 10/08/12, Respondents John and May Mizuno submitted their response to the complaint.  Respondents maintained that the signs were purchased by Respondent May Mizuno’s candidate committee from Respondent John Mizuno’s candidate committee at fair market value, and that the sale and purchase would be reported by the respective candidate committees in the Preliminary General and Preliminary Special reports due on 10/29/12.

Based on the investigation and information received, staff recommended that the complaint be dismissed.  Staff reviewed the 10/29/12 disclosure reports filed by John and May Mizuno and confirmed the reporting of the sale and purchase of the signs.

Respondent John Mizuno stated that the signs Respondent May Mizuno purchased from his candidate committee and signs that had been changed have been taken down.  He further stated that the purchase of the signs will be reported in the Preliminary General Report and that the signs were sold at fair market value.

Nacia Blom stated that she believed that the Mizunos violated the law by allowing May to use John’s banners.

Vice-Chair Snipes moved to accept staff’s recommendation to dismiss complaint.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.

Docket No. 12-13 – In Re the Matter of Ben Cayetano
General Counsel Kam reported that a complaint was filed by Anthony Locricchio against Ben Cayetano for failing to escheat funds from the 2006 election and seeks compliance with a FEC order.  Respondent Cayetano is a candidate in the 2012 election for the office of Mayor of the City and County of Honolulu.

The complaint demands or requests that Respondent Cayetano escheat to the state the unpaid balance the false-name and excess contributions made to Respondent when he ran for the office of Governor.  The complaint further requests that the Commission attach Respondent’s current candidate committee funds to recover the escheated funds.  General Counsel Kam stated that based upon an opinion rendered by the Attorney General in 2006, the Commission could not attach Cayetano’s present mayoral committee funds to satisfy the escheat of excess and false-name contributions from Cayetano’s previous race for Governor.  General Counsel Kam further stated that the Commission cannot enforce an order of a federal agency, the Federal Election Commission.  Further, Complainant has not provided the Commission with an order by the FEC directing Cayetano to return foreign contributions.

On 10/4/12, Respondent’s response was received.  Respondent Cayetano stated that he did not accept foreign contributions for his current mayoral campaign and that he believes that the Complainant was upset with him because of matters unrelated to campaign finance.  Based on investigation and information received, staff recommended that the complaint be dismissed.

Vice-Chair Snipes moved to dismiss the complaint.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.

Docket No. 13-03 – In Re the Matter of Kaniela Ing
Present – Boyd Ready, Kaniela Ing

General Counsel Kam reported that a complaint was filed by Boyd Ready against Kaniela Ing alleging the use of ineligible qualifying contributions, the improper payment of campaign funds to the candidate, the failure to file Notice of Intent to Hold a Fundraiser, and the failure to report expenditures.  Respondent is the candidate committee of Kaniela Ing, a candidate for District 11, House of Representative seat.  Candidate Ing is participating in the partially public fund program.

Violation 1 – The 3 qualifying contributions alleged to be ineligible as qualifying contributions because contributors made contributions in excess of $100.  Investigation found that the previous contributions were made in 2011 outside of the matching payment period which is January 1 of the election year until the day of the election for which public funds are sought.  Staff recommended that this violation be dismissed.

Violation 2 – Respondent reported cash payments directly to Candidate Ing.  Respondent did not report any loans from candidate and there were no documentation to show that the candidate was being reimbursed for expenditures made on behalf of the Respondent.  Investigation and information received found that no payments were made from Respondent to Candidate Ing.  Respondent incorrectly reported Candidate Ing’s name instead of the name of vendor.  On 8/30/12, Respondent filed an amended report where the names of the vendors are reported as recipients of committee funds.  Candidate Ing is now aware of the appropriate information that needs to be reported in Schedule B.  Staff recommended that this violation be dismissed.

Violation 3 – Respondent has held three fundraising events with a fourth being planned, and Respondent has not file a single Notice of Intent to Hold Fundraiser notice in violation of HRS §11-342.  Respondent answered that it did not have any fundraiser where the suggested donation or price was more than $25.  Investigation of Respondent’s website found that a fundraiser held on 9/5/12 suggested a donation of $100 which required the filing of the Notice of Intent to Hold a Fundraiser prior to the event.  Staff recommended that the Commission make a preliminary determination of probable cause that a violation exists and assess an administrative fine of $25.

Violation 4 – Respondent did not report expense for two of the three fundraisers held.  Respondent answered that events were primarily to meet people and not to raise funds.  People who attended paid for their own food or drink.  If Respondent had incurred any expenses for these events, it would have been reported.  Staff recommended that this violation be dismissed.

Kaniela Ing stated that this is his first campaign and admits that mistakes have been made, but he has tried to do everything that he needs to do and that complaints like this discourages people from running for office.  When asked if he had a treasurer, he responded that the treasurer on his Organizational Report is no longer his treasurer and that he has been doing his own reports.

Boyd Ready stated that the complaint pointed out that there were problems with Respondent’s disclosure report.  Nacia Blom stated that even if this is Ing’s first campaign, he is required to know and follow the rules.

Vice-Chair Snipes moved to dismiss Violations 1, 2, and 4.  Regarding Violation 3, Vice-Chair Snipes moved to make a preliminary determination of probable cause that a violation has been committed and accept the fine of $25 as stated in Docket 13-03.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.

Docket No. 13-10 – In Re the Matter of Kaniela Ing
Present – Boyd Ready, representing the Republican Party of Hawaii
Kaniela Ing

General Counsel Kam reported that a complaint was filed by the Republican Party of Hawaii against Kaniela Ing alleging the late filing of the Primary Election Expenditure of Public Funds Report, failure to report expenditures, excess reporting of expenditure of public funds, and the failure to report a loan.  Respondent is the candidate committee of Kaniela Ing, a candidate for District 11, House of Representative seat.

Violation 1 – The Expenditure of Public Funds Report was due on 8/31/12.  After a Notice of Late Report was sent on 9/6/12, Respondent filed the report on 9/11/12.  Unlike periodic disclosure reports that are required, staff has not been issuing notices of late report for Expenditure of Public Funds Report because candidates have until 30 days after a general election to file an application for public funds for either the primary or general elections.  Expenditures of public funds are reported in a candidate’s periodic disclosure report.  Staff recommended that this violation be dismissed.

Violation 2 – Respondent failed to report the expenses for running 4 advertisements in the Maui News.  Respondent answered that they paid for 4 advertisements in the Maui News.  Investigation found that Maui News issued two receipts, one for an ad that ran in their Primary Election Tabloid on 8/5/12, and another for 4 ads that ran in the 8/6/12, 8/8/12, 8/10/12 and 8/11/12 editions of the Maui News.  Respondent’s treasurer reported the receipt for the 8/5/12 and mistakenly believed that it also covered the other 4 ads.  Respondent filed an amended report to report the expense for the other 4 ads.  Staff recommended that the Commission make a preliminary determination of probable cause that a violation exists and assess an administrative fine of $250.

Violation 3 – Respondent’s public funding expenses exceed the “allotted amount.”  Respondent received $1,895 in public funding, but Respondent’s Expenditure of Public Funds Report reported expenditures of $2,480.10 on two items.  Respondent answered that the public funds was used to reimburse the campaign for two advertising expenditures, and the balance of the expense not covered by public funds was taken care of with nonpublic campaign funds.  Respondent stated that he was advised by Commission staff on how to report these expenditures.  Staff recommends that this violation be dismissed.

Violation 4 – Respondent failed to submit a loan document for a $1,895 loan received from Robert Winter.  The loan document should have been submitted on or before the due of the Final Primary Report.  After a notice was sent, the loan document was submitted on 10/17/12.  Staff recommended that the Commission make a preliminary determination of probable cause that a violation exists and assess an administrative fine of $100.

Boyd Ready reiterated that the complaint pointed out the problems with Respondents reporting and not submitting documents in a timely basis.

Mr. Ing, stated that being a first time candidate, admits that mistakes were made and some documents were not submitted in a timely manner.

Commissioner Gomes moved to dismiss Violations 1 and 3.  Regarding Violations 2 and 4, Commissioner Gomes moved to make a preliminary determination of probable cause that violations have been committed and accept the fines of $250 and $100 as stated in Docket 13-10.  Motion seconded by Vice-Chair Snipes.  Motion carried unanimously.

Docket No. 13-14 – In Re the Matter of Erin McLaughlin and Friends of Erin McLaughlin
Executive Director Izumi-Nitao reported that the complaint alleges that Respondents failed to comply with the Commission’s Order from Conciliation Agreement 13-03 and payment of a fine for the untimely filing of the 1st Preliminary Primary Report.

Respondent McLaughlin is a candidate in the 2012 election for the office of Maui County Council-Kahului.  The 1st Preliminary Primary Report was due on 7/12/12.  A Notice of Late Report was sent on 7/20/12.  Respondent electronically filed the report on 7/24/12.  A notice assessing a fine of $200 was sent on 7/25/12.  On 7/30/12, Respondent McLaughlin contacted staff to discuss entering into a conciliation agreement, and as a result, Conciliation Agreement No. 13-03 was proposed to reduce the fine to $70.  On 8/13/12, at a duly noticed Commission meeting, the Commission approved Proposed Conciliation Agreement No. 13-03.  Respondents did not remit payment nor signed the Conciliation Agreement by the 8/30/12 deadline, and after several attempts to get compliance, Respondents were informed that a complaint would be filed seeking payment of $200 because they were in breach of the terms of the Conciliation Agreement. Respondent McLaughlin informed staff that he understood and that because they lost the primary election they would not be complying with the Conciliation Agreement.

Staff recommended that the Commission make a preliminary determination of probable cause that a violation exists and assess a fine of $200.

Vice-Chair Snipes moved that the Commission make a preliminary determination that probable cause exists that a violation has been committed and to accept the fine of $200 as stated in Docket No. 13-14. Motion seconded by Commissioner Gomes.  Motion carried unanimously.

Docket No. 13-15 – In Re the Matter Bart Mulvihill, Janet Grantham, and Friends & Supporters of Bart Mulvihill State Senate District 6
Executive Director Izumi-Nitao reported that the complaint alleges that Respondents failed to comply with the Commission’s Order from Conciliation Agreement No. 13-30 and payment of a fine for the untimely filing of the Organizational Report, 1^st Preliminary Primary, and 2nd Preliminary Primary Reports.

Respondent Mulvihill is a candidate in the 2012 election for the District 6, State Senate seat.  Respondents were noticed of their failure to file the Organizational Report.  On 7/10/12, staff noticed Respondents of a $50 fine for their failure to file the Organizational Report.  Respondents filed the Organizational Report on 8/2/12, but did not pay the fine.   Respondents were noticed of their failure to their failure to file the 1st Preliminary Primary and 2nd Preliminary Primary Reports.  On 8/6/12, Respondents electronically filed the 1st Preliminary Primary and 2nd Preliminary Primary Reports.  A Notice of Fines for Late Reports was sent on 8/7/12 notifying Respondents that a $50 fine had been assessed for the late filing of the Organizational Report, a $200 fine for the late filing of the 1st Preliminary Primary Report, and a $300 fine for the late filing of the 2nd Preliminary Primary Report.  On 8/28/12, Respondent Mulvihill spoke to staff about a conciliation agreement, and as a result, Conciliation Agreement No. 13-30 was proposed to reduce the fine to a total of $270 ($50 late of Organizational Report, $70 for late filing of the 1st Preliminary Primary, and $150 for late filing of the 2nd Preliminary Primary).  On 9/12/12, at a duly noticed Commission meeting, the Commission approved Proposed Conciliation Agreement No. 13-30.  Respondents did not remit payment nor sign the Conciliation Agreement by the 10/23/12 deadline. Respondents were informed that a complaint would be filed seeking payment of $550 because they were in breach of the terms of the Conciliation Agreement.

Staff recommended that the Commission make a preliminary determination that probable cause that a violation exists and assess a fine of $550.

Commissioner Gomes moved that the Commission make a preliminary determination that probable cause exists that a violation has been committed and to accept the fine of $550 as stated in Docket No. 13-15. Motion seconded by Vice-Chair Snipes.  Motion carried unanimously.

Proposed 2013 Legislation
Executive Director Izumi-Nitao reported that the contents of HB 1756 which was introduced last session will again submitted for introduction this session.  The bill also contains 3 new sections.

Proposed changes include:

Section 1 adds the definition of “matching payment period;”
Section 2 clarifies the duties of the Commission;
Section 3 corrects an incorrect statutory citation (new section);
Section 4 requires candidate committees to file the Supplemental Report on January 31 regardless of whether it is an election year;
Section 5 clarifies and identifies candidates supported or opposed by an independent expenditure;
Section 6 requires noncandidate committees to file the Supplemental Report on January 31 regardless of whether it is an election year (new section);
Section 7 corrects an incorrect statutory citation (new section); and
Section 8 increases the amount of expenditures a publicly financed candidate for the office of prosecuting attorney can make.

Commissioners asked that the proposed 2013 legislation be on the December agenda for further discussion.

Discussion about HB 2174 which might be reintroduced this session.  Nikki Love of Common Cause commented that they would like to further pursue some of the issues presented in HB 2174, but would need to meet with her board first.

Old Business:
Docket No. 12-14 – In Re the Matter of Tom Berg
Present – Tom Berg

General Counsel Kam reported that the Complainant Eric Ryan submitted a request that the matter be continued until the December meeting because he was off-island.  Mr. Ryan’s rebuttal to Respondent Berg’s response was due on 10/22/12.  On 10/22/12, General Counsel Kam received an email from Mr. Ryan, but was unable to open the attachment and so informed Mr. Ryan.   Mr. Ryan said that he would fix it and resend.  To date, staff has not received Mr. Ryan’s rebuttal.  General Counsel Kam noted for Commissioners that they already have a lot of information that has already been submitted and that we are dealing with a chapter 92 agency meeting and not a contested case hearing.  Staff recommended that the request for continuance be denied.

Vice-Chair Snipes moved to deny the request for continuance.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.

General Counsel Kam reported that based upon new information provided by Respondent Berg, staff is amending its recommendation.  Staff stands by its recommendations regarding violations 1 and 2 as follows:

Violation 1 – Failure to report the purchase of the voter email list – Recommend making a preliminary determination of probable cause that a violation exists and assess a fine of $250.

Violation 2 – Failure to report 4 on-line contributions received – Recommend making a preliminary determination of probable cause that a violation exists and assess a fine of $250.

Based upon Respondent Berg’s affidavit, it does not appear that he is opposed to the recommendations made regarding violations 1 and 2.

Regarding Violation 3, failure to report in-kind contributions from the city, it is alleged that Mr. Ryan worked on campaign related matters during City work time while he was being paid a salary by the City.  The value of the City’s resources (i.e., Mr. Ryan’s salary) committed to Respondent Berg’s campaign should have been reported by Respondent Berg’s campaign committee as nonmonetary contributions from the City.  After review of additional information submitted by Respondent Berg, staff now recommends that Violation 3 be dismissed.

Respondent Berg reiterated that as discussed at the October meeting, the Complainant Eric Ryan handled most if not all thing related with his campaign committee.  He was responsible for the PayPal account, he maintained the campaign database and purchased the voter email list, and should have been on top of all the disclosure reports.  Respondent Berg stated that his campaign has no money and asked the Commission to consider reducing the fines.

Vice-Chair Snipes stated that he would accept Respondent Berg’s statement, but also that although Mr. Ryan may have been responsible, Respondent Berg is in charge of his campaign so he should have been aware of what Mr. Ryan was or was not doing.

Commissioner Gomes moved that with regard to Violation 1, the Commission make a preliminary determination that probable cause exists that a violation has been committed and that the fine of $250 be reduced to $125. Motion seconded by Vice-Chair Snipes.  Motion carried unanimously.

Vice-Chair Snipes moved that with regard to Violation 2, the Commission make a preliminary determination that probable cause exists that a violation has been committed and that the fine of $250 be reduced to $125.   Motion seconded by Commissioner Gomes.  Motion carried unanimously.

Vice-Chair Snipes moved to dismiss Violation 3.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.

Searchable Database and Socrata
Associate Director Tony Baldomero reported that as a result of the reports filed on 10/29/12, an additional 4,000 records are now available on the data.hawaii.gov website for public access.

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

Report on Compliance of Filing Timely Disclosure Reports
The only new update concerns the Preliminary General Report for the period 8/12/12-10/22/12 or 1/1/12-10/22/12 which was due on 10/29/12.

-Candidate Committees: To date, 5 have not filed
-Noncandadiate Committees: To date, 4 have not filed
-Corporations: Staff to review candidate reports

Update on Public Funding Programs – HCCCPF and Partial Public Funding
Associate Director Tony Baldomero reported that for the Hawaii County Council Comprehensive Public Funding Program (HCCCPF), 8 candidates were certified with $215,344.23 distributed ($195,000 for the primary period and $20,000 for the general period).  With regard to Partial Public Funding, 20 candidates have been certified and $115,346 distributed.  Last day to apply for funding is 12/6/12.

Update from Boards and Commissions Concerning Appointment of New Commissioners
Executive Director Izumi-Nitao reported that on 10/26/12 she was informed by Boards and Commissions Director Tony Benasbese that Gregory Shoda and Eldon Ching have been appointed to serve on the Commission and will serve 4-year terms to expire 6/30/2016.

Certification of Elected Officials
Executive Director Izumi-Nitao reported that staff will be reporting to the Office of Elections and County Clerks whether the winners for state and county offices have filed their Final Election Period Report for purposes of certification.  Although this report is not due until 12/6/12, the winners for county seats on Hawaii and Kauai will need to file the report early so they can receive their election certification and be sworn into office on 12/3/12.

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

Public Session reconvened.

Next Meeting:
Scheduled for Wednesday, December 12, 2012, at 10:00 a.m.

Vice-Chair Snipes moved to adjourn meeting.  Motion seconded by Commissioner Gomes.  Motion carried unanimously.  Meeting adjourned at 12:35 p.m.