Minutes for April 17, 2003

Campaign Spending Commission Meeting
Leiopapa A Kamehameha Building, Room 204
April 17, 2003
3:00 p.m.

Members Present:
A. Duane Black, Della Au Belatti, Richard Choy

Staff Present:
Robert Watada, Tony Baldomero, Ellen Kojima

Russell Suzuki, Deputy Attorney General

Call to Order:
Meeting convened at 3:00 p.m. with Chairman Black presiding.

Consideration of Minutes:
Mr. Choy moved to approve the minutes of February 13, 2003 as circulated, Ms. Belatti seconded. Motion carried.

Old Business:
Docket 03-02 George Peabody vs. KITV, KGMB, KHON, KHNL, FOX, Other TV Stations, Candidates Hirono and Lingle
Complainant George Peabody filed a complaint against several TV stations and candidates Hirono and Lingle alleging that they failed to report in-kind contributions to the candidates for television coverage provided. Mr. Peabody alleges that he as a candidate was not invited to participate in several publicly aired debates and further argued that the TV stations did not give equal time to the lesser known candidates.

Staff reviewed federal election opinions, case law and section 11-207.6, HRS, news coverage and opinions are not considered campaign contributions to a candidate. KHNL/KITV, Shelton Jim On, representing candidate Lingle (also present at the meeting) and Michael Tanoue, representing candidate Hirono responded that no law or regulation has been violated. Staff recommends that the matter be dismissed.

Mr. Choy moved that Docket 03-02 be dismissed, Ms. Belatti seconded. Motion carried.

New Business:
Docket 02-04 Thomas Russi and Christine Paul vs. Lingle Lingle and Francis Jung
Complainants Russi and Paul filed a complaint against Linda Lingle and Francis Jung alleging that Mr. Jung had coerced them into making a contribution to the Lingle campaign. On March 24, 2003, staff received a faxed letter requesting that the complaint be withdrawn. Staff recommends that the complaint be dismissed based upon complainants request.

Mr. Choy moved that Docket 02-04 be dismissed. Ms. Belatti seconded. Motion carried.

Docket 03-03 Joe Gomes vs. Democratic Party of Hawaii
Complainant Joe Gomes filed a complaint against the Democratic Party of Hawaii alleging failure to report electioneering communications, failure to report advertising expenditures as contributions to a candidate and failure to report coordinated activity.

Jane Sugimura, Treasurer for the Democratic Party responded that the flyer at issue was without the coordination or cooperation of the candidate, the expenditures related to the flyers were reported, that Statements of Information for the flyer was filed and that the in-kind contributions were for the cost of advertising templates for a different advertisement.

Staff found no evidence of cooperation with the candidate regarding the flyer in question, also reported that the Democratic Party amended their report to detail electioneering communications. Staff does not interpret the statute regarding electioneering communication to require registered candidates and committees to file separate Statements of Information. Staff recommends that based on the information available and the Democratic Party's filing of amended reports that the matter be dismissed.

Mr. Joe Gomes, the complainant disagreed with the staff's recommendation and voiced his concern over the under reporting of the Party's expenditures and that the matter should be further investigated. Further stated that the staff should further the statute regarding electioneering communications and their interpretation of the statute.

Mr. Choy moved that Docket 03-03 be dismissed, Ms. Belatti seconded. Motion carried.

Docket 03-04 Democratic Party of Hawaii vs. Jim Rath
The Democratic Party filed a complaint against candidate Jim Rath alleging that he used campaign funds to purchase an advertisement to campaign for Mark Jernigan and Paul Whalen and against Mari Herkes. Section 11-200, HRS provides that campaign funds be used for a candidate's own campaign and not to advocate or further the campaign of any other candidate. Candidate Rath responded that the advertisement was intended to counter a Party advertisement that would be targeting his candidacy.

Staff recommends that a preliminary determination of probable cause be made that section 11-200, HRS was violated and that a nominal fine of $50 be assessed and that he reimburse his candidate committee the amount that was paid for the advertisement.

Mr. Choy moved that candidate Rath be assessed a fine of $50 and that he reimburse his candidate committee the amount that was paid for the advertisement, Ms. Belatti seconded. Motion carried.

Docket 03-05 Clyde Mortia vs. David Pendleton
Complainant Clyde Morita filed a complaint against David Pendleton alleging that he exceeded the expenditure limit for the 2002 election and failed to notify the required parties. On 3/11/03, Mr. Morita amended his complaint, alleging that candidate Pendleton also exceeded the limit for the 2000 election.

Staff review of Pendleton's reports found that he did not exceed the limit in 2000, but that for the 2002 election he exceeded the expenditure limit by $6,681 and that he failed to notify the required parties. Candidate Pendleton met with staff and he represented that he did not intent to exceed the expenditure limit.

Staff recommends that a preliminary determination of probable cause be made that candidate Pendleton exceeded the expenditure limit and that he be assessed a fine of no less than $100.

Mr. Morita, the complainant represented that he managed his campaign with the knowledge that Pendleton has agreed to the expenditure limit, and when Pendleton exceeded the limit he was not notified. Further stated that he received a notice well after the election and only after he had filed a complaint and that the notice did not state that he had exceeded the voluntary expenditure limit. Mr. Morita, asked that in addition to the fine that Pendleton also be required to publish a public notice stating that he had exceeded the voluntary expenditure limit for the 2002 election.

Mr. Choy moved candidate Pendleton be assessed a fine of $100 for his failure to notify all parties that he had exceeded the voluntary expenditure limit, Ms. Belatti seconded. Motion carried.

Docket 03-06 David Frankel vs. Bob Herkes and Cooper Center Council
Complainant David Frankel filed a complaint against Bob Herkes and the Cooper Center Council for failure to report an advertising expenditure.

Staff contracted the Cooper Center Council and was informed that Bob Herkers paid for the advertisement. Herkes provided staff with a copy of the campaign check for payment of the advertisement. Herkes also amended his Final Election report to reflect the payment of the ad.

Staff recommends that a preliminary determination of probable cause be made that candidate Herkes filed a defective report and be assessed a $50 fine.

Mr. Choy moved that candidate Herkes be assessed a $50 fine for filing a defective report, Ms. Belatti seconded. Motion carried.

Docket 03-07 In Re the Matter of Mike Gabbard anf Friends of Mike Gabbard
The Mike Gabbard campaign committee signed the Affidavit of Compliance with the Voluntary Expenditure Limits and applied for and received $7,491 in public funding. Staff was informed on 11/29/02 that the Gabbard campaign committee had exceeded the expenditure limit.

Staff recommends that candidate Gabbard return public funds received and be assessed a fine of $100 for failure to notify his opponents.

Devin Bull, representing the Gabbard campaign committee stated that the committee did not realize until 11/29/02 that the expenditure limit had been exceeded. When realized notified the necessary parties and paid the balance of the candidate filing fee with the city clerk's office.

Mr. Choy moved that the Gabbard campaign be ordered to return public funding received and that no further fine be imposed, Ms. Belatti seconded. Motion carried.

Conciliation Agreement 03-02 Fukunaga & Associates, Inc. and Royce Fukunaga
Investigation found that during the period of 1996 through 2001 Fukunaga & Associates made over $65,000 in contributions to various candidates, of which $45,000 had been made to Harris. They have agreed to a fine of $24,000 for excess and false name contributions.

Mr. Choy moved to approve Conciliation Agreement 03-02, Ms. Belatti seconded. Motion carried.

Conciliation Agreement 03-04 Mitchell A. Imanaka
Investigation found that the law firm of Dwyer, Imanaka, et al now known as Dwyer, Schraff, et al. made excess contributions to Harris. Mr. Imanaka asked to responsibility for the contributions made to Harris. He as agreed to a fine of $500.

Mr. Choy moved to approve Conciliation Agreement 03-04, Ms. Belatti seconded. Motion carried.

Conciliation Agreement 03-05 Gerell Management, Inc. and Joe Leoni
Investigation found that excess and false name contributions were made to the Harris campaign. Joe Leoni a former partner in the firm has accepted responsibility for some of the contributions made and has agreed to pay a fine of $750. Staff is continuing an investigation on Gerell Management.

Ms. Belatti moved to approve Conciliation Agreement 03-05, Mr. Choy seconded. Motion carried.

Conciliation Agreement 03-06 AM Partners, Inc. and Brian Takahashi
Investigation found that false name contributions were made to the Harris campaign and they have agreed to a fine of $1,200.

Mr. Choy moved to approve Conciliation Agreement 03-06, Ms. Belatti seconded. Motion carried.

Conciliation Agreement 03-07 W.A. Hirai & Associates, Inc. and Sam K. Hyun
Investigation found that excess and false name contributions were made to Harris, Cayetano, Hirono and Apana, and they have agreed to a fine of $19,000.

Ms. Belatti moved to approve Conciliation Agreement 03-07, Mr. Choy seconded. Motion carried.

Conciliation Agreement 03-10 Stanford Carr Development Corp. and Stanford Carr
Investigation found that excess contributions had been made to the Jerry Chang campaign, and they have agreed to a fine of $600.

Ms. Belatti moved to approve Conciliation Agreement 03-10, Mr. Choy seconded. Motion carried.

Conciliation Agreement 03-11 Fujita & Associates, Akira Fujita and Edwin Maruyama
Investigation found that false name contributions were made to the Harris and Cayetano campaigns. Based upon the formula fine should be $16,000, but because they are in process of filing bankruptcy, their fine has been reduced to $11,000 to assure possible payment.

Ms. Belatti moved to approve Conciliation Agreement 03-11, Mr. Choy seconded. Motion carried.

Conciliation Agreement 03-17 WMO Corp., Inc. and Wilson M. Okamoto
Investigation found that false name contributions were made to candidates and they have agreed to a fine of $5,000.

Ms. Belatti moved to approve Conciliation Agreement 03-17, Mr. Choy seconded. Motion carried.

Communications to Commission:
Legislation
SB 459 is to be heard in conference committee today.

Public Funding
For the 2002 elections $322,00 in public funds was distributed to 45 candidates.

Candidates Willie Espero and Shan Tsutsui exceeded their respective voluntary expenditure limit. But neither candidate applied for public funding and complied with notification requirements.

Next Meeting:
Scheduled for Thursday, May 8, 2003 at 3:00 p.m.

Ms. Belatti moved to convene executive session to consult with counsel, Mr. Choy seconded. Motion carried.

Public session reconvened and with no further business to discuss Chair Black adjourned meeting. Meeting adjourned at 4:50 p.m.