Minutes for November 9, 2006

Campaign Spending Commission Meeting
Leiopapa A Kamehameha Building, Room 204
November 9, 2006
10:00 a.m.

Members Present:
Paul Kuramoto, Steven Olbrich, Gino Gabrio, Dean Robb, Michael Weaver

Staff Present:
Barbara Wong, Grant Tanimoto, Ellen Kojima
Russell Suzuki, Deputy Attorney General

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

Agenda Item #5 - Executive Session, to be taken up after Communication to Commission and Next Meeting.

Consideration of Minutes:
Deferred until next meeting

Old Business:
Docket 06-04  Richard Harrington v. Jeffrey K. Alameida
Mr. Harrington filed a complaint alleging that candidate Jeffrey Alameida used candidate Carol Philips’ disclosure reports to obtain his name and address to solicit a contribution, in violation of section 11-193(a)(4), Hawaii Revised Statutes.  Mr. Harrington is the father of candidate Carol Philips and resides on the mainland and would not be listed anywhere except as a contributor to Carol Philips.

At the last meeting, Commissioners asked that further investigation be done to see whether anyone else received a solicitation from Mr. Alameida.  Staff sent out 17 letters to Carol Philips’ contributors with a return deadline of 11/1/06.  To date, received 9 letters and all responded not having received a solicitation from Mr. Alameida.  Staff recommends approval of the conciliation agreement with Mr. Alameida with a fine of $100.

Mr. Gabrio moved to approve conciliation agreement and fine of $100.  Motion seconded by Mr. Robb.  Motion carried.

Draft Advisory Opinion 06-09/Rescind Advisory Opinion 97-3, 97-3 Amended
Staff proposes to withdraw draft Advisory Opinion 06-09 and recommends that the question, of whether a partnership’s contribution may be attributed to one partner, be addressed by the legislature.

Mr. Robb moved to withdraw Draft Advisory Opinion 06-09.  Motion seconded by Mr. Weaver.  Motion carried.

New Business:
Docket 06-05  In Re the Matter of Louis Erteschik, Friends of Lou Erteschik
Complaint filed by the Executive Director Wong against Louis Erteschik and Friends of Lou Erteschik for receiving excess nonresident contributions.  When section 11-204.5, HRS became effective 1/1/06, a plain reading was made,  that contributions from any individual who is not a resident shall not exceed 20% of the total contributions received by a candidate.

Received an Attorney General opinion saying that section 11-204.5, HRS should be interpreted that not more than 20% of the candidate’s total contributions for the reporting period may be from non-resident contributors.  Staff recommends that it find preliminary determination of probable cause and assess a fine of $6,000 ($500 for 12 excess contributions).

Candidate classes given in February and July, during the February class advised the “plain reading” of the law regarding out-of-state contributions.  The July classes noted the change from 20% of the total contributions to 20% of the candidate’s total contributions for the reporting period.

Respondent Louis Erteschik was present at the meeting.  Mr. Erteschik represented that he did not intentionally violate the law and he gave the law a plain reading, that any non-resident individual may not contribute more than 20% of the candidate’s total contributions for the reporting period.

Mr. Gabrio moved to convene executive session to confer with counsel on administering of a fine.  Motion seconded by Mr. Olbrich.  Motion carried.

Public session reconvened. (10:40 a.m.)

Mr. Olbrich felt that in this case a fine of $500 for each contribution is excessive. Discussion on fine assessment, Ms. Wong noted that based on past practice an excess contribution of $2,000 the assessed fine was $500. Mr. Gabrio noted that what needs to be decided is whether a violation has occurred and whether a fine should be assessed.

Mr. Gabrio moved to find that there was a preliminary determination of probable cause.  Motion seconded by Mr. Kuramoto.  Motion carried.  (Weaver-no / Olbrich-abstain)

Mr. Robb moved to assess a fine of $1.00.  Motion seconded by Mr. Olbrich.  Motion carried.

Conciliation Agreement 06-13  P & R Water Taxi, Ltd.
P & R Water Taxi made an excess contribution of $2,000 to its noncandidate committee in March 2006.  The noncandidate committee made a $2,000 contribution to the Democratic Party, which was not returned within 30 days.  Staff recommends a fine of $500.

Mr. Weaver moved to accept Conciliation Agreement 06-13.  Motion seconded by Mr. Gabrio.  Motion carried.

Conciliation Agreement 06-14  Quong Enterprises, LLC
Quong Enterprises made an excess contribution of $1,000 to the Charmaine Tavares campaign and was not returned within 30 days.  Staff recommends and a fine of $350.

Mr. Robb moved to accept Conciliation Agreement 06-14.  Motion seconded by Mr. Weaver.  Motion carried.

Conciliation Agreement 06-15  Waikoloa Development Company
Waikoloa Development Company made and excess contribution of $250 to its noncandidate committee.  A contribution of $250 was made to the Linda Lingle campaign, which was not returned within 30 days.  Staff recommends a fine of $100.

Mr. Gabrio moved to accept Conciliation Agreement 06-15.  Motion seconded by Mr. Weaver.  Motion carried.  (Robb-recused)

Conciliation Agreement 06-16  Seki Trading Corporation
Seki Trading Corporation made an excess contribution of $100 to its noncandidate committee, which was contributed to the Kay Ghean campaign and not returned within 30 days.  Staff recommends a fine of $100.

Mr. Robb moved to accept Conciliation Agreement 06-16.  Motion seconded by Mr. Weaver.  Motion carried.

Conciliation Agreement 06-17  Kealoha Construction, Inc.
Kealoha Construction made an excess contribution of $343.96 to its noncandidate committee, which was contributed to the Gladys Baisa campaign and not returned within 30 days.  Staff recommends a fine of $200.

Mr. Gabrio moved to accept Conciliation Agreement 06-17.  Motion seconded by Mr. Olbrich.  Motion carried.

Conciliation Agreement 06-18  MC&A, Inc.
MC&A made two excess contributions totaling $550 to its noncandidate committee, of which $350 was not returned within 30 days.  Staff recommends a fine of $200.

Mr. Robb moved to accept Conciliation Agreement 06-18.  Motion seconded by Mr. Weaver.  Motion carried.

Conciliation Agreement 06-19  Patrick Kuniyoshi
Respondent Kuniyoshi made an excess contribution of $2,000 to the Hannemann campaign committee, which was returned within 30 days of receipt.  Staff recommends a fine of $500.

Investigation initiated with Ian Lind article which noted excess contributions to the Hannemann committee.

Mr. Gabrio moved to accept Conciliation Agreement 06-19.  Motion seconded by Mr. Robb.  Motion carried.

Conciliation Agreement 06-20  Mitch M. Kouchi
Respondent Kouchi made an excess contribution of  $100 to the Hannemannn campaign committee.  Staff recommends a fine of $100.

Mr. Gabrio moved to accept Conciliation Agreement 06-20.  Motion seconded by Mr. Olbrich.  Motion carried.

Conciliation Agreement 06-21  Lynne Kaneshiro
Respondent made an excess contribution of $2,000 to the Hannemann campaign committee in October, 2005, which was returned within 30 days.  Staff recommends a fine of $500.

Mr. Gabrio moved to accept Conciliation Agreement of 06-21.  Motion seconded by Mr. Weaver.  Motion carried.

Rescind Advisory Opinion 99-08
Advisory opinion discusses parent-subsidiary relationships of IRS 501(c)(6) organizations. IRS 501(c)(6) organizations are usually trade associations, chambers of commerce, real estate boards and professional football leagues, thus the parent-subsidiary relationship generally would not apply.

Advisory opinion also references section 11-204(b) and 11-204(g), HRS. Act 203 repealed section 11-204(g), which addressed parent-subsidiary relationships and portions of 11-204(b), which allowed unlimited funds to be transferred from a corporate treasury to its noncandidate committee.  Staff recommends that the outdated advisory opinion be rescinded.

Mr. Gabrio moved rescind Advisory Opinion 99-08.  Motion seconded by Mr. Weaver.  Motion carried.

Modify Advisory Opinion 04-01
Advisory opinion has been modified to delete language that was repealed by Act 203 in regards to controlling interest in corporations.

Mr. Gabrio moved to approve Advisory Opinion 04-01 as modified.  Motion seconded by Mr. Olbrich.  Motion carried.

Communication to Commission:

• Proposed 2007 Commission Meeting Schedule
• FEMA Continuity of Operations Plan Workshop – Barbara and Tony to attend a 3-day workshop offered by FEMA for state departments.
• 2007 Legislation

· Exempt internet activity as an expenditure and contribution, except for what is paid for

· Require noncandidate committees  to file electronically effective January, 2007

· Increase expenditure limits

· Citation system

Next Meeting:
Scheduled for Wednesday, December 13, 2007 at 10:00 a.m.

Mr. Olbrich moved to convene executive session to confer with Commission’s counsel.  Motion seconded by Mr. Weaver. Motion carried.

Public session reconvened. (11:50 a.m.)

No further business to discuss –
Mr. Olbrich moved to adjourn meeting.  Motion seconded by Mr. Weaver.  Motion carried.
Meeting adjourned at 11:54 a.m.