By Warren Cornwall
Herald Writer
Initiative guru Tim Eyman allegedly broke state campaign finance laws by obscuring an arrangement to personally profit from his political work, and by blurring the lines between his personal, business and political finances, state investigators say.
Eyman and his campaign organization could risk hundreds of thousands of dollars in fines if the case is sent to the Attorney General’s office, as recommended by investigators for the state’s Public Disclosure Commission. The commission’s fining power is far more limited.
"We do that when we believe the commission’s punishment authority is insufficient," said Vicki Rippie, the commission’s executive director, said of the recommendation to send it to the Attorney General.
The findings, detailed in a report released Friday, are the first sign of a possible government sanction since the Mukilteo resident confessed in January that he had pocketed more than $45,000 from the campaign and lied about it.
Eyman, however, denounced the report as "flat wrong," in a press release issued Friday.
"The payments for political consulting and other services on the tax reduction initiatives were always correctly and completely disclosed to the Public Disclosure Commission," he said.
Christian Sinderman, a consultant for a labor union who had long questioned Eyman’s political finances, welcomed the report as confirmation of his warnings.
"That validates everything we knew about what he was doing and the pathological pattern of lies he told to conceal it. But what really is just incredible is the fact that he was using campaign contributions to subsidize his watch business," he said.
The five alleged violations include:
If the Attorney General’s office pursues charges in Superior Court, it could seek fines of up to $10,000 for each violation, said disclosure commission spokesman Doug Ellis. Those fines could multiply if a court were to consider the multiple incidents contained within each category of violation, he said.
"Depending on what happened and how the attorney general wants to ask for the penalty, it could get up there fairly high," he said.
The commission’s governing 5-person board will consider whether to send the case to the Attorney General at a hearing on Tuesday. His chief political action committee, Political Offense, and his treasurer for a time, Suzanne Karr, were also named for alleged violations.
Eyman was the gregarious promoter of a series of tax-cutting initiatives in 1999, 2000 and 2001 that proved popular with voters. During that time, he always insisted he was working as a volunteer on the campaigns, and making a living with his watch business.
But documents released by the commission staff show that in late 1999, Eyman and Karr were looking for a way to pay him for his work while hiding it from public scrutiny.
In a Dec. 16, 1999, e-mail, Karr suggested to Eyman that by creating a for-profit company to bill the political action committees "we could keep the detail of the money that we pay to participants under wraps."
Soon after, Eyman wrote to Karr that "my goal is from Jan. 1, 2000 to Dec. 31, 2000 that Permanent Offense will distribute to Tim a total of $100,000 over and above expense reimbursement."
Eyman in January admitted that he had set up the for-profit Permanent Offense, Inc. to bill the political action committees, including the Permanent Offense PAC, and pay himself while hiding it from public scrutiny.
Commission investigators found that Eyman received $54,141 from Permanent Offense Inc. in 2000 and another $5,000 in 2001. Investigators put company profits at $150,000 in 2001.
Eyman has said he planned to take an additional $157,000 this year. He hasn’t said what he will do with that money. He didn’t return calls Friday, and no one answered the door of his Mukilteo house.
Investigators also had trouble separating Eyman’s legitimate political expenses from personal and business expenses that he submitted for reimbursement from the political action committees.
Among the questionable expenses were $11,567 in postage expenses, according to the report. Eyman reportedly acknowledged some of those costs could have been for his mail-order business.
For much of that time, Eyman controlled the checkbook of the political action committees, essentially deciding which of his own expenses should be reimbursed, according to the report.
Eyman also acknowledged using equipment like computers and copiers purchased by the Permanent Offense PAC for personal and business use.
Many of those issues are simply technical matters, said attorney Bill Glueck, in a statement that accompanied Eyman’s press release.
"All payments by Permanent Offense PAC were fully and properly reported to the Public Disclosure Commission," he said.
Karr, meanwhile, questioned why she was cited when two others on the political action committee, Monte Benham and Eyman’s wife, Karen Eyman, weren’t. Karen Eyman was listed as the committee’s treasurer for part of the time, and Benham was a close associate of Eyman’s.
"I think it is unfortunate that the Public Disclosure Commission has chosen to target the ‘whistle-blower’ in this case. Especially since they have also chosen to give a ‘pass’ to two people on the political committee who should have stepped forward with the truth," she said in a statement.
Eyman first admitted to the cover-up after Karr sent an e-mail to the media saying he had received money from Political Offense.
You can call Herald Writer Warren Cornwall at 425-339-3463 or send e-mail to cornwall@heraldnet.com.
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