Tim Eyman and his treasurer created a sham corporation in 2000 to hide salary payments to the Mukilteo initiative king, a Snohomish County judge ruled Friday.
The corporation, Permanent Offense Inc., was used to conceal money Eyman drew for his political efforts with his political action committee, which also is named Permanent Offense, Superior Court Judge Linda Krese said in an oral ruling.
In addition, treasurer Suzanne Karr of Everett participated in a deliberate attempt to circumvent state public disclosure laws, Krese said.
The judge identified six specific public disclosure violations by Karr, which could result in her having to pay a fine of up to $22,000.
The ruling came after the state Public Disclosure Commission sued Eyman, Permanent Offense and Karr over campaign reporting violations from 2000 to 2002.
Eyman and Permanent Offense settled out of court in 2002, agreeing to pay a total of $53,000 in penalties. He also agreed to a permanent ban on handling political action committee money.
Karr was the only one left in the lawsuit, and she represented herself during a recent two-day trial. She quit as treasurer in late 2000.
There’s nothing wrong with accepting money for services rendered, the state said, but the two violated the law by hiding the payments.
Eyman’s political career was launched with the highly successful Initiative 695, the $30 car tab measure voters passed in 1999.
He and Karr established the corporation in February 2000, allowing him and Karr to bill the political action committee for their services. Karr didn’t take money, but Eyman did.
The state argued that the two concealed payments to Eyman and that Karr failed to properly report all the debts and obligations incurred by the political action committee.
Eyman paid personal and business expenses of his watch sales business, Insignia Corp., either directly out of political action committee funds or with money he received as expense reimbursements, the state argued.
“Ms. Karr did understand what she was doing,” the judge said.
Ironically, when Eyman continued to publicly deny taking a salary, Karr tipped off reporters about what was really happening.
“The judge today said Karr violated the reporting stature by failing to timely report expenditures made by the (political action committee), and she concealed the scheme for payment to Eyman,” said Doug Ellis, commission spokesman.
In essence, the judge said “the disclosure law should be followed, and the proper filing and transparency in campaign activity is paramount. I guess the lesson for people who get involved in campaign activities is to be transparent; disclose the information that is required by law,” Ellis said.
Krese set May 13 for another hearing to determine how much Karr will be fined and if she will be permanently banned from being a treasurer for any political campaign, as the state has asked.
Karr said she was devastated by Krese’s ruling, and intends to appeal.
“I’m amazed,” she said.
The state is seeking a $22,000 fine for the violations, plus costs and attorney fees, assistant attorney general John Lane said. It also seeks an injunction banning Karr from being a political treasurer.
The injunction didn’t bother Karr.
“Do you really think I would ever want to be a treasurer again? I don’t,” said Karr, who was in tears after the ruling.
The ruling surprised Karr, because “I thought I had made a credible case.”
The former treasurer said the state once offered to settle with her for a fine of $2,500, but “I couldn’t do it,” she said, “because I didn’t do anything wrong.”
Reporter Jim Haley: 425-339-3447 or haley@heraldnet.com.
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