PDC opens probe of Eyman’s cover-up

By Warren Cornwall

Herald Writer

The state’s campaign watchdog is formally investigating Tim Eyman’s election finances following his disclosure that he personally profited from the campaigns and covered it up.

Vickie Rippie, executive director of the Public Disclosure Commission, filed a complaint Wednesday saying there is reason to believe Eyman’s financial dealings broke state campaign finance laws.

But one of Eyman’s initiative co-sponsors, Monte Benham, denied anything illegal had been done and charged the investigation amounted to an attack on the initiative process. Benham pointed to King County government, which in 2001 was fined by the commission for illegally collecting union dues to fight an Eyman initiative.

"It is nowhere near as bad, if we did anything. We didn’t do anything, period. We are innocent," he said. "This is just another attempt to try to smear the citizens trying to petition their government for a grievance. We are protected by the First Amendment of the Constitution."

One Eyman critic who had long questioned the Mukilteo man’s financial arrangements predicted some misconduct would be found.

"We think it certainly is timely and appropriate. Eyman clearly modeled his bookkeeping after Enron and other classic examples of cooking the books for personal gain. And we’re sure the PDC will find something in there," said Christian Sinderman, a Seattle political consultant.

Rippie pointed to several events that triggered the investigation:

  • Eyman has said he formed the for-profit Permanent Offense Inc. to hide the fact that he was making money from his initiatives.

  • Eyman claimed in a 2001 document to the commission that Permanent Offense Inc. had not paid salaries to him or other initiative sponsors.

  • Eyman has recently put the amount of money diverted to Permanent Offense at $210,000. But a commission review of campaign reports showed $226,100 going to the company.

  • Permanent Offense reimbursed Eyman for $13,000 in 2001 for out-of-pocket expenses, including repair and maintenance of his personal cars.

    Eyman revealed on Sunday that he had received $45,000 from Permanent Offense in late 2000 and was poised to take another $157,000. The company made money by billing his initiative campaigns for services. In the past, he had repeatedly denied taking any profits from the company.

    The initiative guru, who has promoted four initiatives in the past three years and was poised to launch campaigns for two more, insisted that he had done nothing illegal. He said he lied because he didn’t want to admit to being paid for his political work.

    Since Monday, Eyman has not responded to repeated phone calls and e-mails seeking comment.

    His actions may have run afoul of state laws requiring accurate reports of how campaign money is spent, barring use of campaign funds on personal expenses or efforts to conceal how campaign dollars are really spent, and requiring political committees to file more detailed financial reports than other groups.

    Since 2000, Eyman’s initiative campaigns reported paying Permanent Offense for accounting, database management and development, and fund-raising and advertising. It has not listed salaries.

    In a September 2001 letter to Rippie, the PDC director, Eyman stated there were no salary payments to initiative co-sponsors between Jan. 1 and Aug. 31, 2001. Eyman has not admitted to taking any salary during that time span.

    In an October 2001 letter, Eyman told Rippe: "Like any good business, Permanent Offense Inc. maintains a prudent contingency fund to handle unexpected needs. What will we use these funds for? The answer is the unexpected (but one thing we know for sure, much of these funds will go toward paying taxes)."

    Since then, Eyman has said most of the company’s money was bound for his pocket.

    Also, Eyman has long insisted that the company wasn’t a political action committee because it wasn’t directly involved in campaigning for a particular initiative.

    His former treasurer, Suzanne Karr, has said she and Eyman set up the company in early 2000 as a way for him to earn money to make up for all the time his campaigning was taking away from his mail-order watch business.

    Karr defended the arrangement as legal, saying consulting firms routinely bill political campaigns but don’t have to detail what they do with that money.

    "I don’t see anything here that’s worth following up on, but it’s certainly their prerogative," she said of the PDC.

    You can call Herald Writer Warren Cornwall at 425-339-3463 or send e-mail to cornwall@heraldnet.com.

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