SEATTLE — Attorney General Bob Ferguson on Friday accused professional initiative promoter Tim Eyman of secretly moving campaign funds between two initiatives in 2012 and receiving hundreds of thousands of dollars in kickbacks from the firm that collected signatures for the measures.
Ferguson, in a civil suit filed Friday, alleges Eyman committed numerous violations of state campaign finance laws. He argues Eyman should pay $1.8 million in penalties plus return the $308,000 in payments from the signature-gathering firm.
The complaint also alleges violations by William Agazarm and the company he helps run, Citizen Solutions LLC. Ferguson wants him to pay nearly $925,000 in penalties.
And the attorney general wants to severely restrict Eyman’s involvement in future initiative campaigns by permanently barring him from handling financial transactions of any political committee. Eyman, as a result of previous transgressions, is barred under a 2002 court agreement from serving as treasurer for any political committees.
Even with that limitation, Eyman “still managed to weave an elaborate web of financial transactions to hide campaign funds, enrich himself while keeping his contributors and the public in the dark,” Ferguson said at a news conference. “Tim Eyman knew what he was doing and he personally profited by his actions.”
The lawsuit caps an 18-month investigation Ferguson launched at the request of the Public Disclosure Commission.
Eyman, through his attorney, denied wrongdoing.
“From the beginning, Mr. Eyman has made clear he did nothing wrong and the money he received was lawfully earned for the services he rendered,” Bothell attorney Mark Lamb said in a statement.
And Lamb blasted the attorney general’s attempt to curb Eyman’s role in future campaigns.
“Mr. Eyman has the same First Amendment rights as the Attorney General himself,” he said. “It is chilling that the stated purpose of this action is to permanently bar him from participating in the political process.”
This dispute began with a complaint filed in 2012 with the Public Disclosure Commission by Sherry Bockwinkel, of Tacoma. It alleged Eyman failed to report that he was shifting money donated for Initiative 1185, a tax-limiting measure, into the campaign for Initiative 517, which sought to reform the initiative and referendum process.
Under state election law, money can be moved from one political committee to another but it must be disclosed in reports to the commission. And the sources of the money that is getting shifted must be revealed, as well.
Allegations in the lawsuit reflect findings of an exhaustive three-year PDC investigation. It relied on bank records, emails and interviews to diagram how Eyman steered payments through his political committee, Voters Want More Choices, to Citizen Solutions knowing a portion of the money would be paid back to him for personal use and political activities.
Voters Want More Choices conducted the campaign for I-1185 and paid Citizen Solutions $623,325 for collecting signatures. The firm actually earned nearly $1.2 million for its work, with the rest coming from the Association of Washington Business and Association of Beer and Wine Wholesalers.
On July 11, 2012, four days after Eyman turned in I-1185 petitions with 320,000 signatures, Citizen Solutions wired $308,000 to Eyman through his for-profit company, Watchdog for Taxpayers.
The lawsuit alleges William Agazarm approved the payment to Eyman “with knowledge that the funds would be used to obtain signatures for I-517” for which signatures were being gathered. Ferguson contends Eyman understood the purpose of the money and broke the law when he failed to report it.
“That’s concealment and that’s against the law,” he said at the press conference.
In the course of the PDC probe, investigators found Citizen Solutions had been paying Eyman during nearly every initiative campaign in the past decade.
Commissioners wanted Ferguson to investigate whether the alleged web of deceit their staff documented might have begun years earlier and might still be going on. Ferguson indicated Friday his office continues to gather information on that relationship.
Lamb said there’s nothing illegal about it.
“Hiding a business relationship with a vendor is not a campaign finance violation,” he said.
Eyman kept a little more than $100,000 of the payment for his personal living expenses. That same month Eyman loaned $190,000 to Citizens in Charge, a Virginia organization that supports initiatives around the country. The group wound up spending $182,000 to underwrite the cost of gathering signatures for I-517.
Ferguson’s suit contends Eyman concealed the true source of the money in violation of campaign law.
“Taking kickbacks from contractors, using campaign funds for personal expenses, redirecting donations made for one initiative to a different initiative — it’s hard to imagine what more Mr. Eyman could have done to show his contempt for our campaign finance disclosure laws,” Ferguson said.
Again, Lamb had a different interpretation.
“For all of the heated rhetoric earlier today, this dispute is simple: whether two transactions needed to be included on campaign reports. The Attorney General believes they should, we do not,” he said.
Eyman told PDC investigators in a July 2014 deposition that Citizen Solutions was paying him to help find new clients for the firm in the future.
And he said he loaned the money to Citizens in Charge because he wanted to help the Virginia organization achieve its goals. He said he didn’t know the leader of the group, Paul Jacob, intended to use the money to support I-517.
“My LLC loaned Citizens in Charge money and what they did with that money afterwards I didn’t have any control over that,” he said in his deposition.
State lawyers interviewed Eyman for nine-and-a-half hours Monday but did not reveal any details of what they heard.
“Up until now, Mr. Eyman has been opposed to the state’s theory of this case,” said Assistant Attorney General Walter Smith. “He does not see it the way that the state does.”