Tim Eyman files for bankruptcy, blaming legal fight with AG

MUKILTEO — Initiative promoter Tim Eyman filed for bankruptcy Wednesday, a move intended to protect his financial assets as he defends himself against political corruption charges brought by the state attorney general.

Eyman, the state’s storied piper of anti-tax causes, filed Chapter 11 bankruptcy in U.S. District Court in Seattle. The move will enable him to keep his Mukilteo home, three cars and other property, while working out a long-term repayment plan.

“It’s going to be the most difficult financial challenge I’ve ever faced. But again, I have no choice,” he said in an email to supporters.

And, he told allies, the stress wrought by the protracted legal fight has taken its toll on his 25-year marriage; he and his wife will be divorcing.

“It is a truly sad, heartbreaking situation,” Eyman said. “While the AG has had unlimited resources to assign teams of taxpayer-financed lawyers to bury me and my attorneys in an endless maze of motions and procedures, my legal costs have had to be funded privately (from my family’s limited resources and from financial support from folks like you). I was doing the best I could to keep up.”

Attorney General Bob Ferguson has accused Eyman of secretly moving funds between two initiative campaigns in 2012 and receiving $308,000 in kickbacks from the firm that collected signatures for both measures.

Ferguson filed a lawsuit in March 2017 seeking $1.8 million in penalties, plus reimbursement of the funds Eyman received from the firm.

In a statement, Ferguson said Eyman “brought these financial problems on himself by egregiously violating state campaign finance laws and refusing to comply with court orders.”

Eyman has denied wrongdoing.

His action has temporarily halted the attorney general’s legal pursuit because under federal law, a bankruptcy filing triggers an automatic stay of civil proceedings against a debtor.

Late Thursday, the Attorney General’s Office filed a motion in Thurston County Superior Court acknowledging the provision of federal law, and requesting the lower court put the case against Eyman and his co-defendants — signature-gathering firm Citizen Solutions and its executive, William Agazarm — on hold.

The motion, signed by assistant attorney general Todd Sipe, says the state will file a motion in the bankruptcy for relief from the automatic stay, which, if granted, would allow the case to restart. A hearing on the motion is slated for Dec. 7.

This dispute began with a 2012 complaint filed with the Public Disclosure Commission alleging 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.

Citizen Solutions gathered signatures for both measures. It paid $308,000 to Eyman after he turned in petitions for I-1185. Eyman turned around and loaned a portion to a group involved in gathering signatures for I-517.

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. Ferguson’s suit accuses Eyman of concealing this information.

The trial was to take place this month. But in late September, Superior Court Judge James Dixon pushed the date to January 2020 as the state argued that Eyman and his co-defendants had not turned over certain financial records.

For months, defendants had been in contempt for failing to turn over demanded documents. The contempt for Eyman was purged Nov. 14, but a separate corporation he formed, Watchdog for Taxpayers, is still in contempt and racking up a $500-a-day sanction.

As of Wednesday, the defendants had collectively amassed $182,500 in contempt fines and a total of $119,500 had been paid, according to a spokeswoman for the Attorney General’s office.

Meanwhile, in bankruptcy documents filed Wednesday, Eyman reported assets of more than $2 million and liabilities of $3.2 million. He owes $77,000 in legal fees and $3.1 million to the Office of the Attorney General, which is listed in the filing as a disputed debt. It covers the amount sought in the lawsuit, $2.1 million, and $1 million that is likely for legal fees the agency would seek if it is successful.

Eyman reported an average monthly income of $42,843 since May 1. Of the total, $5,261 are earnings from Voters Want More Choices, his political committee, and Watchdog for Taxpayers, a separate for-profit corporation run solely by Eyman.

Of the remainder, he reported receiving an average of $21,732 a month in gifts from relatives and friends, and $15,849 a month from a legal defense fund.

Ferguson said revelations in the bankruptcy filing may spark additional civil charges.

“We note Mr. Eyman claims he has received more than $20,000 per month in gifts. We look forward to presenting our case to the court that these gifts are really political contributions, solicited for a political purpose, that should have been reported to the public,” Ferguson said.

“We have asked the court’s permission to amend our complaint to include additional alleged violations of Washington’s campaign finance laws,” he said.

Eyman’s attorney could not be reached for comment. Eyman declined to discuss the situation beyond the email he sent supporters.

Jerry Cornfield: 360-352-8623; jcornfield@herald net.com. Twitter: @dospueblos.