Eyman e-mail reveals inner workings
Seattle Times political reporter
OLYMPIA — After investigators with the Public Disclosure Commission finished taking sworn testimony in the case against Tim Eyman, they received copies of e-mail between the initiative sponsor and his campaign workers — messages that spelled out concern for keeping his salary secret, questions about expenses and a falling-out that eventually led to the investigation.
On Tuesday the commission will consider a staff recommendation that the case be referred to Attorney General Christine Gregoire, who has the power to levy much higher fines than the commission could.
The PDC staff will ask the commissioners to find "apparent violations" of campaign-finance laws against Eyman; his former treasurer, Suzanne Karr; and his political-action committee, Permanent Offense.
The PDC says Eyman used campaign money for personal and private business purposes and concealed $50,000 in salary he took from Permanent Offense Inc., a consulting firm he created that was paid more than $200,000 by his political committee.
Eyman disputes the PDC charges, although he admitted in February that he had lied repeatedly about taking the salary.
Eyman said then that he didn't want anyone to know he took the money because it would have spoiled his image as a citizen crusader. He is the author of several anti-tax initiatives approved by voters, including 1999's I-695, which eliminated the state motor-vehicle excise tax.
Karr told reporters in February that Eyman had lied about taking a salary, a tip that was followed by news stories, Eyman's confession and the PDC investigation. Karr stopped working with Eyman in late 2000.
The earliest e-mail in a report released Friday by the PDC came on Dec. 16, 1999, when Karr sent a message to Eyman about a conversation she had had with gun-rights activist Alan Gottlieb about how best to find a way that Eyman could be paid for his political work.
"He thinks we should run all the money though the PDC and just pay 'Permanent Offense' to manage the campaign like [political-consulting ] the Rockey Group and Madison does. We would not have to disclose how much ever went to you directly. (except that IRS form I have filed for non-profits do require you to disclose in detail the salaries and expenses of all the principals — so once again I am back to preferring that we be a for-profit company). We could not avoid disclosure of the money coming in, but could keep the detail of the money that we pay to participants under wraps."
Here are excerpts from some of the other e-mail that helped investigators piece together the inside workings of Eyman's campaigns and business:
FROM: Suzanne Karr
TO: Tim Eyman
DATE: Jan. 2, 2000
On the issue of Permanent Offense (the company), I guess it is accurate to say that even as a legal entity, there really won't be much there, at least not at this point. You and our bank account are our major assets. There are so many holes in the rules for accounting for PAC's it is really difficult to sort out some of the issues....
As far as control of the bank account. ... there is the question of how much control we really have over it. If it were total, we could use it to buy anything we wanted, but that is really not the case. However, once again PDC rules do not state specifically what we can or cannot do with the money. To an extent it's a donor beware policy.
As you said, the company will exist as an accounting entity to transfer funds to you. (it will cover us with the IRS)....
DATE: Jan. 30, 2000
On to another big topic: I'd like to begin the official "payment to Permanent Offense" by both initiatives so that my "salary" will begin.
My goal is from January 1, 2000 to December 31, 2000, that Permanent Offense will distribute to Tim a total of $100,000 over and above expense reimbursement. Fact is, I'm doing more and more with Permanent Offense and less with Insignia Corp. [his fraternity watch company] and sales on our watches showed it in 1999.
I get ootsie even typing in the number but given the fundraising trajectory and the potential, it's the salary I want to try for. We can keep the disbursements steady throughout or start out smaller and spike it after the signatures are submitted, whatever keeps our reserves adequate to accomplish our goals.
do you have thoughts on this? are you uncomfortable with it? or do you think it's no big deal and don't care? always been a touchy subject with me but want to make sure that you are OK with this.
DATE: March 10, 2000
This is our first [state campaign finance report] with the Permanent Offense payments, so we will see if we get any flack about it. I have to create some invoices to give to myself to file. I charged 25% of Rev and 8% of expense and then the acctg fees. If you get questioned you can continue to refer them to me. I plan to say that we just got too big to be able to operate on a volunteer basis. We have to create some kind of professional organization if we plan to continue to operate the way we have & that requires money.
DATE: Dec. 28, 2000
don't spend so much effort trying to get me to respond to your good faith efforts at resolving our conflict — i will be much more inclined after you are gone to think good of the past times.
karen [his wife] will be taking over the treasurer work and so will ask you again to simply send the expense report and the receipts back to me so we can handle it with help from the PDC and [accountant] dave hawthorne.
DATE: Dec. 28, 2000
Looking through your receipts I realized that I have just scratched the surface of the problem here & have opened an entire can of worms. I found that you charged your parking for when you went to your watch convention & postage to England. I am afraid I will have to do a complete audit of all prior reports & file some amended returns.
DATE: Feb. 1, 2001
i am about to reimburse myself for expenses from 11/21/2000 until present. if you insist on going back over past reports, when can i expect that to be completed? but more importantly (and something i am hopeful of) if you are willing to not do that, please let me know right away so that I will hold off on reimbursing myself on these new expenses until the old ones are taken care of.
please let me know.
DATE: Feb. 1, 2001
If you just reimburse yourself for expenses beginning 12/1, that would be fine. I would be out of it & Karen can take the s — for paying your bogus stuff. I have no problem with that. It's none of my business what you or she do after the point that I am no longer responsible.
DATE: Feb. 1, 2001
what about the 08/22 — 11/26 expenses that you have the report and receipts on?
DATE: Feb. 1, 2001
I will reconcile everything & I think I can get back to you in a week. I have lots of other stuff to do right now. Since you have control of the treasury now, I don't understand your concern. You can turn in just about anything, get all the money you want & I assume Karen will sign the reports. You must have lots of Insignia expenses for December you can use. As long as my ass is not on the line, go for it, if that's what you want.
FROM: Eyman accountant David Hawthorne
Date: Dec. 5, 2001
Unfortunately the Corp. can't pay for your taxes — not without the payment being considered personal compensation to you (or paid on your behalf).
So, in effect, the corporation would be paying this for you and you would get no paycheck, the only trace of compensation paid you would be the W-2 you would receive from the corp. But there would be no check in the checkbook written directly to you for payroll, only to the IRS. This may accomplish what you are thinking only in a roundabout way....
And this period is between elections so your opposition won't be looking so closely for a while. And, if so, we will be into 2002 during the next election season and your 2001 compensation will be outside of the current year accounting period and may be overlooked.
DATE: Jan. 3, 2002
Hi Tim -
We have done some preliminary income tax estimates for you based on the 2001 PO, [Permanent Offense] Inc. and Insignia accounts and you may be facing an income tax liability of about $40,000 to $45,000 on total income of about $205,000....
TO: Campaign worker Kelly Parke
DATE: Feb. 14, 2002
... the $1200 is fine [on an invoice] but you need to drop all references to insignia corporation and only reference I-747, I-776, Permanent Offense. keep the bill at $1200 but remove all the references to Insignia.
DATE: Feb. 18, 2002
I cannot honestly bill the PAC account when you and I both know that about half of what I billed was for you. I don't appreciate being taken advantage of Tim.
I guess now is the time to get someone else to help with your Insignia stuff. I only volunteer for Permanent Offense, the political action committee.
DATE: Feb. 20, 2002
I apologize if I was unclear.
You've done volunteer work for the initiatives and for me at Insignia Corporation. We've never had a formal financial arrangement until I contacted you recently to get billed for your services.
You sent a bill that had both the initiative stuff and the Insignia stuff combined. I said that the $1,200 was fine but that you needed to drop stuff from the bill for Insignia. That was so the PAC would be billed properly.
DATE: Feb. 20, 2002
Thank you for the clarification Tim. I appreciate it. I did misunderstand your intention with my faxed statement, my apologies for that....
To be honest, I'm not so concerned about the amount as I am with accountability. I want to be clear on what services I volunteer.... It was when you started asking for more and more (free) help with Insignia — which I did let you know how I felt, at which point you stopped....
Even with everything that has happened since your announcement, I still have faith in you. My admiration for the work you have done in this state dictates my loyalty.
David Postman can be reached at 360-943-9882 or firstname.lastname@example.org.