Washington Anti-Tax Activist Sued in Alleged Kickback Scheme

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By Paul Shukovsky

A Washington anti-tax activist whose ballot measures have indelibly impacted both state finances and politics is accused of orchestrating a kickback from an initiative signature-gathering firm without properly reporting it in campaign finance disclosure statements.

Washington Attorney General Bob Ferguson (D) is asking a state Superior Court to permanently enjoin Tim Eyman from “managing, controlling, negotiating, or directing financial transactions of any kind for any political committee in the future.” The complaint, filed March 31, also seeks up to $1.8 million in penalties as well as $308,000 in reimbursement ( Washington v. Eyman , Wash. Super. Ct., No. 17-2-01546-34, complaint filed 3/31/17 ).

“Tim Eyman masterminded an elaborate scheme of financial transactions that he hid from the public and from which he personally profited,” Ferguson told Bloomberg BNA April 6.

Ferguson’s alleges that Eyman took donations made in support of his 2012 initiative requiring lawmakers to obtain a two-thirds majority to raise taxes and instead caused them to be redirected to his personal living expenses and to another initiative. The supermajority initiative succeeded at the ballot, but the Washington Supreme Court invalidated it as unconstitutional.

‘It Is Chilling.’

Eyman declined to comment April 5, but emailed a statement from his Seattle-area attorney, Mark Lamb.

“Mr. Eyman has made clear he did nothing wrong and the money he received was lawfully earned for services he provided,” the statement said. “This dispute is simple: whether two transactions needed to be included on campaign reports. The Attorney General believes they should, we do not.”

“It is chilling that the stated purpose of this action is to permanently bar him from participating in the political process in this State,” Lamb wrote.

Ferguson made clear to Bloomberg BNA his intention isn’t to bar Eyman from political participation—simply to bar him from being involved in the financial aspects of a political committee. Noting that the courts barred Eyman in 2002 from being a campaign treasurer, Ferguson said: “Despite the prohibition from being a treasurer, he managed to concoct this web of financial transactions. So clearly, a ban on him being a treasurer was insufficient to deter him from illegally profiting from his initiatives.”

Eyman agreed in 2002 to accept a lifetime ban on involvement in any political committee’s financial accounts and to pay $50,000 to settle charges he violated the state’s Public Disclosure Act by receiving money for his personal use from a political action committee without disclosing it as required by law.

Not Political

Ferguson rejected charges his lawsuit is politically motivated. “A review of our cases shows we are equal opportunity in who we go after. For example, on the left side of the political ledger I have filed campaign-finance lawsuits against the SEIU, Washington State Labor Council, Washington State Trial Lawyers and Democrat Speaker of the House Frank Chopp.”

The lawsuit also names as a defendant Citizen Solutions LLC, the signature-gathering company alleged to have colluded with Eyman in kicking back to him $308,185.

The lawsuit enumerates a complex series of transactions among various entities and Eyman, many of which were either concealed or reported inaccurately in financial disclosure statements. Disclosure violations can include a penalty equal to the amount not reported, with that penalty subject to being tripled.

“I’m used to this; whenever anyone says something is political, you know that is a sign they are losing the legal argument,” said Ferguson, who in March started the successful lawsuit against President Donald Trump that forced the withdrawal of an executive order banning travel to the U.S. from seven Muslim-majority countries.

To contact the reporter on this story: Paul Shukovsky in Seattle at PShukovsky@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of the complaint is at http://src.bna.com/nHA.

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