OLYMPIA — The state Public Disclosure Commission opened an investigation yesterday to determine if initiative sponsor Tim Eyman violated state law by covering up a salary he took from donations made to his campaigns.
The PDC staff is looking at $226,100 paid by political-action committees, or PACs, run by Eyman to a consulting company he owns.
The staff first informally reviewed Eyman's finances last fall and appeared satisfied with his responses, though there was no answer to Eyman's request for a letter "expressing your satisfaction with the resolution of this matter."
The formal investigation was begun yesterday after Eyman admitted this week that he repeatedly lied about taking a salary from the company. He said he had taken $45,000 in 2000 from payments that had been made to Permanent Offense Inc., and had planned to take an additional $157,000 from the company, but his guilt overcame him and he confessed to The Associated Press.
The PDC staff found an additional $24,100 paid to Eyman's company that he has not mentioned.
The investigation, which officials said will take several weeks, dashes Eyman's hopes that his emotional confession this week would quickly clear the way for him to get back to running initiatives and "make a lot of money doing it."
Now Eyman will have state investigators poring through at least two years of financial records while he is trying to run campaigns to collect signatures on two initiatives he wants on the November ballot.
Named in the complaint are Eyman; his PAC, Permanent Offense; his consulting company, Permanent Offense Inc.; and the Traffic Improvement Initiative Committee, the PAC that ran a 2000 Eyman initiative.
Eyman was not available for comment.
"I'm not too awfully concerned about it," said Mike Fagan of Spokane, a co-sponsor of some Eyman initiatives. "But there again, I wasn't privy to seeing and reviewing the reports."
The campaign-spending watchdog agency will look at whether Eyman intentionally concealed the true purpose of the money on campaign reports filed with the commission, whether he illegally used campaign funds for personal expenses and whether his consulting company was actually a PAC that should have been required to file detailed spending reports.
The PDC can levy fines up to $2,500 per case. It also can refer major cases to the state attorney general, who can impose fines up to $10,000 per violation.
"I have probably 10 years experience with PDC reporting, and I have no question or problems with what I have done," said Suzanne Karr, who served as Eyman's treasurer for part of the time under scrutiny. She wrote the $45,000 check in 2000 that Eyman took as salary.
Karr said the money paid from the PAC to Eyman's company was accurately and completely reported to the PDC on campaign-spending reports. The expenditures are recorded as payment for various services, including database management and fund raising.
Last fall, when The Spokesman-Review in Spokane first reported the payments, Eyman denied he had taken any of the money as salary.
The PDC asked him in September for details on what the money was used for. He submitted a single-page balance sheet showing donations and expenses from January through August of 2001. It said the money was for a contingency fund for Permanent Offense Inc. Next to the line that said, "Salaries/payments to I-747 co-sponsors," there is a zero.
But that doesn't cover the date that Karr said she wrote the check to Eyman out of the Permanent Offense Inc. bank account. That came in late 2000, she said.
In a letter received by the PDC on Oct. 11, Eyman said Permanent Offense Inc. was created as a consulting firm to handle fund raising, advertising, database management and accounting for his initiative campaigns. And, he wrote, "like any good business," the company had a contingency fund.
"What will we use these funds for?" Eyman's letter said. "The answer is the unexpected (but one thing we know for sure, much of these funds will go toward paying taxes.)"
He now admits most of the money in the contingency fund was earmarked for his salary.
"The PDC has no right to know what Permanent Offense Inc. is doing with that money," Karr said.
She said the state can regulate campaign spending but not that of private consulting firms that earn money from campaigns.
A political consultant who worked against Eyman's last initiative said he was glad an investigation had begun.
"Who knows in the end what they'll find," said Christian Sinderman, who worked against Initiative 747 for the Washington State Council of County and City Employees. "But I'll put money that a thorough audit will produce something that doesn't look quite right."
David Postman can be reached at 360-943-9882 or firstname.lastname@example.org.