Thurston County Superior Court

STATE OF WASHINGTON

THURSTON COUNTY SUPERIOR COURT

STATE OF WASHINGTON, ex. rel. WASHINGTON STATE PUBLIC DISCLOSURE COMMISSION,
Plaintiff,
v.
PERMANENT OFFENSE, a political committee; TIM EYMAN, a married person; and SUZANNE KARR, a married person,
Defendants. / NO.
COMPLAINT FOR VIOLATIONs OF Chapter 42.17 RCW

The plaintiff, for causes of action against the defendants, alleges as follows:

1. PARTIES

1.1The Plaintiff, Washington State Public Disclosure Commission (hereafter “Commission”) was established by RCW 42.17.350 and is charged by RCW 42.17.360-.370 with, inter alia, responsibility for enforcing various subsections of the state public disclosure laws contained in Chapter 42.17 RCW. The main Commission office is located in Olympia, Washington.

1.2The Defendant, Permanent Offense, (hereafter “Permanent Offense PAC”) is a political committee registered with the Commission pursuant to RCW 42.17.040. Pursuant to filings with the Commission, the stated purpose of Permanent Offense PAC was and is, as a Ballot Committee, to support a variety of statewide initiatives.

1.3The Defendant, Tim Eyman (hereafter “EYMAN”), a married person, is a resident of Snohomish County, State of Washington, and at all times material hereto was the identified chief spokesperson and campaign manager of the $30 License Tab Initiative, Traffic Improvement Initiative Committee and Permanent Offense PAC. Additionally, from 2000 to the present, he was an officer and shareholder in Permanent Offense, Incorporated (hereafter “Permanent Offense Inc.”). All actions taken by EYMAN that relate to this action were taken by him on behalf and for the benefit of his marital community.

1.4The Defendant, Suzanne Karr (hereafter “KARR”), a married person, is a resident of Snohomish County, State of Washington and, at all times as set out below, was the identified Treasurer of $30 License Tab Initiative, Traffic Improvement Initiative Committee, and the Permanent Offense PAC. Additionally, from February 2000 through January 2001, KARR was an officer and shareholder in Permanent Offense, Inc. All actions taken by KARR that relate to this action were taken by her on behalf and for benefit of her marital community.

1. JURISDICTION AND VENUE

2.1This Court has subject matter jurisdiction over the Defendants pursuant to Chapter 42.17 RCW and the authority for the Attorney General to maintain this action is pursuant to RCW 42.17.400.

2.2The Defendants have carried out the violations alleged below, in whole or in part, in Thurston County. The Commission is headquartered in Thurston County. The Commission's records and staff are located in Thurston County. Campaign records filed with the Commission pursuant to RCW 42.17 are located in Thurston County. The Defendants, and/or persons acting on their behalf, have filed reports in Thurston County, with the Commission. Venue is proper in this Court pursuant to Chapter 4.12 RCW.

1. FACTUAL ALLEGATIONS

3.1From 1999 to the present, EYMAN and KARR supported a number of citizen initiatives in the State of Washington. Defendant, Permanent Offense PAC was registered with the Commission for the purpose of supporting citizen initiatives. The campaign operations were managed by EYMAN, as chief spokesperson and campaign manager, from 1999 through February 2002 and by KARR, as campaign treasurer, from 1999 through the end of 2000.

3.2In February 2000, EYMAN and KARR formed Permanent Offense, Inc. By creating Permanent Offense, Inc., EYMAN and KARR could and did bill Permanent Offense PAC for their services, pay those bills to Permanent Offense, Inc. and then conceal payments made from those receipts to EYMAN. In statements, EYMAN and KARR have admitted that this activity occurred.

3.3From February 2000 to January 2001, Permanent Offense PAC and KARR failed to properly report to the Commission all debts and obligations incurred by Permanent Offense PAC. KARR admitted she was negligent in not reporting the debts incurred by Permanent Offense PAC until she actually paid them as opposed to when they were incurred.

3.4EYMAN sought and received reimbursement from Permanent Offense PAC for out-of-pocket expenditures not related to Permanent Offense PAC activities. EYMAN paid his personal expenses and those related to another business he owns, i.e., the Insignia Corporation, directly out of Permanent Offense PAC funds.

3.5During 2001, Permanent Offense PAC failed to maintain campaign records to adequately document reimbursements made to EYMAN for his out-of-pocket expenditures.

3.6During 2000 and 2001, Permanent Offense PAC and KARR failed to properly report “in kind” contributions received by Permanent Offense PAC including but not limited to those received from Permanent Offense, Inc. and Hawthorne & Company, an accounting firm hired by EYMAN.

3.7In January 2001, Permanent Offense PAC amended its filing with the Commission to substitute Karen Eyman for KARR as treasurer for Permanent Offense PAC. Permanent Offense PAC failed to properly identify EYMAN as the treasurer for Permanent Offense PAC. From January 2001 to February 2002, EYMAN performed all significant functions as the treasurer for Permanent Offense PAC, including handling all financial transactions for Permanent Offense PAC. Karen Eyman simply signed the Commission reports compiled by the accountants for Permanent Offense PAC with no review for substance.

3.8Permanent Offense PAC reimbursed EYMAN for at least two political contributions, including an out-of-pocket expenditure made by EYMAN for a $500 contribution to the Republican National Committee and a $60 cash out-of-pocket expenditure made by EYMAN to the No on I-747 Committee.

1. CLAIMS

Based on the foregoing allegations, Plaintiff makes the following claim:

4.1First Claim - Plaintiff reasserts the allegations made above and further asserts that Permanent Offense PAC, in violation of RCW 42.17.040 and RCW 42.17.050, failed to properly designate and report EYMAN as the treasurer of Permanent Offense PAC from January 2001 through February 2002.

4.2Second Claim – Plaintiff reasserts the allegations made above and further asserts that EYMAN and Permanent Offense PAC, in violation of RCW 42.17.065, failed to keep adequate campaign records to substantiate out-of-pocket expense reimbursements made to EYMAN.

4.3Third Claim - Plaintiff reasserts the allegations made above and asserts that Permanent Offense PAC, KARR, and EYMAN, in violation of RCW 42.17.080 and RCW 42.17.090, failed to properly or timely report “in kind” contributions made to Permanent Offense PAC from Permanent Offense Inc. Additionally, Permanent Offense PAC and KARR failed to properly or timely report orders placed, debts or obligations incurred by Permanent Offense PAC.

4.4Fourth Claim- Plaintiff reasserts the allegations made above and asserts that EYMAN and KARR, in violation of RCW 42.17.120, acted to conceal payments to EYMAN from Permanent Offense PAC through Permanent Offense Inc. for services he provided to Permanent Offense PAC.

4.5Fifth Claim – Plaintiff reasserts the allegations made above and further asserts that EYMAN, in violation of RCW 42.17.125, used Permanent Offense PAC campaign funds to pay his personal expenses and those of his marital community, as well as expenses related to his other business, Insignia Corporation.

4.6Sixth Claim- Plaintiff reasserts the allegations made above and further asserts that Permanent Offense PAC and EYMAN, in violation of RCW 42.17.780, used campaign funds to reimburse EYMAN for campaign contributions he made.

4.7Seventh Claim – Plaintiff reasserts the allegations made above and further asserts that the actions of EYMAN and KARR stated in the above claims were both negligent and/or intentional.

1. REQUEST FOR RELIEF

WHEREFORE, the Plaintiff requests the following relief as provided by statute:

1. For a civil penalty against the Defendants in an amount to be determined at trial;

2. For an award of treble damages, if the violations are proven to be intentional;

3. For all costs of investigation and trial, including reasonable attorneys’ fees;

4. For injunctive relief; and

5. For such other relief that the Court deems appropriate.

DATED THIS ___day of April, 2002.

CHRISTINE O. GREGOIRE

Attorney General

LINDA A. DALTON

Senior Assistant Attorney General

WSBA No. 15467

Attorneys for Plaintiff

COMPLAINT / 1 / OFFICE OF THE ATTORNEY GENERAL
1125 Washington Street SE
PO Box 40100
Olympia, WA 98504-0100
(360) 664-9006