Thursday, October 14, 2004

Congressional candidate
faces criminal probe
of 2002 campaign

The investigation focuses on what
a state panel says are suspicious loans
to Dalton Tanonaka

Less than a month before the general election, congressional candidate Dalton Tanonaka is facing a criminal investigation of his 2002 campaign. But the local Republican said the investigation is based on a smear by his former campaign manager.

The state Campaign Spending Commission voted 3-2 yesterday to refer its investigation into Tanonaka's unsuccessful campaign for lieutenant governor to city Prosecutor Peter Carlisle for a criminal investigation.

Bob Watada, the commission's executive director, said his office found a pattern of suspicious loans from Tanonaka's supporters to Tanonaka's personal bank account.

According to Watada, the personal loans, from local real estate executive Carol Tsai and former food industry executive Russell Hata, were made at the time that Tanonaka loaned his campaign nearly the same amount of money.

"We feel that the money that was passed through was concealed and was a knowing and intentional violation," said Watada.

Tanonaka, the Republican candidate for the 1st Congressional District (urban Honolulu), denied wrongdoing, saying the personal loans did not go to his campaign, but were used to cover his personal living costs when he was running for office in 2002.

He said he repaid the personal loans within days of receiving them.

He said the loans to his 2002 campaign, which totaled more than $100,000, came from a second mortgage on his house and a personal credit line with a local bank.

"There was no intent on my part to use somebody else's money for campaign expenses," Tanonaka said. "I was personally trying to pay bills. ... I'm not a John Kerry or a Duke Bainum. I don't have personal wealth."

Tanonaka said the criminal referral is based on a complaint by his former campaign manager, who filed a lawsuit earlier this year over a dispute over alleged unpaid consulting fees.

The former campaign manager, Ed Nishioka, alleged in his complaint that Tanonaka hid loans to his campaign from his supporters to circumvent legal limits.

Nishioka, citing bank records, also noted that Tanonaka made a $48,000 deposit on his personal bank account in June 2002 on the same day he made a $45,000 loan to his campaign.

Tanonaka said Nishioka did not raise the issue of the alleged improper loans until he filed his complaint with the commission five weeks before the general election.

"The timing of the complaint was suspicious," Tanonaka said. "I hope it doesn't affect an election. That would be a shame."

Nishioka, a Republican, said his complaints have nothing to do with politics. He said he has spent tens of thousands of dollars in legal fees during the past two years to collect money owed by Tanonaka.

People familiar with the commission's investigation said Watada met recently with Carlisle to discuss a referral. Carlisle can conduct further investigation, which could lead to criminal charges; he can dismiss the case; or he can kick it back to the Campaign Spending Commission for further administrative proceedings.

In a separate matter, the commission voted 3-1 yesterday to approve $61,000 in fines against the presidents of local government contractor KFC Engineering Management Inc. and sister company KFC Airport Inc.

The commission alleged that the firms' presidents, Dexter Kubota and Brian Bowers, funneled more than $150,000 in illegal political donations.

Recipients included Honolulu Mayor Jeremy Harris, Gov. Linda Lingle, U.S. Rep. Ed Case, ex-Gov. Ben Cayetano, former Lt. Gov. Mazie Hirono, ex-Maui Mayor James "Kimo" Apana, former state Sen. Matt Matsunaga, ex-Big Island mayoral candidate Fred Holschuh and former City Councilman Jon Yoshimura, the commission said.



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