Campaign treasurer misused Inouye funds
By Jim Dooley
Advertiser Staff Writer
Theresa Blanco, former treasurer of U.S. Sen. Dan Inouye's political campaign, improperly withdrew between $90,000 and $100,000 in campaign money for personal purposes, but the campaign took no legal action against her because she repaid the money over a two-year period, an Inouye campaign official said this week.
Blanco, wife of Joseph Blanco, former technology adviser in the administration of former Gov. Ben Cayetano, said she mistakenly charged some $8,000 in personal purchases to the campaign's credit card.
She also said some expenses for her real estate and bookkeeping offices, which shared space with the Inouye campaign, were charged to the campaign and later reimbursed.
Blanco said she also returned to the Inouye campaign accounting fees she charged for the years 2000 and 2001.
"It is clear that I made serious errors in maintaining the financial records of the senator's campaign," Blanco said in a written statement yesterday. All money has been accounted for and restored to the campaign, Blanco said, adding, "I sincerely regret my errors."
Jennifer Goto-Sabas, head of Inouye's Honolulu office, said Blanco withdrew the money for "personal expenditures," and as a result, "we asked her to step down." Blanco said her departure was unrelated to the improper spending.
Calvert Chipchase III, who replaced Blanco as Inouye campaign treasurer about a year ago, said Blanco withdrew from the campaign "between $90,000 and $100,000" without authorization, and later repaid it.
After taking over, Chipchase said he found "some irregularities in the accounts" and began going over the books and filing amended reports with the FEC. He said all the withdrawals and repayments occurred before he joined the campaign.
He declined to specify how Blanco spent the money, other than to say, "They were not campaign expenses. They were not the senator's expenses."
Only a few of the improper withdrawals are specified in campaign reports filed with the Federal Election Commission: an August 2001 "unauthorized charge" of $1,869.71 at Andy Mohan Inc., a downtown Honolulu custom clothing and tailoring store; and eight separate airline travel charges made in 2000 and 2001 totaling more than $8,000.
Blanco said she mistakenly charged the Andy Mohan purchase and other items to the campaign credit card, which "looks identical" to her personal charge card.
"Upon receiving the credit card statement, I realized the error and immediately made payments directly to the credit card company," she said.
The Inouye campaign reported receipt of $8,440.68 from Theresa L.R. Blanco on March 18, 2002. A memo on the line-item entry in the campaign report described the money as "repay unauth use of credit card."
The campaign reported 14 other payments from Blanco, her husband and Blanco Realty in 2001 and 2002, the smallest for $25 and the largest for $40,000, for a total of $86,225. Explanatory memos in the campaign reports describe the money as "repay unauth withdr. T Blanco" and "withdrawn from '98 committee."
"For many years, the campaign shared office expenses, since our office also served as a year-round base for campaign finance operations," Blanco said. "A decision was made to stop this practice, and the campaign was reimbursed."
Inouye closed his 1998 re-election campaign committee in 2001 and opened a new one, called Daniel K. Inouye in 2004, the same year.
Blanco said much of her time and attention in 2001 went toward caring for her terminally ill mother-in-law, and she had some problems transferring the cash balance from the old campaign committee to the new one.
"Years 2000 and 2001 were very trying years for my family and me," she said. "In hindsight, I realize that I did not devote enough time toward the maintenance of the campaign's financial records during that difficult time."
But she said she did not use the money personally or place any of it in personal or company bank accounts she controlled.
Asked whether the campaign had considered filing a criminal complaint against Blanco, Chipchase said, "The money was paid back, and the campaign attorneys felt that wasn't necessary."
Chipchase said regulators at the FEC are satisfied with the campaign's handling of the matter.
FEC spokeswoman Kelly Huff declined to comment.
Larry Noble, former chief attorney for the FEC and currently executive director of the Center for Responsive Politics, a public interest group in Washington, D.C., said he was not familiar with the specifics of the Blanco matter, but noted that "it is illegal under federal election law to convert campaign funds for personal use."
"It's potentially a serious violation," he said. The FEC could initiate an investigation of such a matter on its own, but the agency could also decline to take action if the money was repaid and regulators saw no further evidence of improper conduct, Noble said.
Robert Watada, executive director of the state Campaign Spending Commission, noted that former state House Speaker Danny Kihano was convicted of federal fraud and money-laundering charges for converting $27,000 of political campaign money to his personal use. The money was not repaid to the campaign. Kihano's campaign treasurer cooperated with investigators in the case and was not charged.
Watada said he recalled another case in which the treasurer of a senator's campaign used campaign money to pay for a friend's travel. No charges were filed because the treasurer paid the money back after being questioned about the expenditure, he said.
Inouye campaign reports show that a company called Blanco Systems was paid $12,000 in the last three months of 2000 for "accounting services." Chipchase said Blanco Systems was "Tess Blanco's bookkeeping company" and the payments were for legitimate services rendered to the campaign.
Chipchase's own accounting firm, Chipchase Masuda & Co., billed the Inouye campaign $56,078 in the first three months of 2003, much of it related to his investigation of the Blanco expenditures.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
