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The Honolulu Advertiser
Posted on: Wednesday, January 12, 2005

Tanonaka inquiry a federal case now

By Derrick DePledge
Advertiser Capitol Bureau

The U.S. attorney's office is investigating whether former journalist Dalton Tanonaka broke any federal laws through loans to his 2002 campaign for lieutenant governor.

Tanonaka
The investigation was triggered by a complaint from Tanonaka's former campaign manager, who told the state Campaign Spending Commission that Tanonaka intentionally violated state law by disguising and not reporting loans to his unsuccessful campaign. The commission voted in October to refer the complaint to the city prosecutor's office, but three sources, who spoke on the condition that they not be named because the investigation is in progress, said that the matter has since been turned over to federal investigators.

The federal probe is examining the sources of Tanonaka's loans and whether he improperly moved loans from others through his bank to his campaign. Investigators are also looking into loans Tanonaka made to his failed 2004 campaign for U.S. Congress against U.S. Rep. Neil Abercrombie, D-Hawai'i.

Tanonaka, a former journalist in Hawai'i and anchor for CNN International and CNBC Asia, said he has not been contacted by investigators. He said his former campaign manager, Ed Nishioka, is trying to discredit him over a payment dispute that is the subject of a civil lawsuit.

"We've been wanting to resolve this since the allegations have been made," said Tanonaka, now a business consultant.

State and federal campaign-finance records show that Tanonaka loaned $100,000 to his lieutenant governor's campaign and $80,000 to his congressional campaign. Tanonaka has said that the money came from several sources, including credit lines, proceeds from the refinancing of his home and from personal funds. Democrats, in an October complaint to the Federal Election Commission, claimed that Tanonaka's financial disclosure statement indicated he did not have the financial resources to make large loans to his congressional campaign.

Democrats also suggested that Tanonaka accepted illegal contributions, which Tanonaka has denied. Tanonaka made fund-raising trips to Hong Kong and Japan but insists he was targeting expatriates who can legally participate in U.S. elections.

Tanonaka, a Republican, has said the complaints against him are politically motivated.

Nishioka used Tanonaka's bank records obtained through the civil lawsuit as part of the basis for his complaint to the Campaign Spending Commission. The Democratic Congressional Campaign Committee, a group that raises money to help elect Democrats nationally, filed the FEC complaint.

But Tanonaka has not fully detailed all of the sources for his campaign loans and he and his attorney have given conflicting explanations for two loans in 2002 that have been publicly documented through the civil lawsuit.

Tanonaka initially told The Advertiser that two loans totalling $25,000 from Carol Tsai, a friend and former president of the Hawai'i Chinese Tourism Association, were for personal use to pay bills and were not for his lieutenant governor's campaign. His attorney, Miles Furutani, later told the Campaign Spending Commission that both loans were deposited into Tanonaka's City Bank account and then turned into loans by Tanonaka to his campaign.

Tanonaka, his attorney said, returned the first Tsai loan, for $15,000, after he found out that state law limits loans from individual donors to $10,000. Tanonaka later repaid a second Tsai loan for $10,000. Neither loan from Tsai was disclosed on Tanonaka's campaign-finance statements as required by law.

Tanonaka has said that there was no deliberate intent to violate the law. He said he could not provide The Advertiser with further documentation for any of the loans because of the ongoing inquiry, but said he would cooperate with an investigation.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com or 525-8070.