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The Honolulu Advertiser
Posted on: Thursday, April 15, 2010

Former Honolulu councilman Felix to pay $50,000 fine

By Gordon Y.K. Pang
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Councilman John Henry Felix

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Former City Councilman John Henry Felix has agreed to pay a $50,000 administrative fine to settle claims that he violated campaign financing laws, the highest amount ever paid to the state Campaign Spending Commission by a political candidate.

Without any admission of liability or wrongdoing, Felix agreed to pay the fine to settle charges that he accepted six loans from two individuals in excess of what's allowed, and that he falsely reported the sources of the loans.

The commission voted 5-0 to approve the settlement, with several members calling the Felix case troubling.

The charges stemmed from Felix's unsuccessful 2009 bid to succeed Windward Councilwoman Barbara Marshall, who died on Feb. 22, only months after beginning her second term. Despite being the top spender in the campaign, Felix ended up fifth in that race, which was won by current Councilman Ikaika Anderson.

"I think this is one of the more egregious things we've seen here on the commission," commission member Gino Gabrio said.

Commission member Dean Robb said he's worried others will try to follow Felix's example.

In a statement last night, Felix said: "My campaign did not intentionally violate campaign spending laws. We self-reported the violations as soon as we discovered them. We provided all information the commission requested and gave the commission our full cooperation."

Warren Price III, Felix's attorney, acknowledged that Friends of John Henry Felix, his campaign committee, made mistakes but said they were done inadvertently and in the haste caused by a 51-day campaign timetable.

"The hurry and the rush and the way this campaign was put together and financed led to a bunch of mistakes in reporting and John acknowledges there were mistakes," Price said. "He's agreed to their recommendation and he's going to abide by their decision."

Price stressed that Felix, who served on the City Council from 1987 to 2002 and has been involved in political campaigns since the 1970s, had no previous trouble with the commission.

In 2005, former journalist Dalton Tanonaka was sentenced to three months in prison by a U.S. District Court judge after he was found guilty of diverting $69,000 loaned by individuals to his personal account which he then transferred to his lieutenant governor's campaign account. But Barbara Wong, the commission's executive director, said yesterday she was not recommending that the Felix case be forwarded to prosecutors.


The commission staff found that Felix received $65,000 in loans from attorney William C. McCorriston and $100,000 from dentist Lawrence Tseu.

State campaign financing law bars a candidate from receiving more than $10,000 from any single lender during an election period.

The $165,000 received from the two men were deposited by Felix into a Central Pacific Bank account under Felix's name, which did not specify it was for his campaign.

From that account, Felix wrote seven checks totaling $115,000 which were deposited into a separate CPB account designated "Felix for City Council."

Felix's May 4, 2009, campaign spending reports showed that in addition to $115,000 in loans from himself, he spent $175,655.01 and received $61,731 in contributions.

The conciliation agreement said Felix falsely reported that the loans came from himself.

The conciliation agreement signed by commission members and Felix yesterday also pointed out that on Feb. 23, the day after Marshall's death, Felix wrote a check from his personal CPB account for $19,200 to rental agent Maureen Sapienza, with the notation "319 D Kaelepulu," for six months' rent, which allowed him to move from his home in 'Āina Haina in District 4 to District 3, the Windward district Marshall represented.

According to the conciliation agreement, Felix asked McCorriston for a $20,000 loan to move into the Kaelepulu Drive property in Lanikai.

Felix has subsequently repaid part of his loans with a $10,021.92 check to McCorriston, and $50,000 to Tseu, both from a separate Bank of Hawaii account.

Price said Felix has had a number of business relationships with Tseu and McCorriston and that, aside from $10,000 from McCorriston, there was no intention to co-mingle money from the two men with his campaign funds.

Felix, in a letter to the commission, provided documents showing that he had loaned Tseu $100,000 in 2004 to help pay for his honorary fellowship and candidacy to the Chancellors Court of Benefactors.

Felix said the $100,000 he received from Tseu in 2009 was repayment of his loan.

McCorriston and Tseu are not part of the conciliation agreement. Wong, the commission's executive director, said they are not under investigation.

Tseu said he was repaying his loans from Felix before the campaign started.

"I thought (Felix) had got out of politics," he said. "I didn't even know he was running."

Tseu's April 13, 2009 check, however, contains the notation "campaign contribution."


Felix, in a letter to the commission, said there was "a very brief period (in April) where I had more than $10,000 in loans" from McCorriston.

"Such conduct was wholly unintentional and inadvertent," Felix said, noting that he immediately repaid $10,000.

McCorriston's earlier loans were tied to his relocation to Lanikai but not related to his candidacy, Felix said. He provided documentation to the commission showing he signed a "right-to-sell" agreement with a Realtor in October 2008, four months before Marshall's death. Another document showed Felix signed a rental agreement for the Lanikai property on Nov. 21, 2008.

The conciliation agreement mentions a Dec. 3, 2008, Advertiser article describing how Marshall was continuing to battle colon cancer amid speculation she would be retiring.

McCorriston could not be reached for comment yesterday.

In his statement, Felix said, "I take full responsibility for these oversights and mistakes. I respect the work of the commission. Enforcing campaign spending laws is important, and I endorse the work the commission does."

Felix is a longtime businessman and philanthropist. He is chairman of the Boys Scouts of America's 100th anniversary in Hawai'i and president of local health insurer HMAA.

The commission confirmed that the fine against Felix is the largest to be paid by an individual candidate for campaign financing violations. The second-largest fine was $40,000 paid by former City Councilwoman Rene Mansho in 2001, and $21,250 paid by former state Sen. Cal Kawamoto in 2004.

The highest fine ever paid was $303,000 by Michael Matsumoto, CEO of the engineering firm SSFM International Inc., in 2003.