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Thursday, March 22, 2012
Hanabusa: I am not a Loan Shark
By News Release @ 11:59 PM :: 8823 Views :: Ethics, Politicians

CREW RELEASES REPORT REVEALING REP. HANABUSA LOANS HER OWN CAMPAIGN COMMITTEE MONEY AT UNUSUALLY HIGH INTEREST RATES

News Release from CREW Thursday, March 22

Washington, D.C. – Today, Citizens for Responsibility and Ethics in Washington (CREW) released its new report, Family Affair, detailing how members of the House of Representatives use their positions to financially benefit their families. In the case of Rep. Colleen Hanabusa (D-HI), the Aloha State congresswoman collected significant amounts of money in interest from personal loans she made to her campaign. In addition, her campaign reimbursed her husband thousands of dollars in expenses. While Rep. Hanabusa’s behavior is egregious,she is not alone. In all, CREW found a shocking 248 House membersused their positions to financially benefit themselves or family members.

“With the interest rates Rep. Hanabusa is charging for loaning her own campaign money, she could be confused for a loan shark,” said CREW Executive Director Melanie Sloan. “Most Americans open a savings account when they want to earn a little interest on their money. Instead, Rep. Hanabusa is making a killing by investing in her own campaign.” Campaign records show Rep. Hanabusa made two loans to her campaign committee, totaling $125,000, in 2006. Since then, she has charged more than 9% interest on these loans, resulting in over $30,000 in interest payments. At the end of the 2010 election cycle, less than $3,000 of the principal on these loans had been repaid. Additionally, campaign records show that Rep. Hanabusa’s campaign committee reimbursed her husband, John Souza, almost $9,000 for food and other expenses during the 2010 cycle.

Citizens for Responsibility and Ethics in Washington (CREW) is a non-profit legal watchdog group dedicated to holding public officials accountable for their actions.

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Hanabusa Campaign Responds:

CB Thursday March 22: Hanabusa Rejects 'Loan Shark' Allegation -- Hanabusa's campaign communications director, Richard Rapoza, said in a statement that Hanabusa "has not profited at all from those interest payments," and that the rates were established through a loan from Central Pacific Bank.

“Those loans were fully documented to the FEC as required by law," Rapoza wrote. "The interest rates to the campaign on those funds reflect the rates charged by the bank, and interest payments were made directly to the bank."

If that's the case, then "the FEC is pretty clear that the candidate can be repaid at whatever interest rate they agreed to pay the bank," said Paul Ryan, a Washington-based lawyer who specializes in campaign finance. Ryan is a staffer with The Campaign Legal Center, a nonpartisan elections and policy analysis firm.

"The main provision of federal law that would be at play here is the ban on converting campaign funds to personal use," Ryan said. "Just as it would be illegal for candidates to use campaign funds to pay their personal mortgage, this evokes similar concerns." ....

The Hanabusa campaign could not immediately provide a copy of bank documents illustrating the bank-determined interest rate. That's critical to determining whether Hanabusa handled the loan legally, Ryan said.

Also read HR: Hanabusa Rips Washington Group Calling Her A "Loan Shark"

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CREW Responds: Hanabusa is Lying—the only question is where

The following Statement was issued Friday, March 23 by CREW Executive Director Melanie Sloan in response to Hanabusa’s claim that the loan is a pass-thru:

CREW’s information on the interest payments paid to Rep. Hanabusa is drawn from Federal Election Commission filings made by her own campaign committee. If what Rep. Hanabusa is saying is correct, then her campaign has incorrectly reported the loan on an ongoing basis.

Her 2006 filings show two loans from Central Pacific Bank that were due in 2007. Those filings do not show that Rep. Hanabusa was responsible for the loan, a required step that would have made it clear the loan was a pass-through loan. In addition, outstanding bank loans must be reported by campaign committees on an ongoing basis on Schedule C-1 until the loan is paid off. The most recent Schedule C-1 filed by Colleen for Congress was filed with her 2006 reports.

Despite the fact that the campaign told the FEC both loans were due in 2007, both loans continued to accrue interest for years afterwards, and Rep. Hanabusa’s campaign continued to make interest payments to Rep. Hanabusa, which suggests she was the final recipient of the payments.

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GOP: HANABUSA MUST PRODUCE DOCUMENTATION OF LOANS

News Release from Hawaii Republican Party, March 25, 2012

Honolulu, Hawaii On Thursday, March 22, 2012 Citizens for Responsibility and Ethics in Washington (CREW) released its report, Family Affair, comparing Hawaii's Rep. Colleen Hanabusa (D-HI) to a loan shark, reporting that she made a personal loan to her campaign at a high interest rate. Campaign records show Rep. Hanabusa made two loans to her campaign committee, totaling $125,000, in 2006. Since then, she has charged more than 9% interest on these loans, resulting in over $30,000 in interest payments. At the end of the 2010 election cycle, less than $3,000 of the principal on these loans had been repaid. Additionally, campaign records show that Rep. Hanabusa’s campaign committee reimbursed her husband almost $9,000 for food and other expenses during the 2010 cycle. A spokesperson for Congresswoman Hanabusa's campaign have called the allegations false and state that all of the loans and payments made are well documented.

"The people of Hawaii deserve elected representatives that are above reproach. All we ask is that Congresswoman Hanabusa produce the documentation regarding the high interest loans and that show she is in complete compliance with the Federal and State election rules. Hawaii's citizens are calling for fiscal responsibility, if Rep Hanabusa is not able to handle her own loans and debts - how can she handle the nation's budget?"" says Hawaii Republican Party Chair David Chang.

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Open Secrets.org Top Two Vendors for Hanabusa Campaign 2012

Colleen For Congress paid $82,700
Hanabusa, Colleen paid $72,000

Footnote #8, page 98 of 'Family Affair':  

Colleen for Congress, FEC Form 3, 2010 Year-End Report, Amendment, August 5, 2011. On July 22, 2011, Hanabusa for Hawaii transferred $42,700 to Colleen for Congress, and Colleen for Congress repaid the $25,000 loan. On October 18, 2011, Hanabusa for Hawaii transferred $40,000 to Colleen for Congress. In three separate transactions in October and November 2011, Colleen for Congress paid $47,000 towards the principal of the $100,000 loan. As of the end of 2011, Colleen for Congress reported owing Rep. Hanabusa $50,146, as well as $25,102 in accrued interest.

CREW Report: Family Affair

Legistorm: Hanabusa Family

Roll Call: Report: Members Use Positions for Profit — “Rep. Colleen Hanabusa (D-Hawaii) collected more than $31,000 in interest on a $125,000 loan….”

Fiscal Times: Lawmakers Reap Rewards from Influence Peddling “Rep. Colleen Hanabusa, D-Hawaii, loaned her campaign $125,000 and collected more than $31,000 in interest.”

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