A for-profit signature-gathering firm deceived donors by funneling campaign money to initiative activist Tim Eyman for Eyman’s personal use, and worked with Eyman to cover it up, a Thurston County Superior Court judge ruled Monday, ordering the firm and its principal to collectively pay more than $1 million for the schemes.

Donors thought they were contributing  to a signature-gathering effort to put initiatives on the ballot when, in fact, their money was sent to Eyman for personal use and to support a different initiative than the one they were donating to, according to the ruling.

Washington state Attorney General Bob Ferguson sued Citizen Solutions, principal William Agazarm and Eyman in 2017, alleging a yearslong scheme in which Eyman solicited more money for his signature-gathering campaigns than was needed, and then secretly — in violation of campaign-finance laws — got kickbacks from Citizen Solutions.

Ferguson said in a news release Tuesday that Citizen Solutions and Agazarm unlawfully concealed a $308,185 payment made in July 2012 to Eyman, an activist who is known for introducing voter initiatives to lower car-tab fees and make it harder for lawmakers to raise taxes. Eyman lent about $190,000 of that money to a group promoting Initiative 517, which the donors didn’t intend to support, and kept the rest for himself, according to records and previous Seattle Times reporting.

In response to the ruling, Eyman wrote in a statement Tuesday morning, “As a political activist, I’m focused on passing our $30 Tabs Initiative, raising funds to get paid back the $500k Karen and I loaned to get it qualified, and asking friends for help with my legal defense fund so we can survive the $900k+ the AG’s litigation has cost us so far.”

The order does not mark the end of the case for Eyman, who was charged separately by Ferguson’s office. Ferguson is seeking to ban Eyman for life from directing the finances of any political committee. Earlier this year, Eyman failed to have the proposed ban thrown out as a possible sanction, and the case against him is still pending. Eyman has twice been held in contempt of court for refusing to disclose information about his business and finances, and he has racked up more than $225,000 in contempt fines.

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Judge James Dixon found that Agazarm and Citizen Solutions accepted payments “purportedly for signature gathering” that were made after signature gathering was completed, and then helped Eyman launder the money. Agazarm “personally approved Citizen Solutions’ kickback payment” to Eyman, knowing how Eyman would use the money, according to the ruling.

“The Court finds that the Citizen Solutions Defendants not only knew the extent of Defendant Eyman’s scheme, but actively assisted with his violations, helping him mislead contributors into believing their contributions would go to support ballot initiatives, when in fact, they were benefiting Defendant Eyman personally,” the judge wrote in his ruling.

The Sept. 30 judgment orders:

  • Agazarm to pay $150,000 in civil penalties.
  • Citizen Solutions to pay $150,000 in civil penalties.
  • Agazarm and Citizen Solutions jointly to pay $117,500 in unpaid contempt sanctions and $622,255.67 in costs and fees.

The judgment shows how seriously the court takes these campaign-finance violations, according to the Attorney General’s statement.

According to the Attorney General’s Office, the investigation showed that in a 2010 letter, Eyman asked for a kickback from the signature-gathering company, for giving Citizen Solutions business from his own political committee, Voters Want More Choices. Eyman also allegedly proposed a scheme to increase the kickback payment by padding the price his committee would pay Citizen Solutions per signature for Initiative 1053, a ballot measure requiring tax increases to be approved by two-thirds of the Legislature.

Eyman reportedly wrote in the letter that the committee “agreed to have Citizen Solutions collect signatures for $2.00 each. Im [sic] doing my best to raise money from the business community at a rate of $2.50 per signature. My goal is to have Voters Want More Choices pay Citizen Solutions the agreed upon $2 per sig plus $150,000 so that you have an extra $150,000 to provide to me.”

Eyman forwarded an email from Citizen Solutions to donors that had originally quoted a price of $2 per signature for I-1053 with an altered price of $2.50 per signature, according to the Attorney General’s Office’s statement.

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In addition, the statement says Eyman created “gift schemes” for Citizen Solutions and its owners to funnel money to him, including numerous payments of $13,000 each — the amount Eyman’s accountant told him was the maximum “gift” he could receive without it being reported to the IRS.

Eyman had Citizen Solutions’ owners distribute his kickbacks among his wife, Karen, and their minor children, so none of the checks would be more than $13,000, according to the statement. In a deposition, Karen Eyman said she and the children were unaware of the payments, even though the checks were made out to them.

Ferguson’s statement said Eyman proposed various schemes to officers with Citizen Solutions to increase his compensation, writing: “For the past 10 years, Citizen Solutions has hitched itself to the ‘Eyman bandwagon’ and it’s worked really well — but I think it’ll be even better if I jump on the ‘Citizen Solutions bandwagon’ especially as we approach a post-517 initiative environment. I bring something to the table (non-stop initiative campaigns by me and diligent efforts to refer other clients to you) and you two bring something to the table (a successful petitioning operation). We’d be a great team.”

One proposal was an ongoing business partnership in which Eyman would share one-third of Citizen Solutions’ revenue, according to the statement. Alternatively, in his June 5, 2012, email, Eyman proposed that the company pay him $270,000 as a sales commission.

He wrote, “When it comes to the extra $270k, I’m working hard to get it for myself by having it paid to Citizen Solutions.”

On another initiative campaign related to tax increases, I-1185, Citizen Solutions continued collecting money from interest groups — including $27,150 from the Washington Beer and Wine Distributors Association, $45,000 from the Association of Washington Business Political Action Committee and $170,825 from Eyman’s committee — even after all signatures had been paid for on July 3, 2012.

The firm forwarded 100% of the money donated for signature-gathering after that date to Eyman, according to the statement.

The suit was brought after the Washington State Public Disclosure Commission referred the case to the Attorney General’s Office in 2015, saying it was one of the “most egregious” cases the commission had seen.

The suit claimed Eyman improperly used more than $300,000 in contributions made to political committees and concealed through misleading reporting more than $490,000 in contributions.

In May this year, the judge issued a default order against Citizen Solutions and Agazarm, finding them liable for their role in the scheme. Before that, they had been in contempt of court for 456 days, accruing a total of $177,250 in sanctions for failing to comply with court-ordered discovery requirements.

Citizen Solutions and Agazarm have generally not appeared in court, nor have they sent attorneys to represent them, according to an earlier Seattle Times story.

Seattle Times staff reporter David Gutman contributed to this story, which also includes information from The Seattle Times archives.