Tim Eyman is bankrupt. But he’s not spending money like someone who’s bankrupt, at least according to the state of Washington, his largest creditor.
Eyman, whose personal, business and legal expenses are paid through donations from his supporters, has spent an average of nearly $24,000 a month over the past year, according to his bankruptcy filings.
Big chunks of that are for lawyers. The longtime anti-tax activist is waging legal battles on multiple fronts as he mounts a campaign for governor. But there are myriad other expenses that the state says seem needlessly extravagant and risk exhausting Eyman’s finances before he can pay off the debts he may owe.
There’s the vacation to Orlando. The $4,000 a month in unspecified business expenses Eyman has said he needs. The $2,500 a month he pays to his sister-in-law to rent a Bellevue condo. The list goes on. Eyman bought 97 Starbucks gift cards over 10 months, totaling at least $2,400. The first month after filing for bankruptcy, he ate out on 20 days. Last February, he made 74 restaurant purchases. In June he went to the movies eight times, spending nearly $300, in addition to $450 spent on cable, streaming services and Apple store purchases.
He gets a $79 haircut every few weeks. And just last month, Eyman reported meals at three separate restaurants to celebrate his birthday — at Daniel’s Broiler, The Cheesecake Factory and Pogacha.
The whole time, he’s been in contempt of court, racking up fines of $500 a day.
“The family spending is draining the bankruptcy estate and must be severely reduced,” Washington Attorney General Bob Ferguson, who claims the conservative firebrand owes more than $3 million, wrote in bankruptcy court filings.
Ferguson, representing the state, and Eyman are engaged in two separate legal battles in two separate court systems, that, like a Venn diagram, overlap on Eyman’s finances.
Ferguson is suing Eyman in Thurston County Superior Court, charging that he’s a serial violator of Washington campaign-finance law who has spent years laundering political donations, accepting kickbacks and taking campaign donations for personal use. That case, which dates to 2012, is scheduled to go to trial July 13, just days before voters receive their primary ballots to determine whether Eyman will advance in his campaign for governor.
Eyman says the legal fees and potential fines from that case drove him to file for Chapter 11 bankruptcy in federal court in 2018. Because the state of Washington is Eyman’s largest creditor, Ferguson’s office has been piping up in bankruptcy court to ensure the state gets paid for the fines Eyman has already accrued, and the ones that will pile on top if a judge finds he’s broken the law in the campaign-finance case.
The claims in bankruptcy court are detailed and personal. Ferguson’s office not only calls the spending “wildly inappropriate for someone who is in bankruptcy,” but also suggests Eyman’s divorce case may be a ruse.
Last year, Eyman tried to rescind his bankruptcy claim entirely, while Ferguson tried to force him into Chapter 7 bankruptcy, which would require him to sell off his assets. Both requests were denied.
As Eyman launches his gubernatorial run, he remains in a state of legal limbo. The lawsuit threatens to derail his two-decade political career as Ferguson’s office, in addition to hefty fines, seeks to bar him for life from managing or directing the finances of any political committee. At the same time, his latest initiative victory, Initiative 976, which cuts car tabs to a flat $30, is forcing lawmakers to overhaul the state transportation budget. A judge has blocked it from taking effect, finding it is likely unconstitutional.
“Bob Ferguson wants to destroy me because of my political success fighting for taxpayers — he is demanding more money than I’ll ever have,” Eyman said in an emailed statement. “Bob Ferguson is doing everything possible to drive up my legal costs so that I run out of money in the hope of forcing me to give up.”
Ferguson says Eyman is playing games, withholding information from the court, delaying the case unnecessarily and ignoring court orders.
“He’s doing what Tim Eyman does best — avoid accountability,” Ferguson said in an emailed statement. “He knows he will have to pay a large financial penalty for his conduct, so he’s inappropriately spending down his estate to get out of paying.”
Eyman is accused of funneling money from one initiative campaign to another and of a yearslong scheme in which he allegedly solicited more money for his signature-gathering campaigns than was needed, and then secretly — in violation of campaign-finance laws — got kickbacks from a signature-gathering firm. Last year, a judge found that the signature gathering firm, Citizens Solutions, had violated the law and paid Eyman a kickback of more than $300,000. He imposed sanctions of more than $1 million on Citizen Solutions and its principal, William Agazarm.
Eyman has been in contempt of court for nearly two years for refusing to cooperate with the lawsuit against him, and currently owes over $230,000 in sanctions, a sum that’s growing at $500 a day. In 2018, Eyman paid nearly $60,000 in contempt sanctions.
Ferguson’s office intends to ask for “at least $3 million and possibly more” when the case goes to trial, alleging in court documents that Eyman “has spent decades lying to campaign donors and the public about his misuse of campaign funds.”
Because Eyman, 54, has filed for bankruptcy, he’s obligated to file monthly reports on his finances and present the bankruptcy court with a plan to repay his debts or some portion of them.
He’s proposed, if found liable at trial, to pay the state $5,000 every month for the next 30 years.
Ferguson’s office says that number is woefully insufficient and won’t even cover the interest on the money Eyman could owe.
Ferguson wants Eyman to pay $20,000 a month, saying he can afford it with room to spare. Eyman has told bankruptcy court he brought in more than $325,000 in the last year, or more than $27,000 a month, almost entirely from gifts and donations from supporters he has kept secret. This, Ferguson’s office reasons, would leave him with $84,000 a year after making the $20,000 payments — plenty to live on, provided he cuts down on his spending.
“A net income of $84,000 is exceptionally generous for an individual in bankruptcy,” Ferguson’s office wrote in court filings. “Eyman’s spending is incredibly high and must be curtailed.”
Steak dinners, gifts and divorce
Eyman is spending nearly $24,000 a month, Ferguson’s office wrote, despite the fact the mortgage on his house is paid and his in-laws pay his son’s college tuition.
Ferguson’s office has pointed to spendy dinners at Ruth’s Chris Steak House and Daniel’s Broiler, dozens of trips to the movies, a vacation to Universal Studios, and the $6,500 that Eyman budgeted for “gifts” as evidence that he is not constraining his spending like someone who’s filed for bankruptcy.
Eyman maintains that paying $20,000 a month is not feasible. He says his monthly spending is reasonable and there’s no guarantee he’ll be able to continue to bring in money from supporters.
“The Debtor greatly appreciates this support, as it has allowed him and his family to survive the State’s legal assault,” Eyman’s lawyer writes, but “there is no historical financial data to support the State’s proposed $20,000 payment, and thus it is just not feasible on its face.”
The two sides disagree on a lot.
Eyman says interest on his fines should be at the rate specified in judgments for federal court, 1.55%. Ferguson’s office says interest on Eyman’s fines should be paid at the rate specified for state courts, 12%.
Eyman has said strain from the legal proceedings broke his marriage and led him to seek a divorce. He filed for divorce in May, but the case is not complete and he reports a monthly child-support payment in his bankruptcy filings.
Ferguson’s office is skeptical, noting Eyman and his wife still share bank accounts and pay their living expenses through the joint accounts, spending more than $176,000 on family expenses in the past year.
“Eyman claims to be separated from his wife,” Ferguson’s office writes in another filing, but his grocery and meal receipts, reported to bankruptcy court, indicate he “must primarily spend his time” at his family’s home in Mukilteo, not at the condo he rents from his sister-in-law in Bellevue.
“The Eymans are not divorced and there is no court order requiring a child support payment,” Ferguson’s office wrote. “The child support payment must stop because there is no legal basis for the payment.”
Eyman, in court filings, says he “has an obligation to provide financial support even if no court orders have been entered.”
Meanwhile, Eyman is running for governor, something he said he would never do, saying the political system is rigged and broken. He’s promised supporters a “race for governor like you’ve never seen before.”
In the first month of his campaign he reported raising just over $30,000 and spending about $6,500. More than half of his campaign spending was paid directly to his own political action committee.