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Documents Shed Light On Effort To Fund Casino Campaign, Now Facing $4M Fine For Ethics Violations

Andrew Catalina
Maine Public
Casino developer Shawn Scott appears on Maine Public's Maine Calling program Tuesday, Oct. 24, 2017.

In early December of 2015, casino developer Shawn Scott and his sister Lisa Scott were ready to launch the ballot initiative that will appear as Question 1 on ballot on Tuesday. But first, they needed a name for the campaign committee.“Save Farms and Create Jobs for ME,” Lisa proposed to her brother in an email.

Shawn wrote back four hours later, “Horseracing Jobs Fairness. This will be in every newspaper mentioning who paid. This IS the msg we want out there!”

Indeed, Horseracing Jobs Fairness went on to appear in numerous press accounts, but rarely through developments helpful to the campaign’s objectives of persuading voters to add a third casino in Maine.

And now, nearly two years later, the Horseracing Jobs Fairness committee is facing a potentially devastating fine by the regulators of Maine’s campaign finance laws for obscuring its funding sources for over a year.

The five-member Maine Ethics Commission meets Friday to make its decision. It will partially rely on over 10 hours of testimony at a contentious day-long hearing held Monday in which Lisa Scott and Augusta lobbyist Cheryl Timberlake, both officers of Horseracing Jobs Fairness Committee, attempted to blame each other for ethics filing violations that could result in a multimillion dollar fine.

Credit Progress for Maine
A rendering of the proposed casino in York County.

The commission will also consider reams of emails and financial documents obtained through subpoenas. Many of the documents are sealed as investigative working papers by the Ethics Commission. But on Wednesday the commission released some evidence, including emails like the one in which Shawn Scott overrides his sister to name the campaign committee.

That and other emails show Shawn Scott calling the shots in Maine while often 11 times zones away at his Saipan residence in the Commonwealth of the Mariana Islands.

The documents indicate that Scott and his associates approved and facilitated wire transfers from various offshore and domestic firms and actively avoided questions from the press about the controversial gambling developer’s active role in the campaign. Meanwhile, Shawn Scott and his associates  pumped more than $4 million into a signature gathering campaign that was resurrected last year by an investor with business holdings in Cambodia and Tokyo. The investor’s funding of the campaign remained secret until April.

The documents also paint a vibrant picture of the inner workings of a campaign that began shrouded in secrecy, but has slowly been revealed as one of several ambitious gaming pursuits by the Scott family across the country.

A Tip From A LePage Advisor

Critics of the Question 1 campaign say the Scotts have exploited and commercialized a citizen initiative process originally created as a way for Mainers to redress action or inaction by the Legislature.

Republican Gov. Paul LePage has also been a vocal critic, initially saying the casino proposal is motivated by greed. The governor, who has opposed other gambling initiatives despite receiving campaign donations from the owners of the Oxford Casino, has also taken aim at Shawn Scott for being the only person who could hold the license if Question 1 is approved.

But not all in LePage’s orbit have taken a hostile view to Scott.

In October, 2015, Timberlake sent an email to Shawn and Lisa Scott. Timberlake had heard that the Scotts were looking to bring a casino to southern Maine, possibly at Scarborough Downs. Timberlake offered her services as a consultant.

“Kathleen Newman gave me a heads up on this and encouraged me to contact you,” Timberlake wrote.

At the time, Newman was LePage’s deputy chief of staff and legislative liaison. She resigned her post last week.

Despite her boss’s ideological opposition to gaming, it makes sense that Newman knew the Scotts were tinkering with the idea of developing Maine’s third casino.

Newman is a former consultant to Capital Seven LLC, the company Shawn Scott used when he first brought gambling to Bangor in 2003.

Signature Blitz Begins

Shortly after her email to the Scotts, Timberlake signed a contract to help run the signature collection effort for the Horseracing Jobs Fairness campaign. She and Lisa Scott became officers of the campaign committee - roles that now have both women facing the prospect of the largest fine ever assessed by the Ethics Commission.

Credit Steve Mistler / Maine Public
Maine Public
Augusta lobbyist Cheryl Timberlake consults with her attorney Avery Day during an Ethics Commission hearing about the funding sources behind Question 1.

At issue in the ethics case, is whether Horseracing Jobs Fairness obscured its funding sources for over a year. During the hearing on Monday, Timberlake asserted that she was unaware of the array of domestic and offshore firms pumping money into the campaign - a network she repeatedly described as the “corporate veil.”

Attorneys for Lisa Scott and Bridge Capital, Shawn Scott’s firm in the Mariana Islands, aggressively challenged Timberlake during cross-examination. They cited her October 2015 email to Shawn and Lisa Scott, as well as Timberlake’s interactions and meetings with Scott’s business associates, including Hoolea Paoa.

Paoa is a native of Hawaii. A 2003 report by the Maine Harness Racing Commission chronicled Paoa’s multiple criminal convictions, including assault and theft.

In late 2015, Paoa was in Maine helping oversee the last-minute signature collection effort designed to get Scott’s casino initiative on the 2016 ballot.

Complaints, Then Threats

The signature blitz didn’t go smoothly.

The campaign began in mid-December and it was racing the clock to submit 62,123 signatures to the Secretary of State by Feb. 1, 2016. To expedite the process, the campaign jacked up the amount it would pay petitioners for each signature and paid consultants who flew in petitioners from all over the country.

Previous reports estimated the campaign paid between $7 and $10 per signature, but contracts in the ethics documents show the campaign paid up to $17.

But the signature blitz ran into problems. Reporters and state officials received accounts of pushy and deceptive petitioners, prompting questions for Timberlake, the treasurer of the campaign.

Lisa Scott was unreachable. While she’s listed on campaign finance reports with a Miami address, she told the Ethics Commission she splits time between Saint Kitts and Saipan - which became an obstacle when the commission attempted to serve her a subpoena for records.

Horseracing Jobs Fairness was purposely uncommunicative with the press - a tactic that may have encouraged more scrutiny of the campaign.

Documents show the press strategy was directed by Shawn Scott and passed along through his sister.

When Timberlake forwarded press inquiries to Lisa, emails show she passed them on to her brother.

“Don’t get involved at this time,” Shawn would reply.

Meanwhile, Shawn and business associates continued to wire cash to his sister, who appeared as the only donor to the campaign - a key issue in ethics case.

But emails show the complex and secret funding arrangement between Shawn Scott and sister threatened to derail the signature drive. That’s because the wires weren’t getting to Maine fast enough to pay the people on the ground.

And the campaign was ripping through cash - about $139,000 a day, according to an email sent by Lisa Scott to her brother and business associates in early January 2016.

“We have a balance due right now of $422,576 and I need 24 hours to move it to our PAC account so that we are in compliance,” Lisa wrote. “By not sending the funds we will lose our petitioners today immediately and we won’t have time to catch up.”

The stonewalling of the press and unpaid petitioners converged to create a dilemma for Timberlake. She was confronted by one of them, John Merchant, of Florida. Merchant threatened to go to the Portland Press Herald and expose the campaign.

The money eventually arrived and so did the signatures. But in February, election officials invalidated over half of the signatures, citing widespread irregularities.

Horseracing Jobs Fairness didn’t qualify for the ballot.

For the time being, it was dead in the water.

Toko To The Rescue

The Scotts and associates were looking for new investors in the Maine campaign.

According to documents and oral testimony in the ethics case, the group was engaged in casino campaigns in Massachusetts and Washington, D.C.

At some point, Shawn Scott convinced Toko Kobayashi to invest in the Maine initiative, too. Kobayashi is a Japanese real estate executive who also runs a firm in Cambodia.

According to ethics documents, Kobayashi funneled hundreds of thousands of dollars to the  Massachusetts effort - which ultimately failed and was fined by Massachusetts regulators for the same violation it’s facing here: hiding its donors.

Kobayashi’s cash, sent through the Tokyo firm Regent Able Associates Co., helped revived the Maine initiative. Kobayashi even sent an associate to Maine, Laurence Hamilton, to oversee his investment and make sure the operation ran smoothly, according to documents released by the commission.

The second signature gathering campaign was successful. After $4.3 million spent, Horseracing Jobs Fairness qualified for the 2017 ballot earlier this year.

But Kobayashi’s role was not disclosed until April. Neither were investments made by a network of other firms associated with Shawn Scott and his partners.

Horseracing Jobs Fairness has since receded from the campaign. It’s been replaced by the PAC Progress for Maine, which has pumped another $5.4 million into Question 1 since forming last summer.

The casino campaign is on pace to become the most expensive ballot initiative in Maine history.

And on Friday, it could be hit with the biggest penalty ever assessed by the Maine Ethics Commission.

Journalist Steve Mistler is Maine Public’s chief politics and government correspondent. He is based at the State House.