Tolbert: Ethics Commission Fines Hallum $2,500

by Jason Tolbert ( 6 views 

I will be attending the Arkansas Ethics Commission meeting on Wednesday (Dec. 18) as it considers a citizen complaint I filed against former State Rep. Hudson Hallum of Marion.

You may recall that Hallum, along with his father, were convicted and sentenced for conspiracy to commitment voter fraud in June involving primarily absentee ballots in the special election in 2011 when he was first elected.

You can read the letter from the Ethic Commission here with more details, but my complaint primarily involves a $50,000 loan which he originally disclosed as being made on June 1, 2011 from Fidelity National Bank of West Memphis.  Subsequently, disclosure was never made regarding this or several other smaller loans.  I wrote quite a bit about this during the election and followed up with Hallum the following February of 2012.  At that time, he claimed the loan was a balloon loan and no payment was yet due.  He also denied that he was under investigation on voter fraud, so we know how that turned out.

After numerous attempts to follow up again with Hallum regarding the repayment of this loan, I finally decided filing a citizen complaint was my only route.  And after two years of not reporting any activity, it seemed unlikely the bank would let him walk away without any payments on a $50,000 loan.

Interestingly, Hallum filed a new debt retirement report as well as 8 amended reports with the Secretary of State last Friday.  Among his changes on the amendments was a re-characterization of his $50,000 from being made by Fidelity to being made by his father, Kent Hallum.  Originally, he told me this was a bank loan with his father listed as a co-signer.  He also filed a report showing he repaid the loan to his father by transferring $50,000 to a savings account in his sister’s name on January 28, 2013.

He also showed some additional expenditures on his amended reports, specifically $17,183.09 in consulting fees to Markham Group in 2011 that he originally had not disclosed.  The lack of disclosure of this expenditure was noted in my complaint.  He offset this new expenditure on his amended report with a new loan personal loan of $15,000.

Hallum’s amended reports show additional information of the place of employment for his contributors which were largely missing from most his original reports and was one of the items in my complaint.

In total on his newly filed debt retirement report, he disclosed a personal contribution of $81,000 made on January 28, 2013 to repay three loans – $50,000 to his dad, $2,000 to Crittenden EMS which is his business, and $29,000 to himself.

There seems to be several questions still unanswered on all of this, such as:

  • Where did this new $81,000 suddenly come from?
  • Why was the loan originally shown as being made by Fidelity National Bank of West Memphis rather than his father?
  • If the $17,183.09 Markham Group expenditure was missing and noted by me in my complaint, were there any other missing expenditures?
  • Did he ever disclose the expenditure of items – such as vodka and chicken dinners – that the FBI said he distributed to voters?
  • How do we have assurance that the contributions and campaign funds have all been adequately accounted for?  Were bank records examined?
  • And why were these disclosures just now being made?  Will there be a penalty for his failure to timely make these proper disclosures?

I am still learning how the Arkansas Ethics Commission’s process works, but hopefully I will have some more answers to all of this tomorrow.

Side note – Matt Campbell reports that the Ethics Commission will also consider a complaint he filed against Lt. Governor Mark Darr.  You can follow Campbell’s coverage of this on his blog, Blue Hog Report.

UPDATE – Blogger Day at the Ethics Commission – It was an interesting day to say the least.  The commission first heard from Matthew Campbell and Lieutenant Governor Mark Darr on the complaint Campbell filed. You can read more about that here.

Next, they heard my complaint against Hallum.  It was interesting to see how this process works.  Before the closed door session with the commission, I was able to review their files which are confidential so I was not able to make copies.  The files included an interview with Hallum from November 4, 2013 which shed a bit more light on my complaint but also, in my opinion, raised more questions.

Hallum told the commission that he discovered the day before his interview with them (yes, the day before) that the loan was actually made by Fidelity National Bank to his father.  He blamed the confusion on his father being named “Kent Hudson Hallum” while he is named “Kent Hudson Hallum II.”

This is interesting as a review on the loan document clearly showed that his dad had signed for the $50,000 loan, not Hudson.  In addition, the loan was paid off on August 23, 2011 in full by his dad.  So when he told me in February 2012 that this was a balloon loan that was not yet due, this was clearly false as the loan had already been paid in full.  In addition, I am not sure how someone could think the loan was with them when they did not sign it.  He admitted to being present when the loan was executed so that means he saw his dad sign it not him.

Nevertheless, he admitted his reports were incorrect.  Of course, the law limits contributions to $2,000 per individual.  Loans are treated as contributions unless made by a financial institution, such as Fidelity, so the loan from his father was in violation as it was over the limit.  The fact that he repaid the loan to his dad by transferring $50,000 to his sister is irrelevant.

He also acknowledged in the interview that he left off more than $17,000 in expenditures to the Markham Group – the Democratic political consulting firm currently heavily involved in the Mike Ross for Governor campaign.  He admitted that this was quite an oversight.

During the meeting, the staff presented its findings and recommended that probable cause exists to move forward.  This was a “probable cause hearing” and not the final action. The vote regarding this was in private, but if they had voted not to move forward, I would have been informed.  I was not notified, so it is safe to assume they are moving forward.  If I understand the process correctly, the next step will involve some sort of settlement proposal to Hallum.

Hallum addressed the commission briefly.  He apologized and said he will not make excuses. He attributed his mistakes in part to oversight and in part to a lack of knowledge in his first campaign.  He also said he stopped filing reports when the FBI investigation into his conspiracy to commit voter fraud began.

I also had a brief chance to address the board.  I told them that I still had concerns that Hallum has not fully disclosed all his expenditures.  I noted that I pointed out the Markham omission in my complaint based on news articles and public records.  Hallum admitted to this one expenditure, but it is the only additional expenditure he has disclosed.  It seems more than likely to me that there are more and a complete examination of his financial records would be in order.

Regardless, Hallum basically admitted to everything in my complaint so I would expect some sort of resolution from the commission in the next couple months.

UPDATE (12/30/13) – I received a copy of the settlement between Hallum and the commission today.  The commission found eight ethics violations for Hallum based on my complaint and their investigation.  They agreed to issue a Public Letter of Caution and a $100 fine each for five of the violations, a Public Letter of Warning and a $500 fine for violating ACA 7-6-203 (a)(1)(A) in accepting excess contributions from Crittenden EMS, and a Public Letter of Warning and a $1,000 fine for violating ACA 7-6-203 (a)(1)(A) in accepting excess contributions from Kent Hallum and incorrectly reporting this as a loan from Fidelity National Bank.

The total of the fines is $2,500.

I will point out that Hallum failed to disclose expenditures in connection with consulting services provided by The Markham Group.  This is one of the leading Democratic consulting firms in Arkansas and is the main campaign consultants for Mike Ross for Governor.