Former initiative promoter Tim Eyman may soon be out of bankruptcy after nearly five years of Chapter 11 and then Chapter 7 proceedings, with most of his estate now liquidated and the remaining assets that were inventoried by the United States Trustee recently approved for abandonment by Judge Marc Barreca.
Barreca’s May 19th order granting trustee Virginia Burdette’s motion to abandon the property of the estate (“other than the funds on deposit in the estate’s bank account”) indicates that the case has moved into its final stages.
In Chapter 7, known as a “straight” bankruptcy, an individual or business’ property is examined, inventoried, and then sold to pay creditors by a court-appointed trustee. At the conclusion of the process, the individual or business that filed for Chapter 7 is said to get a chance at a “fresh start,” though it’s important to note that some debts cannot be discharged through a bankruptcy at all.
Eyman’s creditors are his attorneys at Goodstein Law Group PLLC, his former counsel at Klinedinst PC, the people of the State of Washington, and the Internal Revenue Service (IRS). Goodstein has been representing Eyman in the main campaign finance enforcement case brought by Attorney General Bob Ferguson in 2017. That case has now reached the Washington State Supreme Court after Eyman appealed the trial court’s verdict a second time. (Last fall, the Court of Appeals upheld most of the judgment, to Eyman’s great disappointment.)
Eyman, who has long been demonstrably irresponsible with money, originally filed for bankruptcy in attempt to evade accountability in that campaign finance enforcement case, which originated from a PDC complaint filed by NPI member Sherry Bockwinkel and supported by NPI. Federal bankruptcy proceedings normally take precedence over state level cases, and Eyman gambled (probably on a friend’s advice) that the bankruptcy would shield him from Ferguson’s lawsuit.
However, in only a few weeks’ time, Attorney General Bob Ferguson’s team sought and won what is known as a comfort order, allowing the case to resume in parallel with the bankruptcy. With his gambit having spectacularly failed, Eyman tried to back out of the bankruptcy by requesting the case be dismissed.
Judge Marc Barreca refused the request, telling Eyman: “Once you voluntarily filed [for] bankruptcy, the mere fact that the bankruptcy isn’t really doing what you hoped it would do… isn’t of itself grounds for backing out of it.”
Barreca did allow Eyman to stay in Chapter 11 for more than two years, rebuffing a request from Ferguson to convert the case to Chapter 7. However, after Eyman reneged on an agreement to make monthly installment payments to Washington taxpayers, Barreca speedily approved a conversion request, appointing experienced Seattle attorney Virginia Burdette as the trustee for Eyman’s estate.
Burdette wasted no time in getting to work.
Burdette soon verified that Eyman’s principal asset was his share of a house in Mukilteo’s Harbour Pointe neighborhood. The family of Eyman’s former spouse, Karen Williams, agreed last year to put up the money to effectively buy out Eyman’s share, thereby providing a significant amount of funds to the estate and ensuring the home would stay with the family while ending Eyman’s ownership interest in it. (Eyman had previously borrowed against the home to finance initiative schemes without Karen’s knowledge, according to pleadings filed by her.)
In the motion referenced above, Burdette informed the Court that the remaining assets of the estate were simply not worth pursuing, and recommended abandonment as the best course of action. Barreca accepted this advice.
The three specific noteworthy assets mentioned by Burdette in her pleading were:
- A Note to evidence an obligation owed to Debtor from the Debtor’s prior PAC, Permanent Offense (it is interesting that Permanent Offense is described as Eyman’s “prior Political Action Committee”);
- An interest in the website (“URL”) “permanentoffense.com” (meaning, the domain name);
- A political donor list maintained by the Debtor (“List”).
“In the Trustee’s opinion, the potential administration of these assets would not net a positive return for creditors of the estate, and desires to abandon them,” Burdette’s lawyers at Schweet Linde & Rosenblum PLLC explained.
With respect to the Note, they wrote:
“Though the Debtor schedules the Note with a value of $411,000.00, the maker of the Note does not have the financial ability to repay the obligation, and does not appear to have sufficient assets to cover the cost of litigation to obtain a judgment. A judgment would be required prior to any collection if the PAC refused to repay the obligation. Because enforcement of the Note is not expected to bring any return to creditors, the Trustee believes abandonment is appropriate.”
It’s important to understand that the Debtor and the maker referred to above are one and the same: Tim Eyman. Eyman raided his retirement account in order to finance Initiative 976, his most recent unsuccessful attempt to gut funding for multimodal transportation infrastructure across Washington State.
Eyman’s hope was to subsequently find wealthy benefactors to bail him out and allow his retirement account to be replenished, but none materialized. Four years later, it seems unlikely that any will, hence Burdette’s conclusion that the “maker of the Note does not have the financial ability to repay the obligation.”
With respect to Eyman’s domain name, they wrote:
“Though there may be some value to the URL, there is a risk that Debtor, as he claims, does not have an interest in the URL. To discover if the Debtor has an interest will require court orders to require the disclosure of this information. Based on the hurdles, the potential lack of interest of the Debtor, and the delay seeking the answers will cause to final distributions to creditors, the Trustee believes abandonment of the URL is appropriate in her sound business judgment.”
Eyman definitely has an interest in the URL — if you go to permanentoffense.com, you’ll see Eyman’s photo front and center, with the words Tim Eyman: Permanent Offense on a shield-like icon. Whether or not Eyman has control over the domain name is another matter. Eyman is not an officer of Permanent Offense, and the committee is now inactive, having suspended its fundraising and other activities. It may be that the domain name is registered to one of Eyman’s pals nowadays.
With respect to Eyman’s list, they wrote:
“Administration of the List would require the appointment of a consumer privacy ombudsman under 11 U.S.C. §332 before the List could be sold or leased [presumably to some right wing entity] to generate revenue for the estate.”
“Based on the cost of ombudsmen in prior cases, the Trustee believes there is not sufficient value in the List to offset the cost of an ombudsman. Because the administrative cost of trying to sell or lease the List would be offset if not eclipsed by administrative costs, abandonment of the List is appropriate.”
Lastly, they wrote: “Finally, the Trustee, after a thorough investigation has not identified any other non-exempt assets, other than the cash in the estate’s bank account. The Trustee requests the order entered granting this motion include a provision abandoning all assets of the estate, other than the cash that is currently in the estate’s bank account to allow the Trustee to proceed with final distributions and closure of this matter.”
With Barreca now having approved this request, Burdette has the green light to wrap up her work and move on to other cases.
Meanwhile, Tim Eyman is out of business. His initiative factory effectively no longer exists and he isn’t even pretending to try to qualify anything to the ballot.
Instead, he’s spending his time opposing bills and levies he doesn’t like and cheering on others, like his former associate Larry Jensen, who wants to qualify an initiative to the 2024 Legislature (I‑2078) exempting “law abiding gun owners” from Washington’s gun safety laws. Jensen and his backers would need to collect around 425,000 or more signatures by December 31st to qualify the measure, which will be extremely difficult without paid petitioners. Eyman was a featured speaker at Jensen’s recent kickoff event for the measure on Whidbey Island.
NPI recently prevailed over Eyman in our longstanding efforts to pass legislation repealing what he calls advisory votes, but which were really push polls that served as a barrier to voting. The bill was signed into law about a month ago and takes effect this July, which means that for the first time since 2006, there will be nothing on Washingtonians’ ballots authored by Eyman.