The state Campaign Spending Commission wants to fine Maui Mayor Alan Arakawa $2,000, saying he falsely reported dozens of campaign expenditures.
But the mayor, who is now running for Lieutenant Governor, called the investigation a "smear."
In its complaint, the commission said the mayor gave more than $40,000 to about 40 Maui nonprofit groups over the past several years but labeled the donations "advertising expenses" in his campaign disclosures.
It's not illegal to give campaign money to nonprofit organizations but it is illegal to misrepresent the expenditures in campaign reports.
"If you're taking campaign money and funneling it through nonprofits, it's much harder to figure out what that money's being used for," said University of Hawaii political science professor Colin Moore.
"There's just very little transparency."
But Arakawa said the expenditures are legitimate. He said he bought advertising in publications by nonprofts such as local pageants but did not donate the money to the nonprofits.
He called the investigation "vindictive" and "frivolous," saying the commission began investigating him two years ago over a radio show appearance. He said the probe began after a listener complained to the commission that the radio show appearance was really a political ad.
Arakawa said that allegation was later proven to be unfounded but that the commission then began to look at all of his advertising expenses and donations to nonprofits. He said only a few aren't fully documented.
"They are deliberately trying to create a campaign smear for some reason," the mayor said.
The commission's complaint also named Arakawa's wife Ann. Sources said that when commission investigators tried to talk to the nonprofits, some of the nonprofits told the investigators that Mrs. Arakawa told them not to talk to them.
Arakawa said that's a mischaracterization of what his wife said. He said she simply told them that it was their choice if they spoke with the investigators or not.
Arakawa, who is finishing his second term as Maui mayor and can't seek re-election, is now running for Lieutenant Governor. The timing of this investigation can hurt his chances.
"He's not really well known among the voters of Oahu, so if one of their first introductions to him is that he has not been appropriately reporting his campaign spending, then it can be very difficult to overcome that perception," Moore said.
The commission will next take up the matter at a meeting on Wednesday, where its five-member board can vote to approve the fines or refer the complaint to prosecutors for criminal charges.