Political Donors Spend Big In Loophole's Last Days

Sep 15, 2014

St. John Properties, Inc., corporate headquarters in Woodlawn.
Credit Christopher Connelly/WYPR

The big, non-descript glass and brown-brick building at 2560 Lord Baltimore Drive in Woodlawn is home to St. John Properties, one of the biggest commercial real estate firms in the region. It’s also home to a huge chunk of money that’s been spread across dozens of campaigns in Maryland. The address shows up in campaign finance reports for hundreds of donations totaling more than $785,000 since 2011.

Maryland election laws limit companies to a maximum donation of $4,000 per candidate within a four-year election cycle, but there’s a loophole in that law means companies like St. John can get past that limitation by funneling contributions through separate Limited Liability Companies or LLCs. Because each of those LLCS is treated like a totally separate company, the only limit on how much a company can give is the number of LLCs it has registered.

Some 63 candidates in all kinds of races received money from LLCs registered to Saint John’s address – in local and state-wide races, Democrats and Republicans. The company did not return repeated calls for comment.

St. John is not the only company doing this. A WYPR investigation found more than a dozen clusters of LLCs that shared the same address making multiple maxed-out donations to the same candidates.

“LLCs have been the worst loophole in our campaign finance laws for many years,” says Jennifer Bevan-Dangle, executive director of Common Cause Maryland.

Bevan-Dangle says companies use their armies of LLCs to buy influence with elected officials. “If you have a donor who through his LLCs gave you $60k, you're going to take his call, you're going to give him a meeting because you want to cultivate that relationship,” Bevan Dangle says. “It's access and it's influence that everyday citizens don't have.”

Back in the 1970s when the campaign finance laws were written, LLCs hadn’t been invented. When LLCs were made legal in Maryland in the ‘90s to give companies like developers a way to shield interest from , the loophole sprung up with them.

But the good news, she says, is that the loophole is being closed.

“I can't wait for the change,” says Del. Ron George, who co-sponsored the Campaign Finance Reform Act of 2013 that is supposed to end the practice next year when a new election cycle begins.

Under the law, companies with the same owner will only be allowed to donate a maximum of $6,000 to each candidate. Companies will be considered to have common ownership if at least 80 percent of the company is owned by the same individual or individuals.

But this year, the LLC loophole is fair game – add to that a couple of recent Supreme Court decisions and we’re seeing record amounts of cash flowing into political contests. 

“We’re seeing a perfect example of a few people influencing elections and outcomes. They’re neither liberal nor conservative, they’re just protecting their own interests.” George says. “I think that’s a risk.”

“People have gotten complacent about campaigns because it’s gotten so out of control. And that’s unfortunate,” says Del. Jon Cardin, D-Baltimore County. “The more expensive they get the more people seem disengaged.”

Cardin chairs the House subcommittee on election law and co-sponsored the reforms. When he ran for Attorney General this year, Cardin took donations from LLCs: Campaigns are expensive, he says, and he had to figure his opponent would take LLC money too.

“I am by sheer necessity required to raise a lot of money,” he says. “I can’t tie my arm and my leg behind my back and be expected to compete.”

The new rules are meant to provide a hedge against the growing sums spent on campaigns.

But Bevan-Dangle from Common Cause says it might not be so simple. To enforce the law, the state’s election board has to be able to prove that LLCs are owned by the same person – and figuring out who actually owns the companies isn’t easy.

“We feel like maybe instead of shutting the window of the loophole we've sort of just drawn it down so it's just an inch open, so the flies can get in and out and that is of significant concern to us,” Bevan-Dangle says.

Still, she says the board will be able to charge bigger fines for violators starting next year – teeth she hopes will be a deterrent for companies looking to buy relationships.