Disclosure, Investigation, and What To Do With a Loophole
<b>Update: September 26, 2010</b> (see below)<br>
<br>
Disclosure forms are important. Sometimes, even secondary information
can be important. But it can take a lot of work to get behind the
information that appears on disclosure forms. And when you do get behind the
information, it can look real ugly, even if it's completely legal.<br>
<br>
Here's a good example <a href="http://beta.wnyc.org/articles/politics/2010/aug/18/cuomo-accepts-millio…; target="”_blank”">from
the
WNYC
radio website last week</a>. The same address showed up 14 times on a
candidate's campaign contribution
disclosure forms, so the reporter visited the address. It turned out
to be leased by the <a href="http://www.thruway.ny.gov/index.shtml" target="”_blank”">NY
State
Thruway Authority</a> (the Thruway is the state's big toll road). But
the contributions
weren't from Thruway employees.<br>
<br>
The reporter went to the office of the company that gets the tax bill
for the building, Suite 200. The company was started by a developer
named Sheldon
Goldstein. The door to Suite 100 contained the names of seven
companies, some of them on the disclosure forms. All the companies seem
to be linked to Goldstein and his family. They appear to have
each given sizeable contributions.<br>
<br>
The reporter spoke with Ciara Torres-Spelliscy, a campaign finance
expert with the NYU Law School's <a href="http://www.brennancenter.org/" target="”_blank”">Brennan Center for Justice</a>. "I think
what you have stumbled upon is what we in the campaign finance world
refer to as New York State’s LLC loophole. The way that the LLC
loophole works is, if you’re an individual you can spend $150,000 per
year on politics in New York. But if you are incredibly rich you don't
want to stop at $150,000, and the way to get around that is you set up
a set of limited liability companies ... and each LLC itself can give
an additional $150,000.<br>
<br>
"If you feel that the fix is in and that politicians are only
listening to people with a huge amount of money then you can feel, ‘why
bother?’"<br>
<br>
The Goldsteins did not respond to multiple requests by the reporter for
New York City's most prominent public radio station.<br>
<br>
But the gubernatorial candidate, Andrew Cuomo, did respond, and with a
very reasonable point of view:<ul>
I want to reform the campaign finance system. To reform the campaign
finance system I have to get elected. To get elected I have to raise
money. I don't have large sums of personal wealth, I don't come
from a family with personal wealth, so I have to get elected, which
means I have to raise money so I can be in a position to actually make
the reforms.</ul>
But according to this logic, unless Cuomo wins and convinces the
legislature to start a public
campaign financing program, and that program isn't gutted by the
courts,
then the next time Cuomo or another reformer runs for governor, he
won't be able to get sufficient campaign contributions to win, and the
non-reformer he's running against may very well get the law changed back to
allow loopholes such as this.<br>
<br>
In other words, the logic of following law rather than ethics is
short-term. Laws that punch loopholes in ethics should be used not as a
way of getting money, but as a way of showing the sneaky games those in
power use to stay in power. They are things to run against, not run
with.<br>
<br>
<b>Update: September 26, 2010</b><br>
<a href="http://beta.wnyc.org/shows/bl/2010/sep/24/30-issues-money-root-everythi…; target="”_blank”">On Friday, the Brian Lehrer Show on WNYC public radio</a> hosted a discussion about the LLC loophole and, in fact, set up its own LLC, It's That Easy, LLC, in 11 minutes while on air (<a href="http://beta.wnyc.org/articles/its-free-country/2010/sep/23/30-issues-30…; target="”_blank”">click here</a> to see the documents required).<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
---