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NY judge hears suit to close campaign finance loophole

by Assoicated Press
December 19, 2015

CATSKILL, N.Y. (AP) Lawyers for New York University’s Brennan Center, three state legislators and others urged a state judge on Wednesday to close the state’s campaign finance loophole that lets wealthy individuals use limited liability companies to give millions of dollars to candidates.

“It’s caused so much corruption in Albany,’’ attorney Elizabeth Saylor told Justice Lisa Fisher.

The loophole was central in recent trials of former Senate Leader Dean Skelos and Assembly Speaker Sheldon Silver and the $4.3 million in campaign donations made over two years by LLCs controlled by developer Glenwood Management, she said.

Both men were convicted of using their influence to advance legislation while personally benefiting through legal referral fees to Silver and no-show work for Skelos’ son Adam. Glenwood lobbied for extending tax breaks for New York City developers.

By failing to close the loophole in an April vote, New York’s Board of Elections continued its original 1996 misinterpretation of the law, which undermines its purpose and the donation restrictions intended to keep the process fair, Saylor said.

Corporations have a $5,000 annual donation limit and partnerships have a $2,500 donation limit, after which individual partners can donate up to their personal limits. Individuals can give up to $150,000 a year.

Currently, LLCs are treated like individuals. However, they don’t have to disclose their owners and so one wealthy individual or company like Glenwood can form 27 LLCs, Saylor said. This case concerns a Board of Elections error on its application of the law, and the court has a duty to correct that, she said

Board attorney Todd Valentine said that the lawsuit is 19 years too late and that the board in April simply deadlocked on internal guidance to its staff on revising its interpretation of the law, which is no place for the court to intervene.

“This is a political question. This is an issue that’s more properly in front of the state Legislature and governor,’’ he said.
Valentine added that the campaign finance rules are the same for every political candidate, that the three who sued can solicit LLC money.

The three are Sens. Daniel Squadron and Liz Krueger and Assemblyman Brian Kavanagh, who don’t take LLC money. They say that puts them at a financial disadvantage as candidates, and they have pushed legislation to close the loophole. All three are Democrats.
Legislation to close the loophole passed the Democrat-controlled Assembly in May but died in the Republican-controlled Senate. The election commissioners split 2-2 in April on the issue, with the two Democrats voting for staff to draft new LLC regulations and two Republicans voting against it.

Attorney John Ciampoli, representing the Republican state committee and its Chairman Ed Cox, said all the plaintiffs lack standing to bring the case over a 1996 board decision.

“They’re asking this court to legislate from the bench. That’s a violation of separation of powers,’’ he added.

The judge asked for further briefs addressing the question of whether there’s a great public interest that grants the plaintiffs standing.

“There is a thin line whether the court can hear this case,’’ she said.

Plaintiffs include former Republican state Sen. John Dunne, State University at New Paltz Professor Gerald Benjamin and Republican Maureen Koetz, who ran against Silver last year and lost.

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