Donation limits bypassed

Loopholes allow candidates to reap record campaign contributions

Maryland Votes 2006


Supporters of both political parties are sidestepping the contribution limits set by Maryland law through a variety of strategies that allow them to make virtually unlimited donations and pump millions of extra dollars into the state's highest-profile races.

The loophole-aided largesse has already helped Maryland's two candidates for governor raise a record amount of money - $24 million - with millions more expected before the general election Nov. 7.

"It's a joke," said Bobbie Walton, executive director of Common Cause Maryland, who has called for an overhaul of the state's campaign finance rules. "There's always one more way to take money that is under the control ... of an individual and allow them to double or exponentially increase their contributions."

Maryland campaign finance laws say donors may not give more than $4,000 to a candidate for state office and cannot donate more than $10,000 overall to state candidates during a four-year election cycle. The limits are designed to ensure that a small group of wealthy contributors do not unduly influence the outcome of a race.

But those limits, albeit legally, are being circumvented in several ways. Donors, particularly to Republican Gov. Robert L. Ehrlich Jr. and his Democratic opponent, Baltimore Mayor Martin O'Malley, are giving through multiple companies or to state and federal campaign accounts controlled by state parties that then shift the money back to candidates.

In the newest wrinkle, campaign finance records released last week show that Ehrlich received $470,000 from a federal account created by the state Republican Party, which then used the cash to purchase services for his campaign - such as salaries, office equipment and postage.

Election officials say that the practice is legal, and campaign aides say that using state party accounts is necessary to pay for the extraordinarily expensive cost of running a modern statewide election.

In one example of how donors are exceeding the $4,000 cap, R. Michael Gill, chief executive officer of Hoyt Capital Corp., a Lutherville investment company, gave $10,000 to the state Republican Party's federal account May 24. That was a week before the party held a fundraiser that featured President Bush at the BWI Airport Marriott. Party officials said the event raised a million dollars.

State records show that Gill, who could not be reached for comment, had already given checks totaling $4,000 to Ehrlich's campaign in a series of three contributions between 2003 and 2004.

In the six-week period surrounding the Bush fundraiser, the party's federal account received 81 checks for $10,000 and 34 checks for at least $5,000.

The state Democratic Party has a similar federal account but has not yet used it to help O'Malley's campaign. Records show that individual donors have written 17 checks valued at $5,000 or more since the beginning of last year that were deposited into the account, which had a balance of about $200,000 at the end of June.

George Mahoney, who owns Monumental Paving and Excavation in Baltimore, was one of 11 donors who wrote a $10,000 check to the state Democratic Party's federal account in recent years. Records show that he had previously given more than $5,000 to committees formed by O'Malley and his running mate, Del. Anthony G. Brown of Prince George's County. Mahoney also gave $2,000 to the party's state account.

Mahoney said he was not circumventing limits but using money to support a candidate he believes in.

"I'm for Martin O'Malley and the Democratic Party, and I'm not ashamed to say that," Mahoney said. "I feel that the Democratic Party ... with what's happening in the world today and what's happening in the state, is the way to go."

Monumental Paving receives contracts from Baltimore City government, but Mahoney said he does not expect special treatment because he contributes to political campaigns. He said that his contracts are awarded from a competitive-bidding process.

Even before the most recent round of financial disclosures, more than $6 million has been funneled into state campaigns since 2003 under a loophole that allows contributions to be made through multiple companies, according to a Common Cause report issued earlier this year.

The strategy is frequently used by developers, who routinely set up business entities to own and operate various real estate projects. Typically, they are organized as limited-liability companies or partnerships, which do not have to disclose their ownership. Each company can make a separate $4,000 donation to an individual candidate or a total of $10,000 in an election cycle.

In the past seven months, the two gubernatorial candidates have received at least 250 contributions from these entities, with about $252,000 of the money going to O'Malley and $141,000 to Ehrlich. Maryland is one of 30 states that permits corporate contributions.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.