The LLC shell game

Our view: St. John case reveals campaign contribution loophole

June 22, 2008

Developer Edward St. John learned an expensive lesson recently about Maryland's campaign finance laws. Turns out it's against the rules to have third parties (in this case, his vice presidents) make campaign donations with the understanding they'd be reimbursed.

Funny how the law can frown upon circumventing statutory limits on individual contributions. For this bit of knowledge, Mr. St. John is paying a $55,000 fine and has agreed to contribute another $55,000 to the nonprofit College Bound, which helps pay college expenses for underprivileged students.

But as part of an agreement with State Prosecutor Robert A. Rohrbaugh, Mr. St. John also fully disclosed his involvement with more than $300,000 in perfectly legal campaign donations he made through 18 limited liability corporations.

On this topic, it's Maryland voters who should be getting an education. Mr. St. John was able to give this rather tidy sum in essentially an untraceable manner to the Democratic and Republican candidates of his choice. No doubt this is all quite helpful to a developer who wants to make friends with (and get funding for a needed highway interchange or other help from) elected officials.

It's time the LLC loophole was closed. It's bad enough that businesses can give money to candidates - something that's not allowed in about half of the states - but to allow one person or company to create multiple corporate identities to hide one's identity and avoid donor limits is truly beyond the pale.

As Mr. Rohrbaugh notes in a written statement concerning the case, "The use of third parties or LLCs to disguise the true source of the contributions certainly violates the spirit of Maryland's law, if not the letter of the law."

Gov. Martin O'Malley announced last week that he'd like to take a "look" at the LLC law. He needs to do much more than that. The problem could be easily resolved if political contributions were restricted to individuals. Mr. St. John could still give money to candidates, but not as Howard Crossing LLC or Brandywine Meadows LLC.

The loophole has allowed companies to funnel millions of dollars to Maryland candidates in recent years. That kind of influence is costly, particularly to those of us who might naively assume elected officials are not beholden to wealthy - and hidden - contributors.

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