WASHINGTON — When Baltimore-area industrialist Daniel G. Schuster's donations to Republican congressional hopeful Andy Harris reached $3,000 last summer, $600 was quickly refunded. That's because federal law prohibits an individual from giving a candidate more than $2,400 per election.
Then, last month, the concrete company owned by Schuster dumped $300,000 into a new pro-Harris campaign, including more than $149,000 in TV ads attacking his Democratic opponent, incumbent Rep. Frank Kratovil.
And it was all perfectly legal, courtesy of the U.S. Supreme Court.
Michael Toner, a former chairman of the Federal Election Commission, which regulates campaign money, said the injection of unlimited individual and corporate contributions in the 2010 campaign is an outgrowth of recent federal court rulings that have prompted a sharp surge in spending by outside groups.
The court rulings carved out "a sweet spot" in the law that have led to the creation of so-called "Super PACs," which can raise and spend unlimited campaign money as long as the donations and expenditures are disclosed and are carried out independently of the candidate they are designed to help, Toner said.
The Baltimore Sun reported this month that a Super PAC calling itself Concerned Taxpayers of America had started running TV ads in Maryland attacking Kratovil.
The ads echoed Harris campaign commercials, which portray Kratovil as a puppet of Democratic House Speaker Nancy Pelosi. At the time, Harris' campaign said it had no connection to the outside effort.
When the ads began, Concerned Taxpayers was not yet required to reveal its donors. Documents filed Friday with the FEC showed there were only two: Daniel G. Schuster Inc., which made two contributions of $150,000 each in September, and Robert Mercer, a New York hedge fund executive, who gave $200,000.
Schuster did not respond to phone calls placed to his Owings Mills office. Mercer's office said he was not commenting about the political activity.
Schuster's contributions to Harris are his only federal donations on record, according to FEC documents.
Schuster, whose website said he started his construction company in 1974, has contributed to state and local campaigns in Maryland, giving to both Republicans and Democrats, according to a database at the University of Maryland Center for American Politics and Citizenship.
He's given $4,000 since 2008 to Gov. Martin O'Malley and a total of $8,000 between 2002 and 2006 to Republican Robert L. Ehrlich Jr. He also donated a total of $12,000 over the years to Baltimore County Executive James T. Smith Jr.
Kratovil campaign manager Jessica Klonsky said Schuster is "clearly a big Harris supporter." She added that "there's nothing at this point that limits him in any way" from putting more money into the contest in Maryland's 1st District, which takes in the entire Eastern Shore and portions of Baltimore, Harford and Anne Arundel counties.
Rep. Peter DeFazio, an Oregon Democrat and the only other target of Concerned Taxpayers, has sought to turn the outside effort against him to his advantage. DeFazio, in a weekend interview with The Washington Post, speculated that legislation he co-sponsored to tax hedge fund transactions might have motivated one of his Wall Street enemies to attack.