Election closes, campaign finance talk opens

Gansler-appointed committee looks to tweak rules

November 13, 2010|By Julie Bykowicz, The Baltimore Sun

On a single day in January, a local developer used several corporations he controlled to contribute seven times the individual campaign donation limit to the eventual winner of the race for Baltimore County executive.

As Election Day four years ago drew near, a prominent Washington attorney loaned half a million dollars to the candidate who would become governor.

A decade ago, a candidate for mayor of Baltimore spent more than $4,000 in campaign funds on suits.

Such moves might have raised eyebrows, but each was legal — revealing persistent loopholes in Maryland campaign finance law that have been exploited by candidates of both parties and all levels.

As the dust settles from the 2010 elections — and the four-year fundraising cycle that preceded them — a bipartisan committee of lawmakers, state elections officials and lawyers formed by Attorney General Douglas F. Gansler is studying the rules with the goal of proposing new ones when the General Assembly convenes in January.

Among the topics under review are contribution limits, the functioning of multi-candidate groups known as slates, the role of limited liability corporations, loans to candidates, proper uses of donor money, disclosure requirements and new media.

"It's not so much a complete overhaul as it is a tuneup," said Sen. Jamie Raskin, a Montgomery County Democrat and constitutional law professor. "There are certain explosive issues that divide us along party lines, but underneath that, there are many issues where we can find common ground and make moderate, common-sense improvements."

Fellow committee member Del. Ron George, an Anne Arundel County Republican, agreed that the work is mainly "updating."

Critics of the state's campaign financing system say change is overdue. The nonpartisan watchdog Center for Public Integrity gives Maryland a "D" grade for its disclosure laws and ranks it 22nd among the states.

Good-government advocates say loopholes such as slates, which enable candidates to transfer unlimited amounts of money among members, and legal language that allows individuals to circumvent giving limits simply by creating LLCs, render campaign finance restrictions meaningless.

"It really makes a mockery of the system," said James Browning, Mid-Atlantic director for Common Cause. Browning, who headed the watchdog group's Maryland chapter for five years, says the rules allow politicians to control huge sums of money with which to reward or punish candidates and causes.

Jared DeMarinis, candidacy and campaign finance director for the Maryland Board of Elections, said that while some may see the laws as imperfect, "it's almost like a self-regulating business. Everyone is watching everyone." DeMarinis is on Gansler's 10-member committee.

Political slates, Browning said, are an "incumbent protection system." He identifies Senate President Thomas V. Mike Miller as a master of the system: an effective fundraiser who has used slates to legally funnel hundreds of thousands of dollars to allies over the years.

Another slate veteran is Baltimore County Executive James T. Smith Jr., who in 2006 gave $585,000 to the Baltimore County Victory Slate of Democrats — which, in turn, gave state's attorney hopeful Scott D. Shellenberger $435,000 as he successfully fought off a Republican challenger.

Further weakening the campaign finance system, Browning said, is the limited-liability workaround — a system his organization described in a 2006 report as a "Six Million Dollar Loophole."

"The big issues over the last 10 years — gambling, the Inter-County Connector, development — have all been shaped and warped by the loophole," Browning said.

Contributions by two or more corporations owned by the same stockholders are considered to have been made by one contributor, but the rule does not apply to limited-liability corporations. Generous developers are some of the most avid donors through LLCs.

On Jan. 13, Catonsville developer Steve Whalen used nine LLCs to give $28,000 — seven times the $4,000 limit on individuals or corporations during a four-year period — to Baltimore County Councilman Kevin Kamenetz, then seeking the Democratic nomination for county executive. Kamenetz won the primary and the general election.

Steve Lebowitz, a Democratic activist and Daily Kos blogger, says that his research shows that Alan Fabian used the LLC loophole to give more than $250,000 to campaign committees benefiting Republican Gov. Robert L. Ehrlich Jr. during his four-year administration from 2003 to 2007.

Fabian, a state contractor under Ehrlich, was subsequently convicted on federal charges of fraud for operating a Ponzi scheme.

The regulators are regulated

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