Democrats slam Hogan on bankruptcy, debt

September 15, 2014|By Michael Dresser

The Maryland Democratic Party turned Republican Larry Hogan's charge that the state is on the verge of bankruptcy against him Monday, pointing to the GOP gubernatorial nominee's 1994 bankruptcy filing over more than $1.5 million in debt.

In a campaign news release, the Democrats also charged that has "a long history of mismanaging money," pointing to outstanding debt left over from his primary campaign. The report also criticizes the Maryland Republican Party for its track record of debt.

The Democrats contrasted Hogan's record with that of Lt. Gov. Anthony G. Brown, saying their party's nominee "has worked to strengthen Maryland's finances and reduce the deficit," helping to keep the state's AAA bond rating.

The attack takes aim at one of Hogan's chief selling points: that he is a successful businessman rather than a politician.

That Hogan filed for personal bankruptcy is not in dispute. In May, after Republican blogger Jeff Quinton reported on the court case, his campaign released a statement acknowledging that he filed for Chapter 7 two decades ago. He blamed new federal lending rules, contending that they had forced his real estate business' longtime lenders to close or sell out to out-of-state banks. Hogan said the new bankers called in his company's loans, forcing him to liquidate personal assets including his Prince George's County home.

Hogan called the bankruptcy "painful and even humiliating at the time" but contended the experience taught him lessons about "the challenges of life in the private sector."

Quinton predicted in his article that the bankruptcy issue would be "thrown at him by the Democrats," and on Monday that prediction came true. The Democrats said Hogan's explanation shows that he "still refuses to take responsibility for his own bankruptcy."

Adam Dubitsky, a spokesman for Hogan, responded with an attack on Brown.

"The difference between Larry Hogan and Anthony Brown is that Larry leaned from his challenges and went on to create a successful business that created jobs and brought business to Maryland," Dubitsky said.

The Democratic criticism of Hogan's campaign omits some key details. While it points out that his campaign was at the time of its last filing $580,000 in debt, it does not specify that $500,000 of that total represents personal funds Hogan lent to the campaign. 

The last campaign filing report covered a period ending Aug. 19 and thus was a snapshot in time of the state of the campaign's finances as of that day -- not necessarily now. Hogan's campaign used a similar tactic when it boasted about a 3-1 advantage in cash on hand over Brown weeks after the close-out date, gliding over the fact that it was an anomaly caused by a one-time payment of $2.6 million from the state's public financing fund.

Dubitsky said that since the filing cutoff the campaign has repaid all of its primary debt with the exception of the loans from Hogan. 

The Democrats' finger-pointing at the Republican Party over its $120,000 in unpaid debt underscores the state GOP's longstanding financial problems. However, the GOP's money issues far predate Hogan's June 24 primary victory. Most of the money the Republican Party owes came in the form of $67,662 in loans from BB&T Bank, some dating back as far as 2011. 

The state Democratic Party listed no debts on its campaign finance disclosure.

Joe Cluster, executive director of the state Republican Party, said the GOP's actual debt has been reduced to about $55,000. He said the party has had to borrow at times because it relies mostly on individual donations while the Democrats receive heavy contributions from labor unions, corporations and political action committees.

"We don't have unlimited special interest dollars coming into our coffers like the Democrats do," Cluster said. 

Jared Smith, a spokesman for the state Democrats, contended the bankruptcy and debts raised legitimate questions. 

“This is part of a clear pattern of fiscal mismanagement that extends even today to the deficit spending of Larry Hogan’s campaign. Since he refuses to detail his economic agenda, Maryland’s working families have nothing to judge Larry Hogan by other than his record of fiscal irresponsibility," Smith said.

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