Last hurrah for the 'LLC loophole'

For decades, well-heeled contributors have been able to dodge Maryland's campaign donation limits through a quirk in state law known to reform advocates as the "LLC loophole."

The General Assembly passed legislation in 2013 to close the loophole as of the next four-year election cycle, but campaign finance reports filed last week show it is enjoying a last hurrah in the 2014 governor's race.


Here's how the loophole works: Maryland law limits an individual or company to a donation of $4,000 to a single candidate or $10,000 to all candidates combined. But a wealthy business owner who wants to maximize political influence can donate the maximum in the names of all of the corporate entities under his or her control.

Large developers typically set up many limited liability corporations to control their various interests. By contributing through those entities, they can form "clusters" of giving power that increase their political clout into the hundreds of thousands of dollars.


In finance reports filed by Democrats Anthony G. Brown and Douglas F. Gansler there are many examples of each campaign receiving tens of thousands of dollars last year from clusters using the LLC loophole. Here are just two:

Lieutenant Governor Brown and his running mate, Howard County Executive Ken Ulman, got donations from a cluster of LLCs and limited liability partnerships sharing the same Columbia address as the Sanford Cos. and its chief executive, S. Bruce Jaffe. Ulman reported $27,000 and Brown $27,000. With contributions to Ulman in the two previous years, the total for the cluster comes to at least $72,000.

Attorney General Gansler, who set up a task force in 2010 that recommended that the loophole be closed, benefited from a similar cluster surrounding the Washington office of The Bernstein Cos., a real estate development company with interests in Maryland, and CEO Adam K. Bernstein, Gansler's campaign finance chair. Gansler and his running mate, Del. Jolene Ivey, reported receiving $54,000 from that address last year alone. That brings Gansler's total from that cluster to $80,000 since the 2010 election.

The chief executives of Sanford and Bernstein did not return calls seeking comment.

The third candidate in the Democratic race, Del. Heather R. Mizeur of Montgomery County, reported no such clusters of big giving. She said she has stopped accepting corporate contributions since deciding in December to accept public financing. With $284,000 in public matching money, she raised $1.1 million last year.

Asked about the clusters, Brown campaign manager Justin Schall said the fundraising total reflects "broad, diverse support" from 6,000 donors. The Gansler campaign declined to comment.

When they filed their finance reports, the campaigns put a spin on their fundraising practices.

Brown's campaign boasted that the $7 million he and Ulman have in the bank "caps a successful year of grass-roots growth." Gansler's campaign, which fell behind after being outraised 3-1 by Brown last year, accused the lieutenant governor of "shaking down special interests."


The records show that Brown's campaign was far from just a grass-roots effort, while Gansler took plenty of money from special interests as well.