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Companies bypass campaign caps

THE BALTIMORE SUN

More than a year and a half before the 2006 election, developer Edward A. St. John has quietly established himself as a powerhouse in big-money Maryland politics by orchestrating $160,000 in contributions from more than 50 related companies operating out of his Baltimore County office.

St. John, 62, the chief executive of MIE Properties, is the largest donor among more than a dozen major political players who have used multiple companies to sidestep the state's campaign finance law and donate far more than the cap on individual or company contributions - $4,000 to any one politician and $10,000 overall during a four-year election cycle.

Critics say the absence of meaningful limits on contributions illustrates the laxity of Maryland's election laws, portions of which are described as "virtually unenforceable" by State Prosecutor Robert A. Rohrbaugh. Besides permitting donations through multiple entities, Maryland allows corporate contributions, which are banned in 20 states and in federal elections.

By funneling campaign donations through related entities, St. John has the theoretical ability to mobilize more than $500,000 in 2006 election donations without breaking the law or creating any new companies. And, as Rohrbaugh noted, it takes only minutes to establish business entities.

St. John, whose network of businesses donated $140,000 during the 2002 election cycle, defends the lavish giving, saying, "I think it's what you're supposed to do as a citizen if you're able to do it."

Giving through multiple businesses also permits big donors to fly under the radar - escaping the scrutiny their gifts might attract if they were made under a readily recognizable name.

'Exerting influence'

"It's a way of exerting influence without getting caught," said James Browning, executive director of Common Cause Maryland. "They get to have it both ways. They pay for a campaign, but they don't alarm people in a community or a district."

A bill intended to close the loophole has passed the House of Delegates but is languishing in a Senate committee. It would treat multiple companies as a single operation when totaling up campaign donations, if the same people controlled 80 percent of each company.

But Rohrbaugh recently wrote to lawmakers, saying that the bill is not the solution and would make enforcement even more difficult.

"Creative individuals who are intent on finding 'loopholes' in the campaign finance laws will quickly exploit these new 'loopholes,'" Rohrbaugh wrote. "While it is encouraging that the campaign contribution laws are being addressed, the potential of abuse will continue as long as artificial entities such as corporations and limited liability companies are permitted to contribute to campaigns."

While St. John is not as well-known as such prominent political money figures as Orioles owner Peter G. Angelos or racetrack owner Bill Rickman Jr., his recent contributions to state candidates of both parties appear to outstrip theirs. His giving has put him on close terms with prominent politicians - he says he serves on the finance committees of Republican Gov. Robert L. Ehrlich Jr. and one of his prospective Democratic opponents, Baltimore Mayor Martin O'Malley.

MIE-related entities have given more than $42,000 to Ehrlich and $26,000 to O'Malley since the 2002 election. Choosing between them would be "real tough," said St. John, who said he spends two-thirds of his time on civic, charitable and political causes while continuing to run his company.

In recent years, MIE - one of the region's largest commercial real estate managers - has benefited from government actions in jurisdictions where it has contributed tens of thousands of dollars to officeholders. Some of the actions have been praised as bringing needed economic development, but others have been controversial.

Development decisions

In Anne Arundel County in March last year - a day before County Executive Janet S. Owens held a fund-raiser in an MIE building - Owens won approval of $2.6 million in upfront aid to help the company build a technology park near Baltimore-Washington International Airport.

At the time, Republican County Councilman Edward R. Reilly said the deal resembled "a sole source contract" because MIE did not have to compete with other developers. St. John said the public benefited because the company made improvements to Nursery Road and later repaid the money.

In 2002, residents of Parole accused Owens of favoring St. John when she supported MIE's proposal for about 30 acres of commercial and residential development in the area. Community activists said Owens broke a promise not to approve building permits until design standards were adopted - a charge she denied.

In 1999 and 2001, MIE signed deals to lease office space to Baltimore County without having to go through a competitive process. At the time, St. John was a financial backer of C. A. Dutch Ruppersberger, then the county executive and now a U.S. congressman who is exploring a run for Senate next year. Such deals were legal then and are now.

The campaign law loophole gives developers an edge over other donors because they typically control many companies. It is common practice to set up separate limited liability corporations or partnerships for each project. Each is considered a legally separate entity, though one person may control them all.

For example, MIE manages properties for companies such as Riva Business Park LLC, Quarterfield Center LLP, Heat Business Center LLC and dozens of others - all with their address at MIE's headquarters at 5720 Executive Drive in Baltimore County.

State incorporation records list either St. John or another MIE executive and two lawyers for MIE as the resident agents for nearly 50 of the entities.

"It's an end run around the contribution limits. It's giving developers unlimited influence over the political process," Common Cause's Browning said.

The watchdog organization has documented dozens of cases of individuals or businesses that have similarly stretched the campaign finance limits by contributing under multiple names. They include such developers as David Cordish, John Paterakis and Ronald Lipscomb.

MIE-related firms

St. John insisted that the businesses using his company's address are independent entities that contract with his firm to manage properties.

He said he frequently sells fund-raiser tickets to these businesses because he serves on the finance committees of many politicians.

"All of the politicians who run for political office send us bundles of tickets to sell," he said. "We sell them to a lot of people."

St. John said he turns to companies operating out of his offices first because they are the most willing to buy the tickets. He said he probably sells five times as many tickets to people outside the companies.

On May 4 last year, 50 of the MIE-related businesses each wrote a $200 check to provide $10,000 for Phillip D. Bissett, who runs the MARC train system and is expected to seek the Republican nomination for Anne Arundel County executive.

Six weeks earlier, 23 MIE-related entities each gave $250 on the same day to pour $5,750 into the campaign coffers of Owens, the incumbent Democratic executive. Owens, who cannot run again because of term limits, has received at least $8,300 from the network since the last election.

St. John said he serves on the campaign finance committees of both politicians, who ran against each other in 2002. That year, he said, he helped both raise money, though he said he backed Owens in the general election.

In 2002, MIE-related groups gave $4,050 to Bissett. MIE partners, as well as St. John's wife, contributed at least $8,300 to Owens.

Hard-to-trace sums

The extent of St. John's involvement in that race went largely undetected because of the difficulty of tracing MIE-related contributions back to their common source.

St. John said he also serves on the finance committees of Comptroller William Donald Schaefer, who received at least $20,000 from MIE-related businesses, and Baltimore County Executive James T. Smith Jr., who received at least $21,650.

Montgomery County Executive Douglas M. Duncan, O'Malley's likely opponent for the Democratic gubernatorial nomination, has not received contributions from MIE-related entities but has received donations from other developers who have used affiliated entities to give him far more than $4,000.

On March 4, the House of Delegates voted 82-53 to pass a bill introduced by Del. Elizabeth Bobo, a Howard County Democrat, aimed at making it more difficult to avoid the limits. But it and a companion Senate measure have been stuck in the Senate Education, Health and Environment Committee for weeks without coming to a vote.

Sen. Paula C. Hollinger, chairwoman of the committee, said she isn't sure whether to bring the measure up for a vote. The Baltimore County Democrat, who has not taken any MIE-related donations, said that in view of the state prosecutor's opinion she's not sure what the purpose would be.

While a single company would have a hard time affecting the outcome of a statewide election, its impact could be significant at the local level.

Bobo said the current law makes it possible for a developer to marshal large, hard-to-trace sums to defeat local candidates who oppose their projects.

"There's a big potential for that, and I think many people in office are aware of it," she said.

'American way'

But some local officials have no problem with developers marshaling funds through multiple entities.

"People are supporting candidates or elected officials who share their views. It's the American way," said Councilman Reilly, a Crofton Republican who has not received MIE-related money.

But community activists believe donations can give developers an edge over citizens' groups.

John Fischer, an Annapolis resident, led an advisory committee charged with managing growth in the Parole area. Fischer said last week that he was not surprised at the extent of contributions made to Owens and Bissett by businesses related to MIE, which has had several area projects.

"It was very clear from [Owens'] comments to many people including myself that Ed St. John and MIE were very important people," Fischer said.

But Michael Brown, Owens' campaign treasurer, said St. John had received no favors as a result of his contributions.

"Any economic development initiative will benefit people who own property," he said. "Nothing was done for his personal benefit."

Recipients of the MIE-related contributions said they were only doing what the law allows.

O'Malley fund-raising consultant Colleen Martin-Lauer said, "The mayor follows the rules about fund raising. That's all I'm going to say about it."

A spokesman for Ehrlich's campaign committee did not return calls.

Brown said St. John has been "a good and valuable contributor and supporter" of Owens. But he said the campaign was unaware of the extent to which MIE-related businesses were contributing to her campaign.

"We did not pick up on that and certainly had no knowledge that similar contributions were being given to Bissett," he said.

Bissett defended the practice of bundling contributions as "totally legal."

"I can't speak to the reason that the companies donate, other than that I believe they perceive me as a winner and therefore they're making their donations accordingly," he said.

Bissett said he would continue to seek contributions from the MIE network.

"We have a very aggressive fund-raising cycle ahead of us, and we intend to maximize our ability to be competitive and win this race," he said. "I don't see any problem whatsoever because, again, it's a legal practice."

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