Report finds election exploitation through LLC Loophole

State Senator Daniel Squadron

State Senator Daniel Squadron

By Maria Rocha-Buschel

While this will probably not come as a surprise to anyone who’s been following the scandals in Albany this past year, a report by State Senator Daniel Squadron found significant LLC loophole exploitation in state elections contributions, with Tishman Speyer Development LLC one of the names topping the list.

Assemblymembers Brian Kavanagh and Jo Anne Simon, along with Squadron and other advocates, announced the findings of the report last Wednesday.

While the state prohibits corporations from giving more than $5,000 a year to candidates and political campaigns, through the so-called LLC Loophole, limited liability corporations, which are defined as businesses that share attributes of corporations and partnerships, are allowed to donate up to $60,800 to a candidate per election cycle and up to $150,000 a year to candidates and political committees overall. Corporations and individuals are also allowed to set up an unlimited number of LLCs through which to donate, and developers often have an LLC for each of their properties.

“This is why Albany and real estate interests run roughshod,” State Senator Brad Hoylman said of the loophole. “They can manipulate the law. These are often shadowy entities and have multiple owners. They exist primarily to circumvent detection of true ownership. The fact that they’re treated as individuals is outrageous and that needs to be fixed.”

Hoylman is a co-sponsor of Squadron’s bill in the State Senate that would close the loophole.

Squadron’s report also found that when linking LLCs by addresses, Glenwood Management and Cablevision associated addresses were the highest contributors in 2014. Glenwood Management featured prominently in the case against former Assembly Speaker Sheldon Silver, who prosecutors said obtained nearly $4 million in illegal payments through schemes involving Glenwood and real estate investor Steve Witkoff. Governor Andrew Cuomo has pledged to close the loophole, despite accepting more than $6.2 million from LLCs, including at least $800,000 from Glenwood, according to figures found by ProPublica.

“We’ve seen with both Silver and (former Majority Leader of the New York State Senate Dean) Skelos that the LLC loophole is the primary vehicle for the real estate industry to hold sway over Albany,” Hoylman said. “In both cases, the LLC loophole was ‘Exhibit A’ in the government’s case against each legislator so people believe, correctly, that if we close the loophole we’ll help clean up a major aspect of failed campaign finance system and the restore integrity of elections.”

According to the report, median contributions from LLCs were six times higher than median individual contributions and numerous corporations used multiple LLCs to get around the $5,000 campaign contribution limits.

In addition to Tishman Speyer, other top LLC contributors included Harris Beach LLC, SL Green Management LLC, Related Sales LLC and Hinman Straub Advisors LLC.

Squadron’s report recommends reversing the Board of Elections decision in 1996 that classified LLCs as individuals, which local elected officials feel breaches the purpose of state campaign finance law to limit contributions and ensure transparency of campaign finance.

The Brennan Center and Emery Celli Brinckheroff and Abady LLP, on behalf of several former and current state legislators including Squadron and Kavanagh, filed a lawsuit in July of this year against the Board of Elections to close the loophole.

The report analyzed the 11,000 LLC contributions that were made in the 2014 filing year.

2 thoughts on “Report finds election exploitation through LLC Loophole

  1. Skelos and his ugly son have both been found guilty on all charges today. Any pol who opposes the legislation proposed by Squadron should be looked at very, very closely by Preet Bharara AND the voters. What a bunch of crooks! Not at all surprised that TS and other developers are involved because they are worse than the Mafia (when the Mafia really held sway!) Round ’em all up and put them in the pokey!

  2. All members of the politically sophisticated electorate knew already that Albany is a cesspool. Why do we pay them? For most of the members of Assembly and Senate … the “salary” amounts to mere peanuts.

    Throw all the bums out!

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