Disclosure, Investigation, and What To Do With a Loophole
Robert Wechsler
Update: September 26, 2010 (see below)
Disclosure forms are important. Sometimes, even secondary information can be important. But it can take a lot of work to get behind the information that appears on disclosure forms. And when you do get behind the information, it can look real ugly, even if it's completely legal.
Here's a good example from the WNYC radio website last week. The same address showed up 14 times on a candidate's campaign contribution disclosure forms, so the reporter visited the address. It turned out to be leased by the NY State Thruway Authority (the Thruway is the state's big toll road). But the contributions weren't from Thruway employees.
The reporter went to the office of the company that gets the tax bill for the building, Suite 200. The company was started by a developer named Sheldon Goldstein. The door to Suite 100 contained the names of seven companies, some of them on the disclosure forms. All the companies seem to be linked to Goldstein and his family. They appear to have each given sizeable contributions.
The reporter spoke with Ciara Torres-Spelliscy, a campaign finance expert with the NYU Law School's Brennan Center for Justice. "I think what you have stumbled upon is what we in the campaign finance world refer to as New York State’s LLC loophole. The way that the LLC loophole works is, if you’re an individual you can spend $150,000 per year on politics in New York. But if you are incredibly rich you don't want to stop at $150,000, and the way to get around that is you set up a set of limited liability companies ... and each LLC itself can give an additional $150,000.
"If you feel that the fix is in and that politicians are only listening to people with a huge amount of money then you can feel, ‘why bother?’"
The Goldsteins did not respond to multiple requests by the reporter for New York City's most prominent public radio station.
But the gubernatorial candidate, Andrew Cuomo, did respond, and with a very reasonable point of view:
In other words, the logic of following law rather than ethics is short-term. Laws that punch loopholes in ethics should be used not as a way of getting money, but as a way of showing the sneaky games those in power use to stay in power. They are things to run against, not run with.
Update: September 26, 2010
On Friday, the Brian Lehrer Show on WNYC public radio hosted a discussion about the LLC loophole and, in fact, set up its own LLC, It's That Easy, LLC, in 11 minutes while on air (click here to see the documents required).
Robert Wechsler
Director of Research-Retired, City Ethics
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Disclosure forms are important. Sometimes, even secondary information can be important. But it can take a lot of work to get behind the information that appears on disclosure forms. And when you do get behind the information, it can look real ugly, even if it's completely legal.
Here's a good example from the WNYC radio website last week. The same address showed up 14 times on a candidate's campaign contribution disclosure forms, so the reporter visited the address. It turned out to be leased by the NY State Thruway Authority (the Thruway is the state's big toll road). But the contributions weren't from Thruway employees.
The reporter went to the office of the company that gets the tax bill for the building, Suite 200. The company was started by a developer named Sheldon Goldstein. The door to Suite 100 contained the names of seven companies, some of them on the disclosure forms. All the companies seem to be linked to Goldstein and his family. They appear to have each given sizeable contributions.
The reporter spoke with Ciara Torres-Spelliscy, a campaign finance expert with the NYU Law School's Brennan Center for Justice. "I think what you have stumbled upon is what we in the campaign finance world refer to as New York State’s LLC loophole. The way that the LLC loophole works is, if you’re an individual you can spend $150,000 per year on politics in New York. But if you are incredibly rich you don't want to stop at $150,000, and the way to get around that is you set up a set of limited liability companies ... and each LLC itself can give an additional $150,000.
"If you feel that the fix is in and that politicians are only listening to people with a huge amount of money then you can feel, ‘why bother?’"
The Goldsteins did not respond to multiple requests by the reporter for New York City's most prominent public radio station.
But the gubernatorial candidate, Andrew Cuomo, did respond, and with a very reasonable point of view:
-
I want to reform the campaign finance system. To reform the campaign
finance system I have to get elected. To get elected I have to raise
money. I don't have large sums of personal wealth, I don't come
from a family with personal wealth, so I have to get elected, which
means I have to raise money so I can be in a position to actually make
the reforms.
In other words, the logic of following law rather than ethics is short-term. Laws that punch loopholes in ethics should be used not as a way of getting money, but as a way of showing the sneaky games those in power use to stay in power. They are things to run against, not run with.
Update: September 26, 2010
On Friday, the Brian Lehrer Show on WNYC public radio hosted a discussion about the LLC loophole and, in fact, set up its own LLC, It's That Easy, LLC, in 11 minutes while on air (click here to see the documents required).
Robert Wechsler
Director of Research-Retired, City Ethics
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