Behind that door are three men in a room...
Behind that door are three men in a room...
This is a platform for User Generated Content. G/O Media assumes no liability for content posted by Kinja users to this platform.

4 Developers Use LLC Loophole to Give $600K Through 48 Different Entities

Illustration for article titled 4 Developers Use LLC Loophole to Give $600K Through 48 Different Entities

We all know that New York State's campaign finance laws are a joke. The contribution limits are laughably high already. But the limits are also basically meaningless to anyone who really wants to buy influence because they can simply keep giving through fake companies that exist only on paper by using the infamous "LLC loophole." This practice makes a mockery of contribution limits because it means that wealthy individuals or corporate entities can in theory give infinite amounts of money to candidates that will do their bidding. All you need is the will to keep creating fake companies to write the checks. The Albany Times Union documented a recent case where four developers in Albany created at least 48 fake LLCs to donate more than $600,000. This is what your democracy looks like, New York.

Advertisement

Four Capital Region developers have given more than $600,000 to local and state political committees during the past five years — and they've done it by funneling the cash through at least 48 different entities, according to a Times Union analysis of campaign finance reports.

...

Columbia Development Cos. and Galesi Group, among the most politically active developers in Albany and Schenectady counties, contributed hundreds of thousands of dollars using at least 15 different business entities each. Bruce Tanski, a Saratoga County developer who was indicted two months ago on campaign-fraud charges, also has contributed significant amounts of money to various candidates and political committees in the past five years through at least 10 different companies he controls. Another, Highbridge Development in Schenectady, has used at least nine LLCs to make political donations.

Advertisement

As gross and unethical as all this would appear to a casual observer, it is all still perfectly legal.

The practice, known as the "LLC Loophole," is legal. State elections law treats limited liability companies, which are essentially paper companies that have their own bank accounts, as separate entities from their parent corporations. The designation allows owners of the LLCs to donate to the same candidates, and therefore often go beyond state contribution limits — a practice that is most often done by construction, development and real estate companies in New York state. The donation limits vary by political race and location, but the loophole allows donors to easily exceed the $10,300 limit for a state Senate race during the general election.

Advertisement

And it's disgustingly bipartisan.

For many developers, campaign support of municipal and state government leaders is provided every year — whether there is an election or not. For instance, despite a lack of local races this year, Galesi gave the controlling Schenectady County Democratic party $3,850 in 2014, using the name Schenectady Development, one of 15 entities the developer has used to give campaign cash since January 2009.

Advertisement

Hmmm. Why would these developers be giving all this money through all these fake companies even though there aren't any elections? The answer is pretty simple.

Galesi has been a fixture in the movement to redevelop Schenectady's downtown, and has received government assistance to do it. Galesi received tax breaks for environmental remediation at the new Golub headquarters; $583,162 a year in tax exemptions for the new Center City building, and was recently rolled into a federal package to receive money to demolish a former county department of social services building so the land could be used for apartments. Galesi is also behind a project to build Rivers Casino and Resort at the formerAmerican Locomotive Company property that Galesi owns.

Advertisement

Tired of creating an endless stream of fake companies to buy your politicians? Just use your employees. Really.

But Columbia's political gifts are less transparent because they often are listed under names and addresses associated with the company's development projects. Last year, the Times Union detailed how engineering firms — which often have large government contracts — also get around donation limits by contributing through their employees. The practice makes it difficult to decipher how much money candidates are getting from specific private interests.

Advertisement

One of the recipients of all this donor largess is truly awful state Senator Kathy Marchione (R-Bidness). And while her Democratic challenger, Brian Howard is absolutely correct to call on her to return donations that were given through LLCs precisely to evade contribution limits, she is also correct to call out Dems for hypocrisy on the issue.

Marchione's campaign countered that Democrats take just as readily from developer LLCs, particularly Gov. Andrew Cuomo, whose campaign received $800,000 from LLCs linked to billionaire New York City developer Leonard Litwin. "For a few desperate Democrats to now whine about some legal donations from LLCs to Sen. Marchione's campaign, while deliberately ignoring the fact that their own governor has raked in millions from LLCs, is political hypocrisy at its worst," Marchione's spokesman, Josh Fitzpatrick, said in a statement.

Advertisement

The individual contribution limit to candidates for governor of New York is already north of $60K. That's absurd. No one should be able to give any single politician $60,000. Ever. That's more than the median household annual income in New York State. But that's not enough for our ruling class.

800 large. From one donor. To your governor. Think about that.

Follow The Albany Project on Twitter and Facebook.

Advertisement

(image via Examiner.com)

Share This Story

Get our newsletter