Dems find fundraising
loophole
Contributors give
to federal account to sidestep laws
By Ed Jacovino Journal Inquirer |
Jan 28, 2014
HARTFORD — The two lawmakers who wrote the state’s groundbreaking
campaign finance law in 2005 are keeping mum as the state Democratic Party
exploits a fundraising workaround and rakes in cash from donations the law
aimed to make illegal.
Both of
those lawmakers have since left the General Assembly and work for Gov. Dannel P. Malloy, a Democrat.
Donald DeFronzo, who now is commissioner of the state Department
of Administrative Services, was a senator from New Britain and co-chairman of the
legislature’s Government Accountability and Elections Committee. He declined to
comment through a spokesman.
“He’s not in
a position to comment on those issues. He’s happy to take questions on DAS and
its responsibilities,” spokesman Jeff Beckham said. Beckham referred all
questions about the campaign finance law to the governor’s office.
Christopher
Caruso was a representative from Bridgeport
and the other committee co-chairman. He now works at the state Labor
Department. He didn’t return repeated requests for comment from the Journal
Inquirer over the past two weeks.
Former Gov.
M. Jodi Rell, a Republican who also played a key role
in writing the law, didn’t return a request for comment.
Their
silence comes as the Democratic State Central Committee and Malloy face
accusations of creating a pay-for-play system in which state contractors and
others with business before the state are making sizable donations to the
Democratic Party, even though the 2005 law sought to eliminate such donations.
The state
law created the public financing system, which enables candidates running for
state offices to get grants to finance their campaigns if they raise a certain
amount in small donations.
The law also
barred companies with state contracts, their principals and owners, and
prospective state contractors from giving money to candidates, political action
committees run by candidates, or state party committees.
So how is
the state Democratic Party getting money from state contractors?
They’re
avoiding the state law altogether.
The federal
loophole
While
donations from state contractors are illegal under state law, they’re not
outlawed by federal law. The Connecticut
Democratic State Central Committee keeps a federal account. That account is
regulated by the Federal Election Commission and isn’t subject to Connecticut’s law.
There are
limits on how the party spends money in the federal account — it can’t be pumped
directly into state races, for example — but the money can go to general items
such as hiring staff, paying rent and utilities, and buying some ads.
A review of
the party’s latest federal campaign finance filing shows that more than a third
of the $1.9 million in donations from January to November 2013 came from big
contributions from state contractors and other businesspeople, their relatives,
associates, and corporate political action committees, or PACs.
Some of
those would have been illegal if given to the state fund.
Take, for
example, $14,000 in contributions from James A. Manafort
Jr. and his sister, Lauren Manafort. They own Manafort Brothers, the Plainville
company that has more than $30 million in contracts
connected with the Hartford-New Britain
busway project.
And
employees at the state contractor HAKS Construction contributed more than
$42,000 combined.
Donations
also have come from people who don’t hold contracts but have business before
the state.
Brian
McAllister, chairman and CEO of McAllister Towing, the company that operates
the Bridgeport harbor ferry, wrote a $10,000 check to the state party’s federal
account. He sent another to the party’s state account. Both were legal.
Other
contributions have come from partners and employees at law firms with state
contracts and real estate developers who have benefited from state aid packages
to their tenants.
Republican
leaders and Republican candidates for governor have railed against the money.
Senate
Minority Leader John McKinney, R-Fairfield, is seeking his party’s nomination
for governor. He criticized the fundraising after the Democrats gave back
$10,000 from Edward Snider, the owner of the Philadelphia Flyers.
A subsidiary
of Snider’s company has the contract to manage the XL Center in Hartford and Rentschler Field in
East Hartford. Snider made his check out to
the party’s state-regulated account, not the federal one.
“Mr. Snider
doesn’t live in Connecticut and has never
given to the Connecticut
Democratic Party before. But, all of the sudden, at the same time his company
is bidding for a multimillion-dollar state contract, he decides to write a
check for the maximum contribution of $10,000 and, lo and behold, is awarded
the contract,” McKinney said at the time.
The
fundraising also has caught the attention of the groups that helped write the
state’s 2005 campaign finance law.
“Unfortunately,
the federal government has not adopted the same legislation as we did in
Connecticut,” Thomas Swan, executive director of the Connecticut Citizen Action
Group, says.
Swan
questions whether the state law will come into play when the money is spent.
“It
definitely raises questions as to whether or not they’re following the letter
and the intent of the law,” he says. “They seem pretty confident that they are
following the law.
Karen Hobert Flynn, senior vice president for Common Cause, was
the national group’s Connecticut
director in 2005 and also worked to write the law. She wants to know whether
candidates are helping the party raise the money, and how it will be spent.
“We need to
dig deeper to see what the federal committee is spending its money on and make
sure that those expenditures don’t violate our state laws,” Hobert
Flynn says. “It may be that we’re going to have to monitor and beef up our
state laws to prevent that.”
Hobert Flynn says she’s also concerned about the relationships
between candidates and so-called super-PACs. In both cases, they’re an example
of why clean election laws are revised year after year.
“It’s always
been a work in progress,” Hobert Flynn says. “Money
works to find its way around any process.”
The state
Democratic Party refused to comment on fundraising issues.
The most its
spokesman has said came in October, after the governor flew to California to raise
money for the party’s federal account and for the Democratic Governors
Association. James Hallinan said the group would
“aggressively fundraise” because Republican-aligned groups would “unleash
millions and millions of dollars into Connecticut
for the 2014 election cycle.”
Malloy has
said he and the Democratic Party will follow the law — state and federal — when
it comes to raising money.
He said this
month he wasn’t aware of any effort by the party to seek donations from state
contractors and others with business before the state. If there is one, he’s
not involved, he said.
When asked
whether his involvement would be wrong, Malloy didn’t answer directly.
“Everyone needs to comply with the laws,” he said.