In April, the Maryland Board of Elections made a momentous announcement: In order to comply with a recent U.S. Supreme Court ruling, the total amount of money Maryland political donors may lawfully give to campaigns in a four-year period is now unlimited, instead of being capped at $10,000. At St. John Properties, a real-estate firm headed by developer Edward St. John, the change was taken to heart: Campaign-finance data show that 69 companies based at St. John’s Baltimore-area headquarters gave almost $475,000 to Maryland campaigns this year, more than 30 percent of the $1.52 million those companies gave since 2005.
The data bear out what a St. John beneficiary, Republican state Sen. J.B. Jennings of Harford and Baltimore counties, predicted would be the result of the announcement: “This will be a game changer,” Jennings told the Sun in April, adding that “for some businesspeople who love politics and love to play the game, it’s going to take the reins off them.”
At the same time, though, what St. John did this year—donate through 69 companies, each giving an average of about $7,000 to a total of 66 campaigns—is set to be made illegal starting next year. A law enacted in 2013 that goes into effect in 2015 means that contributions made by two or more companies that are owned or controlled by the same interest will be seen under the law as having been made by the same contributor, subject to a newly raised cap of $6,000 to each campaign.
The reform is intended to shut down the “LLC loophole,” a reference to limited liability companies (LLCs), which was long exploited by well-heeled donors like St. John, who give to campaigns through numerous companies under their control to circumvent the campaign-finance limits of $4,000 (now $6,000) to a single campaign and $10,000 to all campaigns by an individual in a four-year period—a cap that has been raised to $24,000, but which the elections board now says it won’t enforce. Since each company could be considered an individual, each one could stay within the limits while still allowing the entity that controlled them—the well-heeled donor—to give with abandon and stay within the letter, if not the spirit, of the law.
“This looks like a last grand hurrah for the LLC loophole,” says Common Cause Maryland executive director Jennifer Bevan-Dangel, in an email responding to City Paper’s analysis of this year’s donations from St. John. Common Cause, a good-government watchdog group that pays particular attention to the role of money in politics, has long had St. John on its radar. In fact, in 2006, its analysis of St. John donations led then-Maryland State Prosecutor Richard Rohrbaugh to fine St. John $55,000, a penalty repeated by the Federal Elections Commission in 2011 as a result of a campaign-finance complaint about St. John filed by another good-government outfit, Citizens for Responsibility and Ethics in Washington.
About the dual rule changes—allowing limitless aggregate donations while closing the LLC loophole—Bevan-Dangel says over the phone, “When one door starts to close, another starts to open.” She adds that the aggregate limit “suppressed campaign spending in a very healthy way” by holding back on the amounts campaigns could receive, and now that it’s been lifted, “it’s going to really flood the system with money from very few donors,” increasing “the sheer cost of running for office” and “stacking the deck in ways that make races uncompetitive.”
To counteract this, Bevan-Dangel says, “the state is going to have to make sure that the individual limit is strictly enforced”—though she says she’s “concerned about enforcing the LLC rule, because the state is going to have to prove common ownership and control, which won’t be easy.” To do that, she says, “it will take a lot more complaints to make sure the LLCs know and follow this law, since the only way to find out who controls them is to bring prosecutorial action and force them to disclose that.”
St. John did not respond to City Paper’s attempts to contact him to discuss his campaign-finance record in Maryland, but in the past, Gerard Wit, a former St. John Properties’ senior vice president, told the Sun that “no developer I ever knew ever calls a politician and says, ‘Can I give you some money?’ It just doesn’t happen,” adding that LLC reform will “save us a fair amount of money.”
This year’s campaign-finance conduct by St. John provides an insightful glimpse into how money works in Maryland politics. The top beneficiary of St. John’s largesse was the failed gubernatorial campaign of Lt. Gov. Anthony Brown, which received $91,500. Next up was $61,000 to the failed Frederick County executive campaign of Republican Blaine Young. Coming in third, with nearly $41,000 in St. John cash, was the gubernatorial-race victor, Republican Larry Hogan, whose top Baltimore-area benefactor was St. John. The campaign of Brown’s running mate, Howard County executive Ken Ulman, received $29,500—so St. John backed the failed Brown/Ulman team with a total of $121,000.
From a wagering perspective, these were ill-placed bets, since more than 80 percent of the total St. John put on the campaigns of Brown, Young, Hogan, and Ulman was placed on three losing horses. Still, nearly a half-million staked in a single year is a lot of dough in Maryland politics. For comparison, consider that in 2013, the Sun noted that St. John “through dozens of corporations” gave “more than $250,000 to Maryland politicians of both parties over the past two years.”
On a single day—Aug. 19, the last day of the first pre-general-election reporting period—33 St. John companies gave a total $144,000 in 38 donations: $81,000 to Brown’s campaign in 21 donations; all $61,000 that was received by Young’s campaign, in 16 donations; and a single $2,000 donation to the campaign of Steven Schuh, the Republican who won the Anne Arundel County executive race, which received a total of $24,250 in St. John cash this year.
This year alone—the last year of the four-year campaign-finance cycle—10 St. John-related companies exceeded the now-unenforced $10,000 four-year cap: APG Investors ($15,250 to six campaigns), Benson Avenue Business Center ($11,250 to four campaigns), Eldersburg Investors ($13,750 to six campaigns), Koppers Property ($12,750 to seven campaigns), Perfectly Positive ($10,500 to four campaigns), Quarterfield Center ($12,000 to three campaigns), Riva Business Park ($12,000 to three campaigns), W Dean ($14,000 to four campaigns), Waxpool ($17,500 to seven campaigns), and Woodlawn Investors ($11,000 to three campaigns). The total given this year by these 10 companies—about $130,000—is more than half of the $257,650 they’ve donated to Maryland campaigns since 2005.
An interesting set of St. John donations is the $15,000 that went in June to Maryland Future Fund PAC, a Harford County-based independent-expenditure committee that raised all of its money from St. John, then gave it all to POS Strategies of Alexandria, Virginia, a public-opinion polling firm. This suggests that St. John contracted to have his own poll conducted, perhaps to gauge the odds of his investments’ success and guide how best to make donations during the rest of the campaign season.
Bevan-Dangel notes “how much [St. John] hedged his bets,” giving to both candidates in a race, which suggests “it’s about relationship-building, not really about picking a winner.” In the Frederick County executive race, for instance, St. John dumped $61,000 into Young’s campaign on Aug. 19, then in September and October put another $9,000 into the campaign of Young’s opponent, victorious Democrat Jan Gardner. Similarly, most of the St. John money going into Hogan’s campaign arrived in June or earlier, but then he pivoted to shower Brown and Ulman with funding in August, September, and October.
“Whoops,” comments Bevan-Dangel, laughing. “Looks like we’re building the wrong relationship. It shows how no one saw that upset coming.”