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State Board of Elections begins enforcing campaign finance disclosure laws

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This story was published in partnership with New York Focus, an independent news and investigative site covering New York State and City politics. Subscribe to their newsletter here.


Following a series of reports from New York Focus on the failure of the State Board of Elections to enforce a reform law 2019 Intended to limit corporate black money in New York’s election, the Council’s top law enforcement official said last week he had begun enforcing the law by notifying thousands of corporate donors that they were raping her.

The 2019 reforms were passed to eliminate a quirk in New York’s campaign finance law that allowed a particular type of corporation — the limited liability company, or LLC — to anonymously funnel millions of dollars in the campaign coffers of elected state officials.

For three years, however, key provisions of the law were not enforced and LLCs continued to make anonymous donations to the campaigns of prominent elected officials – including nearly $400,000 in anonymous contributions to Governor Kathy Hochul Last year.

Now, that could finally change.

“We actually started what someone in the unit called ‘our LLC project,'” said Michael Johnson, attorney for the Board of Election Enforcement. at a board meeting on March 4.

As part of that project, Johnson’s office identified about 3,400 LLCs that had donated to political campaigns but had not filed a “statement of interest” form listing their owners and share. of the business that each owned, as required by the 2019 law.

“They all got letters saying, ‘You need to file an expression of interest with the Board of Elections,'” Johnson said.

Robert Galbraith, a researcher with the government watchdog group Public Accountability Initiative that has investigated the role of LLC money in New York politics, said he was relieved the board was “finally seeking compliance” with the 2019 law – but wondered why it had taken so long.

“It raises serious questions about election monitoring in New York that there has been no attempt to enforce this to date,” Galbraith said.

LLC notification is only the first step to full enforcement. In fact, imposing consequences on campaigns and donors would be more difficult, as council commissioners acknowledged at the March 4 meeting. The current law — which the Board asked the legislature to update — does not allow the Board to impose penalties on LLCs that violate the law.

To force LLCs to comply with the law, the board must sue and ask a court to order an LLC to file its disclosure – a process too cumbersome to use against thousands of non-compliant LLCs.

New York Focus reported earlier this month that dozens of LLCs have also violated annual donation limits, giving up to eight times the $5,000 cap. Johnson said after the letters, the next step for enforcement will be to investigate these violations.

Closing the LLC Loophole

Before the 2019 reforms were enacted, New York’s campaign finance law treated LLCs as individuals rather than corporations – which meant they were allowed to contribute up to $60,000 per candidate each year , while other companies were limited to just $5,000 for all applicants.

The 2019 law, sponsored by Assembly members Jo Anne Simon (D-Brooklyn) and Brian Kavanagh (D-Manhattan/Brooklyn), aimed to change that. It capped LLC contributions at $5,000 in total in a calendar year and required all LLC donors to submit a form to the board of directors at the end of each year listing their owners and the company’s share. business that everyone owns.

The law imposed a parallel requirement that political campaigns that accept contributions from LLCs also disclose the owners of contributing LLCs.

But New York Focus found that the letter and spirit of the law have been routinely flouted: Governor Hochul’s campaign had accepted more than $400,000 in donations anonymous LLC donors; the companies exploited a loophole in the law by using multiple LLCs they own to donate more than $5,000 to individual applicants; and the Board of Elections did not take enforcement action against any of the campaigns or LLCs that have violated the law.

At a press conference in February, Hochul was asked about anonymous donations to her campaign.

“We are focused on trying to get all of this collected data from the LLCs. They have to provide us with that information,” she added. notedarguing that his campaign was unable to disclose the owners of the LLCs unless the LLCs first shared that information with the campaign.

Data from the Public Accountability Initiative shows that only ten percent of LLCs that made political contributions in 2021 filed required disclosure forms with the Board of Elections.

Simon told New York Focus that the council’s failure to enforce the law was not entirely surprising. “They apply on an ad hoc basis. They will enforce some things but leave all these flagrant violations and filing failures without any follow-up,” she said.

Potential fixes

Even with its new ambition, the board’s powers to compel LLCs to follow the law are limited. Even if the council can sanction campaigns who do not obey the law, there is no method to punish LLCs.

“The fact that LLCs have no penalties for not reporting is amazing to me,” Board of Elections co-chair Peter Kosinski said at the meeting. Kosinski called the lack of sanction a “huge flaw of the statutory party”.

Johnson has suggested the legislature pass legislation allowing the council to fine LLCs that flout the law, and council co-chairman Douglas Kellner has floated the idea of ​​a law prohibiting campaigns from accepting contributions from limited liability companies who did not disclose their owners. identities.

Assembly Elections Committee Chair Latrice Walker (D-Brooklyn) said in a statement to New York Focus that she would “examine each proposal with a critical eye,” but did not say if she supported one of the proposals made by Board staff.

Senate Elections Committee Chairman Zellnor Myrie (D-Brooklyn) did not respond to a request for comment.

One obstacle to campaigns publishing the names of the people behind the LLCs who donate to them is that candidates are required to file financial statements multiple times throughout the year, while LLCs are only required to submit information on their owners until the end of the year. This means that when LLCs submit this information – if they do – it can easily take months after applicants were supposed to disclose it.

Last year, the Council suggested that the Legislature pass legislation requiring LLCs to submit required information within a week of making their first contribution of the year. This proposal has not yet been adopted by the legislator.

Beyond LLC issues, many campaigns have not submitted legally mandated documents detailing their campaign contributors. Enforcement of these campaigns has also long been uneven.

Until recently, Johnson had taken no action against campaigns that had failed to file their disclosures since taking over as law enforcement attorney last July, although more than 3 400 campaigns broke the law in October 2021, New York Focus reported last month.

Over the past few weeks, the Office of the Law Enforcement Attorney has launched an action plan, sending letters and emails to thousands of offending campaigns, Johnson said. The number of campaigns in violation of the law for failure to file fell from more than 4,200 to less than 2,400 during the month of February, Council co-lawyer Brian Quail said.

Public shame

Given the difficulty of formal enforcement, the Council also considered a more informal sanction for campaigns that violate disclosure requirements: public humiliation.

At the March 4 meeting, BOE commissioners discussed the possibility of creating a publicly available list of delinquent campaigns.

“You’re hearing consensus from commissioners that there should be public reporting,” Kellner said, noting that providing a public list of campaigns in violation of the law could help encourage greater compliance.

If the Council’s actions don’t encourage greater compliance, campaigns and concerned citizens could take matters into their own hands, David Imamura, an attorney and campaign finance law expert in New York City, noted: A little used arrangement New York’s campaign finance law allows candidates or five-person groups to sue campaigns that don’t file their financial information and seek court orders compelling them to file.