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Democracy Groups Call on Board of Elections to Close LLC Loophole

April 13, 2015 | Adam Smith

Organizations Urging Their Grassroots Activists to Contact the Board

The New York Board of Elections should vote Thursday to close the so-called “LLC loophole” that allows the wealthiest donors to avoid contributions limits and disclosure in order to secretly funnel millions of dollars into politics, a coalition of groups said today, urging their grassroots activists to contact the board in support of the measure.

Citizen Action of New York, the Working Families Party, Common Cause/NY, and Every Voice will all encourage their members to contact the board this week ahead of Thursday’s meeting.

“If we’re ever going to end Albany’s culture of corruption, we need to stop letting billionaires secretly dump millions into campaigns,” said Karen Scharff, Executive Director of Citizen Action of New York. “The Board of Elections must rein in this flood of cash now as a first step toward returning New York State government to voters.”

“We urge the Board of Elections to close the LLC loophole and end a culture of corruption that tilts the playing field in favor of wealthy campaign donors,” said Bill Lipton, New York State Director for the Working Families Party. “We’re asking them to restore working families’ faith in New York State’s government now.”

“New Yorkers are tired of the corrupt status quo in Albany,” said David Donnelly, president and CEO of Every Voice. “The legislature may be unwilling to close this glaring loophole in New York’s corrupt campaign finance system, but the Board of Elections shouldn’t be.

“Allowing the LLC Loophole to continue to subvert the clear purpose of campaign contribution limits and campaign finance regulation – to ensure that our democracy is not captured by wealthy special interests – is completely unwarranted. It’s time to stop LLC abuse once and for all,” said Susan Lerner, Common Cause NY. “The Board of Elections has the power to act now to fix the law and curb corruption in our state and should do so without any further delay.”

The loophole, which allows limited liability companies to classify themselves as individuals instead of corporations, gives the wealthiest New Yorkers the ability to spend millions of dollars on campaign contributions, far exceeding the legal limit. In the 2014 election, one wealthy donor contributed $4.3 million to political committees through 27 different LLCs.

Closing the LLC loophole would be an important step in reducing the influence of wealthy donors in New York politics, but it’s also important to increase the influence of working families. Gov. Cuomo and the legislature still need to pass a small donor public financing system for state elections.

According to a letter sent last week by the Brennan Center for Justice, the Board of Elections could easily close the loophole by reclassifying LLCs as corporations or partnerships and clarifying that no person may use these vehicles to circumvent contribution limits and disclosure requirements. This would also put New York in line with federal law. The board could make this decision at their meeting on Thursday.

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