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Gnash your teeth and rend your Rolodexes: The LLC loophole is dead. As of Jan. 31, the D.C. Council’s legislation eliminating the best workaround in District politics finally went into effect. In lieu of flowers, please make a contribution to the most pliable candidate you can find.
Without the loophole, which allowed corporations that control multiple LLCs to skirt maximum donation limits by counting each LLC as an individual contributor, the pool of money floating around the city’s races should shrink. Forget family members—the loophole is survived by grieving bundlers and incumbents with now slightly less firm grasps on their seats.
Campaigns that could once rake in money from a single contributor with ten checkbooks now need those funders to sign a lengthy legal statement listing their affiliated corporations. The Office of Campaign Finance, once legally obliged to look the other way as donors dodged the city’s flimsy contribution limit, now has its filing system set up to flag affiliated companies.
But don’t worry, the loophole’s demise didn’t catch District pols by surprise: The councilmembers who voted to ban the loophole in 2013 made sure it didn’t apply to their own 2014 campaigns. That means the first candidates to run on leaner budgets are in the ongoing Ward 4 and Ward 8 special elections—and they were ready. As the loophole deadline approached, the best-funded candidates rushed last year and this year to take in what could be the last LLC-bundled contributions in District history, even on the final day.
Muriel Bowser’s 2014 mayoral campaign took in gobs of LLC money even though she voted in favor of eliminating the loophole a year before. In one memorable bundle, Bowser took in $20,000 from companies affiliated with Phinis Jones, the scandal-plagued Southeast businessman, then refused to give it back as his ties to the Park Southern housing fiasco mounted.
The contradiction between her votes and her campaign’s balance sheet earned her some grief from the media, but that didn’t stop her from crushing opponent David Catania in fundraising (and in votes).
So maybe it’s no surprise that Ward 4 candidate Brandon Todd, Bowser’s pick to inherit her seat, took in as much of his own LLC money as he could before the loophole closed. Helped along by Bowser’s endorsement, Todd brought in $231,541 in the latest campaign reporting period, which ran from mid-December to the end of January.
While it’s hard to tell exactly how much of that came from linked corporations whose donations would be newly subject to limits, $24,000 came from corporations that share the same address as at least one other corporation backing Todd—a usual sign that they also share the same ownership. Corporations associated with businessman Warren Williams kicked in $2,500, while gas king Joe Mamo gave $1,000 through his companies.
Todd doesn’t need all the money. Already, he’s outraised his closest opponents by nearly $200,000. None of Todd’s 14 opponents in what’s quickly becoming a victory lap for Bowser and her entourage received a single contribution from LLCs that share the same address. Todd didn’t respond to a request for comment.
Bowser’s candidate east of the Anacostia River proved just as prepared as the LLC loophole’s drop-dead date drew closer.
LaRuby May, Bowser’s Ward 8 coordinator in last year’s campaign, wants to take the late Marion Barry’s seat on the Council dais. The new mayor’s endorsement helped May mirror Todd’s crushing fundraising—she pulled in $177,404.76 at the end of the Jan. 31 fundraising period.
$22,750—more than 10 percent of her total fundraising—came from corporations that shared an address with at least one other contributing corporation.That sum alone is more than 10 times what some of May’s rivals in the 16-person race raised. None of May’s opponents received contributions from LLCs that appear to be linked.
The addresses on May’s campaign finance report read like a map to the District’s go-to financiers. There’s developer Buwa Binitie, whose corporations put in $3,250. Gasoline wholesale magnate Mamo, whose cushy business situation is frequently threatened by Council legislation, gave $1,000 through two of his Springfield, Va.-based LLCs.
Given that District law caps individual contributions to ward-level candidates at $500, neither of those contributions would be legal if made on Feb. 1, now that the loophole has been eliminated. May didn’t respond to a request for comment on her fundraising.
Still, at least one of May’s opponents thinks the end of the LLC loophole means the fundraising gap in the April 28 special election will start to shrink now that donors will have to abide by the contribution cap. Lenox Ramsey Jr., who manages Ward 8 candidate Eugene Kinlow’s campaign, predicts a fall in May’s contributions now that she can’t multiply her money through LLCs.
“There will be a drastic drop in their fundraising,” Ramsey says. Of course, a drop in new fundraising won’t matter much to Bowser’s candidates, thanks to their six-figure leads over the competition.
Political consultant Chuck Thies, who ran ex-Mayor Vince Gray’s failed re-election campaign against Bowser, doubts the end of the LLC loophole will matter for the special elections.
“It’s probably not significant because the only two candidates who really have access to that money are the two Bowser-supported candidates,” Thies says. “And they seem to have done quite well.”
After the special elections, Thies expects the new regulatory regime will mean a reduced pool of money for incumbents to draw on. But Thies has already thought of a workaround for them: dispatching trusted staffers to run PACs on their behalf and take unlimited, post-Citizens United amounts from donors.
That’s the beautiful thing about District campaigns: When one loophole closes, another opens.
Photo by Will Sommer