NY Daily News: All About The LLC Loophole

Today’s New York Daily News runs an editorial and a comprehensive article on the LLC Loophole.

In his article, Wayne Barrett describes the background and state of the law:

“LLCs are a particular form of private company that allows individuals to avoid risk and conceal their ownership. They were legalized in New York in 1994, two years before the loophole decision that let the owner of multiple LLCs make contributions virtually without a cap. They soon evolved into a way for a small pool of wealthy donors, especially many in real estate, to funnel huge amounts to politicians they seek to influence. LLC contributions hit the $20 million a year mark in 2014.”

He continues a few paragraphs later:

 

“The loophole was invented by the state Board of Elections a year after George Pataki became governor and nearly two years after Silver became speaker in the mid-90s. Peter Kosinski, the Republican special counsel at the time, oversaw the drafting of the original resolution, which was approved by the two Republican and two Democratic commissioners, despite its apparent inconsistency with the 1974 election law that sought to strongly restrict business giving.

Kosinski is now the Republican co-chair, installed by Skelos in April 2015, shortly before the Senate leader was indicted. He had been working for Skelos when he left to rejoin the board. The day after he arrived, the four commissioners finally revisited the 1996 ruling, with Kosinski opposing any change and arguing that “our role is to administer the law, not make the law.” He did not mention that in fact this ruling was a board attempt to administer the law, not a law itself, or that he was in fact a prime author of it.

Kosinski, who also deadlocked another vote this April, is protecting what the GOP feels is a logical board opinion, based on state law calling LLCs “unincorporated organizations,” that happens to have a partisan benefit. The party is in the throes of an existential crisis culminating in November, when the prospect of a pro-Clinton wave in New York could end its last vestige of power, a Senate majority that already depends on Democratic cross-overs.”

On the editorial page, the paper urges the legislature to close the loophole because, in part: “politicians rig the game to allow unlimited contributions by wealthy players who couldn’t give a damn whether officials are Democratic or Republican, liberal or conservative, as long as they come through with legislation or administrative decisions worth huge sums of money.”

 

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