Falciglia: Contributions Should Come From Company Profits, Not Individuals’ Pockets
New City, NY (Aug. 4, 2017) – Political donations should occur in the light of day – and that demands changing state law, a move the Rockland County Legislature is calling for after voting 14-0 Wednesday to require that political donations come only from an ongoing business entity’s profits.
“As it currently stands, an LLC or other similar business structures can be formed almost overnight without any legitimate business purpose and immediately – and solely – be used to funnel campaign contributions to candidates of their choice,” said the Resolutions main sponsor, Legislator Charles Falciglia.
The problem, he said, is that the people behind these entities can be unknown and the purpose for creating the company can simply be to skirt election law, including using the company essentially as a straw donor.
Falciglia introduced the measure that requests the state Legislature to amend Election, Business Corporation, Limited Liability Company, and Partnership Law to prohibit political contributions made in the name of an LLC, a Professional Limited Liability Company (PLLC), a Partnership, a Limited Liability Partnership (LLP) or a Corporation unless such donations are derived from the normal everyday profits of an entity that exists as an ongoing business concern.
“I am not against donations by LLCs or other entities,” Falciglia said. “But those contributions have to come from profits realized during the normal course of business. No one should be allowed to just create an LLC and pour their money into it so it can be passed onto candidates. The contribution needs to come from normal profits.”
Falciglia added the business must show a revenue and expense stream plus a time frame of demonstration for the contribution to be considered legal. He is advocating for civil and criminal penalties similar to those that apply to individuals.
An individual contributing in the name of another individual or reimbursing an individual for a contribution – a practice commonly referred to as straw donations or conduit contributions – is a criminal offense under state and federal law.
There is no such prohibition when it comes to contributions through an LLC, PLLC, Partnership, LLP or Corporation and such contributions can be made not only by a member of the LLC, PLLC, Partnership, LLP or Corporation, but by a third party. This can allow campaign finance contribution limits to be circumvented because the maximum donation amount can be made as both an individual and as a member of one of the entities.
Additionally, contributions from these entities can be in amounts larger than the threshold set for individual candidates when donating to a Political Action Committee, which can be used on behalf of the candidate.
Legislator Jay Hood has worked to raise awareness of the problems associated with LLCs in general, including the fact that it can be difficult or impossible to learn who the true owners of a property are when the parcel is held by an LLC. He said a similar pattern exists when it comes to knowing who may actually be donating to a campaign.
“The current situation violates the integrity and undermines the spirit of campaign finance laws and the idea that there should be a level playing field,” Hood said. “It gives wealthy donors an unfair ability to influence the outcome of an election and the rest of the voters don’t even know who is behind the money.”
Hood also said that donations by LLCs or other corporations wasn’t inherently bad, but that stricter rules were needed to make sure everyone plays by the same rules and is held equally accountable.