- Associated Press - Tuesday, July 14, 2015

ALBANY, N.Y. (AP) - A New York University law center and three state legislators were among the plaintiffs Tuesday in a lawsuit to make limited liability companies subject to the stricter campaign finance limits on corporations and business partnerships in the state.

Continuing to allow LLCs to give millions of dollars to state candidates, while publicly shielding the names of their wealthy members, gives them too much behind-the-scenes influence, the lawsuit argues.

“The very consequence that legislators most feared and sought to avoid, dominance of New York government by the wealthiest business interests, has too often come the pass,” the suit says.

The Brennan Center for Justice wants a state judge to reverse the Board of Elections’ 1996 decision that subjected the hybrid business entities to the same higher campaign finance limits as individuals. LLCs are unincorporated but shield members from liability.

“I think this is a clear misreading of the law,” said Lawrence Norden, deputy director of the center’s Democracy Program.

The Board of Elections in April considered changing LLC treatment, but deadlocked along party lines, leaving the 1996 ruling intact. Its two Democratic members proposed treating them like partnerships, subject to a $2,500 annual limit after which campaign donations must be attributed to individual partners. Corporations are subject by state law to a $5,000 annual contribution limit.

The two Republican members voted to let LLCs continue to be treated like people, with donations limited to $60,800 to a statewide candidate in an election cycle.

Legislation to close the loophole passed the Democrat-controlled Assembly this year but died in the Republican-controlled Senate.

Two lead sponsors of the bill, Sen. Daniel Squadron and Assemblyman Brian Kavanagh, joined another Manhattan Democrat, Sen. Liz Krueger, as plaintiffs in the lawsuit. They said they will be directly affected by the LLC loophole by facing pressure to either take the money or raise comparable funds elsewhere.

The suit noted that Gov. Andrew Cuomo raised more than $9 million from LLCs in his first term, almost 20 percent of his campaign total. Cuomo has also proposed closing the loophole.

The election board’s lawyers are reviewing the lawsuit, spokesman John Conklin said. He declined further comment.


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