- Associated Press - Thursday, March 17, 2016

ALBANY, N.Y. (AP) - A state judge has rejected a lawsuit seeking to close a loophole in New York campaign finance law that lets wealthy individuals use limited liability companies to secretly give millions of dollars to candidates.

Justice Lisa Fisher wrote that there have been “numerous attempts” in the Legislature to close it and the matter is best resolved by lawmakers. But she first rejected the suit on grounds that it’s too late to challenge the 1996 decision by the state Board of Elections to treat limited liability companies like individuals.

That lets them donate up to $150,000 a year to a candidate without identifying their owners. Critics want them subject to the $5,000 corporate limit and required to disclose owners.

The suit was brought by New York University’s Brennan Center, three state legislators and others.

“Obviously we think the decision was wrong and we thing we have a good case on appeal,” the Brennan Center’s Lawrence Norden said Thursday. “I think it’s pretty clear from the legislative record at the time and what’s gone on in Albany in the recent, and not so recent, past that this isn’t what the Legislature intended and it’s a huge problem.”

The loophole was central in last year’s trials of former Republican Senate Leader Dean Skelos and Democratic Assembly Speaker Sheldon Silver and millions of dollars in campaign donations made over two years by LLCs controlled by developer Glenwood Management.

Both men were convicted of using their influence to advance legislation while personally benefiting through legal referral fees to Silver and no-show work for Skelos’ son, Adam. Glenwood lobbied for extending tax breaks for New York City developers.

Attorney John Ciampoli said Thursday the judge laid out both procedural and substantive reasons for rejecting the lawsuit in her ruling Wednesday and an appeal would be a mistake. He represented the Republican state committee and its chairman, Ed Cox, who intervened to oppose the suit.

“LLCs are business entities. In this country, we allow our business entities to participate in the political process and exercise their free speech,” Ciampoli said. “These people don’t particularly like what the LLCs are saying so they want to shut down their free speech.”

He also questioned whether the corporate campaign limit is valid.

The Board of Elections last April deadlocked 2-2 on revising its interpretation of state campaign finance law as it applies to LLCs, with both Democratic members backing the change and both Republicans opposing it. That left the current interpretation of LLCs as individuals intact.

New York’s Democrat-controlled Assembly on Tuesday voted 137-to-4 for legislation to treat LLCs like corporations subject to the lower campaign donation limit and require ownership disclosure. Most of the chamber’s minority Republicans joined in supporting it. The measure died last year in a committee controlled by the Senate’s Republican majority.

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