Every election season seems to expose yet another loophole in campaign-finance laws.
This year’s new favorite appears to be the “LLC gap.”
While most big Democratic and Republican donors still prefer so-called 527 committees that allow unlimited donations and spending of soft money, individual donors can boost their support for specific candidates by using limited liability companies to make multiple contributions.
The issue keeps popping up:
In August, Denver businessman Alex Cranberg used the loophole to give 10 state candidates five times as much money as he would be able to give as an individual.
A nonprofit group called last month for an investigation of Republican gubernatorial candidate Bob Beauprez’s campaign for receiving 32 separate $500 contributions on the same day from 16 LLCs at the same address.
Democratic gubernatorial candidate Bill Ritter reported maximum contributions from two LLCs while also getting money from their principals.
Cranberg’s use is perhaps the most aggressive.
According to recent filings with the Colorado secretary of state, five companies linked to Cranberg gave maximum contributions to 10 state candidates in August.
If Cranberg made contributions in his own name, he would be limited to $4,000. By giving through five companies, he was able to give $20,000.
The companies – all LLCs – gave maximum donations of $400 apiece to Republican candidates in hotly contested races.
All of the companies have the same address and list Charles Brownman, general counsel of Aspect Energy, as their registered agent.
Cranberg did not return calls seeking comment.
“It’s an obvious end-around,” said Jenny Flanagan of Colorado Common Cause, who urged candidates to give back the multiple donations.
Dana William, spokeswoman for Colorado Secretary of State Gigi Dennis, said the contributions are legal.
Last month, Colorado Citizens for Ethics in Government, headed by a former Democratic precinct co-chair, asked Dennis to investigate the LLC contributions to Beauprez.
Dennis declined, saying she didn’t have the authority.
Democrats have benefited from the loophole as well. Ritter has reported receiving the maximum $500 contributions (for gubernatorial races) from the Law Offices of John Carver LLC and Urban Ventures Colorado LLC. Principals associated with those firms have also contributed to the Ritter campaign.
Still, the best-known big-money Democrats and Republicans said they are not using LLCs. They seem to be sticking with the favored loophole from 2004 – the 527s.
Those groups are named after a provision in the federal tax code that allows independent committees to spend money on behalf of a candidate. An LLC can give directly to a candidate’s campaign, while the 527 groups cannot coordinate with any candidate.
The big 527s in this election include The Trailhead Group, which is bankrolled by Republicans Pete Coors, Bruce Benson and other business leaders, and Clear Peak Colorado, which is funded by Democrats Pat Stryker and Tim Gill.
Staff writer Mark P. Couch can be reached at 303-954-1794 or mcouch@denverpost.com.
