Payback Is a Hitch
Phony campaign loans are starting to rival straw donations and shadow campaigns as the Rosetta Stone for understanding corruption in the District. There’s former Councilmember Michael Brown’s $20,000 “gift”— from an unnamed businessman whose description in court papers sounds a lot like federal investigation target Jeffrey Thompson—which Brown reported as a personal loan to his Ward 4 campaign in 2007. Meanwhile, Washington Post sources allege that Mayor Vince Gray had his own meeting with Thompson in 2010 to discuss how under-the-table campaign money could be reported as a campaign loan after the election. (Gray won’t talk about the purported meeting.)
But there’s another, entirely legal form of campaign loan that has its own potential to warp D.C. politics. LL’s talking about candidates who make loans to their own election efforts, then later pay themselves back from campaign accounts.
Take At-Large Councilmember Vincent Orange, who ran unsuccessfully in 2010 for the chairman spot Gray left open when he became mayor. Being chairman is an ardent goal of Orange’s, which will be clear to anyone who saw his frenzied politicking last year to be chosen for the essentially meaningless job of chairman pro tempore. To back up his 2010 run, Orange made a $70,000 loan to his campaign, and lost to Kwame Brown anyway.
LL recently took a peek at the past few years of Orange’s campaign finance forms, and he’s impressed. Even if Orange’s chairman campaign was unsuccessful in its original goal of getting him elected, it’s had a healthy afterlife as a fundraising vehicle for paying off its debts to Orange himself. Since the primary, the campaign received $34,010, including donations from names that pop up frequently on checks written to support D.C. political bids like that of lobbyist David Carmen and his company, which gave Orange a combined $3,000. Just in the six months between August 2012 and January 2013, the campaign raised $14,000. All told, of the $34,010 Orange’s 2010 committee raised—money given, LL reminds you, to a campaign that had already lost before collecting a penny of that—$5,000 has gone to pay off Orange’s bill to himself. The campaign still owes him $10,000.
Orange’s 2010 campaign isn’t up to much in the latest campaign filings, filed at the end of last month. Still, that’s not bad fundraising work for a campaign that ended three years ago.
Orange, who didn’t respond to LL’s request for comment, isn’t the only councilmember who raises money or pays off loans to themselves after an election. Ward 8 Councilmember Marion Barry’s 2012 re-election campaign paid him back $3,000 in January, resolving his campaign loans. But then, that was only two months after the election.
Lingering loan repayments to candidates can multiply the sleaze in the District’s campaign finance system. Defenses of campaign contributions as free speech look flimsy, because the campaign’s over. Anyone giving to “Orange for Chair” aren’t donating in the hopes that he wins the chairman’s race; they already know he didn’t. Instead, money from lobbyists, law firms, and others ends up in Orange’s bank account. Former Mayor Adrian Fenty’s firm coughed up $500, while former Councilmember Bill Lightfoot’s firm gave $1,000, adding to a combined $13,500 that a series of malpractice and personal injury attorneys gave Orange’s campaign in August 2012. Orange also received money from parking lot companies and political action committees—both Colonial Parking and the Ironworkers Political Action League gave $500.
“It really does create the potential for a lot more abuse than just the normal campaign finance system,” says Bill Allison, the editorial director at the Sunlight Foundation. “Obviously, a way to get close to a lawmaker is, ‘Gee, I’ll help you retire your debt, because that’s money that goes straight into your pocket.’”
There are theoretically some safeguards in place. The loan between the candidate and the committee has to be documented, with proof that the money is actually coming from the candidate. Considering that the Office of Campaign Finance is only just now discovering that Kwame Brown’s campaign against Orange mishandled or can’t account for nearly $500,000, though, LL doesn’t have the greatest faith in the agency’s ability to enforce its own rules.
Federal courts have ruled that candidates can spend as much money on their own election as they like, meaning that the District’s laissez-faire attitude on campaign loans can’t change much even if the Council is suddenly gripped by good-government fever. The District could impose a limit on how much a candidate can loan to a committee. The McCain-Feingold federal campaign finance reform package imposed a $250,000 maximum for candidate reimbursements, an example the District could model. The amount would have to be scaled down for the District, since the amounts of money are typically smaller than in federal campaigns.
Don’t expect the D.C. Council to do anything about loans anytime soon, though. They’ve got a sweet deal: giving loans to their own campaigns, with years for their friends to pay it back.
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Photo by Darrow Montgomery