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  •   D.C. Mayoral Donors Find Loopholes

    By Yolanda Woodlee
    Washington Post Staff Writer
    Thursday, August 6, 1998; Page A01

    At least one-third of the $1 million that flowed to three leading candidates for D.C. mayor in the first half of this year came from people with a vested interest in downtown development, and in many cases that money came in bundled contributions that could be linked to a single company or business person.

    Although corporations and individuals are limited to giving $2,000 to a candidate, some high-profile contributors are making the most of legal avenues that allow them to give far more than the limit.

    For example, the campaign of Jack Evans has received $17,000 from companies and partnerships affiliated with Jose Rodrigues, whose Fort Myer Construction Co. has paving contracts with the city that have yielded nearly $50 million in the last 18 months.

    "Even when you have laws on the books, people find very creative ways to funnel as much campaign cash as they can to those people they want to see elected," said Meredith McGehee, legislative director of the watchdog group Common Cause. "Sometimes it's legal, sometimes it's gray, and sometimes it's an evasion of a law without any enforcement."

    A change in District law, raising the cap on campaign contributions from $100 to $2,000 two years ago, opened the floodgates to what is likely to become the most expensive mayoral race in city history.

    It is not always easy to trace the contributions to their source.

    Finance reports filed in recent months listed hundreds of corporations and partnerships with no more than a mailing address. In a dozen cases, the space for the donor's address was left blank. The reports contain no indication of who owns the companies, who serves on their boards of directors or who are the members in a partnership. Although District law requires partnerships to provide that information to candidates, the campaign finance office has not requested it from any candidate this year, and none of the candidates has it on file.

    Tracking the origins of contributions with scant information presents a particular challenge for the campaign finance office, which has three employees assigned to review the reports filed by as many as 103 candidates seeking office this year and lacks sophisticated computer programs that campaign finance experts elsewhere use to sift through such filings.

    And it is virtually impossible for the typical citizen to connect the dots to determine who is bankrolling the mayor's race. Critics say the public is left in the dark when it comes to determining the players behind corporate contributions.

    "The current system continues to veil the primary power brokers who run local elections," said Terry Lynch, an activist who sees a need to strengthen the campaign finance law. "There are people behind these companies, and we're trying to track who is really making the donation. It's like climbing Mount Everest to get the information you need."

    The Washington Post examined the campaign contribution reports of Evans and fellow council members Kevin P. Chavous and Harold Brazil. (A fourth leading Democratic candidate, Anthony A. Williams, entered the race late and has not yet been required to file a report.) The Post combined a computer analysis of 1,443 contributions to Evans, Brazil and Chavous with a search of corporate records, occupancy licenses, tax files and property documents.

    The analysis revealed the extent to which downtown development interests, who traditionally have played a role in District political campaigns, have been involved in this year's mayoral race.

    A heavy flow of developers' dollars has rolled in to Evans, the D.C. Council member who represents Ward 2 in the heart of downtown Washington. Evans has been the top fund-raiser thus far, with $536,000, and has benefited from the generosity of several people who control the purse strings of building industry corporations.

    Evans has received about $85,000 from 10 business clusters with interlocking ownership, principal officers or boards of directors. Rodrigues, with links to contributions of $17,000, is foremost among them. Companies linked to other prominent businessmen -- including Stephen A. Goldberg, Robert Gladstone, J.W. Kaempfer and Michael and Stephen Gewirz -- gave Evans bundled contributions ranging from $7,000 to $12,000.

    Chavous (Ward 7), who reported raising $260,000 in last month's filing, received at least $28,500 from corporate contributors with ties to more than one business.

    In five instances, Chavous has received contributions from business interests made up of affiliated companies. In one case, he reported receiving a total of $8,000 from a businessman and three corporations with which the businessman had ties. Chavous's finance report did not list addresses for two of the corporations, but a search of corporate records traced all four contributions to the same address on the 13th floor of a Manhattan office building.

    Brazil (At Large) is the only other mayoral candidate who has received a substantial amount in contributions. Although Brazil, who has reported receiving $142,000, got money from some of the same corporate givers, none of his filings show evidence to suggest that individuals with connections to multiple corporations were using that avenue to give more than the $2,000 maximum.

    "The intent of the law is that no one person would have undue influence," said Westy Byrd, a community activist who pays close attention to campaign finance practices. "The developers are used to controlling this city, and now that [Mayor Marion] Barry is leaving, they want to continue to be able to control the city."

    Although District campaign finance laws, enacted in the mid-1970s, were patterned after federal laws, they took a sharp detour when it came to corporate giving. While federal law does not allow direct corporate contributions to political campaigns, the District, like 27 states including Maryland and Virginia, does.

    District residents led a ballot initiative to amend the campaign finance law in 1992 to put private citizens on the same playing field as corporate leaders. As a result, all mayoral contributions were limited to $100 during the 1994 election.

    After that election, the D.C. Council voted in 1996 to boost the limit back to $2,000. Two of the current mayoral candidates -- Evans and Brazil -- staunchly supported the increase. Chavous voted against it.

    "If you own a dozen corporations, you can give a dozen contributions just like you pay a dozen taxes," said council member Kathy Patterson (D-Ward 3), who heads the campaign finance oversight committee.

    "People who have more money to give can give more money," she said. "That's the law right now. I don't think individuals can be faulted for doing what they can do lawfully."

    But the law is not always clear. When it comes to individuals and corporations, the law is black and white: Each can give a maximum of $2,000. When it comes to partnerships, the law develops shades of gray.

    When a partnership gives up to $2,000, a percentage of that amount counts against the personal contribution each partner can make. Even the candidates and contributors say they are confused by that.

    For example, Rodrigues gave the maximum $2,000 contribution in his own name. The fact that he also is a partner in two partnerships that gave a total of $6,000 suggests a violation of campaign finance laws because a portion of each partnership contribution should accrue against Rodrigues's personal limit.

    "The confusion is, can each partner give $2,000?" said Chris Kerns, vice president and general counsel for Fort Myer Construction, one of the companies run by Rodrigues and his business associate, Lewis F. Shrensky.

    After The Washington Post discovered that one partnership had exceeded the limit by giving $2,000 twice, the partners asked the Evans campaign to refund the overpayment. Kerns said it was an honest mistake made because the partners each were approached on separate occasions by the Evans campaign.

    "All these people, Joe Rodrigues and Lewis Shrensky, want is to make sure they abide by the law," said Kerns, who served as their spokesman. "Mr. Shrensky and Mr. Rodrigues are excited about the candidate, and they're trying to give as much support as they can to back the candidate."

    The partnership provisions of the law were enacted after the 1990 election with the intent of keeping business associates -- who often create a new partnership for each new project they undertake -- from having an undue influence with elected officials.

    The law says that contributions by partnerships should be attributed to each partner's share of ownership, except when the partners agree that one will take credit for the whole contribution. The law requires each campaign to keep on file a letter from a contributing partnership that indicates to which of the partners the contribution should be attributed.

    This year, none of the candidates has those letters on file, according to the campaigns.

    That hasn't caused a problem because the campaign finance office has not made a specific request for information regarding the names of contributing partners to cross-check to see whether they were over the contribution limit. Nor have officials given a written response to a July 9 letter from the Evans campaign asking which documents it was required to keep on file.

    Cecily E. Collier-Montgomery, director of the Office of Campaign Finance, said the office responded orally to the Evans campaign.

    "If a contribution is reported by a partnership, you should see an individual's name" on the report filed by the candidate, she said.

    No report filed by a mayoral candidate this year has included the name of a person making a contribution through a partnership.

    "The partnership is not really giving a contribution," said Kathy S. Williams, general counsel for the campaign finance office. "It's the partners. Our candidates know that. We're not dealing with neophyte candidates. Three of those candidates are lawyers."

    Collier-Montgomery said her auditors review each candidate's filing.

    "Certain things raise red flags, and if a red flag is raised, the auditors request additional information to seek clarification," she said, adding that the Evans and Chavous campaigns have been asked for additional information on some contributors.

    Bill Lightfoot, a Brazil supporter, is a former D.C. Council member who says he worked to strengthen campaign finance law.

    "The law is written for the purpose of full disclosure in the light of public scrutiny," Lightfoot said. "But when [campaigns] and office of campaign finance fail to enforce the law, public scrutiny is clouded."

    A review of campaign finance filings by the mayoral candidates gleaned the following:

    Douglas Development Corp. gave Chavous $4,000, double the legal limit, with a $2,000 contribution in March and again in June. The Chavous campaign later amended the report to show that one of the contributions came from Douglas Jemal, owner of Douglas Development. Jemal wants to develop properties he owns across from the new MCI Center and is trying to form an investor group to bring a major league baseball team to Washington.

    Robert L. Cohen, chairman of Insignia and president of the real estate company Barnes, Morris & Pardoe Inc., donated $1,500 to Evans in January and an additional $1,000 in June -- $500 over the legal limit.

    Halifax Square Associates, a property owner in the District that lists parking magnate D.F. Antonelli Jr. as an officer, contributed $2,000 to Evans. The company's last annual report was filed in 1977 and, by all accounts, it no longer exists. The D.C. Department of Consumer and Regulatory Affairs retired its corporate records in 1994.

    Antonelli, his partner, Angelo A. Puglisi, and five other companies and partnerships associated with them gave Evans a total of $9,500. Antonelli, who gave the maximum contribution in his own name, is a general partner of one of the partnerships. The campaign has sought information regarding the partners of two other partnerships. One of them, DeSales Street Associates, has no corporate or partnership records filed with Consumer and Regulatory Affairs.

    William L. Remley, a former Washington chief executive who moved his offices to New York, gave Chavous $2,000 on May 19. Three corporations for which Remley is either the chief executive or a principal officer -- Sunderland Industrial Holdings Corp., CPT Holdings Inc. and Mentmore Holdings Co. -- also each gave Chavous $2,000. All three corporations use the same 1430 Broadway address in New York.

    Chavous received $7,000 from George Calomiris, president of William Calomiris Investment GP, and business entities that list both the 16th Street address of William Calomiris Properties Inc. and the Wisconsin Avenue office of Peter Calomiris. The Calomiris family has a long history of building and developing property in the District and the surrounding suburbs.

    Records for one of the four contributors affiliated with Calomiris -- Winthrop Associates -- that lists the same two addresses could not be located in Consumer and Regulatory Affairs files.

    Developer Richard S. Cohen gave Evans $1,500. One of Cohen's entities, 1722 Eye Street Associates gave $3,000 to Evans. When the campaign was informed by the Office of Campaign Finance, it returned the $1,000 that exceeded the legal limit. In all, a total of $17,000 came from contributors who listed Cohen's Potomac office as their address.

    "When you get somebody that's a developer, you get bundled checks," Lightfoot said. "That's the political reality in this city. When you convince one individual . . . and when they send you the envelope, it's got several checks. Legally they're separate corporations, but they're controlled by the same person."

    It may be a loophole in the law, but it's legal, Lightfoot said.

    "It's been going on for years," he said. "Either we were not able to figure out how to close the loophole, it was left open on purpose, or the Office of Campaign Finance has failed to properly enforce the law."

    Metro Resource Directors Bridget Roeber and Margot Williams contributed to this report.

    © Copyright 1998 The Washington Post Company

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