Facing Election Day in three weeks and lagging in the polls, Maryland Democratic gubernatorial challenger Ben Jealous went on the attack Wednesday, promoting an ethics plan that included a rebuke of how Gov. Larry Hogan has handled his real estate development business while in office.
“We still have no idea if his administration is making decisions to benefit his own business interests,” Jealous said at a news conference.
Jealous promised to back ethics measures if elected, including requiring future governors with business interests to put them in blind trusts and statewide candidates to release tax returns.
In a statement, Hogan’s campaign defended the Republican incumbent’s record and cited several ethics-related bills the governor has pushed in the past two years, saying Hogan has “enacted the most far reaching ethics reform legislation in more than a decade to clean up Annapolis.”
Hogan campaign aides also punched back at Jealous, saying in a statement that the Democrat “is in no position to lecture anyone on ethics.”
The campaign pointed to LendUp, a company that Jealous invested in as an executive for Kapor Capital, a California-based venture capital firm that focuses on socially conscious businesses. LendUp, which aims to provide a better alternative to traditional payday lending, was fined millions after federal authorities accused it of violating lending regulations. The company says it regrets the missteps and has resolved the issues.
The gubernatorial campaigns also traded barbs over lobbyists, with Jealous accusing Hogan of having “cozied up” to two prominent Annapolis lobbyists — Gerald Evans and Bruce Bereano — despite their long-ago fraud convictions.
If elected, Jealous said, he would “refuse all meetings with lobbyists who have been convicted of ethics-related crimes like fraud or corruption.”
“I’m honestly at a loss why Larry Hogan has asked people like Gerry Evans and Bruce Bereano to raise money for them, has met with them,” Jealous said.
Hogan’s campaign responded by mass-emailing a published version of a voice-mail message left for Evans by Jealous a few weeks ago, soliciting his support for the Democrat’s campaign.
“Gerry, hey, it’s Ben Jealous calling. I hope you’re well,” begins the message, audio of which was first published by the Daily Record. Jealous goes on to say that his campaign “could really use your support.”
Jealous spokesman Steven Hershkowitz said Jealous did not learn of Evans’s conviction until he was creating his ethics plan during the past week or so. “When he was making calls to him, there was an error made, and it wasn’t flagged for him that he was a lobbyist who had been convicted,” Hershkowitz said.
It is well known in Annapolis that Evans and Bereano, among the capital’s top-earning lobbyists, went to prison for fraud related to their lobbying work. Both are supporting Hogan in the governor’s race.
In an interview, Evans said Jealous had called him “five or six times” since winning the June Democratic primary and also “crashed” the party he holds annually at the end of the legislative session.
Hogan founded Hogan Cos. in 1985, developing properties and brokering land in rural and suburban Maryland — particularly Anne Arundel, Prince George’s and Frederick counties — and elsewhere in the Mid-Atlantic.
Hogan Cos. has completed more than $2 billion in transactions over the years, its website says. During his 2014 campaign, Hogan turned the presidency of the company over to his brother Timothy Hogan, 25 years his junior. But he told the State Ethics Commission in an April 2016 letter that he wanted to be able to “resume control of the Hogan Companies after my service as Governor is complete.”
Under Maryland law, a state official may not have a financial interest in a business subject to his authority. Hogan acknowledged that his business would necessarily have contact with agencies he is charged with overseeing, such as the State Highway Administration.
But he secured an exemption from the ethics commission, based on his pledge to avoid certain pitfalls — such as conferring with Hogan Cos. executives about business decisions or using his public office to advantage the business — and on a trust he created for his assets. The trust is controlled by Hogan Cos. executives Victor White and Jake Ermer, along with former Hogan Cos. executive David Weiss.
Public officials wanting to avoid conflicts of interest sometimes opt for blind trusts, which shield them from knowing what investments they hold. But Hogan would have had to divest from his business for his trust to be truly blind. Instead, his trust aims to separate the governor from managing the business.
Hogan spokeswoman Amelia Chasse said Hogan interprets the arrangement as prohibiting him from knowing locations of the company’s new real estate investments and the identities of its current clients.
Hershkowitz, Jealous’s spokesman, said Hogan’s trust does not strictly prohibit him from receiving information about clients and real estate projects. (Legal language in the trust regarding information the governor may access is not clear and appears contradictory in some places.) Hershkowitz said that as governor, Jealous would push legislation making such prohibitions a legal requirement.
“We don’t want to outright discourage businesspeople from running for office, but at the same time there’s more that could be done to make this a blind trust that Larry Hogan has not done,” Hershkowitz said.
According to financial disclosures Hogan is required to file, the number of real estate investment partnerships in which he holds interests through Hogan Cos. grew from 20 to 36 between 2014 and 2017.
Hogan joined White and other Hogan Cos. executives for a tour of the company’s new larger headquarters in May. Asked about it last month, Hogan Cos. executives said Hogan had no involvement in the company’s decision to move. “Mr. White arranged the brief tour as he thought that the Governor would be interested in seeing the new office building,” a company statement said.
This summer, Hogan released his and his wife’s joint tax returns for his years in office, after Jealous released his. Hogan’s returns show $1.9 million in income aside from his government salary, reflecting income from his business as well as the sale of his home in 2016 and rental income from his condo in Ocean City, according to Chasse.
Hogan did not release prior returns, so it is unclear how his income has changed since becoming governor.
Jealous, in his 2017 return, listed nearly $240,000 in income from Kapor. He also earned $192,192 as a visiting professor at Princeton University’s Woodrow Wilson School and $34,115 from speaking engagements. Jealous says he is in the process of divesting from his investments at Kapor.