Jumping through legal campaign loopholes

February 22, 2010 8:51:10 PM PST
It's an inside look at how the money game is played in Albany. Eyewitness News investigators spent weeks looking at campaign contributions to state lawmakers and found a loop-hole large enough to funnel millions of bucks through.

There's been a lot of talk among politicians at the capitol about campaign finance reform.

But it really is just talk. The money from big businesses seeking access to power still flows freely, thanks to self-serving lawmakers and their loopholes.

Soon after Brooklyn State Senator Carl Kruger became chair of the powerful finance committee, the money started rolling in. These campaign disclosure reports show that in the first six months, he received more than a half-million dollars in contributions, double the donations received in ALL of the previous year.

HOFFER: Is it a coincidence, or is it because of the power you have as chair of that committee?
KRUGER: Absolutely not!

Closer scrutiny of contributions to Senator Kruger suggests those who hold power in Albany attract the money. Shortly after he became head of finance, Kruger's campaign received more than $33-thousand dollars from nine Manhattan parking garages, all of them first time Kruger donors and all outside the Senator's Brooklyn district.

So what do all these garages have in common? A building in Long Island. Each garage lists the building as its home office. It also happens to be the Headquarters for Glenwood Management Corporation, which owns all the garages.

Glenwood Management is run by Leonard Litwin, wealthy developer of Manhattan luxury residential properties.

"It's a shell game and it should be stopped," Dick Dadey said.

Dadey, from the watchdog group Citizens Union, said Litwin's various parking garages allow his business, Glenwood Management, to skirt the corporate campaign contribution limit of $5-thousand dollars per year. A convenient loophole written and protected by state lawmakers.

"What is wrong about it is that Litwin is able to multiply his influence by making the number of contributions that he has made to the detriment, I think, of the larger public interest because it overshadows what average New Yorkers are able to do and how they are able to influence the system," Dadey said.

Our investigation has found that Litwin, by listing his 20 garages as separate entities, has been able to funnel more than $2-million dollars to the campaigns of state lawmakers since 2006. While all legal, the amount far exceeds the 5-thousand dollar a year corporate cap. Some of that loophole loot went to the new head of Senate Finance, a committee that deals with tax issues important to developers, like Litwin.

HOFFER: Isn't it just a big loophole to shovel money in a campaign such as yours?
KRUGER: Following the law, and following the traditional practices of filing campaign statements, there is no such thing as loopholes. If you want to misinterpret the law --
HOFFER: Senator, this is a huge loophole, and everyone has said it is, including Governor Patterson. He wants to close it.
KRUGER: Well, then by the way, you should look at Governor Patterson's filing as well.
HOFFER: But I'm talking to you right now. Maybe we will look at Governor Paterson. Why point the finger at others when we want to ask you some questions?
KRUGER: You have asked me the questions, and I have responded to your questions. Have a good day.
HOFFER: But don't these kinds of loopholes erode integrity in government? Don't they Senator?

"You cannot tell me that a legislator, who is receiving the kind of contributions that Carl Kruger is receiving, is not in some way influenced by those who are making those contributions to him," Dadey said.

Glenwood Management through its various entities has also contributed $300-thousand dollars to Governor Patterson and $150-thousand to Attorney General Andrew Cuomo.

All of the contributions were legally done through the lawmakers' favorite corporate loophole.

If you have a tip about this or any other issue you'd like investigated, please give our tipline a call at 877-TIP-NEWS. You may also e-mail us at the.investigators@abc.com and follow Jim Hoffer on Twitter at twitter.com/nycinvestigates