It’s Time to Close the “LLC Loophole”

June 27, 2017

Today the Brennan Center for Justice and Emery Celli Brinckerhoff & Abady LLP, on behalf of a bipartisan group of former State legislators, candidates, and other appellants, filed their opening brief in the New York Supreme Court, Appellate Division (Third Department), arguing that two lower court rulings leaving New York’s notorious “LLC Loophole” intact should be reversed. 

The LLC Loophole was created by the state Board of Elections. It provides that LLCs must be treated like natural persons under New York’s campaign finance laws, making them subject to much higher contribution limits than other artificial business entities. The Loophole has allowed wealthy donors who control multiple LLCs to inject millions of dollars into state elections, often with little or no transparency. LLC donations have played a role in several recent corruption scandals, including those that brought down former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos.

“LLC contributions have been central to the state’s pernicious corruption problem,” said Larry Norden, deputy director of the Brennan Center’s Democracy Program. “The Legislature never intended to allow a select set of business groups to give astronomical contributions, yet a controlling bloc of the State Board has inexplicably decided twice to continue giving LLCs and those behind them special treatment.” 

“Businesses routinely and egregiously exploit the LLC Loophole by giving massive contributions through many different LLCs, each of which is treated as a separate person by the Board—rendering the contribution limits essentially meaningless,” said Elizabeth Saylor, a partner at Emery Celli Brinckerhoff and Abady LLP. “Although the public is kept in the dark, big donors take pains to make sure candidates know who is behind those LLCs, creating opportunities for corruption.”

Read the Brennan Center and Emery Celli’s full brief here.   

Read more about the Brennan Center’s work on money in politics.

For more information or to schedule an interview, contact Blaire Perel at (646) 925-8734 or perelb@brennan.law.nyu.edu