On Tuesday the state Assembly passed a bill to close the controversial LLC loophole at the center of the federal corruption cases against former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos. Both men - a Democrat and a Republican, respectively - were recently arrested and subsequently stepped down from their powerful leadership posts. Later in the evening Tuesday, the Senate’s version of the bill to close the loophole that allows money to flow unfettered into campaign accounts appeared to be dispatched by Senate Republicans in a bit of behind-the-scenes maneuvering.
The LLC loophole that allows individuals and corporations to donate unlimited amounts of cash to legislators has been treated by many as a political hot potato all year. It gained attention when Glenwood Management and its principle, Leonard Litwin, were connected to the Silver indictment. Litwin is the state’s largest campaign donor thanks to the many LLCs he controls and his tendency to donate large sums to politicians at all levels of state government and in both major parties. The issue flared up again after Litwin and his company appeared in the federal complaint against Skelos.
According to a study by Common Cause NY, Glenwood Management has given $12.8 million in political donations from 2005 to 2014, but only 10 percent of those donations actually came directly from Litwin or his companies. The rest of the donations were made by LLCs registered to Glenwood or listed at its address.
In April, Sen. Daniel Squadron, a New York City Democrat, used a parliamentary maneuver called “Motion for Committee Consideration” to force the Elections Committee to consider the bill. In an apparent move designed to avoid controversy, Republican Senators voted to move the bill out of committee without recommendation. Instead of being sent to the floor for a vote it was sent to the Corporations Committee. Squadron told Gotham Gazette at the time it appeared the Republicans had “used a loophole to kill an attempt to stop a loophole” because the Corporations Committee rarely meets.