Transcript

Forum: Corporate Political Spending and Foreign Influence

Hosted by Commissioner Ellen L. Weintraub

Federal Election Commission, 999 E St. NW, Washington, DC 20463

June 23, 2016

Statement ofJared DeMarinis, 

Director, Candidacy and Campaign Finance Division, 

Maryland State Board of Elections

JARED DEMARINIS, DIRECTOR, CANDIDACY AND CAMPAIGN FINANCE DIVISION, MARYLAND STATE 

BOARD OF ELECTIONS: Well, I just wanted to say thank you, Commissioner, for inviting me to this 

esteemed panel, and this has been very informative throughout the entire day here. I'm going to be 

addressing the impact of corporate contributions on the state and local level and I'm going to just first 

address that Maryland has always allowed corporate contributions, we just don't allow corporations to 

run for political office because they are not a person for that purpose. 

And when Citizens United came out, I remember all the press calls that were coming in, because 

now there was such a heightened awareness among the press corps and it had really no impact on the 

state of Maryland's giving process because we've always allowed corporations to give and to make 

independent expenditures. But since then, it definitely changed. And I'm going to give you a little case 

study about how difficult it is, and kind of a, what the other panel and everyone here being such 

professors in law schools, it reminds me of my, one professor's quote about the, if you don't let the nose 

of the camel inside the tent, type of deal. Once it's in there, it's very difficult to get out. 

And corporations and corporate contributions is definitely that type of being here. So... like I 

said, Maryland has always allowed corporate contributions and we had an attribution rule in place that 

said that wholly owned subsidiaries of a corporation and if the corporation had identical shareholders, 
they would be considered as one contributor. Now this makes sense and everything. And this is since 

the dawn of the time. In the 90s, LLCs came into existence and into corporate law in Maryland, the 

powers that be and everyone asked, “Well, are LLCs part of this attribution rule?” And the office of the 

Attorney General at the time said “no.” LLCs have to be considered separate entities and they're not a 

part of the attribution rule because when the law was written, it was written saying corporations and 

LLCs are not corporations. 

This became the LLC loophole in the state of Maryland here. And basically, everyone who was 

the most popular form of corporate structure, especially for small business owners, developed many 

LLCs. And they were able to give to politicians over their contribution limits. And this is, it existed for 

years. Out there. And it had such a significant impact on local and state elections, which was making it 

virtually impossible for it to ever get changed. And there was years of it, constantly in front of the 

General Assembly, to close this loophole. And I was going through some of the comments online too, 

that I, with the FEC, #FECforum. And one of the things was about how corporate contributions are 

insignificant. If that’s the case then they wouldn’t make it. Of course corporate contributions are 

significant and they have an impact here. Large developers in the state of Maryland used to typically set 

up many LLCs for legitimate reasons to control their various interests. 

And they then contributed money that they controlled to their candidates. They formed 

basically, clusters of giving power to increase their political clout. And this ranged into the hundreds of 

thousands of dollars to specific entities and to specific candidates. I mean, the corporations, corporate 

contributions, you know, targeted the correct elections to maximize their effect at the state and local 

level. 

So, I think that it would be, while you may, while it may be insignificant as a figure compared to 

say, overall giving to a candidate by individuals, its impact is probably greater than that. Because one 
person given $25 versus a person giving $100,000, they controlled all those interests there. And I think 

corporate money was kind of like the original dark money in a sense here. Because you don't necessarily 

know how they were, how this decision was made, who really speaks for the corporation, and the public 

just kind of looks at it and goes, it's just a name and most of these LLCs or corporations have names that 

no one even knows about and then they go in and they get a registered agent there. 

So... it was really the first form even though it was disclosed and you could try to find it, it takes 

a long time there. 

So flash forward now from the 90s all the way to 2013 which we basically, when the LLC 

loophole was finally closed. And the law was only effective after the 2014 general election. So they 

wanted to make sure that they got one last election with the LLC loophole. 

And this law that we passed in Maryland was passed with bipartisan support. So, this is not 

something, now, that was a Republican or Democratic issue. I think that the states now have taken the 

mantle of this for disclosure and reform, in a bipartisan effort here. 

And the close, now, is that we then changed it to all business entities, so that we don't care 

what structure they are, LLC, LLP, corporations, anything, that if they're owned or controlled by 80% of 

the same individuals, they're considered one contributor now. 

Along the lines here, the idea, then, there was a ban on casino interests as well. I received many, 

I guess, concerns about well, if the, if one corporation in this person's control is a casino, will it affect, 

say, their dry cleaning business if they want to give to me on an unrelated matter? And the answer is yes 

-- I said, once the, you know, once the ban was attached to all the contributors then it affects all of 

them. 
That wasn't the most popular response because they still wanted a lot of the money there. So... 

but, once you have big money entering into the political process, it is nearly impossible to get it out, or 

its corrupting influences on it, because campaigns constantly get more expensive. 

The last cycle is the floor. It's not the ceiling anymore. Because then they look around, they go, 

well, if I took $100,000 to win, my opponent's going to raise $150,000 so therefore, I have to now look 

at it and raise $200,000. So, it's always kind of, like, an increasing arms race there. So, once they know 

that they have an access to money from one contributor that can give tens of thousands of dollars, then 

of course they can easily raise that in their mind. And if you cut off those sources for that, it has an 

impact on their ability to raise money and they have to say, “Well, now I have to go out and get, you 

know, the legal limit from 20 people” or “I have to go out a little bit harder.” 

The other thing, too, is that I wanted to say about how the states are taking this responsibility, I 

think, about corporations and shareholders in a new light. I think that they are, they used to look at the 

federal side and say, that used to be the shining model of disclosure and activity for, you know, 

compliance and the states were always the, let almost anything go. 

Now I think the roles have kind of flipped here. For example, with independent expenditures in 

the state of Maryland, if you're an entity that makes an independent expenditure in our state for a state 

or local election and you have shareholders, you have to submit your activity to the shareholders on 

their regular shareholder report. 

So the shareholders will have some knowledge about that. I think I wanted to talk about, a little 

bit, one of the questions here is, “What can the FEC do? You know, how can they build a record about 

this?” And... I can say that how this change came about, I can talk about the fact that we had two 

commissions, to study campaign finance law, one by the Attorney General, another one by the General 

Assembly or that outside groups did reports about how much money was passed through the loophole, 
which in one four-year cycle was $5 million in the very small state of Maryland, which, as you can see, 

had a very significant impact there or the press was very knowledgeable about this loophole. But in the 

end, it was really the Citizens United case. 

I think that the Citizens United case, even in the state, where it had no effect, prior, I mean, after 

its ruling, made legislators rethink and take a look about corporate influence. And I think that in their 

mind, because we, everyone looked at the federal model, you had a lot of people go, “Oh, of course 

corporations can never give because the federal law prohibits corporations from giving.” Once Citizens 

United, it opened up and it was in the press that corporations can give, corporate owners felt a little bit 

more secure about giving in state and local elections, and that they weren’t going to run afoul of 

everything. And the other thing, too, is that I’m an eternal... I’m an optimist in these situations here. 

We’ve, campaign finance has gone through a, depending on how you feel about it, major 

changes in the last seven, you know, in the last decade or so. I think that one of the things about it is 

that on the state and local levels, the, it is more of a bipartisan issue than on the federal level. And the 

reason for it is because of the impacts that they have been doing to themselves as legislators with 

redistricting. Redistricting has made every district now a safe district. Before, you used to have to worry 

about what the Democrat or Republican is doing in your own district. Now you are more worried about 

your challenges from your own party, whether it from left or right, and that, the general election, is 

almost predetermined at that point there, for the outcome. 

So... legislators are now looking at it and saying, "Well, I want to know what activity this, what 

my opponent is doing." And their opponent is more in their party than ever before, so, which is why I 

think we were able to pass such a comprehensive campaign finance reform with greater disclosure on 

dark money with (c)(4) activities, with 527 activities, with rapid disclosure on super PAC activities within 

48 hours. All these reforms and greater disclosure and enforcement laws was because they were looking 
at it in their own light and saying, “Well, I want to know what's going on in my election, that matters to 

me the most.”

And before I leave, I just wanted to talk a little about foreign influence here. Now, foreign 

influence is a, we can all agree that, I think, that we never want a foreign government to influence our 

elections. Or have the ability to change our political discourse. Maryland is unique in one scenario here. 

We have a town that actually allows noncitizens to vote and participate in municipal elections. They 

have, they can go out and vote for mayor, but it's against federal law right now for a person in that 

town, that's living there, to give a $5 donation to the candidate that they choose. 

Also... nationally, we've been passing a lot of Dream Acts. There's the dreamers out there. Now, 

maybe they have a right, maybe they don't have a right to participate in the electoral process, but 

they're here, they want to participate in this process here. This is not a national government trying to 

push their own agenda in our political process here. These are people that, in the Dream Act, you know, 

pay taxes. So they are actually, you know, should they be able to give money to a ballot initiative? These 

are some questions now, I think, that as we go forward, I think we need to address and that foreign 

nationals is a different subject from when it was first, I guess, thought of in the 1930s or in the 40s when 

there was a war and we wanted to make sure about that. 

So... with that, I just wanted to show that how it took forever, but it did take, we did get it done, 

to limit or corporate influences on the electoral process here, which is why I'm an optimist in these 

situations here. I think that as the people from the states move up through the ranks, the rules that they 

play with on the state level, they’ll want to bring to the next election. Because then they're going to say, 

“Well, this worked and this is not something that I couldn't win or it wouldn't have a negative impact on 

it,” and they're going to take that, I hope, bipartisanship and disclosure and reform attitude up to the 

next levels, to the federal side and that is all.