‘Full of loopholes’ — Mayor Adams’ 2021 fundraising shows weaknesses in campaign finance law

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By Dan Sears

Campaign finance regulators overseeing New York City’s generous taxpayer-funded matching program for political campaigns flagged nearly 400 donations to Eric Adams’ 2021 mayoral campaign as possibly bundled and requiring disclosure the campaign never provided, according to records obtained by Gothamist.

The city’s Campaign Finance Board generated the list of donations that were combined into a single contribution – a practice called bundling – in October 2021 as part of an audit of Adams’ fundraising. It represents nearly $396,000 in potential public matching funds for his campaign, a Gothamist analysis of the data shows.

The board says the audit is meant to instill confidence in the public financing program, where small-dollar donations are matched 8-to-1 with taxpayer funds. Officials said the audit has been paused while the FBI investigates whether the mayor’s 2021 campaign collected illegal foreign and straw donations.

But the federal probe has also made abundantly clear that rules and enforcement around campaign finance law leave a lot of room for improvement.

“It’s unfortunate, but there can be a gap between the intent and the specific black letter of the law,” said Nicole Gordon, the Campaign Finance Board’s founding executive director, in an interview.

Neither Adams nor his campaign have been accused of wrongdoing. Still, the campaign appears to have failed to disclose some fundraising events and bundlers, also known as “intermediaries,” who deliver donations from others, reporting by Gothamist and other news outlets has found. Although intermediaries must generally be disclosed to the CFB, the rules around them are contradictory and riddled with loopholes — making enforcement tenuous and transparency elusive, according to several election attorneys interviewed.

The Campaign Finance Act outlines several exemptions where intermediaries are not required to make disclosures, including when they’re relatives of contributors, or when they’re fundraisers who are recruited by the campaign and perhaps working only as volunteers.

But legal experts also pointed to several less obvious loopholes that could obviate the need to disclose bundlers: for example, if the campaign paid for at least part of the fundraising event, or if a well-heeled donor hosted a party with their friends where the candidate solicited donations.

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A spokesperson for the campaign said finance rules contain many exemptions for having to disclose intermediaries including types of contributions, the way they’re collected and who attends the fundraiser as examples.

Election lawyers and campaign finance experts agreed. Enforcement of the intermediary rules hinges on how they’re interpreted and even the Campaign Finance Board acknowledged that the regulations are outdated.

The ultimate intent of the law is to give the public a better view of who might be trying to gain influence with candidates.

Eric Friedman, NYC Campaign Finance Board assistant executive director

“Modernizing the law to address these gaps or exceptions would ultimately provide campaigns with better direction and provide the public with better disclosure,” the CFB’s Assistant Executive Director Eric Friedman said in an interview. “The ultimate intent of the law is to give the public a better view of who might be trying to gain influence with candidates by going and raising money for them.”

Friedman added he expects the City Council to update the rules with stronger disclosure requirements this year. But with new councilmembers and committee assignments after last year’s elections — and the Council gearing up for tense battles with Adams over the city’s budget and other legislation — it’s not clear when this might happen.

The donations in the list, which Gothamist received through a public records request, were flagged because they came from multiple people with the same employers, on the same dates, and often in similar amounts. The CFB requested further documentation on the flagged contributions before the audit was paused. Once flagged, auditors will ask the campaign for clarifications and documentation around the donors and events. .

While CFB officials could not say how much taxpayer money would ultimately flow to Adams’ campaign as a result of the suspected bundles, the board could claw back any improperly remitted funds once the audit is completed. Adams received more than $10 million in total matching funds for his 2021 campaign.

The list shows the donations were made between December 2018 and September 2021 by people in various industries, including real estate, law, transportation, education, food and health care. The donations amounted to roughly $49,000, not accounting for potential matching funds.

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Whether any of these suspected bundles actually had to be disclosed, though, is a gray area clouded by the knot of laws and regulations on bundlers for city campaigns, legal experts said.

“It’s so full of loopholes and so vague, and you’re asking treasurers and campaigns to interpret it?” said longtime election lawyer and former New York state senator Martin Connor. “It’s very hard to track, and who has to report this to the treasurer? They may not even realize that somebody else asked somebody to send in a check.”

New York attorney Laurence Laufer, who helped draft the law on intermediaries while serving as the CFB’s general counsel from its establishment in 1988 to 2000, said the rules are “tricky” because they’re laid out in multiple places: the city’s Campaign Finance Act, CFB regulations, and the candidate handbook the board publishes.

“At a minimum, you have three sources of information here,” he said. “And that still leaves out CFB advisory opinions and any communications CFB staff may have sent, and the campaigns have the ability to rely on that as guidance.”

Other election lawyers drew a distinction between the law’s intent and implementation, saying the gap gives campaigns leeway to circumvent having to disclose would-be bundlers in many cases.

“Of course there are always ambiguities, and it is hoped that campaigns do as much due diligence as possible to make sure that they are in compliance with the law,” said Jerry Goldfeder, a campaign finance attorney at the law firm Cozen O’Connor and an election law professor at Fordham University.

Gordon, the former CFB director who’s now a public affairs professor at Baruch College, said some campaign lawyers prevail in finding loopholes for bundlers because the law doesn’t — and can’t — define every possible case.

“Lawyers are entitled to argue for their clients in ways that can defeat the purpose of the law,” she said.

It’s unfortunate, but there can be a gap between the intent and the specific black letter of the law.

Nicole Gordon, NYC Campaign Finance Board founding executive director and Baruch College professor

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Although CFB rules require bundlers to be “known” by a campaign, it could receive numerous identical donations on the same day from a dozen employees of the same company hoping to signal its influence by coordinating their contributions. Under current rules, campaigns are not obligated to inquire if a bundler was involved.

“How would the [campaign] treasurer know if somebody asked somebody else to go online and make a contribution?” Martin Connor said.

Still, some election lawyers said the City Council could close loopholes in the law by requiring more due diligence of campaigns. One proposed solution involves establishing a threshold for campaigns to attest an intermediary wasn’t used, say, when multiple donors have the same employer and gave at or around the same time, or in identical amounts.

“The more disclosure the better, so voters know who is contributing to and raising money for candidates,” Goldfeder said. “Whether voters take that into consideration when they vote is an entirely different story.”

Others expressed a dimmer view about policymakers’ ability to limit money’s role in politics — efforts that, in the United States, largely date to the 19th century.

“And here we are 200 years later, still worrying about the influence of money on politics,” said Connor.

Brigid Bergin contributed reporting.

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