Latest trick for fundraising: the check swap
By William F. Zorzi, Jr. and Thomas W. Waldron
The Baltimore Sun
It all began over cocktails with a quasi-tip a passing reference to ³check swapping² between the campaigns of Ellen R. Sauerbrey, a Republican challenger for governor of Maryland, and U.S. Sen. Alfonse M. DıAmato, the GOP incumbent from New York.
Details were sketchy, but what seemed clear was that late in the election, campaign supporters of one candidate had given heavily to the campaign of the other, only to have a like amount returned by supporters of the other candidate.
It was clear that if it were true, supporters of Sauerbrey who did not want their names known (she ran against a sitting governor) could still back their candidate financially but without detection. Plus, it would have allowed supporters of either candidate who were ³tapped out² to elude campaign finance limits and further support their candidate.
At the center of it, so the story went, was Joseph A. De Francis, the majority owner of Pimlico and Laurel race courses and Marylandıs most visible proponent of slot machines at state horse-racing tracks.
De Francis already had given $250,000 in soft money to the Republican National Committee in mid-October. At about the same time, the Republican Governors Association launched ads attacking Gov. Parris N. Glendening, the incumbent Democrat who had vowed to fight slots at the tracks.
In the days after the Nov. 3 general election, after the final dollar tallies for the governorıs race, The Baltimore Sun reported a large number of contributions to the Sauerbrey campaign from New York, including $8,000 from a member of the New York State Racing Commission.
The tip, such as it was, seemed to show promise. Proving it was another story.
We had to find out if, and then how, similar amounts of money moved between the two states; whether there were matching contributors, addresses or dates in each of the campaign finance reports; and whether there were any identifiable links to the horse-ra
cing or gaming industries.
The complexity of doing that seemed at the time mind-boggling, given the fact that each of the campaigns played by different rules state and federal.
For instance, contributors to each campaign were subject to different limits: $8,000 for the ticket that included Sauerbrey and her running mate for lieutenant governor; $1,000 for DıAmato in the general election. If the scheme involved a simple dollar-fo
r-dollar match, there should have been eight times the number of Marylanders writing checks to DıAmato as there were New Yorkers sending money to Sauerbrey.
Second, while Sauerbreyıs filings could be accessed electronically, DıAmatoıs campaign finance reports were on paper. Senate candidates do not file electronically with the Federal Election Commission, as House candidates and political action committees do,
but instead on paper with the Secretary of the Senateıs Office in Washington.
And finally, under Maryland law companies can contribute to a candidate, but federal law prohibits such contributions to federal candidates. That meant in order to match up individual contributors to both campaigns, we needed to find out the names of the
principals of the New York companies contributing to Sauerbrey.
The easiest piece was identifying the Sauerbrey campaign contributions. Since the 1994 statewide election, The Sun has maintained its own database of contributions to campaigns of gubernatorial candidates and others.
Mike Himowitz of The Sunıs electronic news department used Microsoft Access to create the database and search system. Initially, those data were input by hand, but since the 1994 race, state law has changed to require all statewide candidates to file elec
tronically with the Maryland election board. This enables The Sun to post the contributions more quickly and analyze them in a timelier manner.
Out of that database, which included 1998ıs most up-to-date post-election filings, we were able to identify the New York contributors and other large out-of-state Sauerbrey donors, many of which were businesses.
The names of those businesses were sent to The Sunıs library research staff, along with a request to find any and all names of those companiesı officials. Using a variety of on-line databases, including Dun & Bradstreet, the Security and Exchange Commission and New York state corporate records, the research staff established a list of potential contributors to DıAmatoıs campaign who may already have hit the contributions limit.
Those searches were supplemented by checks of online New York newspapers to see what we could learn about those contributors and about DıAmatoıs fund-raising apparatus.
We also checked those names against the online databases that list contributions to federal candidates and committees to see if any of them were merely big-money Republicans who would support any GOP candidate nationally. More importantly, though, we want
ed to see if they were linked to DıAmato. Aside from the FECıs own databases, we found Public Disclosure Inc.ıs FECInfo database and that of the non-partisan Center for Responsive Politics very easy to use and most helpful.
The real key to making the case, however, was the list of DıAmato contributors in the last weeks of the campaign, which was not available at the U.S. Senate until Dec. 8. It was the worth the one-week wait.
About halfway through the paper filing was a grouping of easily identifiable Sauerbrey supporters from Maryland, including De Francis and others affiliated with the horse-racing industry. All of them had given to the campaign in mid-October.
We went through the filing, identifying all the Marylanders who gave to DıAmato and with the help of Genice Ownes, a researcher in The Sunıs electronic news department, created a database, again using Microsoft Access. Each entry, done by hand, included t
he name and address of each Maryland contributor, the amount given, the date and any other miscellaneous information offered on the report.
By comparing that ultimate list to that of the Sauerbrey contributors, we were able to come up with a listing of those Marylanders who had contributed to both.
Some of the names were well-known to us as being supporters or key advisers to Sauerbrey or as having some affiliation with the tracks. Searching The Sunıs electronic library and other on-line publications, we were able to find more contributors with link
s to the racing industry.
By trying to identify still other contributors, we discovered a tremendous resource: a database maintained by the Maryland Racing Commission of all horseowners, trainers, vendors and other workers at tracks in the state. We were able to check our list ag
ainst the names on the database and identify more of the contributors.
Finally, the last connections were made the old-fashioned way not through computers, but through paper copies of the annual reports of Pimlico and Laurel race courses. That gave us the names of the tracksı lawyers and accountants.
One of the more intriguing contributions was $8,000 to Sauerbrey from Renew New York, a DıAmato-controlled PAC in New York. Since the PAC could easily have been used as a vehicle to recycle Maryland contributions from Sauerbrey supporters either direct
ly, as in this case, or through transfers via some other campaign account it seemed critical to obtain copies of it to see who had contributed to it and where the money went.
Unfortunately, the New York State election board in Albany does not maintain a computerized database, much less one accessible on line. But we were able to hire a journalism student there to copy the full report and send it via Fed-Ex overnight.
Among the entries was Peter G. Angelos, a multi-millionaire Baltimore lawyer and majority owner of the Baltimore Orioles. Though a nationally known Democratic giver, Angelos had kicked in $25,000 to the DıAmato PAC. This only fueled the fire.
The rest of the PAC report yielded little to support that it had been used as a pass-through to the Sauerbrey campaign. But it, along with our earlier on-line database searches of federal campaign contributions, did confirm that several of the New York contributors with no links to the racing industry were in fact long-time, big-money donors to DıAmato.
Overall, not including the Angelos money, we were able to document that at the same time in mid-October at least $118,000 was sent to Maryland from DıAmato backers, including New York City developers, Chicago bankers and Long Island construction companies. In turn, at least $50,000 went to DıAmato from Sauerbrey supporters and Maryland horseracing interests.
When finally confronted with what we had found, De Francis and others readily admitted to the scheme, which apparently violated no state or federal campaign-finance laws.
Both campaigns, they said, had agreed to a joint fund-raiser, held Oct. 21 in New York City, where the check swap was made. In fact, the finance chairman of the Republican Governors Associations, Wayne L. Berman, said that he played matchmaker between the campaigns, since both needed infusions of cash in the closing days of their hard-fought, and ultimately losing, campaigns.
He openly acknowledged that check swapping was a way around campaign spending limits in state and federal law.
"You find (a candidate) with a lot of donors who have hit the maximum contribution level allowed," Berman said. "You have someone else in a similar situation, and you have a joint fund-raiser, and both people benefit."
Angelos, on the other hand, said that he had no knowledge of the Maryland-New York check swap. He offered DıAmatoıs support of the construction trades and lawyers as the reason for the contribution.
Advocates of campaign-finance reform say check swapping serves to circumvent limits on campaign contributions and weakens the law that requires all contributions be made public. Nevertheless, they say the use of such techniques are on the upswing, as campaigns look for new ways to raise money to pay for increasingly expensive races.
As if to underscore that assertion, after the story ran, Glendening campaign aides sought us out to learn more about the check swap.
"I wish we had thought of it," one aide said.
Zorzi covered Maryland government and politics for more than a decade before becoming The Sunıs weekend metropolitan editor. Waldron is chief of The Sunıs State House Bureau in Annapolis.