Brown’s campaign finance woes

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News and analysis by Geoff Kelly, Investigative Post's political reporter

As he prepares to seek a fifth term, Mayor Byron Brown’s latest campaign finance report illustrates three things:

• Brown has never been so financially under-equipped entering a reelection year.
• His donations the past six months overwhelmingly came from folks who owe him their jobs and firms seeking city contracts and project approvals.
• The mayor’s campaign continues to violate state law governing how donations from limited liability corporations are disclosed.

The mayor’s campaign committee, Brown for Buffalo, recently filed its latest campaign finance disclosure with the state Board of Elections, covering donations and expenses from July 11, 2020, to January 11 of this year.

The committee took in $157,925 in that period. Most of the money was raised at one high-dollar fundraiser held Oct. 5 at 500 Pearl, owned by Ellicott Development. Over the six month reporting period, the committee spent $102,949. 

The committee reported $170,544 in cash on hand as of Jan. 12.

That’s half the amount Brown had four years ago in January, as he prepared for a primary challenge by then city Comptroller Mark Schroeder. 

Four years before that, in January 2013, as Brown readied to face Bernie Tolbert, the committee boasted more than $1.1 million. 

And in January 2009, Brown had almost $580,000 at his disposal — more than double the amount his challenger, then South Council Member Mickey Kearns, would raise and spend on his entire campaign that year.

Certainly the COVID pandemic has limited political fundraising. And perhaps Brown doesn’t feel he needs much money to keep his office. Three challengers have declared themselves so far. On the face of it, none seems to have the institutional or financial support that Schroeder, Tolbert and Kearns brought to the table. 

Of the three, only community activist India Walton has filed a campaign finance disclosure report. According to her filing, Walton raised $11,288 since launching her campaign in mid-December — all donations from individuals, none from corporations. Her committee, India Walton for Mayor, had $7,947 at the end of the filing period.

Scott Wilson first indicated his intention to run last summer. His committee, Wilson for Mayor, filed a “no activity” statement, indicating he has neither raised nor spent money on his campaign.

LeCandice Durham, who works for the city’s 311 call Resolution Center and describes herself as a lifelong friend of the mayor, declared her candidacy on Jan. 13. She is soliciting donations through her website but has not yet registered a committee with the state Board of Elections. 

Donors acting in self-interest

Brown for Buffalo’s January filing lists 120 donations made by individuals — as opposed to unions, businesses or other political campaign committees. 

Almost all those individuals demonstrate a clear self-interest in donating.

At least 78 of those individual donations, or 65 percent, came from people who are on the payroll of a city agency or owe their jobs to Brown’s patronage. At least 40 such individuals bought $600 tickets to Brown’s Oct. 5 fundraiser. (LeCandice Durham did not.) 

About a dozen pitched in higher amounts. Among city employees, Buffalo Fire Commissioner William Renaldo gave the most: a total of $2,500 in two donations. 

Brown’s largest donors July 2020 to January 2021

Source: New York State Board of Elections

At least 20 more individual donors work for, or own companies with city contracts or projects requiring city cooperation or approval. 

John DiDonato, for example, gave $4,100. His engineering company, DiDonato Associates, has done close to $5 million in business with the city over the past three years, according to city records on payments to vendors. 

The lobbyist Victor Martucci, of the firm Masiello & Martucci, gave $1,500. So did Paul Billoni, the owner of Colvin Cleaners. Both companies have contracts with the city.

Developer Howard Zemsky donated $3,500 and developer Paul Ciminelli gave $2,500. Both have ongoing projects that benefit from friendly relations with the mayor’s office.

Other individual donors included at least four local lawyers who are angling for City Court judgeships: Jennifer Stergion, Rebecca Town, Rashied McDuffie, and Phillip Dabney. (Brown appointed Dabney to city court last month to fill the vacancy left by Amy Martoche, who was elected to state Supreme Court; Dabney must run to keep the seat.) All four bought tickets to the Oct. 5 fundraiser. There are three openings on the ballot this year, and the mayor’s blessing goes a long way in getting a City Court judge elected. 

In sum, those 120 individual donors accounted for almost two-thirds of Brown for Buffalo’s income over the past six months. 

Of the rest, a small portion came from unions ($2,600) and other politicians ($1,200). The Seneca Nation of Indians pitched in $1,000, which is more than they’ve paid the city in casino revenues in the past three-and-a-half years.  

Most of the money came from private firms, including limited liability corporations, or LLCs. 

On this front, the mayor’s campaign committee might have some legal problems.

Violating election law

Beginning in 2019, state law began to require LLCs that donate to political committees to disclose their ownership and attribute their donations to the owners as individuals, in proportion to their ownership stake. 

 Say, for example, that ABC LLC gives $1,000 to John Smith for Governor, and the company is owned in equal part by four individuals. John Smith’s campaign committee is obligated not only to record the $1,000 donation from ABC LLC, but to file a separate form — called a Schedule O — identifying the four owners by name and attributing $250 to each as an individual donation.

The change in law was intended to close the “LLC loophole,” which previously allowed businesses to circumvent campaign contribution limits by using multitudes of LLCs to make donations. The LLC loophole was especially useful to real estate developers, who frequently create an LLC for each property they own — thus providing them many entities through which to support politicians, who can in turn support their projects.

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Brown for Buffalo accepts lots of money from LLCs, especially law firms and real estate developers. But it has never, since the law took effect, used Schedule O filings to reveal the ownership of those LLCs and attribute the donations to individuals.

Instead, the committee’s Schedule Os simply list the names of the LLCs that donated and mark the donations as “unitemized.”

This appears to be a violation of state election law.

In Brown for Buffalo’s most recent filing, LLCs accounted for $36,600 in donations. These corporate donors include three law firms ($6,600), two engineering firms ($7,000), two construction companies ($4,500), a subsidiary of Rich Products called B.R. Guest Ltd. ($5,000),   Russ Salvatore Development ($5,000), and two real estate firms that share an address in Syosset, New York ($8,000).

Half those LLC donations aren’t even listed on Brown for Buffalo’s Schedule O. The contributions of those listed are described as “unitemized.”

Many of the LLCs that have donated to Brown for Buffalo have donated to other campaign committees. Those other campaign committees properly disclosed the LLC ownership in their Schedule Os. 

Take, for example, Erie County Executive Mark Poloncarz. His campaign committee took donations from two LLCs that also donated to Brown: the engineering firm Clough Harbor Associates and the law firm Lippes Mathias Wexler Friedman. Poloncarz’s committee split up the donations among the LLCs’ partners in its Schedule O, as required by law. Brown’s committee did not.

LLC contributions can only be “unitemized” if each partner’s share of the contribution amounts to $99 or less, according to Mark Popp of the state Board of Elections.

“The committee’s treasurer is responsible for determining the ownership of the LLC and the percentage of ownership for each individual,” Popp told Investigative Post.

Brown for Buffalo’s campaign treasurer is Jessica Maglietto Smith, who works for the mayor as director of governmental relations and special projects. Smith did not return a call requesting comment.

The penalties for violating state election law are seldom applied but not insignificant. One failure to file a required form is punishable by a fine of up to $1,000; three such failures in an election cycle can result in a fine up to $10,000. A candidate or treasurer who “knowingly and willfully” fails to file a disclosure is guilty of a misdemeanor.

Support from Paladino

Brown for Buffalo seems to have glossed over one LLC donation entirely. 

Brown for Buffalo’s January filing lists $45,727 spent on fundraising expenses. But that total doesn’t include any rental or food and drink costs for the Oct. 5 fundraiser at 500 Pearl Street. 

In fact, there’s no accounting for the price of hosting that fundraiser at all in Brown for Buffalo’s January filing.

Presumably, those costs were donated by Ellicott Development. Or, more precisely, by Pearl Group LLC, the Ellicott Development subsidiary that owns 500 Pearl. Ellicott Development is, of course, owned by Carl Paladino and his son, William.

The Paladinos have done this before: In June 2019, 500 Pearl hosted a fundraiser for Brown, and Pearl Group LLC wrote off the cost of the event as a $3,034 donation to Brown for Buffalo.

That time, Brown for Buffalo duly noted the Pearl Group’s generosity in its June 2019 campaign finance filing. But it failed to itemize the donation in its Schedule O.

Geoff Kelly