The limit for contributions in local elections is $1,000 per individual per candidate. But in this year’s race for mayor of Charleston, companies associated with Bennett Hospitality founder Michael Bennett have poured a combined $15,000 into the campaign accounts of candidates Leon Stavrinakis and Ginny Deerin, according to State Ethics Commission filings. And it’s only April.
What Bennett is doing is completely legal — and it has plenty of precedent. New York real estate investor and libertarian activist Howard Rich has famously funneled millions of dollars into elections in South Carolina and other states, thwarting contribution limits by giving the maximum allowable donation via numerous limited liability companies (LLCs). Texas real estate investor Chowdary “Charlie” Yalamanchili used the same loophole in the 2014 South Carolina gubernatorial election to funnel $72,000 into Gov. Nikki Haley’s re-election campaign, despite a $3,500 limit on individual contributions to a candidate in a state race, according to a report in the Post and Courier.
So far in the mayoral election, Stavrinakis’ donors seem to be taking the most liberal advantage of the LLC loophole. Of the $310,000 he has raised, $56,000 — that is, nearly one-fifth — came from just 12 addresses. Bennett, whose upcoming eight-story hotel beside Marion Square required a controversial zoning change by City Council, is listed as the registered agent for 11 companies that each gave $1,000 to Stavrinakis this year, including International Blvd. Ventures IV LLC, West Ashley Ventures LLC, and Old Citadel Associates LLC.
A search of the S.C. Secretary of State database shows that Bennett is the registered agent of 69 companies, meaning that Bennett and companies associated with him could theoretically give a combined $70,000 in the mayoral race — or even more, if Bennett decides to register more LLCs with the state.
John Crangle, director of the ethics watchdog group Common Cause South Carolina, says he has been trying to convince state legislators to close the LLC donation loophole for years. During the current legislative session’s debate over proposed ethics overhauls, Crangle says he hasn’t seen any lawmakers move to change that particular law.
“It’s a very serious problem because, using LLCs and multiple PACs, a single source can completely evade contribution limits and render them worthless,” Crangle says. “It gives the individual donor a great deal of influence over the election process and determining who gets the nomination, who wins the general election — not only that, but it gives the donor who goes way beyond the ordinary limits a great deal of influence over the candidate.”
In addition to the donations from LLCs associated with Bennett, Stavrinakis received $1,000 from Varn Realty owner M. Stephen Varn and $1,000 each from nine LLCs that list the same West Ashley address as Varn Realty. As with the Bennett donations, all 10 donations were made on the same day.
Stavrinakis has also received eight donations of $1,000 each from companies listing the same P.O. Box as JEM Restaurant Group, a Charleston-based operator of Pizza Hut and Taco Bell restaurants owned by John McGrath — plus $1,000 each from John and Jennifer McGrath.
Stavrinakis’ brother, Michael Stavrinakis, is the registered agent behind three LLCs that have each given $1,000 to the Stavrinakis campaign.
Bennett, McGrath, and Michael Stavrinakis have not responded to requests for comment about their donations. Varn, reached by phone, gave the following statement:
“I support a very integrous candidate that has proven himself with his time served as chairman of county council and state legislator, and I think he’s the guy that really needs to be the next mayor of Charleston.”
When asked if anybody else had authority to disburse money from LLCs for which he is a registered agent, Varn said, “I support Leon Stavrinakis for mayor.” When asked if he thought his donations went against the spirit of the campaign contribution limit law, Varn said, “I support my candidate.”
The City Paper compiled spreadsheets showing donations to each candidate that came from duplicate addresses. Excluding cases where two family members in the same household gave to a candidate, here are the results for the Stavrinakis campaign (the column labeled “Who?” shows who, if anyone, is listed as a registered agent for a company in the Secretary of State database):
A spokesman for the Stavrinakis campaign sent the following statement by email in response to a list of questions about the campaign’s ethics report:
“We are proud of the diverse and wide-ranging levels of support the campaign has received so far. People across Charleston are supporting Leon because he’s going to be a hands-on mayor who will focus on delivering the best city services. Receiving contributions from these businesses are common place, completely legal, and something done by Mayor Riley, Gov. Haley, and countless others. Campaigns are supposed to follow the rules, and that’s exactly what our campaign is doing.”
Here’s the spreadsheet for Deerin’s campaign, which had raised a total of $218,000 at the time of its April ethics report, of which $8,000 came from three addresses:
A Deerin spokesman gave the following statement:
“We are proud of the broad support Ginny Deerin has received from over 500 donors from all walks of life in such a short period of time. They support Ginny’s record of getting things done for Charleston and vision for making Charleston an even greater city that is easy to get in around in and economically strong.”
Other candidates in the race have also received donations from duplicate addresses. William Dudley Gregorie, who had raised $37,000 at the time of his report, received two $1,000 donations from entities listing a Charleston P.O. Box of 21794:
Maurice Washington has not officially announced his candidacy for mayor, but on April 21 he reported having raised $6,700, of which $2,000 came from an address on Sam Rittenberg Boulevard:
Out of $267,000 raised, John Tecklenburg received $1,150 from entities listing the address 1601 Oceanic St. (note: Thomas Thornill is one of three principals at Clement & Coleman Properties):
The campaign of Paul Tinkler lists $1,050 in donations from a single company, Futeral & Nelson LLC:
The campaign of Dean Riegel has not reported any fundraising to the Ethics Commission. Stay cool. Support City Paper. City Paper has been bringing the best news, food, arts, music and event coverage to the Holy City since 1997. Support our continued efforts to highlight the best of Charleston with a one-time donation or become a member of the City Paper Club.