Federation of Connecticut Taxpayer Organizations

HARTFORD � The two lawmakers who wrote the state�s groundbreaking campaign finance law in 2005 are keeping mum as the state Democratic Party exploits a fundraising workaround and rakes in cash from donations the law aimed to make illegal.

Both of those lawmakers have since left the General Assembly and work for Gov. Dannel P. Malloy, a Democrat.

Donald DeFronzo, who now is commissioner of the state Department of Administrative Services, was a senator from New Britain and co-chairman of the legislature�s Government Accountability and Elections Committee. He declined to comment through a spokesman.

�He�s not in a position to comment on those issues. He�s happy to take questions on DAS and its responsibilities,� spokesman Jeff Beckham said. Beckham referred all questions about the campaign finance law to the governor�s office.

Christopher Caruso was a representative from Bridgeport and the other committee co-chairman. He now works at the state Labor Department. He didn�t return repeated requests for comment from the Journal Inquirer over the past two weeks.

Former Gov. M. Jodi Rell, a Republican who also played a key role in writing the law, didn�t return a request for comment.

Their silence comes as the Democratic State Central Committee and Malloy face accusations of creating a pay-for-play system in which state contractors and others with business before the state are making sizable donations to the Democratic Party, even though the 2005 law sought to eliminate such donations.

The state law created the public financing system, which enables candidates running for state offices to get grants to finance their campaigns if they raise a certain amount in small donations.

The law also barred companies with state contracts, their principals and owners, and prospective state contractors from giving money to candidates, political action committees run by candidates, or state party committees.

So how is the state Democratic Party getting money from state contractors?

They�re avoiding the state law altogether.

The federal loophole

While donations from state contractors are illegal under state law, they�re not outlawed by federal law. The Connecticut Democratic State Central Committee keeps a federal account. That account is regulated by the Federal Election Commission and isn�t subject to Connecticut�s law.

There are limits on how the party spends money in the federal account � it can�t be pumped directly into state races, for example � but the money can go to general items such as hiring staff, paying rent and utilities, and buying some ads.

A review of the party�s latest federal campaign finance filing shows that more than a third of the $1.9 million in donations from January to November 2013 came from big contributions from state contractors and other businesspeople, their relatives, associates, and corporate political action committees, or PACs.

Some of those would have been illegal if given to the state fund.

Take, for example, $14,000 in contributions from James A. Manafort Jr. and his sister, Lauren Manafort. They own Manafort Brothers, the Plainville company that has more than $30 million in contracts connected with the Hartford-New Britain busway project.

And employees at the state contractor HAKS Construction contributed more than $42,000 combined.

Donations also have come from people who don�t hold contracts but have business before the state.

Brian McAllister, chairman and CEO of McAllister Towing, the company that operates the Bridgeport harbor ferry, wrote a $10,000 check to the state party�s federal account. He sent another to the party�s state account. Both were legal.

Other contributions have come from partners and employees at law firms with state contracts and real estate developers who have benefited from state aid packages to their tenants.

Republican leaders and Republican candidates for governor have railed against the money.

Senate Minority Leader John McKinney, R-Fairfield, is seeking his party�s nomination for governor. He criticized the fundraising after the Democrats gave back $10,000 from Edward Snider, the owner of the Philadelphia Flyers.

A subsidiary of Snider�s company has the contract to manage the XL Center in Hartford and Rentschler Field in East Hartford. Snider made his check out to the party�s state-regulated account, not the federal one.

�Mr. Snider doesn�t live in Connecticut and has never given to the Connecticut Democratic Party before. But, all of the sudden, at the same time his company is bidding for a multimillion-dollar state contract, he decides to write a check for the maximum contribution of $10,000 and, lo and behold, is awarded the contract,� McKinney said at the time.

The fundraising also has caught the attention of the groups that helped write the state�s 2005 campaign finance law.

�Unfortunately, the federal government has not adopted the same legislation as we did in Connecticut,� Thomas Swan, executive director of the Connecticut Citizen Action Group, says.

Swan questions whether the state law will come into play when the money is spent.

�It definitely raises questions as to whether or not they�re following the letter and the intent of the law,� he says. �They seem pretty confident that they are following the law.

Karen Hobert Flynn, senior vice president for Common Cause, was the national group�s Connecticut director in 2005 and also worked to write the law. She wants to know whether candidates are helping the party raise the money, and how it will be spent.

�We need to dig deeper to see what the federal committee is spending its money on and make sure that those expenditures don�t violate our state laws,� Hobert Flynn says. �It may be that we�re going to have to monitor and beef up our state laws to prevent that.�

Hobert Flynn says she�s also concerned about the relationships between candidates and so-called super-PACs. In both cases, they�re an example of why clean election laws are revised year after year.

�It�s always been a work in progress,� Hobert Flynn says. �Money works to find its way around any process.�

The state Democratic Party refused to comment on fundraising issues.

The most its spokesman has said came in October, after the governor flew to California to raise money for the party�s federal account and for the Democratic Governors Association. James Hallinan said the group would �aggressively fundraise� because Republican-aligned groups would �unleash millions and millions of dollars into Connecticut for the 2014 election cycle.�

Malloy has said he and the Democratic Party will follow the law � state and federal � when it comes to raising money.

He said this month he wasn�t aware of any effort by the party to seek donations from state contractors and others with business before the state. If there is one, he�s not involved, he said.

When asked whether his involvement would be wrong, Malloy didn�t answer directly. �Everyone needs to comply with the laws,� he said.