Friday, February 26, 2010

Rushern Baker on the Spot, Part Five

Powerful people usually have powerful enemies. Southern Management Corporation (SMC) boss David Hillman and Prince George’s County Executive Jack Johnson proved that axiom true with a bitter feud that eventually benefited Rushern Baker in a VERY big way.

It was early 2005. Prince George’s County was suffering through a brutal crime wave that was monumental even by its standards. County Executive Jack Johnson, who was about to run for a second term, needed a scapegoat. He found about two dozen of them: specifically, a group of apartment complexes that generated disproportionate levels of calls to police. Johnson said he was ready to “use the power of eminent domain to tear down some of these complexes” if they did not install better lighting and hire private security guards. Some of the complexes were owned by SMC.

Hillman was furious. In 1998, he and other apartment owners agreed to pay a $25 per unit bi-annual tax that would be used to hire police officers to improve safety at the apartments. But the apartment managers claimed that their calls for more police patrols went unanswered. Now the County Executive was blaming the apartment owners themselves for crime. So SMC filed an $18 million federal lawsuit in March 2005 against the county alleging that because of Johnson’s statements, “potential lessees would not execute leases with plaintiffs, plaintiffs’ creditors would discontinue extending plaintiffs credit, and ... those individuals who already have leased agreements with plaintiffs would vacate the property ... [which] would lead to a diminution in value to plaintiffs’ properties, making it more ripe for contemplated condemnation.” SMC also alleged that the county’s failure to hire more police officers despite the per-unit tax amounted to a breach of contract. A month later, Johnson held a meeting with SMC President Ron Frank that ended badly. Frank told the Post, “Our next step, I guess, is, ‘See you in court.’”

But David Hillman did not merely get mad – he set out to get even. Former Delegate Rushern Baker, who finished fourth of five candidates in the 2002 County Executive primary despite mortgaging his house, was running again. Hillman knew Baker back when he was in Annapolis. Hillman, his wife and his companies contributed $2,500 to Baker between 2000 and 2004, hardly an unusual amount given that Hillman contributes to lots of Maryland politicians. But after Hillman sued the county, he became a MAJOR benefactor of Baker.

Hillman’s tool of choice was Maryland’s LLC loophole, which allows groups of corporate entities to contribute the maximum amount of $4,000 each per cycle to a candidate even if they have common ownership. MPW has posted case studies of racetrack owner William Rickman and developer Ronald Lipscomb using this loophole to send hundreds of thousands of dollars to state and local politicians. (Lipscomb’s relationship with Baltimore Mayor Sheila Dixon would lead to the events that would ultimately drive her from office.) Real estate owners are particularly well-suited to exploit the LLC loophole because their properties are typically held by LLCs. Large real estate owners like Hillman own lots of properties and therefore control lots of LLCs. That means they can spend BIG money on political candidates.

Over many hours of research, we have painstakingly assembled a list of dozens of SMC-related entities associated with its property holdings. Almost all of these entities are based at addresses matching SMC’s corporate headquarters or its many apartment buildings. Hillman’s pattern since 2005 has been to send bundled checks of identical amounts to Baker that arrive on the same day. He has interspersed those checks with large loans to Baker that have collectively amounted to a colossal sum of money.

Consider this timeline.

March, 2005
SMC sues Prince George’s County in federal court because of the derogatory remarks made by Jack Johnson.

July 13, 2005
Renter’s Finance Corporation, an SMC subsidiary in Silver Spring, loans Baker $10,000.

November 15, 2005
Fifty SMC affiliates send Baker $500 checks for a total contribution of $25,000.

February 6, 2006
Twenty-four SMC affiliates send Baker $1,000 checks for a total contribution of $24,000.

April 28, 2006
Twenty-six SMC affiliates send Baker $500 checks for a total contribution of $13,000.

July 5, 2006
Twenty-five SMC affiliates send Baker $2,000 checks for a total contribution of $50,000.

August 16, 2006
Renter’s Finance Corporation loans Baker $200,000.

September 8, 2006
Renter’s Finance Corporation loans Baker $100,000.

Baker lost his 2006 rematch against Jack Johnson by five points, but there was a silver lining. Johnson’s second term would be his last because of term limits. Baker, who had now run countywide twice in a row and had come close to beating Johnson the second time, would be the clear favorite in 2010. And so David Hillman chose to double down. Consider these payments.

November 27, 2007
Fifty-five SMC affiliates send Baker $4,000 checks for a total contribution of $220,000.

January 13, 2009
Ten SMC affiliates, all from Virginia, send Baker $2,600 checks. Another SMC affiliate from Maryland contributes $4,000 for a grand total of $30,000.

January 14, 2009
Fifteen SMC affiliates send Baker $4,000 checks for a total contribution of $60,000.

Our calculation of the total in loans and contributions made by entities associated with David Hillman to Rushern Baker over the last ten years is $751,756. And because we have not conducted a complete asset search on Hillman or obtained a complete employee list for SMC and its affiliates, our total is likely understated. The maximum amount that an individual or corporation can contribute to a Maryland politician over one election cycle is $4,000, but because of the LLC loophole, the above contributions are entirely legal.

The State Board of Elections reports that Baker has received $2.1 million in contributions over the last ten years. He has additionally received $865,960 in loans, making his total receipts close to $3 million even. We calculate that one-quarter of all of Baker’s campaign funds over the last decade have come from entities connected to Hillman. That share would be close to a third if Baker’s secret slate account transfer also came from Hillman.

It is entirely possible that in Maryland’s modern era, no serious County Executive candidate has ever owed more to one contributor than Rushern Baker owes to David Hillman.

We will conclude in Part Six.