Under intense pressure by the media, Prince George’s County Executive candidate Rushern Baker has finally revealed the contributors to his County 1 Now slate. Of its $209,000 in proceeds, $200,000 came from one man. Who is he? You guessed it, readers:
Southern Management Corporation boss David Hillman.
On 1/13/10, the slate received a $200,000 loan from Renters Finance Corporation, a Silver Spring company affiliated with Southern Management. That same day, the slate contributed $200,000 to Baker’s campaign account. January 13 was also the cutoff for the last finance report. 
So the slate contribution was structured to both hide Hillman’s money and to keep the loan off Baker’s own books, thus inflating his reported contribution total. Without the loan, Baker would have reported just $110,631.51 in cash on hand – not much larger than Delegate Gerron Levi’s cash balance of $101,106.80.
Media coverage immediately after the January reports’ release noted Baker’s financial edge and helped shape the perception of his status as the front runner. But if it had been known at the time that Baker had little more money on hand than Levi, the race would have been seen very differently.
We have previously calculated that Hillman has accounted for at least $751,756 of Baker’s $3 million in contributions and loans over the last ten years. Now we know that the true amount is at least $951,756, meaning that one-third of all of Baker’s money has come from one man. This may be unprecedented in the modern history of major County Executive candidates.
News Channel 8 reporter Bruce DePuyt mercilessly grilled Baker over Hillman yesterday. According to the Post, Baker said of Hillman, “There's nothing I can do for him. He’s a billionaire. There’s really very little. It doesn’t matter whether Rushern Baker is county executive, Jack Johnson is county executive or Joe Blow is county executive, he’s gonna do well.”
Actually, there’s a lot Baker can do for Virginia billionaire and major Republican contributor Hillman. We will explore that soon.
Update: The Post has confirmed that Hillman was responsible for the $200,000 loan.
Wednesday, March 17, 2010
Baker’s Secret Slate Money Revealed (Updated)
Monday, March 08, 2010
Top Blog Posts, February 2010
Here are the most-viewed blog posts on MPW in February 2010.
1. Snap Your Whip at Bethesda’s Pimping Castle!
2. Top Snow Totals in Maryland
3. MPW Poll: Most Amazing MoCo Fundraising Achievement of 2009
4. British Lucky Paul’s Pal
5. Rushern Baker on the Spot, Part One
6. Pimping Castle Raided by Police
7. Rushern Baker on the Spot, Part Three
8. Pimping Castle Makes Fox 5
9. The Campus is the Wrong Place for a Hospital
10. Rushern Baker on the Spot, Part Two
Snap Your Whip, the blog post that broke the insane British Lucky Paul story, easily spanked the other posts raw last month. The fact that posts related to the Bethesda Pimping Castle accounted for four of our top ten suggests that perverted sex may have a bigger fan base than state and local politics. Who knew?
Cheryl Kagan, a candidate who last ran for office in 1998, beat out Sam Arora and Saqib Ali in an MPW poll that was heavily swamped by Facebook friends. As of this writing, here are the results:
Question: What is the Most Amazing MoCo Fundraising Achievement of 2009?
Kagan Outraises Forehand Two Years in a Row: 166 votes (34%)
Ali Outraises King: 120 votes (24%)
Arora Breaks Six Digits: 111 votes (22%)
No Indictments: 51 votes (10%)
Duchy Outraises Everybody: 48 votes (10%)
We know our readers love Kagan, Ali and Arora, but we think they underestimated County Council Member Duchy Trachtenberg. Trachtenberg’s eye-popping haul of nearly $300,000 last year has had Rockville insiders buzzing for weeks.
Former Montgomery College trustee Gene Counihan’s guest post opposing Holy Cross Hospital’s proposed new facility on the campus drew coverage from the Washington Business Journal and aroused the ire of at least some current trustees. As one of MoCo’s most renowned civic and political leaders, Counihan’s opinions carry significant weight. The Holy Cross-Adventist battle is so enduring that it has actually outlasted MoCo’s Democrat vs. Republican battle, which was won by the Democrats conclusively with the ousters of GOP County Council Member Howie Denis and Delegate Jean Cryor (D-15) in 2006.
Finally, our series on Prince George’s County Executive candidate Rushern Baker has amplified and prolonged the scrutiny of his campaign finances that began in the Post and the Gazette. Other than the blog PG Politics, which has linked to all of our posts on Baker, the traffic to this series is not coming from any particular source. The story seems to have gone viral as many of our individual posts are receiving direct entries from emails, listservs and Google searches.
A footnote on Baker’s slate. The State Board of Elections (SBE) website shows only one member – Baker – on that slate, an apparent contradiction of state law. The Gazette has also reported that “forms for County 1 Now only list Baker as the group's intended candidate” and that Baker’s spokesman “said last month that County 1 Now is also supporting two longtime delegates: Tawanna Gaines (D-Dist. 22) of Berwyn Heights and Barbara Frush (D-Dist. 21) of Beltsville. Neither delegate is listed on the slate's paperwork, and no donations have been made to Gaines or Frush so far.”
After our series on Baker’s finances, the Post reported that a “clerical error” was responsible for omitting other members from the slate. We asked SBE to send us the slate’s paperwork and they sent the paperwork to the Post instead. So Baker’s slate definitely has two other members and any reliance on SBE’s online record - including ours - is incorrect.
Now, two more issues have sprung up involving the slate. First, campaign spokesman James Adams told the Gazette that state law forbade him from disclosing slate donors prior to the next report deadline and was contradicted by SBE. Second, Adams also said, “...to our knowledge, no candidate has ever reported its donors immediately after they contributed.” That is not true. During the 2008 County Council District 4 special election, Don Praisner regularly updated his website to list new contributors regardless of the filing deadlines. Praisner’s commitment to transparency benefited him as he won the contest.
So do all of the revelations concerning Baker’s secret slate transfers, use of an official from an anti-worker company to head his slate, six-digit mystery loans and acceptance of $750,000+ from one Virginia apartment owner - none of which has been denied by his campaign - amount to anything politically significant? Not necessarily. Baker was the favorite before the scandals got underway because of his big advantages in name recognition, money and organization. None of that has changed. From a campaign perspective, the many barrels of ink that the Post, the Gazette and this blog have spilled on this issue constitute a gold mine of opposition research, but there is no sign that any of the other candidates have made any real use of it. Just add “passive opponents” to Baker’s long list of reasons for victory and he still looks like a winner.
More of your picks next month!
Wednesday, March 03, 2010
Baker Slate Chairman Employed by Anti-Worker Company
The Chairman of Prince George’s County Executive candidate Rushern Baker’s slate is the Assistant General Counsel of one of North America’s most notorious anti-worker companies: Sodexo, Inc.
As the Washington Post originally reported, Rushern Baker took $206,000 in contributions from the “County 1 Now” slate and used a technicality to avoid disclosing its donors. Both this blog and the Gazette reported that the slate’s paperwork listed just one candidate at the time of its formation – Baker – and state law requires slates to have at least two candidates at all times. Baker’s spokesman claimed in the Gazette that the campaign was following “the letter of the law,” a statement that is contradicted by the State Board of Elections slate registration reproduced below.
All of the above has been known for over a week. Today, we disclose a fact that is sure to interest many in organized labor: the Chairman of Baker’s slate is a senior official with one of North America’s worst anti-worker companies, Sodexo Inc.
Kenneth Woolridge Johnson is a lawyer who lives in Springdale and has been the Assistant General Counsel of Sodexo (formerly known as Sodexho) since 1998. 
Johnson has contributed $5,225 to Baker from 2000 through 2009. He has also contributed $500 to Barack Obama and $1,250 to the Democratic State Central Committee of Maryland in federal donations with which his employer is clearly marked.
Sodexo is a food services and facilities management contractor that is based in France. Its U.S. subsidiary is headquartered in Gaithersburg. The company works for a large number of schools, universities, government agencies, hospitals, retirement homes, military organizations, private companies and even jails. Sodexo is one of the largest companies of its kind and has operations all over the world. But inside the North American labor movement, it is known primarily for one thing: poor treatment of its workforce.
Any understanding of Sodexo’s labor practices must begin with its shameful record of discrimination. In 2001, its African-American managers filed a class-action lawsuit against the company alleging that it discriminated against them in promotions and segregated them in “black accounts” such as historically black universities. The case featured testimony that a Sodexo manager said, “African Americans were genetically inferior to whites, and genetically most of the criminals in the world were African Americans, and that they didn’t deserve promotion.” Sodexo’s Chief Operating Officer in North America “stated in sworn testimony that a white individual referring to black co-workers in the workplace using the ‘n-word’ was not necessarily offensive and could be meant as a ‘term of endearment.’” Sodexo paid $80 million to settle the case but did not learn its lesson. In 2006, Sodexo paid $61,000 to settle a sexual harassment case brought by the EEOC on behalf of a female custodian who was groped, propositioned and ultimately subjected to exposure by a male nurse. The custodian said management retaliated against her for objecting to the harassment. In 2007, the company paid $788,877 in back wages to settle a case brought by the U.S. Department of Labor alleging that it rejected 4,465 applicants – most of whom were African-Americans – for jobs on oil rigs and drilling platforms. Finally, the company paid $80,000 to settle another EEOC lawsuit alleging that it had discriminated against a pregnant Haitian worker who asked for alternative duty after suffering from pregnancy complications last year.
That is just the beginning. Sodexo pays some of its workers as little as $8.27 per hour. The company lost a contract at SUNY Albany in 2000 after refusing to recognize a union for over a year. In 2006, workers in Plattsburgh, New York claimed the company was “openly harassing pro-union workers.” Sodexo was caught paying tens of thousands of its workers in the United Kingdom less than the country’s minimum wage last year. In January 2010, the company refused to accept an employee petition at the University of Denver calling for better working standards and the right to form a union. Sodexo has had multiple problems with e.coli in its food. The company has a long record of hospital cleaning problems, food safety issues and unfair labor practices. The sheer volume of Sodexo’s controversies is so overwhelming that the Service Employees International Union (SEIU), which is running a national campaign against the company, has established a website dedicated to chronicling its problems.
According to some of its employees, Sodexo’s labor practices are impacting its customers. Here are two Sodexo school cafeteria workers discussing management pressure on them to hurry food preparation for children.
And here is a Sodexo hospital food worker complaining of inadequate food supplied to patients.
As Sodexo’s Assistant General Counsel since 1998, Kenneth Johnson would have known about, and perhaps may even have represented the company in, many of the above legal issues. Interestingly, Rushern Baker accepted a $6,000 contribution – the maximum amount allowed by state law - from SEIU Local 1199 on 1/7/10. That was just two days after Baker made Johnson, a top official of one of the union’s national targets, the Chairman of his slate.
Tuesday, March 02, 2010
Team Baker Responds to MPW
A representative of Rushern Baker’s County Executive campaign has responded to MPW’s series on his campaign finances.
David E. Byrd, who says he is affiliated with Team Baker, left the following comments on our “Baker Staffers Discuss Response to MPW” post. We guess that means the discussion is over!Adam, there are several reasons your reporting on Mr. Baker can be considered “bullshit.” At the top of the list is your assertion that Mr. Baker belongs to a “one-person slate,” which is factually incorrect. Now, if you worked for the Washington Post or The Gazette, you’d know this because searching the internet without verifying the information you find would bring immediate sanction from even the most sedate editor. You would have been required to call Mr. Baker’s office for a response before publishing erroneous information. As a blogger, you are liberated from journalism ethics and protocol and can proceed as your ire and passion dictates. No one can fault you for coming home after working all day and spending time researching campaign finance reports and other public documents; filling a perceived gap in hard-nosed investigative journalism, without the institutional resources of a major or regional publication. In fact, you provide a valuable service and are to admired for your hard work. I beg you to apply a similar level of scrutiny to every Prince George’s County Executive candidate’s fund raising history. But, what about the slippery slope into fallacious conclusions that allowed you to skip a critical step in your keyboard indictment of Rushern Baker’s ethics?
Our Response:
How could he possibly get the documents to open a “slate” bank account from the Maryland Board of Elections without additional candidates listed on the paperwork? Perhaps, a less eager blogger/journalist would have discovered what the Washington Post had reported over a month ago:
http://voices.washingtonpost.com/annapolis/2010/01/how_bakers_slate_could_have_ra.html
There are and always have been other candidates on the slate. I guess you can’t always believe what you find on the internet; right Adam?
However, you are not a journalist. You work for the United Brotherhood of Carpenters, which requires noting for reasons that will become obvious as the campaign finance reports of all candidates become public in August, or sooner. You can post six consecutive days of either misleading or inaccurate information, unencumbered by any editorial oversight, or personal responsibility, because you have an internet account. We at the Baker campaign cannot call your boss, expect a correction, or an apology. In fact, you’re free to skewer Rushern Baker under the guise of “reporting,” without ever revealing the true motivation for your assault on his character or that of his friends and donors. That is the second reason I consider your series “bullshit.”
Now, we each have had our turn thumping our chest on behalf of our friend/candidate. Might we introduce a tinge of reality into this episode? We get it; we really do. Nobody wants an executive that cares more about the people that funded his campaign, then the people he’s been elected to represent. Anyone that believes Rushern Baker is that kind of person should not vote for him, period.
All the candidates for County Executive believe in their hearts, they can help bring Prince George’s County to the next level. None of the candidates for County Executive are independently wealthy. If you ask any politician from the lowest municipal seat to the President of the United States what part of their job they enjoy the least, most will say fund raising. I have known Rushern since we were children and speak personally about his distaste for the act of asking people to loan or donate money to his campaign. However he does it and has done it because he believes he can make a difference if he’s elected County Executive and Prince George’s County no longer has the lowest rated schools in the state: first education, first in job creation, last in crime, last in foreclosures. That is Rushern’s mantra; his vision; and, his reason for enduring the attacks on his character, the many hours of fund raising calls, and the hundreds of nights away his family, listening to the concerns of the people of Prince George's County.
I’m certain Mr. Jackson, Mr. Knotts, Mr. Dean and some of the lesser known candidates feel the same way. Yet, in a 485 square mile jurisdiction with nearly 400,000 eligible voters, one can’t win a countywide election on shoe leather alone. You have to raise lots of money. To touch a portion of the voters once, you need over a million dollars. Adam, if you needed a million dollars over the next few months, how would you raise it?
If you suggest the solution is to raise the dollars directly from the people you hope to represent through grassroots efforts, well Rushern has nearly as many small donors as all his competitors combined. If you suggest that the funds should come from personal resources, then Mr. Baker meets that requirement as well. As an executive of a non-profit during a downturn in the economy, he likely takes home less money than you do, Adam, in your job as an assistant to a union executive in downtown, D.C. Yet, he has sacrificed, taken equity from his home, for a chance to bring his message to the people of Prince George’s County. If you believe that one should play by the rules, but avoid a hint of impropriety, then you may suggest taking on $750,000 of debt and having to spend the next three years raising money to pay it back is a political sin. You and I will disagree. It is a stressful burden, especially given most of the money will go to the media and pay the salaries of the very people that criticize you for accepting the donations, without offering a hint of how you come up with a million dollars in a jurisdiction that has one of the highest unemployment and foreclosure rates in the state of Maryland. Rushern Baker is the kind of man that goes without a salary to keep from laying off employees. He ran twice and would not form a slate either time, despite the suggestions of politicos and advisers that he do so, because he championed and believes in comprehensive campaign finance reform. He still takes the high road; he just won’t drive his campaign off a cliff and by doing so hand the county’s future over to his opponents. It’s not unethical to refuse to unilaterally disarm and follow the law. To suggest otherwise is the definition of political naïveté.
On the other hand, some of the candidates that have criticized Mr. Baker’s contributions and positioned themselves as being of a higher ethical stock, sought similar levels of funding from nearly every Baker contributor they want to drag to the journalistic gallows today. Reason three your reporting on the matter is “bullshit.” Why would someone that transfers $100,000 from their slate to a personal campaign account during the “off year” or someone that sought but failed to get the $200,000 donation from a wealthy donor, be considered more “transparent,” when they hide from the public their many failed meetings seeking big donors?
Adam, I have never met you and I bet you’re great guy: smart, fun loving, a good friend. I’ve enjoyed your blog in the past and will continue to read it in the future. Under different circumstances, we might find ourselves fighting for the rights of workers together or pushing for health care reform, shoveling out seniors, or some other progressive cause. Today, however, you crossed the line by repeatedly publishing false information. You failed your readership, by not fully disclosing your motivations and you owe them apology. Of course, I assume you’re much too proud a man to offer an apology to Mr. Baker, but we appreciate that your intentions are not personal, just politics as usual.
All the best,
David E. Byrd
Team Baker
P.S.
The site you stumbled upon is a beta of a social networking site that was scheduled to be made available to the general public in the coming days. We will allow our volunteers and the general public to sign on as soon as we migrate the site from it’s beta domain to the main website. Thanks for the free promotion!
Thank you for commenting under your own name, David.
1. You are absolutely correct that I am not a journalist, so let’s discuss what the journalists at the Gazette have reported. Their article of February 18 reported the following about the slate:Under state law, a slate committee must support more than one candidate. However, forms for County 1 Now only list Baker as the group’s intended candidate.
James Adams is Rushern Baker’s press spokesman. The Post article that you cited did not contradict the Gazette’s findings on the paperwork.
Adams said last month that County 1 Now is also supporting two longtime delegates: Tawanna Gaines (D-Dist. 22) of Berwyn Heights and Barbara Frush (D-Dist. 21) of Beltsville. Neither delegate is listed on the slate’s paperwork, and no donations have been made to Gaines or Frush so far.
The Gazette article also said this:Adams initially praised the slate and promised to work on obtaining the reports last month, but said Friday that he is not really in close contact with the campaign’s biggest contributor.
It’s quite bizarre for Baker’s own campaign people to have no knowledge of the slate, don’t you think? And it was also quite remarkable how the campaign left Adams swinging in the wind on this issue. Adams originally told the Post that the campaign was going to disclose all of the slate’s donors soon on January 26:
“I really don’t know those folks,” Adams said. “It’s really out of my [list of] names and knowledge.”“There’s no secret,” Adams said of the slate's funding sources. “There are going to be no secrets about anything in our campaign.”
But the campaign took the opposite position on February 19, accusing the Post of “innuendo disguised as journalism.” Baker has done quite a disservice to his own spokesman by deciding to maintain absolute secrecy over the $206,000 in slate contributions.
As of this morning (March 2), nearly two months after the establishment of the County 1 Now slate, Baker is still the only member listed on the State Board of Elections’ website. The slate has been heavily scrutinized by the Post, the Gazette and this blog for about six weeks now. That has given the Baker campaign a strong incentive to correct SBE’s records if SBE indeed made a mistake. Yet, SBE continues to show that Baker is the only member of the slate, meaning that it is not in compliance with state law. If SBE issues a letter stating that its records are in error and that other candidates have been members of the slate since the day of its inception, I will run that letter on this blog and stop talking about a “one-candidate slate.”
2. My union had nothing to do with the production of this series. I have disclosed my occupation many times on this blog, as well as my political affiliations. This is nothing more than an attempt to change the subject by going after the messenger.
3. I am struck by what you chose NOT to discuss. You did not address the $166,000 in loans from MStream Inc., an entity created by the campaign’s Treasurer shortly before the loans began and closed shortly after they ended. Is this a legitimate company or just a shell for moving money around? You did not address the combined $750,000+ in loans and contributions from Southern Management boss David Hillman, which may be the biggest exploitation of the LLC loophole by any Maryland candidate ever. What is Hillman going to get for his $750,000? And is Hillman responsible for the $206,000 in slate transfers that the Baker campaign is trying desperately to avoid disclosing until August?
4. Let’s discuss my “motivations.” Maryland’s campaign finance rules are in hopeless disarray and matters might get worse in the wake of the Citizens United decision allowing unlimited corporate “free speech.” The LLC loophole, of which Baker is a leading user, has been employed by a racetrack owner to pursue the miserable failure of a slots amendment that was passed in 2008 and has also been used by a developer to corrupt and ultimately bring down the Mayor of Baltimore. Baker’s campaign finance record over the last decade, and not just over the last two months, shows the same willingness to engage in the kinds of fundraising practices that have brought such ruin to the state. Other politicians will be sure to emulate his actions if they result in victory.
The irony here is that Baker does not have to do any of this. He has more name recognition across Prince George’s County than any of the other candidates. He deserves great credit for standing up to the appalling administration of Jack Johnson when no one else did. And he is a man of enormous charisma, intelligence and talent. In a clean race, Baker would be the overwhelming favorite. But he has chosen to hide his contributions from a dubious slate, to take $166,000 from an obscure entity controlled by his treasurer and to accept at least one-quarter of his $3 million in total funding over the last decade from one apartment building owner. I do not know of similar conduct rising to this level on the part of any of his opponents.
And that provides my motivation. I would like to see more disclosure and clean elections. Rushern Baker says he favors the same things, as his campaign’s response to the Gazette said, “In keeping with his lifelong beliefs, Baker will fight for greater disclosure of political contributions when he is elected county executive.” I understand that some rules are bent and loopholes are used by many candidates during elections across the state, but I have never seen anything resembling the cumulative total of all of the tactics deployed by the Baker campaign. Any candidate who wants to run as a reformer who will provide much-needed change from Jack Johnson has to act like one. Otherwise, Prince George’s County will get little more than another Johnson and the rest of the state will foot the bill.
Update: The Post has since reported that the slate has three members. When your author contacted the State Board of Elections to verify this, they did not respond to our request.
Monday, March 01, 2010
Baker Staffers Discuss Response to MPW
In an internal communication that was probably never intended for public scrutiny, staffers on Rushern Baker’s County Executive campaign discussed how to respond to MPW’s series on his campaign finances last week. Here’s what they had to say.
Baker’s website contains a page on which campaign workers exchange messages, advice and event information. Inexplicably, the site was left open for public access, enabling all of Baker’s rivals to keep tabs on what he is doing. On the site, Baker volunteer Christopher Wallas expressed worry about our post on Baker’s acceptance of $166,000 in loans from a paper entity created by his Treasurer:Christopher Wallas: Article on Brad Seamon, http://maryland-politics.blogspot.com/2010/02/rushern-baker-on-spot-part-three.html It’s on the Maryland Politics Blog. James here’s your media crisis of today.
That prompted two replies from the “Administrator.”Administrator: Not a crisis at all.
Administrator: Facts, context, and perspective that makes sense in the kitchen and living rooms and does not exceed the scope or scale of the original attack: that’s how you respond. For example: the only thing that the author has established is that Rushern Baker borrowed and paid back money from life-long friends, some that had not been involved with politics or even had a different political philosophy. So far, have you read anything that is illegal or even unethical? Nobody got anything for their money and the money was paid back. Almost all of it was borrowed in August or September during tough elections. Isn’t that what friends do, help each other? Yesterday he criticized us for taking money from someone whom supported democrats at the time he donated, but later became a more conservative Republican. Take the next logical step: isn’t better for Democrats to have money from Republicans than to either have no money; or, for the Republicans to keep that money and push a Republican agenda? Is he really concerned that a man that has been a delegate to the democratic convention for over 12 years, supported Common Cause and the ACLU and knocked doors for Dukakis, Clinton, Gore, Kerry, and Obama, might be influenced by a friend that is conservative? Should democrat and republican friends not speak to each other? Is he suggesting donations from non-friends is more ethical than taking loans or contributions from life-long friends? Does he plan to review everybody’s finances or just the front runner? Get sharp. This is not that big as far as attacks go. There will be many more. Stay Frosty and respond with a post when you see bullshit.
Where to begin? First, we love to see campaigns openly denouncing incriminating information as “bullsh*t.” Who says there’s no honesty in politics? Second, the Administrator’s defense of taking money from Republicans may be comically unnecessary as sources inside the GOP say they believe Wargotz may have been a Democrat for part of the time he was making loans and contributions to Baker. (We noted his contributions to Democrats in our original post.) But we are sure that Prince George’s County Democratic primary voters will appreciate the sentiment that contributions from Republicans and birthers are welcome. Third, Baker’s $206,000 slate transfer is a warranted trigger for investigation by the Post, the Gazette and this blog. As far as we can tell, no other Prince George’s County Executive candidate belongs to a one-person slate.
Finally, the Administrator’s contention that we have not uncovered evidence of illegal or unethical activity is worth addressing. Baker’s one-candidate slate is clearly not in compliance with state law and must be shut down. And the voters will decide whether the six-digit MStream loans and Baker’s acceptance of over $750,000 from one apartment building owner is ethical or not.
Update: The Post has since reported that the slate has three members. When your author contacted the State Board of Elections to verify this, they did not respond to our request.
Saturday, February 27, 2010
Rushern Baker on the Spot, Part Six
Prince George’s County Executive candidate Rushern Baker has taken tens of thousands of dollars from a GOP candidate for U.S. Senate who is a birther, even more money from an obscure entity operated by his campaign Treasurer and at least three-quarters of a million dollars from one apartment building owner. All of the above is legal. But what about his slate account?
Baker’s acceptance of $206,000 in contributions from the “County 1 Now” slate triggered significant coverage from the Post and the Gazette as well as this investigative series. The slate account was established on 1/5/10. Under state law, slate accounts can transfer unlimited amounts of money to candidates who are members. The Post reported that the slate account was established too recently to be required to file a January report and did not have to disclose its donors until August. That may be true, but there is a hitch.
As of this writing, the County 1 Now slate has only one member: Rushern Baker.
State law says that slates must be formed by more than one candidate. After all, if single candidates could form slates, they could easily get around contribution limits.
The State Board of Elections’ summary guide goes even further by stating, “A slate account is required to have 2 candidate members at all times. If there are less than 2 members, the slate is required to close the committee and file a final report.”
At the time that the County 1 Now slate transferred $206,000 to Baker, it was not in compliance with state law. The State Board of Elections has a responsibility to compel Baker to return that payment.
But there are bigger issues here. Rushern Baker’s serial use of the LLC loophole, big loans steered through an entity controlled by his treasurer and additional money from a one-person slate amounts to a deliberate strategy to circumvent the state’s campaign finance rules. That strategy could well be copied by other candidates. If it is, the state’s already-fragile system for regulating political contributions will become wholly irrelevant. And if that happens, the losers will be the very working people that candidates like Baker say they are running in order to help.
Update: The Post has since reported that the slate has three members. When your author contacted the State Board of Elections to verify this, they did not respond to our request.
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.
Thursday, February 25, 2010
Rushern Baker on the Spot, Part Four
Meet David H. Hillman. He’s a 67-year-old, self-made white billionaire. He once lived in Bethesda, but now lives in an 11,809-square-foot, $6.3 million mansion in McLean. He is one of the biggest apartment building owners in the Washington metro area. He has given thousands of dollars to Republican politicians including George W. Bush, John McCain, George Allen, Michael Steele, Mitt Romney and Rick Santorum in addition to thousands more to the Republican National Committee. And a year from now, he could be the second-most powerful man in Prince George’s County without even living there.
Why? Because after spending over three-quarters of a million dollars, he may finally get Rushern Baker elected County Executive.
David Hillman could write an encyclopedia on hard work, success and power. Gazette columnist Blair Lee profiled him in 2005, writing, “Hillman, the son of a grocer, was an accountant back in the 1960s when one of his clients offered to sell him a mismanaged apartment building. Hillman, who knew nothing about real estate, took the offer and began building a real estate company, Southern Management, that today owns 70 apartment buildings (23,000 units including 890 units in Prince George’s), employs 1,200 people and is worth more than $2 billion.”
Hillman’s Southern Management Corporation (SMC) is one of the Washington-Baltimore area’s most prominent companies, and Hillman is one of the area’s most famous businessmen. Hillman is a member of the University of Maryland-Baltimore Foundation’s Board of Trustees and gave $1.7 million to establish the Hillman Entrepreneurs Program for students at Prince George’s Community College and the University of Maryland. Hillman has been a major player in the revival of Downtown Baltimore, renovating and leasing 1,800 luxury housing units there since the late 1990s. Hillman has also been involved with Baltimore’s massive “Superblock” development on the west side of downtown, at one point suing the city over the block’s parcel composition.
Successful people often become successful by overcoming big problems. So it has been with Hillman and SMC. Consider the following.
1. United States of America vs. SMC, 1992
This case concerns the Fairfax-Falls Church Community Services Board, which cares for drug and alcohol addicts who at first live in its residential facility and later are placed in housing rented by the board. In 1989, the board approached SMC to arrange for housing for its clients and was unable to lease any units. The federal government then sued SMC under the Fair Housing Act alleging that SMC’s failure to accept the board’s clients constituted illegal discrimination against handicapped individuals. A federal jury did not find discrimination, but did find that SMC violated the rights of the board’s clients and imposed $36,280 in damages. The trial court imposed an additional $50,000 and enjoined SMC against discriminating against handicapped people in the future. SMC appealed the verdict to the U.S. Court of Appeals, 4th Circuit. The appeals court said, “With the benefit of hindsight, we can see that there is no question that SMC denied housing to the Board on the basis of the substance abuser status of the prospective tenants and the perception that they would be undesirable tenants; the jury verdict puts this issue beyond dispute.” The appeals court vacated the monetary damages but upheld the injunction.
2. Racial Discrimination Lawsuit, 1998-2000
Sharon Reeves, a black property manager working for SMC in the 1990s, alleged that SMC President Ron Frank promised to promote her if she lowered the vacancy rates in the apartments she was running. Reeves claimed she did so, but that Frank (who is white) fired her anyway. After Reeves accused the company of racism, Frank brought her back but assigned her to a white supervisor who (according to Reeves) threatened to fire her “black ass.” Reeves quit in 1996 and sued for discrimination in 1998. During the trial, Reeves’s lawyer discovered that Frank had stated during a deposition in an unrelated case that calling an employee a “black baboon” did not violate SMC’s anti-discrimination policy. SMC settled the lawsuit on confidential terms and would not talk about it with the Washington City Paper.
3. FTC Investigation, 2001
In 2001, staffers at the Federal Trade Commission investigated whether SMC violated the Fair Credit Reporting Act “by furnishing derogatory information – I-9 credit ratings, which denote debts that have been charged off to profit or loss – to a consumer reporting agency while knowing or consciously avoiding knowing that the information was inaccurate.”
The agency wrote:Staff has serious concerns about whether SMC’s practices violated the FCRA. From our investigation, it appears that SMC, upon a renter’s termination of a lease with an outstanding debt, automatically reported an I-9 rating within approximately 30 days (and sometimes fewer) of the renter’s move-out date. In many instances, it appears that SMC failed to determine that the debt was uncollectible – the accounting basis for charging it off – before using the I-9 rating, even though less derogatory ratings indicating that the debt was overdue but not yet uncollectible were available and may have been more accurate. The I-9 rating is the most adverse rating available, and its presence on a credit report can contribute to a creditor’s decision to deny credit to a consumer.
However, the agency decided to close its investigation because SMC only engaged in these practices for “a very short period of time.”
4. David Hillman and Suzanne Hillman vs. Internal Revenue Service, 2001
In an epic battle that had to happen, David Hillman – one of the Washington area’s most powerful real estate owners – once squared off against one of the country’s most powerful federal agencies, the IRS.
In 1997, the IRS sent written notice to Hillman and his wife that they owed “$294,556.00 in federal income taxes for taxable year 1993 and $309,696.00 in federal income taxes for taxable year 1994.” The issue was the Hillmans’ treatment of management expenses charged by SMC to a number of their real estate partnerships characterized by the IRS as “passthrough entities.” The Hillmans deducted fees charged by SMC to the passthrough entities from their income and the IRS objected, taking them to federal Tax Court. The Tax Court initially found in favor of the Hillmans, but the IRS appealed the case to the U.S. Court of Appeals, 4th Circuit. The Appeals Court found that the Hillmans could not legally deduct the fees and decided in favor of the IRS. The case established a precedent for the real estate industry and is still cited by the IRS in its advice memoranda.
5. Lawsuits Involving Renters
Maryland courts have recorded so many lawsuits involving SMC that they may be literally uncountable. The Maryland Judiciary Case Search website reports that “Southern Management” has been a party in more than 500 lawsuits in Prince George’s County.
And the site reports that “Southern Management” has been a party in more than 500 lawsuits in Montgomery County.
The majority of these lawsuits are probably claims for unpaid rent or damaged property. That does not necessarily reflect badly on SMC as evictions and rent claims are an unfortunate part of the apartment rental business. But is SMC’s staggering volume of litigation truly necessary?
So what does David Hillman and SMC have to do with Rushern Baker? Plenty, because Hillman is BY FAR Baker’s biggest financial supporter. We’ll get into that tomorrow.
Wednesday, February 24, 2010
Rushern Baker on the Spot, Part Three (Updated)
Meet Bradford L. Seamon. He is the President, CEO and founder of B.L. Seamon Corporation, a minority business enterprise (MBE) government contractor based in Greenbelt with offices in Atlanta and Bedminster, New Jersey. He is also very, very close to Rushern Baker.
Bradford Seamon is a self-made man with smarts, savvy and guts. The District Chronicles has written of his struggles as a young black entrepreneur:It’s been almost 18 years since Bradford Seamon rounded the corner on his block heading towards his house only to discover the “repo man” sitting in his front yard, waiting to take his car.
Seamon founded his company in 1989 and has had great success working as a contractor for the federal government and private companies, including the U.S. Food and Drug Administration, the National Cancer Institute and the Department of Labor. His firm was named as one of the area’s top 100 MBEs in November. According to the company’s website, “BLS orchestrates meetings and events, designs communication materials and Web sites, and executes program services using advanced technology, expert staff, and unparalleled client service standards. We have built our reputation by providing top-notch service and designing seamless support that allow us to work in unison with our clients and their partners.”
As a young entrepreneur in his late twenties, he was able to pay everyone on his payroll - everyone except for himself. He took another look at his yard and kept driving.
“That’s one of the risks that you take as an entrepreneur,” Seamon said. “It’s all about being an individual and being willing to take risks. The more risks, the higher the reward.”
Minority contracting is the mother’s milk of Prince George’s County politics. The county government is saturated with minority contractors who win public consulting, vending and construction contracts and then use part of their profits to contribute to the politicians in power. All of this creates a “pay-to-play” culture that exceeds anything that has ever been seen in Montgomery County. WSSC has been nearly paralyzed for years by the relentless focus of its Prince George’s County commissioners on minority contracting requirements. Many minority contractors spray their campaign contributions liberally across the county’s political establishment and beyond. But Bradford Seamon is different. He has contributed to only four political accounts: Barack Obama ($4,550), DNC Services Corporation ($1,250), State’s Attorney Glenn Ivey ($1,250) and Rushern Baker.
B.L. Seamon Corporation has made three loans to Baker: $693 on 10/18/99, $1,192 on 11/10/99 and $1,426.69 on 8/1/02. This is the period during which Baker, who served as a Delegate from 1995 through 2003, was preparing for and running in his first race for County Executive. Seamon, his company and his wife also made 21 different contributions to Baker worth $10,613.63 from 2000 through 2008. Many of these contributions reflect Seamon’s closeness to Baker: forgiveness of interest on loans, sale of office furniture, food for a fundraising event and even a $100 generator rental. There’s nothing unusual here. Loyal political supporters often make these kinds of contributions to their candidates.
What is unusual is the behavior of a company called MStream Inc. Founded on 4/23/02 by Seamon and his wife, the company’s purpose according to its Articles of Incorporation was, “to engage in investment management and other business ventures as the officers of the corporation may decide.” The company’s business address matched the Seamons’ home address in Upper Marlboro.
On 8/2/02, less than four months after its creation, MStream made a $100,000 loan to Baker. On 8/8/06, right before Baker’s second County Executive primary loss to Jack Johnson, MStream made another $65,000 loan to Baker. On 5/8/07, MStream made a final $1,000 loan to Baker. MStream forfeited its Maryland corporate registration on 10/5/07 for “failure to file property return for 2006.”
We cannot find any record of an MStream Inc. based in Upper Marlboro undertaking any actual business activities in Maryland or anywhere else. Furthermore, Baker was the only candidate recipient in Maryland of any contributions from MStream. The Baker campaign has repaid all of MStream’s loans, but we can find no record of any interest paid to the firm.
What was MStream’s scope of business? How did it get hold of $100,000 to loan to Baker after less than four months of existence? If MStream’s money came from Seamon, why would he not loan it under his own name? Did it come from somewhere else? Will we ever know the answers?
The traditional excuse used by candidates for transactions like these is that they cannot know everything about all of their donors. That is often true, but the excuse would fail in this case for two reasons.
1. All candidates know exactly where five- and six-digit loan checks come from.
2. Bradford Seamon has been Rushern Baker’s campaign Treasurer since 1992.
The story of Seamon, Baker and MStream’s money may never be known because it has never been investigated and perhaps never will be. But as generous as Seamon has been, he is not Baker’s biggest benefactor. We will reveal that person’s identity tomorrow.
Update: All contribution and loan data may be verified at the State Board of Elections campaign finance website.
Tuesday, February 23, 2010
Rushern Republican is a Birther
Let's be fair: Prince George's County Executive candidate Rushern Baker may not have much control over his GOP contributor Eric Wargotz, but this tidbit is too wild to ignore. Courtesy of blogger Mike Stark and the Examiner, here is video of Wargotz saying that he does not believe Barack Obama was born in the United States. Those remarks come in the first two minutes of the video.
Rushern Baker on the Spot, Part Two
Meet Eric S. Wargotz. He is a doctor from Queenstown, a passionate conservative and an elected Republican office holder in Queen Anne’s County. And if a group called “Republicans for Rushern” was ever established, Wargotz would likely be its President.
In the final days of his 2002 primary race for Prince George’s County Executive, then-Delegate Rushern Baker began tapping supporters for loans. Two loans came in from “E.S. Wargotz P.A.” of Queenstown, MD: one for $10,000 on 8/2/02, and another for $10,000 on 8/9/02. These were not the only funds connected to “Wargotz” of Queenstown collected by Baker. The Wargotz Group Inc. donated $1,000 to Baker on 7/30/01. E.S. Wargotz donated $1,000 to Baker on 4/16/02. And Cheryl-Ann M.L. Wargotz gave $200 to Baker on 9/16/05. The latter three contributors were all based at the same residential address in Queenstown. All are connected to Eric Wargotz.
Wargotz was elected as a County Commissioner in Queen Anne’s County in 2006. His biography describes him as, “a physician-businessman managing several medical businesses. He served as a Laboratory Medical Director for 17 years responsible for administering and managing a busy hospital department including operating and capital budgets, management team and employees totaling over 100 at times, and scrutinizing department and hospital activities to ensure proper utilization of resources. He currently serves as an independent consultant and contractor in that field.”
Wargotz’s contribution record suggests that he may have been politically moderate in 2002, the year in which most of his donations to Baker were made. In addition to Baker, Wargotz contributed $300 to the Queen Anne’s County Democratic Central Committee and $1,000 to Democratic governor candidate Kathleen Kennedy Townsend, both in 2002, and gave $200 to Steny Hoyer in 1997. But Wargotz later took a turn to the right. Most of his recent contributions have gone to Republicans, including $1,000 to Senator Andy Harris (R-7) in 2004 and $6,655 to the Republican State Central Committee of Maryland between 2004 and 2009. However, Wargotz did not forget Rushern Baker as his wife, Cheryl-Ann, contributed $200 to Baker in 2005, a year in which Baker was gearing up for his second County Executive race.
These days, Wargotz is best known as a GOP challenger to U.S. Senator Barbara Mikulski. His issue statement begins with this:What is Conservatism to me? What kind of Conservative am I?
Additionally, Wargotz knocked doors in Massachusetts for GOP upset Senate winner Scott Brown, telling Red Maryland, “The Brown race is a game breaker; it changes races such as Wargotz vs. Mikulski in Maryland.” Wargotz has a lot in common with Senator Andy Harris (R-7), another conservative doctor/politician with a lot of desire to move up. One difference is that Harris has not made a habit of contributing tens of thousands of dollars to Prince George’s County Democrats.
I am an ardent Fiscal Conservative. I stand for Low Taxes; Adherence to the Constitution; Less Government; Law & Order; Government Transparency & Accountability; Second Amendment rights; Cultural Diversity with No Bias (so-called "colorblindness); Strong Military & Protect our National Security: we must not appease terrorists. Traditional American Values - including Personal Responsibility, Love of Our Country. Energy independence is paramount as the lack of it is a threat to our National Secuirity, our way of life, our peace and prosperity. As Social Conservatives, we must respect God and preserve Life. I am a physician by profession and always will be; being conservative is how I live my life and represent the principles I promote; I am an independent-minded Republican.
I admire President Ronald Reagan for many things but particularly, his principled conservatism. We need that today. Yes, I am a Patriot.
Of course, all of this leads to an obvious question: why has an Eastern Shore Republican activist, county elected official and U.S. Senate candidate given $22,200 to Rushern Baker?
As curious as the Baker-Wargotz relationship may be, it is not the most interesting revelation from Baker’s campaign finance records. We’ll have more in Part Three.
Monday, February 22, 2010
Rushern Baker on the Spot, Part One
The Washington Post has put a deserved spotlight on Prince George’s County Executive candidate Rushern Baker’s fundraising practices. The object of the Post’s inquiry is a $206,000 contribution to Baker from his “County 1 Now” slate. State law permits slate accounts to make unlimited transfers to member candidates. Because the slate formed on 1/5/10, it has no duty to disclose its contributors until August. After initially promising to reveal the slate’s donors soon, Baker’s campaign angrily backed away from that commitment. Both the Post and County Executive candidate Gerron Levi show no sign of backing off the issue.
But the Post only has a small part of this story. Rushern Baker’s three races for County Executive present a fascinating case study of contributions, relationships, debt and campaign finance loopholes that is unusual in Maryland politics. In a new six-part series, MPW begins drawing back the curtains on Baker’s funding record in a way that has never been done before. Every Prince George’s County voter needs to see what the sunshine of disclosure reveals.
The first step to understanding Baker’s financial world is his record of accepting campaign loans. In our ten-year survey of Montgomery County candidate finances last fall, we identified 188 loans to MoCo candidate accounts worth $1.8 million. Of that amount, 175 loans worth $1.71 million, or 95% of the total, came from the candidates themselves. Eight more loans worth $80,310 came from family members of the candidates. Only five loans worth $11,777 came from unrelated individuals. None came from business entities.
That history illustrates a general rule in Maryland: the vast majority of campaign loans are made by the candidates themselves. Montgomery County and the rest of the state have seen many wealthy lawyers and businessmen in both parties drop five- or even six-digit checks on their own campaigns. Big loans from outside parties tend to raise eyebrows. One example was then-Mayor Martin O’Malley’s acceptance of a $500,000 loan from lawyer John Coale just days before the 2006 gubernatorial election. O’Malley defeated incumbent Governor Bob Ehrlich and paid back the loan along with $8,815.07 in interest in January 2007, but the transaction still drew scrutiny from the Post.
Rushern Baker’s loan record does not fit the general rule. We show every loan received by his campaign committee over the last decade below.
Baker’s campaign has accepted 24 loans worth $865,960 since 1999. Nineteen loans worth $580,812 – two-thirds of the total – came from outside individuals and businesses.
These loans are unusual in their own right. But their true revelatory value lies in tracing them to their originators and then back into Baker’s contribution stream. We will begin that exercise tomorrow.
