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In Illinois politics, campaign money goes round and round, records show

It's all legal,
his aides say

SPRINGFIELD, Ill. - Illinois Comptroller Dan Hynes, legally barred from using his state campaign money for his U.S. Senate bid, instead funneled thousands of those dollars into Chicago's Democratic machine last year - then received donations in similar amounts from the same sources for his Senate campaign, records show.

A Hynes official last week said the donations and re-donations are a routine part of politics, and weren't an attempt to slip restricted state campaign money into Hynes' Senate campaign.

But others say Hynes and his supporters have effectively circumvented federal election rules that bar use of state campaign funds. Moreover, they say, it isn't an unusual strategy in Illinois, where lax campaign fund-raising laws lead to state-level war chests that are huge but hard to use in federal races.
"It sounds like money laundering," said David Starrett of the reform group Independent Voters of Illinois. "It's the Illinois way. Political operatives here can be incredibly creative. Their ingenuity is boundless."

A Post-Dispatch analysis of state and federal campaign records found that Hynes, one of the Democratic front-runners for Illinois' open Senate seat, regularly donated money from his state political campaign to key supporters in Chicago in the first half of 2003, then received similar amounts from the same sources in the form of donations to his U.S. Senate campaign.

In all, Hynes and his allies in Chicago's political system transferred roughly $20,000 last year from Hynes' state campaign fund to his Senate campaign, mostly by donating and re-donating the money to each other, records indicate.

Federal restrictions limit to $1,000 the amount that Hynes could have moved directly between the two funds.

Hynes spokeswoman Chris Mathers said any apparent patterns between the donations are coincidental. She noted that Hynes, as a top state Democratic office-holder, has a long history of donating to other Democrats, particularly in his Chicago base. She said it "isn't surprising" many of those same Democrats want to support his Senate bid.

Unlike Illinois' unlimited state campaign funding system, federal law puts strict limits on how much money federal candidates can accept from individual donors and from other political funds.

That creates a unique dilemma for state politicians like Hynes, who are trying to make the jump to federal office. Hynes had $215,000 on hand in his Illinois campaign fund as of mid-2003, but is barred by federal law from using that cash in his bid for the U.S. Senate.

However, Illinois law doesn't limit Hynes from giving as much of that money as he wants to other state-level Illinois politicians, who then can contribute to Hynes' Senate campaign, as long as they stay within the federal donation limits.

"The Illinois system allows you to move money around. It's a legal way to get around the federal limits," said Kent Redfield, a political scientist at the University of Illinois at Springfield.

Redfield said it isn't unusual to see these kinds of donation patterns among Illinois politicians vying for federal office. "There certainly are different ways to interpret the patterns, but I think this is a reasonable interpretation."

Revolving donations

Much of the money runs through Chicago's 19th Ward, where Thomas Hynes, Dan Hynes' father, is a Democratic committeeman.

Records show that Dan Hynes' state campaign in late January 2003 donated $5,000 to the 19th Ward Democratic organization and, on the same day, $2,500 to 19th Ward Alderman Virginia Rugai. Two weeks later, Hynes' federal campaign received a $6,000 donation from Thomas Hynes and, six weeks after that, a $1,000 donation from the 19th Ward organization itself.

The 19th Ward organization in January also paid $1,500 to the relative of a state employee who works for Dan Hynes at the comptroller's office. Three months later, another relative of the same state employee donated the same amount of money - $1,500 - to Dan Hynes' Senate campaign.

Records indicate a similar pattern in Chicago's 43rd Ward. Hynes' state campaign in January 2003 donated $5,000 to the 43rd Ward Democratic organization and later saw much of it come back in the form of several donations to his Senate campaign: $1,000 from the 43rd Ward organization itself, another $1,000 from 43rd Ward Alderman Vi Daley, and $500 from former 43rd Ward Alderman Charles Bernardini.

Mathers, Hynes' spokeswoman, stressed that the donations from Hynes' state fund to the Chicago political funds are part of a long pattern that predates this Senate campaign. She noted that many of the key donations the analysis identified were made shortly before city elections, and that most of the donations to Hynes' Senate campaign came from individuals rather than the ward organizations themselves.

"A gray area"

The legal separation between state and federal funds is designed to prevent candidates from sidestepping tough federal restrictions on political fund raising. Candidates for federal office cannot accept more than $1,000 in donations per election from state political organizations, and are limited to $2,000 from individual donors.

In a 1996 FEC advisory opinion, the agency determined that a New Hampshire state legislator who was running for Congress was in violation of rules when he openly sought specific arrangements with fellow legislators in which he would give them donations from his state campaign and they, in turn, would donate the same amount of money to his federal campaign.

But FEC spokesman George Smaragdis said last week that the same set of circumstances, minus the explicitly stated arrangements, don't violate the rules in and of themselves.

"The commission has stated that the candidate cannot contribute (from a state fund) with the understanding that they would then contribute to his federal fund," said Smaragdis.

Illinois elections in the past have routinely produced allegations of candidates moving money from Springfield to Washington via third-party donations.

"Is it illegal? No. Is it common? Yes," said Redfield, the U of I political scientist. "But in the larger scheme of things, there's the question of whether it circumvents the spirit of the federal limits. That's where you're getting into a gray area. It just illustrates how difficult it is to regulate money in the federal system."

The latest FEC records, which cover donations made through September, showed Hynes had raised about $2.75 million as of that point for his Senate campaign.

The $2,000 individual limit can be raised to as much as $12,000 if the candidate can show that he or she is up against a self-financed opponent who has exceeded certain levels of funding. Hynes' Senate campaign qualifies for that higher $12,000 individual limit due to the presence of millionaire businessman Blair Hull, a self-financing candidate and one of Hynes' opponents for the Democratic Senate nomination.

Reporter Kevin McDermott
Phone: 217-782-4912

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