Campaign Finance Complaint Accuses Monarch Beverage Of Illegally Funneling Campaign Contributions Through LLC

Well, here's a new one on the campaign finance front. A major Indiana beer distributor, Monarch Beverage, owns Vision Concepts, LLC, a five-employee company based in Indianapolis that sells marketing materials to companies. According to a complaint filed with the Indiana Election Division, competitors of Monarch are accusing the corporation of violating Indiana's law limiting the amount of money corporations can contribute to state and local campaigns annually by funneling money from Monarch to Vision Concepts for the sole purpose of skirting the campaign finance limits.

The Indianapolis Star's Tony Cook has a story on the complaint filed by a group of smaller beer distributors in which Monarch is accused of buying marketing materials from Vision Concepts at an inflated price in order to provide capital to the limited liability company to make large campaign contributions--at least $1.47 million since 2002. Corporations are limited by law to giving a combined $22,000 to state and local campaigns annually. Indiana lawmakers deliberately didn't change Indiana's campaign finance law when limited liability companies came into existence in the early 1990s to make them subject to the same campaign finance limits to which corporations are subjected, allowing LLCs to make unlimited campaign contributions.

Cook's story points out that Monarch, by law, could have given no more than $264,000 during the same period its much smaller affiliate Vision Concepts donated $1.47 million. Monarch's CEO Phil Terry told The Star that Vision Concepts has annual sales ranging from $800,000 to $3.1 million, making it a much less profitable company than Monarch. Since campaign contributions aren't tax-deductible, presumably Monarch is unconcerned about the profitability of its affiliated company to give away that much money in campaign contributions. Terry denied the allegation, however, that Monarch is purchasing marketing products from its affiliate at inflated prices to generate enough revenue to allow it to make such generous campaign contributions.

The Star points out that generous campaign giving by LLCs is not unique to Vision Concepts. Many major companies in Indiana operate LLCs that are similarly making large contributions annually, including real estate companies, engineering firms, telecommunications companies and the Indianapolis Motor Speedway. The complainants are hanging their hat on the legal argument that Monarch is really using Vision Concepts as a conduit to make contributions in the name of another to influence state policy on alcohol matters. It is illegal to give money to another person for the purpose of using the money to make campaign contributions. You could similarly accuse big law firms in this state of doing the same thing. They can produce bogus billing invoices to make it appear their clients are paying them for legal services, which in reality are intended by the clients to be used by the law firms to make large campaign contributions to elected officials they're seeking to influence.

I don't expect the Election Division to resolve this dispute, namely because it doesn't have the resources it would need to really investigate the complaint. The real answer lies in tightening up the state's campaign finance laws, for starters, making LLCs subject to the same contribution limits as corporations. For all practical purposes, there is no real meaningful distinction between LLCs and corporations. It's not uncommon nowadays for LLCs to be as large and powerful as corporations. I seriously doubt though that this legislature will pass any law that might limit how much money they are currently raising from businesses to finance their campaign.