Dallas City Council candidate Jesse Moreno recently found himself in an interesting predicament. He is running to represent District 2, an oddly shaped swath of the city that sweeps from Love Field, the Medical District, south of downtown, and into the Cedars and Deep Ellum. From January 1 through March 22, he raised more than $36,000 in contributions, but a D Magazine analysis revealed that nearly a third of the money appeared to come from limited partnerships that were governed by a single person. Election law limits contributions in Dallas municipal races to just $1,000 per individual and certain businesses.
When asked last week about the origins of the money, Moreno pointed out—correctly—that everything was aboveboard. This week, though, he has returned all $11,000, saying that he wants to avoid even the whiff of funny business. The episode illustrates an interesting gray area in election law that it appears few local campaigns have taken advantage of, particularly during this cycle.
The contributions, each in the amount of $1,000, were made by 11 limited partnerships all registered to the developer Scott Rohrman, whose purchase of many buildings in Deep Ellum almost a decade ago helped begin the neighborhood’s latest resurgence. Rohrman says each limited partnership has varying interests “in or near” the district and wanted to support Moreno. And that is, without question, legal. The state’s election code allows individuals and certain businesses (e.g., limited partnerships, limited liability corporations) to give to political candidates; the city’s election code limits each to a maximum $1,000. But what happens when one individual controls multiple partnerships?
“Is this the sign of someone who’s putting his toe right on the ethical line, or, alternatively, is this the sign of a shrewd businessperson who knows how to get things done?” asked Dallas appellate attorney Chad Ruback, who has experience with election law. He was speaking generally about the situation after hearing a description of it. “I think two different voters can interpret it two different ways.”
Rohrman says even raising that question was enough for him.
“We determined that everything is aboveboard, but I did not want anyone questioning my intent,” he said. “The donations have been sent back.”
Moreno is a former member of the Dallas Parks and Recreation Board who is running against four others for the seat. He has earned the support of sitting Councilman Adam Medrano, who is term-limited from serving another two years. Many prominent developers and property owners who are active in the district have given Moreno money, but nobody has contributed through limited partnerships, like Rohrman did.
In recent years, council races have produced flagrant violations of the city’s election code. In one, the low-income housing developer Ruel Hamilton wrote a check for $6,000, wrote the names of six family members on the back of an envelope, and passed it along to former Councilman Scott Griggs, who deposited it in his campaign account. Two of those family members were 3-year-old twins. In another case, the school-aged children of attorney and former judge James Stanton contributed $1,000 maximums to Griggs and his colleagues Omar Narvaez and Philip Kingston. Months later, the Dallas Morning News found that former South Dallas Councilman Kevin Felder had accepted donations from two incorporated businesses, which violates state law.
To be clear: the donations from Rohrman-controlled partnerships are of a different stripe. First, they’re absolutely legal. According to Ruback, things get dicey when contributions are handed from one person to another in the interest of contributing more than what was allowed by law. Those are considered “conduit” or “straw” donations. That doesn’t seem to be the case here, as each limited partnership is active and operating. In Felder’s case, he said his accepting those funds was an accident—but accepting money from incorporated contributors is against state law, and candidates are required to sign a statement on their campaign finance forms saying they have not accepted contributions from such entities.
In the Rohrman case, the state of Texas considers each limited partnership to be independent and frees them to contribute to candidates. City code caps their total at $1,000, just like it does an individual. Political action committees can donate up to $2,500 per cycle. The city’s election code is meant to limit the amount of financial influence an individual can wield in these races, which, in Dallas, generally attract a small percentage of registered voters on years in which there is not a statewide or national election.
Rohrman, the owner of 42 Real Estate in downtown, said he is the general partner for about 50 limited partnerships. These are each made up of individuals who invested in various business interests across North Texas. He said the 11 that contributed money to Moreno are all tied to developments in or near District 2. Rohrman said the way the agreements are written gives the general partner the right to perform any action “that the general partner deems would benefit the partnership.”
I asked Moreno last week whether he viewed this as one individual donating 11 times. “I don’t believe that’s the case,” Moreno said. “Each LP is the one who individually made each contribution.”
Rita Kirk is a political science professor at SMU and the director of the university’s Cary M. Maguire Center for Ethics & Public Responsibility. She says that this is the type of judgment call where the donations’ appropriateness is ultimately left up to the voter, not the law. “We’re in tax season, right? Every tax accountant I know closely reads and interprets the law so they can meet the letter of the law,” she said. “The intent of the law? That’s a gray matter.”
Some companies, particularly law firms, use a technique known as “bundling.” The partners decide to support a candidate, urge their associates to donate, and they all do it using their own names. You could even argue about the ethics of fundraisers: a bunch of wealthy contributors in a room sign a bunch of checks to one candidate. A general partner of a limited partnership, meanwhile, is making a decision on behalf of his investors.
What is the voter comfortable with?
“It’s tough to say what is ethical and what isn’t,” Ruback, the attorney, says. “It’s easy to go to law books and figure out what is legal and what is illegal. That’s pretty clear. In terms of what’s ethical or isn’t ethical, I think we each have our own ethical standards.”
Both Rohrman and Moreno, after being asked about the contributions, decided to walk away from them.
“We have a property in Mansfield, Texas. I didn’t take a limited partnership in Mansfield, Texas, and give money to a city council candidate in Dallas, Texas. We have over 50 partnerships,” Rohrman says. “We weren’t looking for ways to create as much money to give. These partnerships have a distinct and separate interest in District 2. Because the intent has been questioned, I will think twice about it next time.”
Moreno has returned the money. Rohrman, meanwhile, says he and his wife both now plan to make $1,000 donations to the candidate.