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Long IslandPolitics

LI congressional candidates often find themselves in money pit

David Calone, Democratic candidate for Rep. Lee Zeldin's

David Calone, Democratic candidate for Rep. Lee Zeldin's seat, has lent $250,000 to his campaign so far, a position many candidates find themselves in. Photo Credit: Gordon M. Grant

When venture capitalist David Calone lent $250,000 to his campaign for the Democratic nomination to face Republican Rep. Lee Zeldin this year, he started down a well-trodden path in the money pit of Long Island congressional districts.

In the past three elections in the 1st Congressional District on the East End, three candidates lent a combined $6.3 million to their campaigns. Yet they all lost their races — and a total of $5.4 million in loans they never repaid themselves, campaign finance filings show.

That history hasn’t deterred Calone, of Setauket, whose business is investing money.

“I felt like a lot of people were stepping up to make contributions and volunteering time, and I should make a serious financial commitment myself,” Calone said after reporting his loan.

If Calone doesn’t win the June 28 Democratic primary against rival Anna Throne-Holst or the November general election against Zeldin, of Shirley, he could find that the financial cost of losing can be high.

“Those who amass a lot of debt in their run for office are unlikely to be able to raise the funds to pay it back — unless they win,” said Sheila Krumholz, executive director of Center for Responsive Politics, a Washington, D.C., nonprofit that tracks political money.

“There will always be donors who line up to give to the winning candidate, even if the donor actually favored, or even supported, their opponent,” she said. “But losing candidates often find it’s difficult to retire their campaign debts.”

That is a possibility that other Long Island candidates for Congress also face.

In the competitive Democratic primary in the 3rd Congressional District to replace retiring Rep. Steve Israel (D-Dix Hills), North Hempstead Town Councilwoman Anna Kaplan has lent $100,000 to her campaign and Suffolk Legis. Steve Stern (D-Dix Hills) has donated $36,000 and lent $32,000 to his bid.

State Sen. Jack Martins (R-Mineola), who also is running for Israel’s seat, lost his campaign in the 4th Congressional District in 2008 after lending his campaign $50,000. He ate $41,765 of it.

This year, Martins said, he won’t be lending any money to his campaign.

After the 2014 election, 595 House candidates across the country — most of whom lost — had $71.9 million in debt, either from self-made loans or unpaid bills, according to the Federal Election Commission.

The 28 New York candidates in that report said they owed a total of $10.8 million, more than in any other state.

That amount of funding in part is a result of the high cost of running for office, particularly in competitive districts. That reality can be an intimidating factor for a would-be candidate who does not have a large bankroll or a lot of wealthy friends.

Nationally, it costs about $1.5 million to run for a House seat. But in New York’s 1st District, former Democratic Rep. Tim Bishop of Southampton spent an average of $2.7 million per race in the past three elections, a period in which all candidates spent a total of $22.1 million.

“When people run for office and they have their own money, they tend to spend it. They think they can win,” said Rob Ryan, a Republican consultant in Brooklyn.

But when they don’t win, they find out how much they’ve lost.

“You’d be surprised how many candidates don’t ask these questions until it’s too late,” said Washington, D.C., election lawyer Brett Kappel.

Candidates can repay themselves for their loans only if their campaigns have the cash to do so on Election Day, the FEC says. That’s a rare occurrence. After the election, they have 120 days to pay themselves back up to $250,000 in loans with donor contributions for that purpose.

Their unpaid personal loans then become a contribution — it’s no longer repayable — that can’t be written off as a bad debt or used for a tax deduction, said Kappel.

Most Long Island congressional candidates who ate loans or piled up debts declined to comment or did not respond to queries. But their FEC filings tell their stories.

In the 2014 race in the 1st District, Zeldin didn’t make a loan to his campaign, but still had $41,236 in debt when he won. For this year’s election, he has raised $2.6 million — some of it from PACs that had backed his opponent, Bishop — and cut his debt to $7,512.

Zeldin’s Republican primary rival in 2014 — lawyer George Demos, who married into a wealthy family fortune — never paid himself back the $2.5 million he lent his campaign.

In the district’s two previous elections, in 2012 and 2010, GOP businessman Randy Altschuler lost twice, after making $451,000 in contributions and eating $1.7 million of the loans he made to his campaigns. Republican attorney Christopher Cox swallowed all of his $1.2 million in loans in a 2010 primary loss.

In the 2014 race in the 4th Congressional District in Nassau County — Long Island’s second biggest money pit — candidates ate $1.3 million in loans they made to their campaigns and owed nearly $129,000 in unpaid campaign costs.

The winner, Rep. Kathleen Rice (D-Garden City), made no loans but had $76,577 in debts. In her first three months in office, Rice raised $272,800 and wiped out the IOUs. Since then, Rice has raised another $1.3 million.

Her GOP opponent — businessman Bruce Blakeman of Long Beach — didn’t repay himself $970,000 of the $1 million he lent his campaign. In 2010, Blakeman also ate $278,410 in his unsuccessful race for the U.S. Senate.

In three failed bids in the 4th Congressional District since 2010, Republican attorney Frank Scaturro spent $286,500 out of his own pocket. Now a congressional staffer in Washington, Scaturro owes $16,384 to donors who want their 2014 contributions back after he failed to win.

Former Republican Nassau Legis. Francis X. Becker Jr. of Lynbrook, who ran for the seat in the 4th District in 2010 and 2012 but lost, said once you start putting your own money into a race, it’s easy to keep the money flowing.

“You put so much money in already to win the race, and a pollster tells you need one step more,” Becker said, so candidates sink more funds into a race they believe they can win. “That’s what happens: the adrenaline, the excitement.”

Becker never repaid himself $19,900 of a $20,000 loan from his 2010 campaign. His last filing shows he used personal funds to pay $57,000 to campaign vendors and owed $35,000 for printing, accounting and advertising — debts he said he now has paid off.

“Once you’ve lost,” Becker said, “you know there is no way you’re going to be able to raise that money, because there is no way anyone is going to contribute money to pay off your loans.”

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