When she first jumped into the race for the NY-27 congressional seat, Darien resident Beth Parlato got off to a fast start in fundraising from individual donors.
She raised $271,000 in eight weeks. Her campaign coffers now stand at $554,153.62, which includes some PAC money and a personal loan but so far that isn't half of the $1,253,465.46 Chris Jacobs has in his campaign account.
Parlato said she knows what she's up against in trying to win a congressional seat against a candidate who can afford to drop $446,000 of his own money into his quest for a seat in D.C. So when the novel coronavirus swept through New York and she was forced to cancel five fundraisers, Parlato took what she thought was the next most sensible route to keep her effort financed. She borrowed $150,000 against her property on Seven Day Road.
That loan, which she turned around and loaned to her campaign, promoted a reader to contact The Batavian and suggest the loan violated Federal Election Commission rules.
At first blush, based on language on the FEC site, that might seem true.
When a candidate obtains a bank loan for use in connection with his or her campaign, the loan is considered to be from the bank and not from the candidate's personal funds.
However, two experts in campaign finance interviewed by The Batavian for this story said Parlato's use of money obtained from a second mortgage to make a personal campaign loan is legal.
"It's her personal money," said Paul Cole, a Republican who was once heavily involved in WNY politics, working for Tom Reynolds and Chris Lee before running David Bellavia's 2012 primary campaign. He is not currently involved with any congressional campaign.
"She's going to be personally responsible for paying back that banknote regardless of what happens in terms of the campaign," Cole said. "She's going to have to pay back that loan."
While the campaign, if it raises enough money, can repay the loan to Parlato, if the campaign for any reason can't raise enough money to pay back the loan, Cole said Parlato is still personally responsible to repay the money to the bank.
Michael E. Toner, an election law attorney in Washington, D.C., also said it is legal for a candidate to take out a second mortgage on his or her own property and then loan that money for a loan to his or her campaign.
A footnote on the FEC site also indicates such a loan is permissible:
The personal funds of a candidate include: Assets which the candidate has a legal right of access to or control over, and which he or she has legal title to or an equitable interest in, at the time of candidacy ...
Parlato, who is endorsed by the Conservative Party and is running the GOP primary, has raised $376,691 from individual contributors. She collected another $11,000 from political action committees.
Jacobs, the endorsed Republican in the special election and also a candidate in the primary, has raised $720,856 from individual contributors. He's also raised -- from PACs, other congressional campaigns, and corporations -- $85,699.
The other Republican in the race is Stefan Mychajliw, who has raised $75,576. He's loaned his campaign $465.
Democrat Nate McMurray, running in both the special election and unopposed in the Democratic primary, has raised $527,886. He's received more than $30,000 from PACs and has not loaned his campaign any money.
The Libertarian candidate is Duane Whitmer, who has raised more than $20,000, half of which comes from a loan from himself to his campaign.
CORRECTION: Parlato is not a candidate in the special election, as previously stated.