One anecdote speaks volumes
The Daily News
December 10, 2013
One of the more distressing parts of last week’s report from Gov. Cuomo’s anticorruption commission was the story of how one bill became law in Albany.
Needless to say, it was not the legislative process you remember from “Schoolhouse Rock.” More like “The Price Is Right.”
Decrying Albany’s “pay-to-play culture,” the report told of a particular company — part of a “controversial and heavily regulated industry” — that spread tens of thousands of dollars around the Capitol while mounting an intense and at least partly successful lobbying campaign in 2008 and 2009.
The commission did not name the company, because its investigation is continuing. But a check of public records points to Coventry First of Fort Washington, Pa., whose political contributions and lobbying activity fit the facts to a tee.
Coventry is in the “life settlement” business, meaning it buys life insurance policies, mostly from the old and sick. The policyholders get cash to use while they’re alive, and the company aims to turn a profit when the person dies.
At one point a few years ago, some players in this industry experimented with bundling purchased insurance policies into securities that could be traded on Wall Street. They were dubbed “death bonds.”
Coventry made headlines in 2006 when then-Attorney General Eliot Spitzer sued it for allegedly cheating customers. The company paid $10.5 million to settle that case in 2009.
Meanwhile, the state Insurance Department was preparing to crack down on broader industry abuses — such as persuading people in their 70s to purchase life insurance solely for the purpose of reselling it as an investment.
When the Assembly and Senate introduced the relevant legislation in 2008, Coventry’s checks began to fly.
That year, the company contributed $25,000 to the Senate Republican Campaign Committee, $25,000 to the Democratic Assembly Campaign Committee and another $10,000 to then-Assembly Insurance Chairman Joe Morelle of Rochester.
After the bill passed in November 2009, the company donated $6,000 to then-Senate Insurance Chairman Neil Breslin, plus another $9,300 to Morelle — all of which lines up with the details in the commission’s account.
What the company got for its money is unclear. The commission’s report portrayed the bill as favorable to Coventry. But players on all sides insisted that the law as ultimately approved was a good compromise — greatly strengthening regulations while allowing the industry to stay alive in New York.
As Morelle points out, the bill passed both houses unanimously, was promptly signed by then-Gov. David Paterson — and has not been the subject of controversy since. Morelle said that he has not been contacted by the commission, and strongly denied that Coventry’s donations influenced his actions.
“If that’s what they’re talking about, they don’t understand the law,” he said of the commission. “It’s a very rational, thoughtful and, in my view, thorough law that will protect thousands of New Yorkers.”
A Coventry spokesman, too, said the company was unaware of any probe and “has regularly participated in political activities through political contributions.”
What’s beyond dispute, however, is that state lawmakers collected $76,000 from a single company with a clear vested interest in how they voted — and New York’s pathetically weak campaign finance laws paved the way.
Keep in mind that corporate donations are supposedly capped at $5,000 a year. Yet Coventry easily got around that by directing its funds to party housekeeping accounts that can accept unlimited amounts, and by making multiple gifts in the name of various corporate subsidiaries.
For years, reformers have been clamoring for the Legislature to close these egregious loopholes. Cuomo’s Commission to Investigate Public Corruption has now taken up that cause. Yet somehow, the necessary fixes keep dying in Albany.
To be clear, a commission spokeswoman declined to comment to the Daily News on whether or not Coventry was the company mentioned in its report.
Either way, though, it’s a classic example of a deep-pocketed special interest funneling money to the politicians who control its fate — which is business as usual in Albany.
“It must work, otherwise they wouldn’t do it,” says government watchdog Blair Horner of the New York Public Interest Research Group. “They’re hard-nosed businesses making bottom-line decisions. When they cut all those checks, they expect to get something in return.”