Maryland Governor Accused of Rerouting State Funds to Benefit His Business

Larry Hogan is governor of a state with a rich tradition of corruption. Photo: Sarah L. Voisin/The Washington Post via Getty Im

The advent of a billionaire real-estate mogul with fingers in many pies as president of the United States has helped educate us about the many forms of public corruption more subtle than direct cash-and-carry transactional deals. Sure, we all understand the latter kind of gross corruption, including, perhaps most famously, the bribes then–Vice-President Spiro Agnew received from Maryland road contractors. His corruption was accidentally detected by prosecutors, which led to Agnew’s forced resignation, and eventually to Gerald Ford’s ascension to the White House when the other half of the Nixon-Agnew ticket resigned as well.

But there are more baroque forms of corruption that can arise when people with government-adjacent business holdings assume public office and then ignore conflicts of interest in making decisions that just happen to benefit the family enterprise. You know, like quietly encouraging those with important business with the federal government to stay in one of your hotels or resorts, or cutting deals with foreign governments that compromise your independence.

Now allegations of a similar nature have arisen involving one of Spiro Agnew’s successors in that legendary wonderland of casual corruption, Maryland. According to a very extensive investigative report by the Washington Monthly’s Eric Cortellessa (disclosure: I am a former writer for the Monthly), current Governor Larry Hogan Jr. has made a habit of directing state transportation resources toward areas where his family real-estate business is heavily invested:

As governor, one of Hogan’s signature policies has been to expand state spending on roads, highways, and bridges at the expense of mass transit. His most controversial policy to date was to cancel the Red Line — a planned $2.9 billion metro rail line through Baltimore, for which the state had already acquired land. In the process, Hogan gave up $900 million in federal aid from the Obama administration. As The Baltimore Sun put it, “Hogan freed up hundred [sic] of millions of dollars he plans to use to undertake a significant shift in the state’s transportation priorities from public transit to road projects.” 

Hogan has advanced a number of major state transportation projects that are near properties his company owns, a development that can boost the value of those properties. Before canceling the Red Line, he approved construction of an interchange down the road from a parcel of land his company controlled. Later, he approved millions of dollars in road and sidewalk improvements near property he had bought approximately two years earlier and was turning into a housing development.

Cortellessa focuses particularly on a big highway project in Prince George’s County near a land parcel held by the governor’s company (the Hogan Companies) that has gotten a big push during his road-building initiative:

[I]n February 2018, Maryland Matters, a state-based politics and policy website, reported that Hogan held ownership in a company called Brandywine Crossing Realty Partners LLC. The company was chartered on March 9, 2015, and it became a controlling partner for a parcel of land behind the Brandywine Crossing Shopping Center in Prince George’s County. The land was just down the road from a major state transportation project: a new highway interchange …

Several months before the governor’s company took control of the Brandywine land parcel, Hogan’s administration … earmarked $58 million to build this interchange. In April 2015, the general assembly approved the project. Hogan did not notify legislators that he had property interests nearby before the vote.

In this and other occasions where state transportation decisions appear to have benefited the Hogan Companies, the governor’s spokespersons — when they’ve deigned to address the appearance of impropriety — have tried to minimize the governor’s personal role in project-specific decisions and have touted a “trust agreement” that limits Hogan’s involvement in company business. The former assertion “doesn’t pass the laugh test,” according to one anonymous but well-placed source in the Maryland Department of Transportation, who says the governor signed off on every major decision made in his appointed secretary’s name. And the “trust agreement” Hogan signed falls far short of a blind trust in insulating the governor’s company from his personal involvement; indeed, he retains almost complete access to the company’s books and personnel. And it certainly is far from the divestiture of government-adjacent business interests that anyone wishing to be squeaky clean would strongly consider.

It seems entirely possible that Hogan has complied with the letter of state law while thoroughly violating its spirit, in a state where cutting corners and self-dealing often seems endemic. The Baltimore Sun noted that pattern recently after a Democratic state legislator’s forced resignation for misuse of campaign funds:

Oguzhan Dincer, associate professor and director of the Institute for Corruption Studies at Illinois State University, told Capital News Service that when it comes to “legal corruption” — unethical acts without actual criminality — “Maryland is very corrupt” and it is “quite alarming.”

So far Hogan has blown off the fresh scrutiny of this ethics, referring to the Monthly’s piece as “the blog thing” that rehearsed politically motivated allegations against him. But they won’t go away, as the Sun reports:

Del. Vaughn Stewart, a Montgomery County Democrat, said he plans to push Hogan to disclose more information about his business. Stewart said lawmakers could consider legislation limiting a governor’s ability to do outside business related to governing decisions.

“I hope that he’s going to put his money where is mouth is,” Stewart said.

That was an allusion to Hogan’s announced plans to push anti-corruption legislation in Annapolis. He may have reason to protect his flanks, not to mention his legacy as a moderate Republican hero to Never Trumpers and even a potential national party leader. As Cortellessa notes, Hogan may have “more in common with Trump than his reputation suggests.”

Maryland Governor Hogan Accused of Self-Dealing Plot