Who Does Maryland’s Governor Really Work For?

 Larry Hogan has more in common with Donald Trump than his reputation suggests.

For years, Never Trump Republicans have courted Larry Hogan to run for president. It’s easy to see why. He’s won two gubernatorial elections in Maryland, where Democrats outnumber Republicans two to one; he’s currently one of the most popular governors in America; and he’s widely viewed as a moderate who’s willing to reach across the aisle. The late-night talk-show host Seth Meyers recently described him as “a Republican who believes in climate change.” In June, he’s publishing a memoir—a move that suggests he’s laying the groundwork for a 2024 presidential bid. Last spring, he launched a national advocacy group, An America United, designed to break partisan gridlock and “bring people together to advance bold, common-sense solutions for all Americans.” Simply put, everything about Larry Hogan’s public image would lead you to believe he’s the opposite of Donald Trump. 

But Hogan, it turns out, has more in common with Trump than his reputation suggests. 

Both are real-estate executives who have refused to relinquish their private businesses while in office. Just as Trump maintained his ownership of the Trump Organization when he became president, Hogan maintained ownership of HOGAN, a multipurpose real-estate brokerage firm, when he became governor. Both have left close family members in charge of their businesses—Trump with his children; Hogan with his brother, Timothy—and created arrangements that allow them to be apprised of the company’s dealings. In other words, they have set up situations in which they can use their powerful government positions to increase their private profits. 

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.

Maryland law says that an official may not partake in a decision if the official or a qualifying relative—defined as a parent, spouse, child, or sibling—has an economic interest in the matter and the official or employee knows of the interest. These decisions “certainly seem to implicate the statute,” said Virginia Canter, the chief ethics counsel for Citizens for Responsibility and Ethics in Washington and a former ethics adviser for the International Monetary Fund. “It looks like there’s credible evidence of a violation.” 

Hogan’s real-estate business has only grown while he has been in office. In 2014, the year before he became governor, his company had ownership in 30 real-estate limited-liability companies, or LLCs, according to his financial-disclosure forms. Now, he has 43. HOGAN is currently selling or leasing more than 20 properties throughout the state, according to its website, and has completed other real-estate deals over the past five years. 

But Hogan has not revealed payments he has received from specific real-estate transactions while in office. “He’s getting paid by developers all across the state—who he’s in charge of regulating in one way or another—and the public has no idea who they are,” said Democrat John Willis, a former Maryland secretary of state and now a University of Baltimore politics professor and a historian of Maryland politics and government. 

Hogan’s income has far exceeded his official yearly government salary of roughly $180,000. From 2015 to 2018, his first three years as governor, he made a total of roughly $2.4 million, according to his tax returns for those years, which he released during his 2018 reelection campaign. But he has refused to release his returns for the years before he became governor, much like Donald Trump, giving the public no way to compare his earnings before and after he ascended to Annapolis. In addition, the tax returns Hogan has released do not include attached statements detailing the sources of his private income, effectively hiding what entities were paying him. 

The amount he’s made while in office is unprecedented. According to Willis, Hogan has made more money as governor than any other governor in the history of the state— and is the only one to have made millions of dollars while in office.

In 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.

As Maryland Matters reported, development funding for this project was first allocated by Hogan’s predecessor, Democrat Martin O’Malley, and it had been studied by state transportation planners since 1984. “There is no indication that the governor deliberately took an official action to benefit himself financially,” the site wrote.

But there’s more to the story—and reason for greater concern. 

Several months before the governor’s company took control of the Brandywine land parcel, Hogan’s administration—not O’Malley’s—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.

Maryland law says that an official may not partake in a decision if the official or a qualifying relative—defined as a parent, spouse, child, or sibling—has an economic interest in the matter. Hogans’s real-estate firm is run by his brother.

The allocation for the interchange was made as part of Maryland’s annual transportation budget process. Each September, the Maryland governor releases a draft six-year transportation budget. It includes transit projects that the government is considering or actively building, along with the phase that each is in. The following January, the governor releases a finalized version. The legislature then takes several months to deliberate on the budget—for which the gubernatorial staff lobbies—before voting on it. Lawmakers can vote down individual projects but can’t add any.

In O’Malley’s final 2014–19 transportation budget, the Brandywine project was in a planning phase of development. When O’Malley released Maryland’s draft 2015–20 transportation budget, it was not mentioned. But when Hogan released the finalized 2015–20 budget five months later, he moved the overpass into construction and added $58 million in new funding. A source familiar with the situation said that the decision to expedite the project was made during meetings that included the governor, which took place in November and December 2014, after Hogan was elected but before he was sworn in. Hogan didn’t become a controlling partner for the Brandywine property until the following March, but it’s not clear when his negotiations to gain a stake in the property began. Real-estate executives I spoke to who are familiar with the process, and who have worked with HOGAN in the past, said these deals typically take months (and in some cases years) to complete.

Hogan’s communications director, Michael Ricci, said that advancing the Brandywine project had nothing to do with Hogan. “The governor has never made a decision on an individual project,” he said. 

But a Maryland Department of Transportation (MDOT) official familiar with the process, who spoke on the condition of anonymity, said that wasn’t true. Ricci’s claim, he added, “doesn’t pass the laugh test.” The governor, at the very least, has signed off on every decision. “The [transportation] secretary can propose it, but it’s the governor’s call,” the official said.

Maryland’s constitution declares that the governor is responsible for sending the budget to the legislature “in such form and detail as he shall determine.” Warren Deschenaux, who directed Annapolis’s nonpartisan Department of Legislative Services for decades, said Maryland’s transportation-infrastructure process is one of the most executive driven in the nation. He called Hogan’s claim that he hasn’t made any decisions in his transportation budget a “ridiculous assertion.” 

Former Maryland Governor Parris Glendening, a Democrat, added that the governor is the sole official responsible for moving transportation projects into construction: “Those decisions are going to have to be the governor’s decision and not someone in government bureaucracy.” 

Multiple legislators said they were not informed of the governor’s nearby real-estate interests before voting on his transportation budget. “I certainly had none of this information when working on the budget committees or in discussions,” said Bill Ferguson, a Democratic Maryland state senator, when we spoke in September. (In October, Ferguson was selected to become the Maryland Senate’s next president.) “Had I known this information, I think there would have been much more targeted and purposeful questions about the necessity of projects that appear to have a financial benefit to the governor.” (Hogan listed his holdings in real-estate LLCs in his submission to the Maryland State Ethics Commission, filed 17 days after the legislature approved his first budget, but he did not identify specific properties, let alone the dates of acquisition.)

Greg Slater, the Maryland State Highway Administration’s administrator, told me that transportation planners make a variety of recommendations for what belongs in the budget and at what phase. One of the reasons the Hogan administration advanced the interchange, Slater said, was that the state had completed “right-of-way”—meaning it had purchased the land needed to construct the project. But right-of-way and engineering were still in process when it was advanced, according to MDOT records. (In December 2019, Hogan nominated Slater to be Maryland’s new transportation secretary.)

Hogan himself has taken credit for the Brandywine interchange. “Our administration promised to fix Maryland’s crumbling roads and bridges, as well [as] address the worst traffic in the nation, and with the MD 5 interchange project, we are doing exactly what we said we would do,” the governor said in a press release. “This important project will help remove a major bottleneck in Prince George’s County.” 

Hogan awarded the contract to build the Brandywine interchange to Facchina Construction Company, according to records obtained by the Washington Monthly through Maryland’s Public Information Act. Facchina donated to Hogan’s reelection campaign one year before receiving the contract. The interchange is scheduled to be completed by the late spring of 2020.

Experts I spoke with who reviewed Maryland’s ethics laws were alarmed by the Hogan administration’s decisions around Brandywine and other properties. Richard Painter, a professor of corporate law at the University of Minnesota Law School and a former chief ethics lawyer for President George W. Bush, said that Hogan should have been prohibited from participating in the decision. “The [ethics law] language suggests that he should recuse because the official or employee or qualifying relative—he himself—has an interest in the matter and he knows of the interest,” Painter told me.

Hogan has a history of investing in the area surrounding the Brandywine project that dates back to 2003. Under his administration, the government has also advanced a number of other improvements in the same vicinity, including the construction of embankments, exit ramps, and median piers; pavement upgrades; a new park-and-ride lot; and a bridge. 

At the same time, Hogan’s business has been increasing its portfolio near all of these improvements. In early 2017, HOGAN purchased a new parcel of land for $2.2 million near the interchange, where, according to a Maryland real-estate newsletter, it plans to build townhouses, apartments, a medical office space, and an assisted-living center. Most recently, the company bought 14 additional parcels of land in Brandywine near the interchange for more than $1.2 million, according to public land records.

I asked Mike Sponseller, a HOGAN vice president, whether the interchange project contributed to the firm’s increased investment in the area. “Yeah,” he said. “Infrastructural updates are incredibly important to facilitating new development. Infrastructure contributes to land value, contributes to access, of course.”

Brandywine isn’t the only place where Hogan has advanced construction projects near his existing property interests. On November 12, 2014, just eight days after his election, Hogan’s company bought a parcel of land from Maryland’s State Highway Administration in Severn, Maryland, for $400,000. The sale was conducted through a public auction, and only one bid was made: by Timothy Hogan. In November 2014, HOGAN created a new LLC called the Villas at Severn Crest. Since Larry Hogan took office, the State Highway Administration has begun a number of transportation projects that could boost the value of that property, including intersection improvements and road resurfacing less than a mile away, which started in 2018. 

In addition to his Brandywine and Severn properties, HOGAN chartered a company in West Hyattsville in early March 2015 that bought a parcel of land a half mile off Queens Chapel Road. The company is turning the parcel into a townhouse development. In his 2017 transportation budget, Hogan put $23.5 million in road and crosswalk improvements on Queens Chapel Road into construction, less than a mile from the property. (Previously, this project had been in a planning phase.) Lawmakers said they were not told at the time that he owned a property near the road improvements.

Amy Swan

Larry Hogan, 63, has been steeped in politics since childhood. His father, Lawrence Hogan Sr., won a seat in Congress when his son was 12, and he gained fame as the first Republican member of the House Judiciary Committee to call for Richard Nixon’s impeachment. The younger Hogan nurtured dreams of holding office himself. Throughout the 1980s and ’90s, Hogan Jr. tried unsuccessfully to win a seat in Congress. 

Instead of going to Capitol Hill, he went into real estate. In 1985, he founded HOGAN, his real-estate firm. He wasn’t always successful. Hogan filed for bankruptcy in 1994 when he couldn’t pay back multiple longtime lenders who called in their loans, and he was forced to liquidate his assets, including by selling his house for $750,000. He later rebuilt his business, and his brother joined the firm in 1999. 

In 2003, Hogan got his first political break when Bob Ehrlich was elected governor, the first Republican to win in Maryland since Spiro Agnew. Ehrlich appointed Hogan to a cabinet post in charge of filling jobs at Maryland state agencies, boards, and commissions. After Ehrlich lost his reelection campaign to Martin O’Malley four years later, Hogan founded a political advocacy group, Change Maryland, which tallied O’Malley’s tax increases. That became the springboard for Hogan’s 2014 gubernatorial bid, which he won as part of a wave election that saw GOP victories all across the country. Hogan finally got his chance to serve in elected office.

But Hogan’s election came with an immediate complication: What would he do with his real-estate business? Maryland ethics law bans officials or employees from making decisions on matters in which they have an economic interest. But the law states that this prohibition does “not apply if participation is allowed as to officials and employees subject to the authority of the [Maryland State] Ethics Commission.” Hogan reached out to the ethics commission for advice.

One day after Hogan was inaugurated, on January 22, 2015, Maryland State Ethics Commission executive director Michael Lord wrote back with guidance. His letter was designed to “serve as an interim approach pending the full resolution of possible financial interest issues.” Those issues, Lord said, could take “a number of months” to fully sort out. 

In the guidelines Lord sent to Hogan, he told the governor to follow the ethics law’s prohibition on making decisions that impacted his financial interests. Lord wrote:

The Law provides that an official may not participate in a matter if (1) the official or a qualifying relative (defined as parent, spouse, child or sibling) has an interest in the matter, or (2) any of the following is a party to a matter: (i) a business entity in which the official has a direct financial interest; or (ii) a business entity, including a limited liability company, of which the official or a qualifying relative is an officer, director, trustee, partner or employee. Given these limitations, the Governor should not personally participate in any matter that may come before him or a state agency that involves [his] businesses, or any matter in which he or any of his qualifying relatives or a company that employs them have an interest. 

Later in the letter, Lord wrote, “The Commission has determined that participation includes supervision of others involved in a matter.” 

In December 2015, Hogan entered into a trust agreement that he asserted would prevent conflicts of interest. On April 15, 2016, the trust was approved by the state ethics commission. Between Hogan’s inauguration and the trust agreement’s approval, the governor submitted two transportation budgets—including the one advancing the Brandywine interchange—and gained ownership of at least seven newly created real-estate LLCs. In other words, Hogan’s real-estate business was growing just as he was supposed to be separating himself from it.

In an email, Ricci said that given the length of time it took the commission to deliberate, much of this was both unavoidable and acceptable. “Since before being sworn into office, the governor’s representatives requested and received guidance from the Ethics Commission to ensure full compliance with the Public Ethics Law,” he said. Ricci cited the letter from Lord, sent to Hogan the day after his inauguration, in which the chairman stated that the commission “appreciates the efforts that have been made to date by the Governor and his team to address the complicated issues involving his private business interests and his sincere desire to ensure compliance with the Ethics law.”

But even after Hogan began talks with the ethics commission, there were signs that he had not made a clear break from his business. In February 2015, while serving as governor, Hogan himself announced a $3.4 million real-estate transaction in a press release issued by his private company. His administration began construction on projects near both the Villas at Severn Crest and the Riverfront at West Hyattsville after his trust went into place.

Hogan refused multiple requests to be interviewed. “Washington Monthly is making absolutely baseless allegations that the state’s major media outlets have already thoroughly vetted and rejected,” Ricci wrote in an emailed statement. “With the advice and agreement of the Ethics Commission, the governor has gone above and beyond to comply with Public Ethics Law.”

There are several different ways by which Hogan could have separated himself from his business. Craig Holman, a government-affairs lobbyist for Public Citizen, a nonprofit good-government group, said that the most robust way would be to divest entirely. It’s an approach that some Democrats in the Maryland legislature have also endorsed. “When you have a business owner who takes the reins of government, that business owner needs to remember that he is no longer simply beholden to his business interest,” said Kirill Reznik, a Democratic state delegate. “He is beholden to the interests of the people of the state. If those business interests are not something that you are willing to give up, then you frankly don’t deserve to be in that position.” 

Some members of the conservative movement disagree. Kendra Arnold, the head of the Foundation for Accountability and Public Trust, an organization once led by former Acting Attorney General Matthew Whitaker, told The Baltimore Sun in 2018 that it was “not realistic” for public officials to sell their businesses. “Having everyone divest themselves of every interest they have is not a reasonable requirement,” she said. 

Reformers are not asking for politicians to divest from every stock or mutual fund, of course. And Hogan’s real-estate empire—which has properties across the state he governs—is not a typical business. But experts like Holman argue that when politicians do maintain their business interests while in office, they should have to place them into a blind trust, managed by an independent entity with which they have no prior relationship. When Jimmy Carter became president, for example, he put his peanut farm into a blind trust.

But Hogan’s trust is not blind. The ethics commission granted the governor a “financial-interest exemption,” which allows him to continue to own real-estate projects and to be apprised of his company’s business dealings, as well as how much money he’s making. In a letter to Lord, Hogan wrote that the arrangement “will not prevent me from requesting or receiving information about the status of the Hogan Companies . . . including the status of its current investments and, [sic] the identity of the investors and the locations of real property in which the Hogan Companies have an investment.” 

Ricci said Hogan opted for this type of arrangement because a “blind trust is generally reserved for passive investments. Given that the trust represents an active and ongoing business, it is sensible to have it managed by experts in the field.” Ricci said that, as part of the deal, the governor promised to not participate in matters involving HOGAN. “The agreement prohibits advance consultation or solicitation of advice with respect to the business activities of the trust,” Ricci told me. “In short, this trust goes further than current Maryland law.”

But the trustees Hogan chose to manage his holdings are not just experts in the real-estate field—they are his previous business associates: Victor White, the chief operating officer of HOGAN; Jacob Ermer, the executive vice president of HOGAN; and David Weiss, a former broker at HOGAN. According to public records, all of them are Hogan campaign contributors. His brother, Timothy, is in charge of his company. 

As governor, Hogan has maintained a close relationship with all four of these individuals. He had at least eight meetings with them between 2015 and 2018, according to his meeting calendar, obtained by the Washington Monthly through a Public Information Act request.

Hogan withheld $1 million from the Maryland attorney general to stop lawsuits against Trump, the most prominent of which alleged that the president was using his position to bolster his real-estate profits.

Kathleen Clark, a government ethics professor at the Washington University in St. Louis’s School of Law, said it was “misleading” to even call the arrangement a trust because Hogan is kept fully apprised of his investments and assets. “He owns it, he will benefit from it, he is not shielded from knowledge of what the holdings are,” she said. 

This faulty arrangement is, in part, the responsibility of the Maryland State Ethics Commission, which granted Hogan the financial-interest exemption and signed off on the trust. The commission’s decision speaks to the overall weakness of Maryland’s ethics laws. The Center for Public Integrity, in its 2015 State Integrity Report, the most recent to date, gave the state a D overall for integrity—and an F for ethics enforcement. (Maryland passed a law in 2017 that strengthened certain provisions in the state’s public ethics law—mainly toughening the regulations governing when and how former legislators can become lobbyists.) 

Still, the ethics commission made it clear that financial-interest exceptions do not allow officials to participate in government decisions that impact their outside business. “Even when the Commission grants an exception or exemption, all of the other provisions of the Ethics Law continue to apply,” the commission wrote in an August 2019 memo to state workers. “For example, the employee or an official may not participate in any matters on behalf of the State relating to the employee’s secondary employer or entity where the ownership interest lies even if the Commission grants an exemption or exception.”

In its specific guidance to Hogan, the commission stated that Hogan could, and should, identify “a specific person within the Governor’s Office to act in his place on any such matters that come to the Office while he continues to retain his financial interest in his businesses.” Yet when I asked Ricci, Hogan’s spokesperson, if the governor had ever recused himself from a decision in his transportation budget that could impact his properties, he was clear that Hogan had not. “The answer is no,” Ricci said. “The governor does not make decisions on individual projects, so he has no decisions to recuse himself from.”

The ethics commission did indicate that it’s these kinds of discrete decisions Hogan should avoid making. In its guidance to Hogan, it wrote that the participation restrictions refer to specific matters, “not to broad policy matters where his businesses are among a small number directly affected.” But senior Maryland officials, past and present, said the governor routinely makes specific calls on infrastructure projects and, indeed, is the official responsible for making such calls.

Maryland law allows state officials or employees to participate in decisions from which they would otherwise be barred, as long as they are the only person authorized to make those decisions. But the law also states that when officials are exempted from participation prohibitions by necessity, they must publicly disclose their conflict of interest. Multiple legislators said Hogan did not disclose real-estate interests before they voted on his proposed transportation projects.

Last October, Hogan endorsed the Ukraine-related impeachment proceedings against Donald Trump. “I think we do need an inquiry because we have to get to the bottom of it,” he said in a televised interview. “I don’t see any other way to get to the facts.”

But Hogan has been, at best, silent over the president’s alleged violations of the Emoluments Clause. In fact, in 2018, he withheld $1 million from the Maryland attorney general’s office to stop a series of lawsuits against Trump, the most prominent of which alleged that the president was using his position to bolster his real-estate empire’s profits. 

The governor justified his decision on fiscal grounds. “The administration takes its responsibility to find efficiency and savings in the state budget extremely seriously,” Doug Mayer, a spokesperson for Hogan at the time, told The Baltimore Sun. “This is a perfect example of that.”

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Eric Cortellessa

Eric Cortellessa is digital editor at the Washington Monthly.