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Political Pull

As a (former) New Yorker, I was drawn to the story of the audacious use of raw lobbying power by the New York State Dental Association. The association's executive director, Roy E. Lasky, was not shy about using a quirk of the law and his connections to tamp down dissent within his own non-profit organization.

According to news reports, Lasky's wide acquaintance with and substantial political contributions to senators and assemblymen have made him an influential lobbyist in the state capital. Unfortunately, he became at odds with his New York City chapter--its members were upset with his compensation (as much as $475,000, according to the latest IRS filings) and with his successful effort to dilute their voting power in selecting
statewide officers.

In response to this challenge to his control, Lasky simply legislated his critics out of existence. Using his clout in Albany, he got the legislature to pass a bill that gave his association authority to remove a so-called "component" member, which is what the New York City chapter of dentists is (was). Problem solved.

The jaw-dropping aspect of Lasky's power grab is that, in addition to being contrary to all the good corporate governance trends in non-profit law and practice, it is all perfectly legal due to an interesting aspect of the history of corporation law. Lasky's dental association was formed in the late 1800s when most states, including New York, did not have general corporation statutes, much less non-profit corporation statutes. The only way for such groups to operate legally was to get a charter granted to them directly by the legislature, which the dentists did.

In later years, even after corporation laws had been enacted, the dental association continued to operate under the authority of the legislature (as did other chartered organizations), rather than under the authority of the newer statutes and the specific jurisdiction of the state attorney general.

Generally, this legal wrinkle wouldn't matter much. In New York, at least, the newer statute technically governs the chartered non-profits and the attorney general clearly has jurisdiction over them. But Lasky understood legislators and their sense of ownership of the dentists' charter, even if it was granted more than 100 years ago.

He knew they would be susceptible to the argument that they should not cede power to the attorney general over this particular non-profit. And besides, hadn't Lasky been generous in making political contributions? The result was a bill passed 59 to 1 in the Senate and 79 to 44 in the Assembly that enabled Lasky to expel the New York City chapter.

When I asked the former head of the New York charities bureau, William Josephson, about this he said, "The matter raises a number of issues not clearly precedented." For example, a general legal principle is that a member about to be expelled from an organization is entitled to an explanation and an opportunity to be heard--in other words, due process.

But here, the legislature bigfooted the New York City dentists, and they barely knew what hit them. Beyond that, even though legislatures might feel a proprietary interest in the organizations they've chartered directly, they generally keep their hands off. According to Josephson, "It is very unusual for [legislatures] to act because they don't like to intervene in the internal affairs of any organization." Yet the New York legislature did intervene in this case. The question is why.

I tried to find out, but nobody is talking. Lasky has not taken press calls on the matter. The attorney general's office did not respond to my requests for an interview. The executive director of the New York City dental group referred me to her lawyer, who didn't return my calls. People who deal with legislators and other politicians tend to clam up when confronted with such bold displays of power.

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Bruce D. Collins

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