The Multinational Monitor

April 2004 - VOLUME 25 - NUMBERS 4

CAFTA:  Recolonizing  Central  America

DeLay, Inc. on the Brink?
Prosecutors Probe the Legality of
Tom DeLay’s Texas Republican Majority

By Andrew Wheat

Criminal prosecutors have subpoenaed U.S. House of Representatives Majority Leader Tom DeLay's daughter -- along with current and former DeLay aides -- in a widening probe of allegations that politicos spent millions of illegal corporate dollars to orchestrate a 2002 Republican takeover of the Texas House of Representatives.

That takeover will exact national repercussions for years to come. The DeLay loyalist whom it ensconced as Texas House Speaker helped redraw Texas' congressional districts last year to DeLay's specifications. It hardly will be surprising, then, if the candidates elected to these new GOP congressional districts in November someday express their gratitude by making DeLay speaker of a more powerful House.

Since the 1978 election of Governor Bill Clements, Republicans led by Karl Rove -- the strategist behind President George W. Bush's political career -- have swiftly transformed the political landscape of Texas. The Lone Star State long had been the turf of so-called "yellow-dog Democrats," who would sooner elect a hound than vote Republican. But by Bush's gubernatorial reign in the late 1990s, Republicans controlled every statewide elected office and were banging on the doors of the last vestige of Democratic control: the Texas House.

A 1996 Republican PAC called "76 in '96," fell just eight seats short of the 76 seats needed to control the 150-member House, inspiring a failed follow-up PAC called "Eight in '98." By 2000, when a decennial U.S. Census was paving the way to political redistricting, then-House Majority Whip Tom DeLay personally waded into these state elections, chairing the Victory 2000 PAC. The GOP takeover of the House was the top priority of Victory 2000, which set out to raise $4 million. Yet the Austin political newsletter Quorum Report wrote two months before that election that heads were rolling at DeLay's PAC after it fell woefully short of its fund-raising goal. Even with Bush headlining the ballot and with DeLay corralling cash, Republicans again failed to seize the Texas House in 2000.

Next time, things were going to be different.

The Corporate TAB
The first sign that something had gone amok with Texas' 2002 election came from the Texas Association of Business (TAB). Texas' leading business lobby bragged in its post-election newsletter that it "blew the doors off" the election by spending $2 million in an "unprecedented show of muscle." TAB said that it flexed most of this muscle on behalf of GOP candidates in "22 hotly contested Texas House races." The 18 of these candidates who won were crucial to the GOP's takeover of the House. The same newsletter quoted state representative Gene Seaman saying, "The TAB mail pieces and television ad absolutely won the race for me."

Although $2 million is more money than any non-party PAC spent on that state election, the most shocking part of TAB's boast was that just $100,000 of this amount came from TAB's PAC. The other $1.9 million came from a secret slush fund that TAB amassed after promising donors -- including corporations -- that their identities would be kept secret. Rather than giving this money to candidates directly, TAB spent it on "independent, educational" ads that trashed Democrats running in those "hotly contested" House races. This corporate money commanded attention because Texas -- which richly deserves its reputation as "the Wild West of money in politics" -- nonetheless has outlawed corporate expenditures on electioneering since the robber-baron days of a century ago. Alleging that TAB violated Texas' prohibition against corporate electioneering, four defeated Democratic House candidates filed a pending lawsuit even before the new GOP House majority took office in January 2003. Soon thereafter, the state-funded Public Integrity Unit of Austin's Travis County District Attorney's Office convened a grand jury to investigate TAB's actions.

TAB attorney Andy Taylor counter-sued Democratic District Attorney Ronnie Earle in federal court, arguing that the grand jury probe violated TAB's constitutionally protected free-speech rights. Because TAB's attack ads did not use so-called "magic words," which expressly instruct voters to "elect" or "defeat" a candidate, Taylor argued that the attack ads were "independent, educational" expenditures protected by the First Amendment. The U.S. Supreme Court demolished this defense in late 2003. First it declined to hear TAB's appeal. Then it ruled in a challenge to the McCain-Feingold campaign-finance reform that the "magic words" test that TAB invoked was "functionally meaningless." With nowhere left to turn, TAB began cooperating with the grand jury's widening investigation.

All over the map
During this 2003 legal chess match, television cameras chased a related but more theatrical story. With new census numbers in hand in 2001, the Texas Legislature had failed to agree on a redistricting map, temporarily punting this task to federal judges. Many observers believe that Republicans -- aware that they could get a better map if they controlled both chambers -- procrastinated to get one more shot at taking over the House in 2002. After they succeeded in doing so -- with help from TAB's anonymous corporate friends -- the new House majority's first task in January 2003 was to elect Midland oil man Tom Craddick as House speaker. When Tom DeLay was in the Texas House, he served alongside Craddick, who is one of the longest-serving House Republicans. After Craddick became speaker, he and other GOP leaders struggled to deliver DeLay's map.

To make Democratic lawmakers swallow DeLay's map, Republican Governor Rick Perry had to convene three special legislative sessions in a row in what quickly became a media circus. Democrat -- first in the House and then in the Senate -- fled across state lines to rob Republicans of a redistricting quorum. During the May 2003 House exodus, the Federal Aviation Administration gave DeLay's office flight information on the private plane of Democratic Representative Pete Laney, whom Craddick recently had dethroned as speaker. Then a state trooper got the anti-terrorist Homeland Security Department to put a trace on Laney's plane, saying that it had disappeared with lawmakers aboard.

Yet even after the Democrats all came home, House and Senate Republicans could not agree on a map, forcing DeLay's direct intervention. DeLay personally walked competing maps back and forth between Austin's legislative chambers in October 2003 until he brokered a compromise. The new map, drawn at a time when Texas Democrats held a 17-15 advantage in Congress, carves out 22 presumptive GOP districts and 10 Democratic ones. Because courts sometimes nix maps that dilute minority voting rights, DeLay's map practices reverse discrimination. The nine Anglo Democrats now representing Texas in Congress found themselves disproportionately targeted for extinction. "Whoever wins the [Texas Republican] primaries tonight," DeLay confidently predicted in March 2004, "we will be in a great position to win those seats."

DeLay's PAC
Six weeks before Texas House Democrats fled to Oklahoma, Austin-based Texans for Public Justice filed a complaint with District Attorney Ronnie Earle accusing a DeLay-affiliated PAC of also violating Texas' prohibition against corporate-financed electioneering. Driving the complaint were discrepancies between the financial disclosures that DeLay's Texans for a Republican Majority (TRM) PAC filed with the Texas Ethics Commission and those that it filed with the federal Internal Revenue Service (IRS). TRM's state filings said that it spent about $800,000 in the 2002 election cycle, with most of this money going to Republicans in the same close House races that TAB targeted. Yet TRM's IRS filings reported that it spent $1.4 million in the same period. TRM spawned this $600,000 gap by failing to report its corporate funds to election authorities in Texas -- where corporate electioneering is illegal.

DeLay and TRM PAC were joined at the hip from the get go. The very name "Texans for a Republican Majority" flags TRM PAC as the state stepchild of DeLay's federal PAC, Americans for a Republican Majority (ARM), which seeded TRM with $75,000 in contributions. DeLay aide Jim Ellis, who ran ARM, sat on TRM's board; DeLay sat on its advisory board. In a sworn statement, ARM consultant and TRM Executive Director John Colyandro said DeLay participated in key TRM conference calls. TRM PAC also hired DeLay's daughter, Danielle Ferro, as a fundraiser and paid DeLay associate Warren Robold to head its corporate fundraising out of Washington. It is hard to imagine TRM PAC raising the corporate money that it did without DeLay on its marquee. Many of TRM PAC's top out-of-state corporate donors have a greater interest in DeLay's congressional influence than they do in the machinations of the Texas legislature.

Last year, Kansas-based TRM PAC donor Westar Energy made headlines when the media obtained emails in which a Westar executive -- noting that Westar was giving money to DeLay in Texas -- asked, "What's our connection?" Another executive responded that DeLay is the House Majority Leader whose cooperation was needed for Westar to secure a special exemption that it was seeking from federal utility laws. Acknowledging that his boss met with Westar representatives in 2002, a DeLay aide told the Washington Post, "We have no control over any fantasies they might have about what they might get for a campaign contribution."

In Texas, which controls such fantasies by strictly prohibiting corporate dollars from being spent on state electioneering, prosecutors directed the TAB grand jury to investigate TRM, too. Without the First-Amendment background noise that TAB repeatedly -- though unsuccessfully -- raised, the TRM case is more clear cut. A Texas Ethics Commission ruling bars PACs from spending corporate or union funds on anything other than generic administrative expenses such as utilities and rent. TRM PAC legally contributed more than $600,000 in non-corporate money to GOP candidates in 21 close House races. Yet it also spent more than $600,000 in corporate funds on such political expenditures as consultants, fundraisers, polls and telemarketing to identify swing voters. GOP House candidates also may have received TRM-laundered corporate money. TRM PAC contributed $190,000 in corporate funds to the Republican National State Elections Committee (RNSEC) in Washington a month before the 2002 election. On a single day two weeks later, seven of the targeted GOP House candidates received RNSEC contributions that happened to add up to $190,000. National GOP officials characterize this well balanced bookkeeping as a "coincidence."

The southwest office of Judicial Watch, a conservative watchdog group, followed up in March 2004 by urging a federal prosecutor in San Antonio to investigate TRM PAC. "Laundering campaign money through the Republican National Committee would defraud the public and violate state elections laws," argued Judicial Watch's Russell Verney, citing potential TRM PAC violations of federal mail fraud and money laundering laws.

Mapping Coordinates
Prosecutors subpoenaed House Speaker Craddick and several of his top House lieutenants in February 2004 after a memo from TRM PAC's John Colyandro surfaced. A few weeks before the 2002 election, Colyandro directed an accountant to write $152,000 worth of checks to Republicans in 14 tight House races. Rather than send the checks directly, Colyandro ordered the checks to be sent to Craddick to distribute to the candidates. This is significant because state anti-bribery laws prohibit speaker candidates from contributing to the very House candidates who later elect the speaker. Craddick's attorney said in April 2004 that his client never personally handled TRM PAC's checks, suggesting that Craddick's employees distributed them. Apart from wondering if Craddick ran afoul of this law by handing out TRM PAC checks to House candidates, prosecutors may be investigating if Craddick coordinated any other actions with a PAC that helped make him speaker.

Evidence of such coordination keeps expanding the scope of the grand jury investigation. Anyone who coordinated efforts to spend corporate money on state elections could be looking at a potential felony. "Coordination is just a fancy word for conspiracy," Ronnie Earle told the Austin American-Statesman.

TRM Executive Director John Colyandro has emerged as one of the scandal's most coordinated players. Before the 2002 election, he and TAB Executive Director Bill Hammond met with corporate lobbyist Mike Toomey (now the governor's chief of staff) to discuss TAB's corporate-funded attack ads. While running TRM, Colyandro also consulted for the campaign of Republican attorney general candidate Greg Abbott. In a recent deposition, Colyandro acknowledged that he spoke with the head of the Virginia-based Law Enforcement Alliance for America (LEAA) during the fall of 2002. The Abbott campaign previously had denied having any contact with the shadowy LEAA, which helped elect Abbott by running $1.5 million in attack ads against his Democratic opponent. Once elected, Attorney General Abbott's duties included legally vetting

Texas' redistricting maps. Abbott contracted out this lucrative work to Andy Taylor -- TAB's future defense attorney. In another coordination conundrum, some of the attack ads that TAB created -- accusing Democratic candidates of such things as being lawyers for drug traffickers and baby killers -- mysteriously appeared in voters' mailboxes under TRM or LEAA logos.

Witches and Frogs
From the moment that Tom Craddick replaced Pete Laney as Texas House speaker in January 2003, Travis County District Attorney Ronnie Earle became -- by default -- the most powerful elected Democrat in Texas. Earle's power stems from his Public Integrity Unit, which enforces state ethics laws. Within two months of becoming speaker, however, Craddick had a discussion with Greg Abbott about the possibility of transferring the Public Integrity Unit to the Attorney General's Office.

First elected in 1976, Earle has prosecuted four Republican elected officials and 11 Democrats, including then-Speaker Gib Lewis, whom Earle charged in 1991 with taking an illegal bribe (Lewis did not seek reelection after pleading no contest to the charges). After Republican Kay Bailey Hutchison joined the U.S. Senate in 1993, Earle charged her with abusing state property and employees for political purposes when she was state treasurer. Earle dropped that case--and Hutchison was acquitted -- after a judge declined to make a pretrial ruling guaranteeing that prosecutors could present key evidence to the jury.

In a replay of the Hutchison showdown, Republicans are accusing Earle of conducting a "partisan witch hunt." Denouncing the "runaway district attorney" in a February news conference, DeLay said Earle has "a long history of being vindictive and partisan."

"Being called partisan and vindictive by Tom DeLay," Earle told the Houston Chronicle, "is like being called ugly by a frog."

Tom DeLay accomplished his extraordinary rise from bug exterminator to U.S. House Majority Leader by tirelessly marketing DeLay, Inc. This political machine continually raises money to enhance its political power, even as it exercises power to extract more contributions. In an aggressive use of this strategy, DeLay helped organize the K Street Project, which threatens trade groups and corporations with reprisals if they hire Democrats as top lobbyists. The House Ethics Committee admonished DeLay in 1998 for delaying an intellectual-property vote sought by the Electronic Industry Association -- which had hired a Democratic director.

At press time, the grand jury had issued 62 indictments that carpeted Austin and reached as far as Washington. These subpoenas suggest that indictments of DeLay, Inc. employees are likely. If so, one overarching political question will stand trial in Austin. Did DeLay, Inc. finally go too far? n

Andrew Wheat is a contributing editor to Multinational Monitor, and research director of Texans for Public Justice.