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The Hammer is Tom DeLay, who in 2001 stopped juggling and came home to Texas. DeLay and Jim Ellis, a political operative who had run DeLay's Americans for a Republican Majority (ARMPAC), devised a scheme that would get DeLay the House seats he wanted in Washington by electing Republican legislators in Austin. First, they would use DeLay's Washington contacts to raise the money to get Tom Craddick his Republican majority in Texas. Then, Craddick would deliver to DeLay an off-year redistricting plan that would add as many as seven Republican members to the Texas House delegation in Washington.
They were spectacularly successful. They raised and spent $1.5 million. All but three of 21 new Republican legislators elected in 2002 were supported by Texans for a Republican Majority (TRMPAC) -- the PAC DeLay and Ellis created. And after he was elected speaker Craddick delivered a redistricting plan, despite Democratic state representatives and senators fleeing the state on two separate occasions to deny the Legislature a quorum. The entire deal was done in one election and three special sessions. It was a bold and brilliant case study of DeLay's power.
But in their grab they failed to pay close attention to bookkeeping and Texas election law. One group did: Texans for Public Justice. The Austin campaign-finance advocacy group began comparing TRMPAC's Texas Ethics Commission filings with its IRS filings. "We found approximately $600,000 in contributions on their IRS filings that weren't filed in Texas," said TPJ director Craig McDonald. "It wasn't reported in Texas. It was off the books." It was also PAC money raised from corporate sources -- in almost all circumstances a violation of Texas campaign finance law. McDonald wrote a letter to the Travis County D.A., documenting what he had found and requesting a criminal investigation.
Much of the funding McDonald turned up was from DeLay's regular funders like Philip Morris and Bacardi. There were also contributions from corporations that had no business dealings in Texas yet were suddenly making campaign contributions there. The Washington-based Alliance for Quality Nursing Home Care contributed $100,000.
Questerra Corp., a Virginia energy company, contributed $50,000. One widely reported contribution was from Westar, a Kansas utility that has no ostensible connection to Texas. When a Westar executive asked in an internal e-mail about the $25,000 donation to DeLay's Texas PAC, a colleague told him it was to "get a seat at the table" in Washington and ensure that a deregulation provision was inserted in a key piece of legislation. Even the Mississippi Choctaw Indian tribe kicked in $6,000. The tribe does no business in Texas, but its Washington lobbyist was none other than the ubiquitous Jack Abramoff.
DeLay political operative Jim Ellis told the Texas Observer that there is a simple explanation for the two sets of books. TRMPAC raised "hard money" from individuals and spent it on election campaigns, which no one charges is illegal. But TRMPAC had another account that included "soft money" raised from corporate donors. Those funds were reported to the IRS, not to the Texas Ethics Commission, and were spent on administrative expenses rather than direct contributions to political campaigns.
The Travis County D.A. might not buy the argument that that was legal. Texas election law "clearly defines administrative expenses as operating expenses incurred in the normal course of operation of any active organization, whether engaged in politics or not," said an Austin lawyer who specializes in campaign finance. "The law is further defined by a half-dozen opinions from the Texas Ethics Commission." DeLay's PAC spent corporate funds on polling, voter identification, fundraising and candidate recruitment -- hardly routine expenses that would be incurred even by businesses not involved in politics, as Texas law requires. That is, unless TRMPAC's attorneys can convince a jury that Starbucks, say, does political polling, phone banking and candidate recruitment.
Even more explicit in Texas law is the prohibition of the use of corporate money for political fundraising. TRMPAC paid John Colyandro, a former associate of George W. Bush political advisor Karl Rove, a year's salary with corporate funds, said a campaign finance lawyer close to the case. Also, the Texas Observer reported that the Texas PAC spent $130,000 on fundraising.
"Ronnie has a very, very strong case," said the campaign finance lawyer. The case seems to get stronger by the week, as reporters following civil suits filed by a former state representative defeated by TRMPAC turn up documents that suggest what the grand jury must be reviewing in its criminal inquiry.
On Sept. 10, 2002, TRMPAC donated $190,000 in corporate money, which could not be legally used in Texas elections, to the Republican National Committee. On Oct. 4, the RNC sent $190,000 that could legally be used in Texas to TRMPAC's Jim Ellis, with instructions to distribute the money to seven candidates in Texas. If the case ever gets to court, jurors will be told that the check was left blank for Ellis to fill in, which doesn't look good. Prosecutors will allege a classic soft-money-in/hard-money-out deal, though TRMPAC attorneys contend that the $190,000 up and $190,000 back was a coincidence.
In addition, documentation of 14 TRMPAC checks totaling $152,000 that Craddick personally distributed to 14 Republican candidates has surfaced in the civil case. An e-mail from Colyandro directed TRMPAC's accountant to send the checks to Craddick. Craddick insists that the 14 candidates were already supporting him, so he was not cultivating their favor and therefore not violating the speaker's statute. (He has retained an Austin attorney who specializes in defending elected officials facing public corruption charges.)
On March 3, Laylan Copelin, an Austin American-Statesman reporter, found another discrepancy certain to catch the attention of the district attorney: "The Republican Majority committee has said it didn't report the $600,000 to state election authorities because it was spent on the committee's administrative expenses ... Yet the committee's 2002 tax return lists $1.6 million -- instead of the $900,000 -- as 'activities related to support for state Legislature and statewide offices in the state of Texas.'" The numbers don't add up and lawyers and accountants for DeLay's Texas PAC are going to have a hard time coming up with proof they had enough legal (hard dollars raised from individuals) money to cover all they spent on the 2002 Texas election.
All of this makes the notorious Sharpstown scandal look like a parochial pissing match in the political backwater Texas of 30 years ago. Tom DeLay is the majority leader of the U.S. House. He achieved that position by using his federal PAC to elect Republican representatives indebted to him because he provided the money that put them in office. He is grooming himself to replace Speaker of the House Denny Hastert. And the House is likely to remain in Republican (read: Tom DeLay's) control for years.
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