12-18-2004
Special Report - The Charges, the CounterattackA Troubled HistoryEliza Newlin Carney (E-mail this author)
© National Journal Group, Inc.
In October, when the House Standards of Official Conduct (Ethics) Committee admonished Majority Leader Tom DeLay, R-Texas, for his fundraising practices and for the improper use of his office, he claimed total vindication. The committee, DeLay contended, had "done the right thing in dismissing" the ethics complaint lodged by outgoing Rep. Chris Bell, D-Texas.
"For years, Democrats have hurled relentless personal attacks at me, hoping to tie my hands and smear my name," DeLay said in an October 6 statement. "All have fallen short, not because of insufficient venom, but because of insufficient merit."
In fact, the most serious charge against DeLay is still pending. The Ethics Committee acted on only two of Bell's three main accusations. These involved DeLay's efforts to raise money from Westar Energy, which the committee said created the appearance of favorable treatment, and his bid to involve federal officials in a Texas spat over the whereabouts of Democratic state legislators, which the panel said was improper.
But the Ethics Committee deferred any action on Bell's third and most controversial claim: That DeLay used a state-based political action committee known as Texans for a Republican Majority (or TRMPAC) to funnel illegal corporate contributions to GOP legislative candidates in the Lone Star State. Thanks in part to DeLay's TRMPAC, Republicans won control of the Texas Legislature in 2002 and approved a congressional redistricting map that this year helped enlarge the House Republicans' majority.
The Ethics panel held off because a Texas prosecutor is still completing a grand jury investigation into TRMPAC's alleged misuse of corporate funds. A grand jury seated by Travis County District Attorney Ronnie Earle has already indicted three DeLay associates, and some observers speculate that the majority leader could be next. Even if DeLay escapes indictment, the Ethics Committee could revisit the TRMPAC matter once Earle wraps up his probe.
While DeLay has brushed off the ethics controversy, he also has moved aggressively to defuse it. When the Ethics panel chastised Bell for making exaggerated claims in his complaint, DeLay publicly bashed Bell and House Democrats for abusing the ethics process. Reports have even surfaced that Rep. Joel Hefley, R-Colo., might lose his Ethics Committee chairmanship over the matter. And DeLay's allies have launched a unified and highly organized attack on Earle as a partisan Democrat who is engaged in a political witch-hunt.
DeLay has assembled a three-man legal team and revived a legal defense fund that he established in 2000, when House Democrats charged him with campaign finance abuses in a lawsuit that was later dropped. GOP donors and lawmakers have been contributing generously to the fund, which has pulled in close to $1 million since its inception. (The fund got a big boost last July, when Rep. Harold Rogers, R-Ky., who is angling for the House Appropriations Committee chairmanship, hosted an event that netted close to $160,000.)
But GOP flag-waving for DeLay has also fueled speculation that the majority leader is worried about Earle's investigation. House Republicans faced criticism after they voted in November to repeal their rule that automatically removed an indicted member from a leadership post.
"We changed the rule because it was a bad rule, and not to protect Tom DeLay," said Rep. John Carter, R-Texas. "And the reason that I say that is that every public statement out of the district attorney's office so far -- every one of them -- has said: 'Tom DeLay is not the target of this investigation.' "
Still, the indictments have struck at the heart of DeLay's political operation. In September, a Texas grand jury indicted Jim Ellis, a longtime DeLay aide and a TRMPAC officer, on money-laundering charges. Two other associates, John Colyandro and Warren Robold, were also indicted. Colyandro, who was TRMPAC's executive director, is charged with money laundering and with accepting illegal corporate contributions. Robold, a fundraising consultant, faces charges that he solicited and received corporate donations.
Seven corporations, including Sears, Roebuck; Bacardi USA; and Westar Energy, also face indictment for allegedly making illegal donations. All of those indicted have maintained that they obeyed the law.
The premise of Earle's probe is relatively straightforward: Texas law prohibits the use of corporate or union money in elections for state office. But after the GOP takeover of the state Legislature in 2002, a group called the Texas Association of Business bragged publicly that it had helped put Republicans over the top by donating $1.9 million in corporate money -- a boast that certainly caught the attention of campaign finance watchdog groups.
The TAB had worked closely with TRMPAC, and campaign finance groups started combing through the DeLay PAC's records. They found some interesting discrepancies. While TRMPAC had reported about $800,000 in expenditures for the 2002 election cycle to the Texas Ethics Commission, it had reported spending a far larger amount -- $1.4 million -- in its filing with the Internal Revenue Service. (The PAC's nonfederal arm reported to the IRS as a political organization that is tax-exempt under Section 527 of the Internal Revenue Code, making it a so-called "527 group.")
TRMPAC's IRS records showed just over $600,000 in corporate receipts that were not reported in Texas, according to Texans for Public Justice, the Austin-based watchdog organization that filed the initial complaint to Earle. And the IRS records also showed hundreds of thousands of dollars in political expenditures -- far more than the PAC could have paid for with its noncorporate cash.
The Texas law banning corporate campaign donations "is about as clear as the law that says you can't steal another man's horse around here," said Craig McDonald, director of Texans for Public Justice. The money-laundering allegations stem from $190,000 in corporate money that TRMPAC sent to an arm of the Republican National Committee. Within weeks, the RNC sent $190,000 worth of checks back to Texas GOP legislative candidates.
TRMPAC's officers "either didn't take the time to get the proper legal advice, they got bad legal advice, or they ignored the advice they got," McDonald speculated.
TRMPAC's activities mirror those of Americans for a Republican Majority, another PAC that DeLay launched at the national level. ARMPAC, also run by Ellis, furnished $50,000 in seed money to help TRMPAC get off the ground. Like its Texas cousin, ARMPAC had a 527 arm that reported to the IRS. Before the new campaign finance law banned soft money in 2002, ARMPAC raised millions in unregulated corporate contributions to help federal candidates.
At the time, campaign finance critics complained that ARMPAC and other nonfederal leadership PACs were illegal because they enabled members of Congress to raise and spend soft money, but the Federal Election Commission essentially left such PACs alone. (The new law bans them.)
DeLay and his lawyers have fought back on three fronts. First, they contend that DeLay did not work closely with TRMPAC. DeLay was not available for comment for this story, but he has been quoted as saying he "didn't have anything to do with the day-to-day operations of TRMPAC." His lawyers acknowledge that he launched TRMPAC but maintain that he did not have daily dealings with it.
Second, the DeLay camp argues that Texas campaign finance laws are vague and open to interpretation. For example, the Texas ban on corporate campaign money does include one exception: Such funds may be used to cover a PAC's administrative or overhead costs. "The category of 'administrative expenses' is so broad that that money can be used for just about anything," said Bill White, an Austin lawyer who is representing DeLay.
DeLay's third contention is that Earle, a Democrat, is a politically motivated media hound with no real case. Republicans point to Earle's unsuccessful bid 10 years ago to prosecute Sen. Kay Bailey Hutchison, R-Texas, for allegedly misusing her office staff and equipment for political gain during her tenure as state treasurer. A Texas judge refused to make an advance ruling on whether to admit evidence that Earle had seized in a raid of Hutchison's office. Earle then dropped the case.
"Ronnie Earle is a partisan prosecutor who harasses Republicans," said Sherry Sylvester, director of communications for the Texas Republican Party. "We saw in 1994 that his [modus operandi] was the same as it is now. He works the press, he makes it a national story, as he did with Senator Hutchison, and then he can't prove it in court."
In a November 23 op-ed in The New York Times, Earle responded that, during his 27-year tenure, he has prosecuted 12 Democrats and three Republicans. He also noted in The Times, "No member of Congress has been indicted in the investigation, and none is a target, unless he or she has committed a crime."
Even DeLay's critics acknowledge that he may be sufficiently removed from TRMPAC to escape indictment. But they argue that DeLay appears to have been far more involved than he has acknowledged. Press reports have disclosed that he briefed donors by phone; sat in on planning sessions; and chaired TRMPAC's five-member advisory board, which was involved in money decisions.
"DeLay's indisputable involvement is so extensive, he should be taking this seriously," said Cris Feldman, an Austin lawyer representing the Texas Democrats who lost state legislative seats in 2002, and who have mounted a separate civil suit involving TRMPAC. Feldman also defended Earle's two-year investigation, which has just seated its fourth grand jury.
"The alleged crimes are so obvious that there's nothing partisan whatever about this process," Feldman said. "Ronnie Earle would be remiss for not investigating this. It's pretty serious stuff. I mean, these are felonies."
Nor are Texas campaign finance rules so vague, DeLay's detractors contend. A 1993 advisory opinion by the Texas Ethics Commission spells out clearly that corporate money may cover only limited administrative expenses. According to the opinion, the exception does not cover salary paid to a staff member engaged in political activities such as fundraising, for example, or for printing, postage, or stationery used to solicit contributions.
Yet TRMPAC's reports to the IRS disclose extensive campaign-related expenditures. These include tens of thousands of dollars paid to polling, telemarketing, and campaign consulting firms, as well as to Colyandro. "They paid for expenses that, under Texas law, [qualify as] expenses to carry out the political purposes of the committee," noted McDonald, of Texans for Public Justice.
Publicly, DeLay and his lawyers all but shrug off the Earle investigation. "Tom DeLay is not going to be indicted," said White, DeLay's attorney. "Tom DeLay has not done anything wrong. Ronnie Earle has never said he's done anything wrong." But DeLay's many defensive moves appear to acknowledge that, for all his bravado, his ethics saga is far from over.
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