Republican mischief in Texas

In a continuing investigation, a grand jury indicts three of Tom DeLay's top fundraising associates and a handful of companies for money laundering and other felonies.

Published September 22, 2004 3:33PM (EDT)

Tom DeLay's name did not appear anywhere in the 32 indictments returned by a Travis County, Texas, grand jury on Tuesday. But the reach of the U.S. House majority leader from Sugar Land seemed to be everywhere. Among the indicted were two of DeLay's top associates and a handful of his closest corporate allies.

The charges relate to a coordinated Republican campaign to influence state races in Texas in 2002. The effort, led in part by a DeLay-founded political action committee called Texans for a Republican Majority, funneled corporate money into key races that year. It has been illegal to use corporate money to influence the outcome of an election in Texas since 1907. Nonetheless, TRM raised about $600,000 from corporate donors to help 20 handpicked Republican candidates. Sixteen won their elections, transforming the Texas Legislature and ensuring the passage of DeLay's desired mid-decade congressional redistricting in 2003.

Two of those indicted, James Ellis and Warren Robold, are longtime DeLay associates. Ellis is charged with one count of money laundering. The Virginia-based consultant serves as executive director of DeLay's national PAC, Americans for a Republican Majority. When the redistricting battle brought chaos to the state Legislature in 2003, Ellis actively worked with Republican leaders to ensure that DeLay obtained his congressional map. Yet it is a six-figure check that is at the root of the grand jury's first-degree felony charge against Ellis.

According to the indictment, in September 2002 Ellis took a total of $190,000 in corporate contributions received by Texans for a Republican Majority that could not legally be used to help elect candidates and gave it as a lump-sum check to the Republican National State Elections Committee. The indictment charges that at about the same time, Ellis provided the elections committee with a list containing the names of Texas Republican House candidates as well as how much each should receive. Two weeks after receiving the check, the elections committee turned around and sent $190,000 in seven contributions to the specified candidates. The first-degree felony charge is punishable by five years to life in prison and a fine of up to $10,000.

Robold, DeLay's corporate fundraiser, is charged in nine indictments with third-degree felony offenses related to making and accepting corporate contributions prohibited by the Texas Election Code. Each count is punishable by two to 10 years in prison and a fine of up to $10,000. According to information revealed in a civil lawsuit against Texans for a Republican Majority, Robold worked to gather large donations from corporations for DeLay's group. He sent a brochure to potential donors that promised, "Unlike other organizations, your corporate contribution to TRMPAC will be put to productive use." Robold is alleged to have solicited a total of $250,000 in illegal political contributions from companies such as Burlington Northern Santa Fe Railway and AT&T.

The grand jury also handed down 13 indictments against TRM executive director John Colyandro. Among the charges is one first-degree felony for money laundering (sending the $190,000 as a signed check to Ellis) and 12 misdemeanors for accepting illegal corporate contributions. At press time, none of the men were available for comment.

Steve Brittain, a lawyer for DeLay, broke the news of the indictments to the assembled press corps at the Travis County Criminal Justice Center. He insisted that none of the men intentionally broke the law. "I think people were all doing their jobs," he said. "I think they were operating in a political season in a way they thought appropriate -- now we are going to find out if they were right or not."

The grand jury also indicted eight companies for donating money to TRM. The corporations allegedly were aware that the cash was earmarked for political work. That's a third-degree felony. Seven of the eight indicted companies have direct political ties to DeLay. Bacardi USA, for instance (indicted for a $20,000 contribution to TRM on July 3, 2002), has been a spirited contributor to Americans for a Republican Majority and one of DeLay's biggest backers for years. DeLay is reportedly working diligently in Congress to pass what's known as the "Bacardi bill." The legislation would grant the Miami-based liquor company U.S. trade rights to the Havana Club rum label owned partially by the Cuban government. Critics have lambasted the legislation as a corporate handout and charged that Bacardi bought DeLay's support.

Similarly, Kansas-based Westar Energy, also indicted on Tuesday, gave $25,000 to Texans for a Republican Majority. The company apparently believed its cash would win DeLay's approval of a House energy bill amendment favorable to Westar. A company official wrote that the contribution would earn Westar "a seat at the table," according to internal e-mails uncovered last year in a federal investigation and first reported by the Washington Post. In another instance, a contributor seemed to think DeLay and TRM were intertwined. On July 14, 2002, the Williams Companies, a Tulsa, Okla., natural gas outfit, sent its $25,000 corporate contribution to TRM with a note that reads, "Dear Congressman DeLay ... I'm pleased to forward our contribution for $25,000." Williams was also indicted on Tuesday for its involvement with TRM.

Three other indicted benefactors of Texans for a Republican Majority -- Sears, Roebuck & Co.; the Cracker Barrel Old Country Store restaurant chain; and the debt-collection agency Diversified Collection Services -- were also generous contributors to DeLay's Americans for a Republican Majority. Ellis has said previously that TRM was essentially a spinoff of ARM. Indeed, nearly half of TRM's corporate checks came courtesy of ARM contributors or ARM itself, according to federal campaign filings.

The week had started out as a good one for DeLay. On Monday, a panel of the House ethics committee punted whether to investigate Houston Democrat Chris Bell's ethics complaint against DeLay. The complaint, which touches on many of the same issues the grand jury is investigating, now goes before the entire committee, where it will almost certainly die.

Despite DeLay's connections to those indicted in Texas, whether he personally broke Texas campaign finance laws remains unclear. He appears to have delegated day-to-day operation of his political action committee to his subordinates. If prosecutors have evidence that links DeLay to possible violations, they're certainly not saying so. DeLay has not been subpoenaed to appear before the grand jury.

Prosecutors did make clear, however, that Tuesday's indictments are just the first phase of a wide-ranging investigation of multiple Republican-affiliated groups that spent at least $2.5 million in corporate money in 2002. So more charges could be on the way. "Additional allegations continue to arise from the mass of information gathered by the grand juries that have investigated various aspects of this matter," said Travis County district attorney Ronnie Earle. "What has emerged is the outline of an effort to use corporate contributions to control representative democracy in Texas."

By Jake Bernstein

Two-time Pulitzer Prize winner Jake Bernstein was a senior reporter on the International Consortium of Investigative Journalists (ICIJ) team that broke the Panama Papers story. He has written for The New York Times, The Washington Post, Bloomberg, Mother Jones, The Guardian, ProPublica, Vice and has appeared on the BBC, NBC, CNN, PBS, and NPR.

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By Dave Mann

Dave Mann is staff writer at The Texas Observer.


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Tom Delay