Texans for Public Justice


'98 affidavit alleges he told businessman how to skirt limits; GOP leader calls claims partisan
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By TODD J. GILLMAN and CHRISTY HOPPE / Jyuly 16, 2004

House Majority Leader Tom DeLay plays politics like some people play hockey – fast and hard. He's deftly able to score campaign cash, but critics question whether he plays by the rules.

In the last half-dozen years, he has created numerous committees that have drawn millions from business interests. A network of current and former aides has moved large sums through these committees to state and federal candidates, sometimes obscuring the identities of the original donors.

This week, Democrats and campaign watchdogs dug out a 1998 affidavit from a southeast Texas businessman who says Mr. DeLay advised him how to skirt money limits. They called it an early template for more recent maneuvers involving DeLay protégés. E-mails also surfaced from Enron lobbyists indicating Mr. DeLay wanted to steer corporate funds to Texas GOP candidates favoring redistricting, despite prohibitions on corporate funds in state races.

Mr. DeLay calls allegations of impropriety baseless and partisan. No federal or state authority has accused him of violating campaign law. Nor has he been identified as the target of any investigation.

"You give us a list of rules, and we'll abide by them," said Jim Ellis, head of Mr. DeLay's Americans for a Republican Majority political action committee.

Critics have a different take on the suburban Houston lawmaker. "You can clearly say that Tom DeLay and some of his former and current colleagues have mastered the dark art of moving campaign money," said Craig McDonald, executive director of Texans for Public Justice, whose complaint against a committee Mr. DeLay created sparked an Austin grand jury investigation into corporate funds in Texas politics.

Freshman Democrat Chris Bell of Houston filed an ethics complaint last month that alleges Mr. DeLay has traded political contributions for legislative favors. The House ethics committee has until next month to decide whether to act.

Thursday, campaign watchdog groups in Austin and Washington called on the committee to hire an independent prosecutor, partly because Mr. DeLay previously had arranged donations to four of the panel's five Republicans.

'Additional vehicles'

This week, DeLay opponents latched onto the case of Peter Cloeren, who owns a plastics company in Orange, Texas.

In 1996, Mr. Cloeren, a self-described conservative Republican, had given as much as federal law allowed to East Texas congressional candidate Brian Babin, a Woodville dentist. Then, one day that summer he sat next to Mr. DeLay at a Babin luncheon.

In an affidavit he gave House investigators two years later, Mr. Cloeren said he was frustrated that he couldn't do more for Dr. Babin. According to the affidavit, Mr. DeLay, then majority whip, replied that "it would not be a problem for him to find, in his words, 'additional vehicles,' " and Mr. DeLay told an aide to provide "details of how to funnel additional moneys" to the Babin campaign.

Within months, federal records show, Mr. Cloeren and his wife gave tens of thousands of dollars to out-of-state congressional campaigns and groups. Donors to some of those groups later assisted the Babin campaign.

In 1998, Mr. Cloeren pleaded guilty to a misdemeanor violation of federal campaign law, admitting that he got employees to donate $37,000 in their names to Dr. Babin and reimbursed them. A Beaumont federal court fined him and his company $400,000. Mr. DeLay was not implicated.

Two months later, Mr. Cloeren filed a complaint with the Federal Elections Commission accusing Mr. DeLay of luring him into the alleged donation scheme. In July 1999, the FEC cleared Mr. DeLay, noting Mr. Cloeren hadn't reimbursed anyone, and his claims lacked corroboration.

Democrats on the House Government Reform Committee tried to force an investigation in 1998. When Chairman Dan Burton, R-Ind., refused, they sent their own investigators to obtain Mr. Cloeren's affidavit.

"He said there's ways to get money into the Babin campaign," Mr. Cloeren said by phone this week. "He said his staff would take care of it."

DeLay aides dispute Mr. Cloeren's account. They note that the FEC cleared Mr. DeLay, while Mr. Cloeren has confessed to violating campaign law.

"I find it dubious that this guy's being treated like an innocent lamb and my boss is being treated like public enemy No. 1," said DeLay spokesman Jonathan Grella.

No conspiracy.

Larry Noble, director of the Center for Responsive Politics in Washington, a campaign watchdog group, was the FEC general counsel who oversaw the Cloeren case and recommended clearing Mr. DeLay in 1999.

He said that even if Mr. DeLay suggested the scheme Mr. Cloeren described – and Mr. Cloeren provided the only testimony to that effect – conspiracy isn't covered by civil laws the FEC enforces.

Still, Mr. Noble said, "He's one of those people who pushes the envelope and plays on the edges."

Mr. Bell said he'll call the Cloeren incident to the ethics committee's attention. "Mr. DeLay continues to try to distance himself from all this nefarious activity, but here he was the instructor for Mr. Cloeren on how to get around the campaign finance laws."

Mr. Grella said the only pattern he sees is the "pattern of baseless charges from Democrats."

The Bell ethics complaint accuses Mr. DeLay of taking $25,000 from Kansas-based Westar Energy Corp. in exchange for legislative favors. And it accuses him of laundering corporate donations through Texans for a Republican Majority, a DeLay-affiliated committee known as TRMPAC that critics say violated Texas law by using nearly $600,000 in corporate donations to help key GOP candidates in 2002 statehouse races.

The victories paved the way for last year's redistricting, which succeeded in ousting Mr. Bell from his newly configured district.

Enron funds

The TRMPAC issue is part of the grand jury investigation. Wednesday, Mr. Bell asked the committee to look into reports that TRMPAC got $50,000 in Enron funds months before the company declared bankruptcy in 2001. TRMPAC officials say corporate money went only for administrative costs, as allowed by state law.

Among other incidents involving DeLay protégés that have raised objections in recent years:

• In April, the National Republican Congressional Committee was fined $280,000 for funneling $500,000 raised by a former DeLay chief of staff to a group run by Mr. Ellis, which used it on anti-Democrat ads. The FEC cleared Mr. Ellis and the former DeLay aide, Ed Buckman.

• A Senate committee is investigating the $45 million that Indian tribes paid former

DeLay aide Michael Scanlon and DeLay confidant Jack Abramoff for lobbying and public relations. Mr. Scanlon has been accused of laundering funds from Indian gaming interests to an Alabama gubernatorial candidate, and has been fined in Louisiana for late reporting of tribal donations to a campaign to defeat a rival casino plan.

Mr. Ellis, head of Mr. DeLay's Americans for a Republican Majority political action committee, said everyone connected to Mr. DeLay is sensitive to the scrutiny his high profile attracts, and is careful to follow the rules.

"One of the things that Democrats aren't used to is that he plays the game like they do. They play hard ... and maybe they're surprised that someone on our side uses the same aggressive tactics they do," he said.

End

The money trail

Lieutenants of U.S. House Majority Leader Tom DeLay, R-Sugar Land, have been connected to a number of political finance investigations in the last five years, but none have been individually cited for any wrongdoing.

Oct. 20, 1999

The National Republican Congressional Committee gives $500,000, its largest contribution, to the U.S. Family Network, solicited by Ed Buckman, Mr. DeLay's former chief of staff. The donation includes corporate money, which restricts its use to nonpolitical purposes, such as administrative costs.

U.S. Family Network transfers $300,000 to the Americans for Economic Growth, run by Jim Ellis, who also heads Mr. DeLay's Americans for a Republican Majority political action committee. Americans for Economic Growth spends $260,000 for two sets of radio ads, one that bashes Democrats and another that bolsters vulnerable House Republicans, regarding Social Security. While the ads are sponsored by the group and partially paid for by the U.S. Family Network, they actually are funded by the Republican Party.

Aftermath: The Federal Election Committee finds in April 2004 that the National Republican Congressional Committee knew that the U.S. Family Network "planned to pass all or part of the $500,000 to a third party to pay for the issue advertisements." The Republican group is fined $280,000 for using corporate money improperly.

Oct. 17 and 22, 2002

The Republican Governors' Association receives two checks of $250,000 each from Capitol Campaign Strategies, headed by Michael Scanlon, who has served as an aide to both Mr. DeLay and U.S. Rep. Bob Riley, R-Ala. Mr. Scanlon currently represents Indian casinos.

The day the first check arrived and over the next two weeks, the governors' group makes five donations totaling $600,000 to Mr. Riley, who seeks to become Alabama governor. Mr. Riley opposes gambling, which also serves Mr. Scanlon's clients' interests. Mr. Riley also doesn't accept contributions from gambling interests.

Aftermath: The Republican Governors' Association failed to disclose the donation received from Capitol Campaign Strategies until May 2004, 16 months after Mr. Riley won the election by a razor-thin margin.

March 29 through April 6, 2002

The Coushatta Tribe of Louisiana, with Mr. Scanlon working as its political consultant, spends $156,642 as the "Concerned Citizens Against Gaming Expansion" to defeat a proposition on a gambling license that would compete with its casino. The expenditure is not disclosed until well after the election. It ignores campaign disclosure deadlines so that voters can't know until well after the election that the tribe was behind part of the anti-gambling campaign.

Aftermath: On Dec. 12, 2002, the Coushattas are fined $11,240 by the Louisiana Board of Ethics.

September 2002

Mr. Ellis, a DeLay point man, takes $190,000 in corporate donations from the Texans for a Republican Majority Political Action Committee, founded by Mr. DeLay, and gives it to the Republican National Committee. Corporate donations cannot be used as campaign funds for candidates in Texas.

Within several weeks, the Republican National Committee donates $190,500 to eight Texas House candidates for use in their campaigns. All the races had been targeted for help by TRMPAC.

Aftermath: A Travis County grand jury is investigating the transaction.