Monday, February 16, 2004

A political action committee created by Tom DeLay, the House majority leader, enjoyed tremendous success here in 2002: all but 3 of 21 Republican candidates the committee backed for state representative won their races, helping the party take control of the Texas House.

Inquiry Focuses on Group DeLay Created

February 16, 2004
By RICHARD A. OPPEL Jr., The New York Times

AUSTIN, Tex. — A political action committee created by Tom DeLay, the House majority leader, enjoyed tremendous success here in 2002: all but 3 of 21 Republican candidates the committee backed for state representative won their races, helping the party take control of the Texas House.

Last year, the Republicans used that clout to carve Texas into new Congressional districts under a plan that political analysts say will bring them at least five new seats in Congressional elections this year.

But local prosecutors and a grand jury here have been investigating the committee, Texans for a Republican Majority, including its use of corporate donations in the election, lawyers close to the case said.

Investigators are also examining whether there were violations of a law intended to curb the ability of outside groups to influence the race for House speaker, the lawyers said. The investigation follows a complaint filed with prosecutors last year by Texans for Public Justice, a campaign watchdog group.

The extent to which Texans for a Republican Majority used corporate money in the 2002 races is laid out in a trail of recently obtained documents. Under Texas law, political action committees are generally prohibited from using corporate and union donations for anything other than administrative expenses, like rent and utilities.

But records and interviews show that fund-raisers from Texans for a Republican Majority who were paid with corporate money solicited donations on behalf of individual candidates backed by the committee, which also spent corporate donations on fund-raising events, polling and a voter identification project.

In one case, corporate donations were used to pay a $1,200 legal bill to defend a new Republican legislator, Bill Zedler, against accusations from his opponent that he did not live in the district that elected him.

The documents, and interviews, also show that the committee often coordinated its efforts with Tom Craddick, a Republican state representative whom lawmakers elected speaker of the House after the 2002 elections. Later, at the urging of Mr. DeLay, Mr. Craddick helped lead the bitter fight to carve the state into new Congressional districts.

John Colyandro, who was the committee's executive director, said that Texans for a Republican Majority operated lawfully and that hundreds of other political action committees in Texas had conducted business similarly.

"The notion that TRMPAC alone administered itself in this way is deceitful and offensive," Mr. Colyandro said. The payment in the Zedler case, made several days after the election, was legal because it had "nothing to do with the campaign," he said. Mr. Colyandro has been granted limited immunity in return for grand jury testimony, a person close to the case said.

But Cris Feldman, a lawyer in Austin who has sued the treasurer of Texans for a Republican Majority on behalf of four defeated Democratic House candidates, said Mr. DeLay and his aides "clandestinely funneled illegal corporate cash into the elections."

In all, the committee spent $1.5 million, including $600,000 in corporate money, according to an analysis by Texans for Public Justice.

Jim Ellis, Mr. DeLay's political aide, said he, Mr. DeLay and Mr. Colyandro created the committee. Mr. DeLay served on a five-member advisory board, which decided whom to endorse, Mr. Colyandro said. Mr. Ellis, executive director of Mr. DeLay's own political action committee, Americans for a Republican Majority, was one of three officers authorized to make decisions about expenditures and contributions by Texans for a Republican Majority, state records show.

Mr. DeLay's daughter was also paid by the committee to set up events, other records show.

Before the 2002 elections, Mr. DeLay wanted lawmakers to take up redistricting, Mr. Ellis said, adding that "there is no question" that Mr. DeLay wanted Mr. Craddick elected speaker. The two men served in the Texas House together in the 1980's.

But Mr. Ellis said the committee's main goals were to "elect Republicans and further the Republican agenda." He added that the investigation "seems to be getting to the point of being ridiculous" and that any mistakes by the committee "certainly weren't intentional."

But Ronnie Earle, the Democratic district attorney in Travis County, who is leading the inquiry, calls the investigation "an effort to unravel a tangled web of secret money."

In an interview, Mr. Colyandro said he believed that the committee was legally allowed to spend corporate money to raise other money that the committee collected and then distributed to candidates.

But in a separate interview, Susan Lilly, the committee's Texas fund-raiser during the 2002 elections, said she had a different understanding: that people involved in raising money intended for state campaigns — whether or not that money first passes through a political action committee — are not supposed to be paid with corporate money.

Ms. Lilly said she did not know Texans for a Republican Majority had paid her with corporate money until after the election, when prosecutors began looking at the committee's activities. She said she solicited donations that went straight to candidates, confirming a report in The Austin American-Statesman.

Records and interviews show that other committee officials were involved in raising money sent directly to candidates.

On Aug. 12, 2002, Ms. Lilly wrote an e-mail message to Mr. Colyandro and Warren Robold, a fund-raiser for Mr. DeLay who worked for the committee and, records show, was paid with money from corporate donations. In it, she described a visit from Ron Olson, an official with Union Pacific railroad.

Mr. Olson, she wrote, "came down this morning and said that through DeLay's efforts (i.e. Warren) that UP had identified $25,000 worth of TRMPAC targets that he is supposed to individually go and give checks to. However, he was asked that a `DeLay' person accompany him when he gives the checks (so that the recipient will know that it was TRMPAC related)."

A Union Pacific spokeswoman confirmed that Mr. Robold asked Union Pacific to make donations from its political action committee to candidates backed by Texans for a Republican Majority. He made the request, she said, after the railroad declined to donate to the committee.

Union Pacific donated to 11 candidates but would have made those donations anyway, she said. She also confirmed Mr. Craddick handed out some Union Pacific checks to candidates, explaining that company officials did not have time to do it.

Mr. Robold did not return calls seeking comment. He has been subpoenaed by prosecutors, a person close to the case said.

Another document, dated Sept. 27, 2002, and written by Ms. Lilly, states that committee officials sent letters to the candidates letting them know that some donations made by others were due to their efforts.

"All checks that have been distributed were pre-empted by faxed notes from Beverly or Dianne letting the recipient know the checks were coming via TRMPAC's efforts," the document states, referring to two state representatives on the committee's advisory board, Dianne Delisi and Beverly Woolley. "The only exception was the Union Pacific checks which were given to Tom and he distributed. TRMPAC has gotten credit for all the funds distributed to date."

An attached spreadsheet lists donations made by others directly to candidates at the request of the committee, including $22,000 by Compass Bancshares' political action committee. A separate document, outlining the itinerary for a fund-raising trip to Houston by Ms. Lilly and Ms. Woolley on Sept. 9, 2002, mentions a visit to an official at Compass Bank. Next to that is written, "22K direct." Ms. Woolley and bank officials did not return phone calls for comment.

Mr. Colyandro said he did not recall the documents outlining contributions by others at the committee's request. But he said, "Raising any money on behalf of any specific candidate and being compensated with corporate money is inappropriate."

Documents show that Mr. Craddick worked closely with officials from the committee to raise money. In turn, the committee sent Mr. Craddick campaign checks that he then distributed to individual candidates. For example, on Oct. 18, 2002, Mr. Colyandro wrote an e-mail message instructing the committee's accountant to send Mr. Craddick, via Federal Express, $152,000 in checks made out to 14 Republican House candidates, records show.

A spokesman for Mr. Craddick, Bob Richter, said Mr. Craddick "never passed out any money to any members or would-be members with the idea that they would vote for him for speaker. There was never a quid pro quo: I give you this check and you give me your support for speaker."

In another episode drawing scrutiny, the committee donated $190,000 raised from corporations to the Republican National Committee on Sept. 10, 2002. On Oct. 4, the national committee wrote checks totaling the same amount to seven Texas House candidates supported by the committee, money that unlike that sent to the national committee could be given directly to a campaign.

A spokesman for the national committee said there was "no record" of discussions about the transactions with Texans for a Republican Majority. Mr. Ellis also said he could not recall whether he discussed the state candidates when he delivered the check to the national committee.