Wednesday, September 22, 2004

A Travis County grand jury on Tuesday indicted three top lieutenants of U.S. House Majority Leader Tom DeLay and eight corporate donors for their efforts on behalf of DeLay's Texans for a Republican Majority during the 2002 elections.

Grand jury indicts DeLay lieutenants

Craddick's lawyer says speaker collected corporate check, too

By Laylan Copelin, Austin American-Statesman
Wednesday, September 22, 2004

A Travis County grand jury on Tuesday indicted three top lieutenants of U.S. House Majority Leader Tom DeLay and eight corporate donors for their efforts on behalf of DeLay's Texans for a Republican Majority during the 2002 elections.

While the felony indictments put the two-year controversy on DeLay's doorstep, the investigation also inched toward Texas House Speaker Tom Craddick, R-Midland. Craddick was not indicted, but it was disclosed for the first time that he accepted a $100,000 corporate check on behalf of the Republican political action committee from a nursing home alliance that was indicted.

Craddick's lawyer, Roy Minton, confirmed that his client accepted the check, even as John Colyandro, the PAC's former executive director, was indicted for collecting the same check. Minton said he didn't agree with the indictments and didn't think the speaker ultimately would be indicted.

"Tom has been handed millions of dollars in checks just like (former Speaker) Pete Laney has," Minton said. "If that's a crime, we are a little late deciding that. If they are going to decide that's a crime, they ought to be indicting 15,000 or 20,000 people."

The scope and number of indictments stunned defense attorneys, who had expected only a handful of charges, if any at all. The investigation will continue, and the criminal trials could overshadow any attempt by the Legislature to redefine laws prohibiting corporate money being spent on political activity except in limited circumstances. Those laws have been on the books for decades, the result of populist fears against the financial power of corporations.

Indicted on one count of money laundering each were Colyandro and Jim Ellis, a former DeLay staff member who now directs Americans for a Republican Majority, DeLay's national fund-raising PAC. Ellis also was a paid consultant to the Texas PAC.

Colyandro also was indicted on 13 counts of unlawful acceptance of a corporate political contribution.

Warren Robold, DeLay's corporate fund-raiser based in Washington, D.C., was indicted on nine counts of accepting and making corporate contributions.

Eight corporate donors, including the Alliance for Quality Nursing Home Care, were indicted for making illegal donations.

The money laundering counts are first-degree felonies, punishable by up to life in prison; the rest are third-degree felonies, with a maximum sentence of 10 years. A corporation convicted of a third-degree felony faces a fine of $20,000 or double any damages or profits related to the crime.

Accusations of politics

Lawyers for the indicted individuals and corporations denied wrongdoing, while DeLay accused Travis County District Attorney Ronnie Earle, a Democrat, of trying to influence this year's elections.

"This has been an investigation that has been under way for nearly two years. And 40 days before the election, they've suddenly taken action," DeLay said. "You do the political math." Earle denied playing politics with the investigation. He blamed the lengthy investigation on the Texas Association of Business, which is still under investigation, for fighting the inquiry through a series of court motions for the first year.

Earle said of the investigation: "What has emerged is the outline of an effort to use corporate contributions to control representative democracy in Texas."

The grand jury that returned the indictments was the third one to investigate the allegations.

Gregg Cox, who is leading the investigation, said the inquiry will continue with a new grand jury. Besides the business group, investigators are looking at: the Law Enforcement Alliance of America, a Virginia-based group that spent an estimated $1.5 million on TV commercials in the attorney general's race in 2002; Americans for Job, which spent corporate money in a special Senate election this year; and Craddick's role with Texans for a Republican Majority and how that might have affected his campaign for House speaker.

The money laundering charges stem from an incident in which Colyandro sent Ellis a blank check for the Republican National Committee. On Sept. 13, 2002, Ellis filled in the amount for $190,000 and gave the corporate money to the Republican National Committee. He also gave the committee a list of seven Texas candidates with suggested donation amounts. The candidates, including Austin's Todd Baxter and Jack Stick, received a total of $190,000 in noncorporate money. Neither Baxter nor Stick is accused of wrongdoing.

In addition to the alliance, companies indicted are: the Williams Companies; Sears, Roebuck and Co., Westar Energy, Bacardi USA, Cracker Barrel Old Country Store, Diversified Collection Services and Questerra Corp.

The nursing home alliance, a group of 14 nursing home companies, gave $100,000; Diversified Collection and Questerra each donated $50,000; Bacardi gave $20,000; the rest donated $25,000 each.

Other companies that donated money were mentioned in the indictments, but were not indicted. The difference was that prosecutors did not think they had the evidence to show that the corporate officials knew the money was going to be spent on political activity.

In inquiry launched

Following the Republican sweep of the 2002 elections, Earle began investigating allegations that Republicans and their business allies used unprecedented amounts of corporate cash to affect the elections.

State law generally prohibits using corporate or labor union money for political purposes except to pay for the administrative expenses of a political action committee.

Texans for a Republican Majority spent $1.5 million during the election, including $600,000 of corporate money that was spent on consultants, pollsters and phone banks. But lawyers for the political action committee argued that the money was spent for the benefit of the committee and not directly on behalf of candidates. They also argued that any activity that did not expressly advocate the election or defeat of a candidate is protected by the First Amendment, not regulated by state law.

Austin lawyer Joe Turner, who represents Colyandro, said he was worried about his client getting a fair trial in Democratic-leaning Travis County.

"There's a lot of bad blood out there," Turner said. "We might try to move the case."

Turner said the election code is unlike other laws. He said prosecutors will have to show that the defendants intended to break the law and knew they were breaking the law.

"Typically you'd say ignorance of the law is not an excuse," Turner said. "Under these indictments, ignorance of the law is an excuse."

Turner added that he didn't mind having mainstream companies such as Sears, Roebuck indicted with his client: "As a criminal lawyer, my co-defendants usually aren't this pretty." Robold could not be reached for comment Tuesday night.

San Antonio lawyer J.D. Pauerstein, who represents Ellis, said, "The statutes are ambiguous. It's hard to say what they prohibit."

Even as DeLay's lieutenants faced criminal trials, DeLay told reporters that he is not a target of the investigation.

"I have not been subpoenaed. I have not been asked to testify. And I have not been called as a witness," DeLay said.

Of the three individuals indicted, however, only Colyandro testified before a grand jury. Earle refused to rule anyone in or out of the investigation: "Anyone who has committed a crime is a target."

Affecting lawsuits

Tuesday's indictments might affect civil lawsuits that losing Democratic candidates have filed against Texans for a Republican Majority.

Austin lawyer Buck Wood said he might add corporate donors to his lawsuit.

Terry Scarborough, an Austin lawyer who is defending the Republican PAC, said the indictments might delay the litigation: "Anything that gets in the way of that civil judicial determination which we have been seeking since March of this year is disappointing."

Texas Democratic Party Chairman Charles Soechting and three advocacy groups -- Texans for Public Justice, Common Cause and Public Citizen -- called on Craddick to step aside pending conclusion of the investigation.

"Craddick is at the center of all of this," said Craig McDonald with Texans for Public Justice. "If TRMPAC operatives broke the law, Craddick needs to step aside until we figure it out. If TRMPAC operatives are convicted, the House needs to elect a new speaker."

Minton said that suggestion is ridiculous.

Those groups did not know Tuesday that Craddick had accepted the $100,000 corporate check on behalf of the PAC.

Several sources, including Minton, said Chris Winke, the chief executive officer of Mariner Health Care Inc., one of the 14 nursing home companies in the alliance, either had breakfast or dinner with Craddick in October of 2002. At that meal, Winke gave Craddick the $100,000, and they discussed the upcoming legislative battle to curb lawsuits, including those against nursing homes.

Winke spoke to prosecutors by phone last week after they agreed nothing he said could be used against him, according to Winke's lawyer.

Craddick, like DeLay, could have one tactical advantage over Tuesday's individuals who were indicted.

The election code allows Earle to prosecute Colyandro because he lives in Austin. It also gives Earle jurisdiction over out-of-state defendants. But because Craddick and DeLay live in Texas, but outside of Travis County, their local district attorneys would have jurisdiction over election code violations.

Earle could argue for jurisdiction in Craddick's case if he has a dual residence. It's unclear if the speaker's apartment provided in the Capitol would qualify.