Details of secretly funded mail effort shared with campaignLawyers debate whether evidence of coordination is enough to force disclosure of corporate donors.
By Laylan Copelin, Austin American-Statesman
October 17, 2004
Two years into a criminal investigation of the Texas Association of Business, documents show that the group's plans to mail to voters ads paid for with corporate money were shared with a campaign, raising questions about whether the association's ads were illegal political mail.
Consultant Kevin Brannon, who worked for Texans for a Republican Majority while advising San Antonio legislative candidate Ken Mercer, discussed the business association's mailings with Mercer and his campaign manager, according to documents obtained by the Austin American-Statesman. Brannon's handwritten notes also show that he knew about two last-minute attack ads prepared for the association and a donor who wanted to finance TAB mailings for Mercer.
Gene Ryder, Mercer's campaign manager, confirmed the discussions with Brannon, saying Brannon would routinely tell the campaign when the association's mailings were being sent.
TAB officials deny any wrongdoing.
As previously reported, Brannon's boss, John Colyandro, executive director of Texans for a Republican Majority, was working with TAB President Bill Hammond, among others, on the TAB mail pieces being sent to Mercer's San Antonio voters. Brannon and Colyandro talked by phone almost daily during the last weeks of the campaign, according to Brannon's phone records.
State law prohibits corporate money from being spent on campaigns, but Hammond always has contended that the association's direct mailings were issue ads and not intended to elect or defeat a candidate. He has refused to identify the corporations that paid for the $1.9 million worth of mail sent to voters in two-dozen legislative districts in 2002. He says the issue ads were protected free speech and not regulated by state campaign finance laws, including the requirement that donors be publicly disclosed.
Evidence of coordination between the business group and a campaign would undercut that legal argument, lawyers on both sides agree.
However, Andy Taylor, a Houston lawyer representing TAB in a criminal investigation and civil litigation over the ads, says the documents do not show that a TAB official communicated with the campaign about the ads. He said Hammond never met Brannon, and the consultant is not a member of the state's largest business organization.
"No one at TAB coordinated with any candidate at any time," Taylor said.
Ryder confirmed that Mercer's campaign talked to Hammond but said it was only generally about how the race was shaping up. He said Brannon, who advised Mercer on direct mail and other topics, was his only contact on the TAB mail pieces.
"He was the person we talked to," Ryder said of Brannon. "Did he talk to somebody else? I'm sure he did."
Austin lawyer Cris Feldman, who has sued Texans for Republican Majority and the Texas Association of Business on behalf of Democrats, said the documents, Ryder's comments and Colyandro's role in creating TAB mail pieces show how the groups coordinated their efforts with campaigns.
"This is conclusive evidence of coordination," Feldman said. "TAB made direct corporate contributions to the campaigns in blatant violation of state law."
Brannon and Mercer, who was elected in 2002 and is running for re-election, did not return phone calls for comment.
For two years, TAB and Texans for a Republican Majority, a political action committee created by U.S. House Majority Leader Tom DeLay, R-Sugar Land, to help Republicans capture the Legislature, have been at the center of Travis County District Attorney Ronnie Earle's investigation into whether they spent corporate money illegally.
Last month, a Travis County grand jury indicted Colyandro, along with two other DeLay associates and eight corporations, on various felony violations of state campaign finance laws. Colyandro also was indicted on a charge of laundering corporate money into legal donations from individuals.
The investigation into the Texas Association of Business and other groups that used corporate money continues.
Eyes and ears
Texans for a Republican Majority paid Brannon to be the committee's eyes and ears.
He evaluated legislative candidates, collected their confidential campaign plans and advised them how to win.
Together, Brannon and Colyandro recommended which legislative candidates the political committee should support.
In the final weeks of the campaign, as previously reported, Colyandro was attending strategy meetings led by lobbyist Mike Toomey, who later became Gov. Rick Perry's chief of staff, where TAB's mailings were created. Also attending were representatives of TAB, publicist Chuck McDonald and his staff, and Matt Welch with Texans for Lawsuit Reform, a group that generally supported Republican candidates in 2002.
While TAB added the corporate ads to the mix, Texans for Lawsuit Reform donated non-corporate money to candidates, including paying for mailers for Mercer. Texans for a Republican Majority spent $1.5 million on the two dozen legislative campaigns, including about $900,000 in non-corporate donations to candidates and another $600,000 of corporate money for pollsters, phone banks and consultants such as Brannon.
Colyandro also oversaw the creation of one of TAB's attack pieces against Mercer's opponent and, according to Brannon's documents, faxed Brannon a copy of another attack ad financed by Texans for Lawsuit Reform.
Colyandro, through his lawyer, declined to comment.
While Colyandro was working with TAB, Brannon was traveling the state, monitoring the campaigns for Texans for a Republican Majority.
By Aug. 1, 2002, the political committee began paying Brannon an extra $5,000 a month with non-corporate money to work directly with three campaigns, including Mercer's. The committee reported Brannon's services as an in-kind campaign contribution.
Brannon advised the Mercer campaign on everything from raising money to getting out its message. Ryder said Brannon was particularly involved in advising the campaign on the timing and techniques of its mail pieces.
On Sept. 18, 2002, Brannon flew from Dallas to San Antonio for a strategy meeting with Ryder and Mercer, according to Brannon's travel records.
Included on the one-page agenda was an item, "TAB Mailing." It was the first time Ryder had heard that the state's largest business organization would weigh in with direct mail.
As Ryder recalls it, Brannon told them that the business association would mail ads to voters in the San Antonio district if Mercer didn't object.
Ryder said Mercer campaign was happy to have support from a pro-business group but never contacted TAB about it.
"It was consent by silence," Ryder explained.
The Mercer campaign, like those of other Republican legislative candidates, gave Brannon its confidential campaign plans, including a schedule of when its direct mail would go to voters.
Ryder said TAB could gather information on Mercer from the campaign's Web site but added, "We also had given stuff to Kevin" about Mercer's positions on issues.
Ryder said Brannon would tell the Mercer campaign the week that the TAB mail pieces were arriving in voters' mailboxes. But Ryder said he didn't see the pieces ahead of time.
For Mercer's campaign, Brannon's documents included handwritten notes about everything from financing to endorsements to special guests at campaign events. (Ken Starr, the special prosecutor who investigated President Clinton, headlined one Mercer event.)
In July 2002, Brannon wrote, "1st donor wants to sponsor mailing via TABCC." The initials stand for Texas Association of Business and Chambers of Commerce, the former name of the TAB. The donor is not identified.
Another note refers to a "hit piece," including details about the campaign's other mail pieces. It also notes, "TAB – 2 neg."
Ryder confirmed that the TAB notation referred to two TAB pieces attacking Mercer's opponent.
The Brannon-Mercer connection refutes earlier claims that no one contacted the campaigns about the group's direct-mail effort.
"Not a single dollar TAB spent on its educational campaign went directly to any campaign," Taylor said 20 months ago. "Nor was any candidate, their staff or surrogates contacted regarding their education efforts."
The 22 House candidates supported by TAB, including Mercer, echoed that statement shortly after the criminal investigation began.
When it was disclosed in May that Toomey was overseeing the creation of TAB ads with assistance from Colyandro and others, Taylor defended that practice, saying the law does not preclude cooperation between groups.
"Illegal coordination presupposes substantial contact between the sponsor of the ad and the benefited candidate, not political dialogues between political action committees," Taylor said.
In their court documents, prosecutors disagreed, arguing that TAB should not have worked on its mail program with other political action committees.
Ultimately, a Texas court will have to decide the definition of coordination and its significance to the case.
Last week Taylor said Hammond never intended for Brannon or any other campaign operative to have any information about the TAB mail program.
He said Hammond gave specific instructions to everyone at the ad meetings — Toomey, Colyandro, McDonald and Welch — not to discuss the mail pieces with candidates or their staffs.
Taylor defines coordination as "involving substantial discussion between the sponsor of the ad and the benefited candidate about the timing, content, medium and target audience of a particular ad."
That's slightly different from the way TAB's expert on campaign finance, Austin lawyer Ed Shack, defined it an advisory letter that TAB officials used as their official guideline.
Shack wrote that it was substantial discussion about any one of the four factors — timing, content, volume or intended audience.
More important, Taylor said Brannon is not considered a member of TAB, and the substantial discussion must occur between the sponsor of the ad (TAB) and a member of the campaign.
He added that Colyandro never shared the campaign's confidential plans, including dates for their mail pieces, with TAB.
TAB President "Bill (Hammond) refused to discuss anything of that sort," Taylor said. "He drew a line in the sand and said, 'We can't go there.' "