Judge freezes Republican PAC's corporate accountsTemporary action comes two weeks before election
By Laylan Copelin, Austin American-Statesman
Thursday, October 21, 2004
State District Judge Paul Davis Jr. on Wednesday temporarily froze the corporate accounts of the Associated Republicans of Texas, just two weeks before the Nov. 2 election.
The judge ordered the political action committee, which has existed for three decades, to stop raising and spending corporate money to pay its overhead until after a Nov. 3 hearing on whether ART, as the committee is known, should have raised and spent corporate money in the first place. The committee is not accused of giving corporate dollars to candidates, and the lawsuit does not accuse any candidates of wrongdoing.
Austin lawyer Cris Feldman, representing two Democrats running for the Legislature, declared the ruling by Davis, a Democrat who is retiring, a significant victory in curbing the illegal use of corporate money in politics. But Hector DeLeon, ART's lawyer, said the lawsuit is a political stunt to malign innocent Republican candidates as voters are going to the polls.
The decision, albeit temporary, is one of the few preliminary judicial rulings on corporate money in Texas politics and raises the question of whether Texans for a Republican Majority, at the center of a two-year criminal investigation, should have raised and spent $600,000 in corporate money on the 2002 legislative elections for any reason.
State law generally prohibits corporate money from being spent on a campaign. However, a corporation or a group of corporations acting as a trade association may use corporate money to create and administer a political committee which, in turn, raises money from individuals to give to candidates or to support political causes.
In ART's case, Feldman argued that the political committee has no sponsoring corporation or trade association that created it. Instead, a group of individuals formed the committee and incorporated as a nonprofit only to limit their legal liability.
Feldman argued that ART's use of corporate money to pay for overhead gives it an unfair subsidy -- allowing more of its individual donations to go to candidates -- that a PAC without a corporate parent cannot use. (ART has raised $150,000 in corporate donations this year.)
Most Texas PACs, however, seem to be connected to a trade association or a corporation, according to a review of PACs registered with the state.
The most prominent exception is Texans for a Republican Majority, which was created by U.S. House Majority Leader Tom DeLay and several state Republican officials and political professionals to help state GOP candidates for the state Legislature.
DeLay's committee raised some $600,000 from 33 corporations, some with no dealings in Texas. The most common definition of a committee's overhead is office rent and utilities, but DeLay's committee spent the money on phone banks, pollsters and consultants. The committee's lawyers have argued that expenditures were part of the committee's overhead, not political spending to benefit candidates.
Terry Scarborough, who represents DeLay's committee, said he is not worried that the legal argument against ART will be used against DeLay's committee.
He noted that Feldman is the lawyer in both lawsuits.
"We've been in litigation with them since May '03," Scarborough said. "They could have asked this of us and never did."
This year a group of Republican legislators created Stars Over Texas PAC, raising more than $100,000 in corporate cash, to fill the role of Texans for a Republican Majority. However, they returned the money to the corporations last month after a Travis County grand jury indicted three officials with Texans for a Republican Majority and eight of its corporate donors.
DeLeon said ART was following state law when it limited its corporate spending to the common definitions of overhead such as rent and utilities, plus lawyers' fees in redistricting litigation.
Feldman's lawsuit, if successful, would deny ART and PACs like it the ability to raise or spend corporate money for any reason.
"This was a major first step in preserving the Texas electoral system from the corrosive effect of corporate cash," Feldman said of Wednesday's ruling.
Given the criminal investigation and litigation against Texans for a Republican Majority, Feldman hailed the ART case as a linchpin in curbing corporate influence over Texas politics.
"We are quickly narrowing this (corporate) loophole," Feldman said.
DeLeon predicted that ART would win in later rounds. He said ART would continue to operate without spending corporate cash but admitted it might have to divert donations from candidates to pay for the committee's overhead.
He also questioned the timing of the lawsuit, coming just weeks before the election.
"We've been following the rules," DeLeon said. "If someone didn't believe that, they should have taken it up with the courts long ago."
He predicted that Democrats in the dozen or so competitive races for the Texas House of Representatives would try to use the court's decision against Republicans, and at least one local campaign wasted little time doing just that. Democrat Kelly White complained that Rep. Todd Baxter, R-Austin, took $4,000 from ART -- albeit a legal donation.
DeLeon said Democrats know how ART, which was created in 1973, raises and spends its money.
"It's not like the incumbent members of the Legislature who are Democrats haven't known about ART," he said. "All this is designed to do is to tie in their opponents to the grand jury investigation."