Texas Association of Business pays $10,000 fine for misdemeanor
after six-year investigation by Travis County district attorney.
By Corrie MacLaggan
Wednesday, October 22, 2008
The state's largest business organization pleaded guilty Tuesday to violating campaign finance law, six years after helping elect a slate of Republican lawmakers to the Texas Legislature.
As part of the settlement, the Texas Association of Business pleaded guilty in District Court in Austin to a misdemeanor charge of unlawful direct campaign expenditure and agreed to pay a $10,000 fine.
The agreement involved the last of the criminal charges against the Texas Association of Business stemming from an investigation by Travis County prosecutors that began shortly after the November 2002 elections.
Travis County District Attorney Ronnie Earle claimed victory Tuesday for Texas taxpayers, but he didn't get what he'd initially sought: felony convictions for unlawful political contributions by a corporation. Earle, who retires in January, has drawn both praise and criticism for pursuing felony charges against the organization.
"It has been a long, hard slog, but it has been worth it," Earle said. "The real issue is whether we're going to have a democracy where the people count, or rule by the wealthy where corporations count."
Earle accused the trade association, which is a corporation, of making illegal corporate donations to its political action committee by paying the salaries of two employees as they traveled the state, appearing at fundraisers and other events, urging voters to support 24 state GOP candidates, speaking to the news media on behalf of the candidates and consulting on strategy.
Those two employees were association President Bill Hammond and the association's former lobbyist, Jack Campbell.
State law generally prohibits the spending of corporate money in connection with a political campaign.
"I now recognize that while working as a salaried employee of the Texas Association of Business, it was a violation of the law to expressly advocate for the election of these candidates," Hammond told reporters Tuesday, standing beside Earle and reading from a court-mandated statement. "I take full responsibility for my actions. I apologize to the voters of Texas and to the members of the Texas Association of Business."
The guilty plea involved the charges against the association relating to Hammond's activities. Felony charges relating to Campbell's activities were dropped Tuesday with an agreement that they can be re-filed if the association violates the law in the next year.
Later in the day, Hammond accused the district attorney of going on a politically motivated quest.
"Six years of political persecution by Ronnie Earle has come to an end with a misdemeanor over a bookkeeping error," Hammond said. "Hundreds of thousands of taxpayer dollars that could have been used to protect our streets have been wasted."
Asked about the cost of the investigation, Gregg Cox, director of the district attorney's public integrity unit, said it was "really impossible to estimate" because employees working on the investigation simultaneously worked on others as well. Joe Turner, a lawyer for the association, called on the Legislature to clarify "this treacherous area of the law," which he said can be confusing for people like Hammond who must wear multiple hats: salaried employee, representative of a political action committee and citizen.
"This is an accounting nightmare," Turner said.
But Earle argued that state campaign finance law is not vague.
"The law in Texas is clear," Earle said. "Texas citizens, the people of Texas, are entitled to a voice in democracy; corporations are not, just as they are not entitled to vote."
Earle said that the facts supported a felony but that he's pleased with the agreement. The punishment for a felony would have been a $20,000 fine, Earle said. "The difference between $10,000 and $20,000 when you factor in the cost of the trial ... was simply not worth the cost-benefit analysis," Earle said.
Turner said a felony charge was "the line in the desert" that the association wasn't willing to cross in negotiating a plea agreement.
"There's no way in the world we felt like they were responsible for a felony conviction in this case," Turner said.
State District Judge Mike Lynch earlier had dismissed indictments accusing the organization of illegally spending $1.7 million in corporate money to send 4 million mailers to Texas voters in 2002.
Lynch ruled that the mailers were protected free speech not covered by the ban against corporate money in campaigns. But Lynch said last month that the group should stand trial on the charges that it illegally paid the salaries of Hammond and Campbell with corporate money.
In addition to their duties for the association, Hammond and Campbell also directed the activities of the association's political action committee, which endorsed the 24 candidates and raised money for them.
Prosecutors argued that the association's political committee should have paid a portion of the two men's salaries with campaign donations, not corporate dollars, when they were politicking.
In a related case, Earle is continuing to pursue felony money-laundering charges against former U.S. House Majority Leader Tom DeLay and two campaign associates. They are accused of laundering corporation money into political donations for the same 2002 legislative campaigns that the business association was involved in.