Skip to main content

Another September, More Storm Clouds

A Travis County grand jury indicted the Texans for a Republican Majority PAC and the Texas Association of Business on charges relating to the use of corporate money in the 2002 legislative election. The five indictments include 130 counts alleging third-degree felony violations of campaign finance laws. Fines reach up to $20,000 per count, a potential total of $2.6 million.

A Travis County grand jury indicted the Texans for a Republican Majority PAC and the Texas Association of Business on charges relating to the use of corporate money in the 2002 legislative election. The five indictments include 130 counts alleging third-degree felony violations of campaign finance laws. Fines reach up to $20,000 per count, a potential total of $2.6 million.

A different grand jury working these same fields returned 32 indictments against three individuals and eight corporations last September. None of those cases has gone to trial.

For prosecutors (and for potential targets), the clock is ticking. The investigations of campaign finance practices in the 2002 elections started within weeks after Texans handed the statehouse over to the Republicans, something that hadn't happened since the days of Reconstruction. Most of the alleged irregularities in that election have three-year statutes of limitations, as we've written here before. That fuse is almost gone. And the current grand jury — the fourth to work on this inquiry — is supposed to pack up and go home at the end of the month.

At issue, generally speaking, is whether the Republican efforts to take control violated campaign finance laws by illegally using corporate money for electioneering, or by illegally coordinating campaigns with third-party groups. One man's community of interest is another man's conspiracy, and that's what the lawyers will sort out: Whether the Republicans went too far in their efforts or whether they were particularly clever in winning those contests.

Travis County District Attorney Ronnie Earle blamed TAB for the length of the investigation, saying the group's efforts to protect the names of its donors and other information stalled the grand juries' work. He said the investigation has "unmasked the corporate donors, many of which are not even Texas companies. This use of over $1 million of secret money in many local Texas races was improper, illegal and unprecedented."

Roy Minton, the attorney defending TAB, said the indictments "completely ignore the First Amendment that, according to the United States Supreme Court, gives individuals and their businesses the absolute right to inform the public of the conduct of our elected officials and the conduct of candidates for public office including their public statements and their voting record." He said TAB never endorsed candidates, made political contributions to them or spent money on their behalf.

TRMPAC was founded by U.S. House Majority Leader Tom DeLay, R-Sugar Land. He has maintained he's not a target of the investigation, and this new round of indictments doesn't mention him. Last year's indictments, still pending, were focused on TRMPAC personalities and on companies that gave it money. This time, four of the indictments don't deal with TRMPAC at all, but with TAB.

Even so, former U.S. Rep. Chris Bell, D-Houston, said the new indictments should increase pressure for congressional inquiries of DeLay. Bell, who's now running for governor, initiated complaints against DeLay while he was still in Congress.

A hint that more indictments are coming: Someone missed a word in the DA's press release, saying that a total of six indictments were issued. But in fact, only five indictments were issued. That last one — whatever it contained — apparently wasn't quite ready for public consumption.

The grand jury produced five indictments, each containing multiple counts. A summary:

Criminal Action No. D1-DC-05-900533

The State of Texas v. Texas Association of Business, Counts 1-28: Prohibited Political Contribution by Corporation.

The indictment says TAB illegally solicited corporate contributions for campaigns from Aetna, Inc., United Healthcare of Texas, Inc., Humana Insurance Co., AT&T Corp., Great-West Healthcare of Texas, Inc., Connecticut General Life Insurance Co., Liberty Mutual Insurance Co., Travelers Property Casualty Corp., Fortis Insurance Co., Dannenbaum Engineering Corp., J.F. Thompson, Inc., United Services Automobile Association (USAA), Kemper Insurance Cos., Royal Indemnity Co., State Farm Mutual Automobile Insurance Co., Allstate Insurance Co., Metropolitan Life Insurance Co., Alliance for Quality Nursing Home Care Inc., The Boeing Co., Corrections Corp. of America, USA Managed Care Organization, Inc., Ace American Insurance Co., Nationwide Mutual Insurance Co., and the Chamber of Commerce of the United States of America.

Criminal Action No. D1-DC-05-900534

The State of Texas v. Texas Association of Business, Counts 1-14: Prohibited Political Contribution by Corporation.

The grand jury accused TAB of making illegal corporate contributions by paying TAB President Bill Hammond and Jack Campbell, TAB's director of governmental affairs, with corporate funds while they were doing political work for TAB's political action committee — BACPAC. According to prosecutors, using corporate money to pay people doing political work is illegal.

• Criminal Action No. D1-DC-05-900535

The State of Texas v. Texas Association of Business, Counts 1-3: Prohibited Political Expenditure by a Corporation.

This one charges TAB with making illegal expenditures on printing and postage to the benefit of Republicans and/or the detriment of Democrats in 23 legislative races, and says that was done under the control of Hammond. It says the trade group did the same thing, essentially, to buy broadcast advertisements in two races, and that it paid a group called the Law Enforcement Association of America which in turn used that money against Democratic candidates in three House races. No individuals were indicted, but several are mentioned in the indictments for having worked on the campaign effort as employees, directors or contractors to TAB, including Campbell, Lara Laneri Keel, Mike Toomey, Eric Glenn, Cathy DeWitt, and Chuck McDonald. In various combinations, the indictment says those people, along with Hammond, raised money, prepared ads, strategized about campaigns and coordinated efforts with TRMPAC and with Texans for Lawsuit Reform.

Criminal Action No. D1-DC-05-900667

The State of Texas v. Texas Association of Business, Counts 1-83: Prohibited Political Contribution by Corporation.

TAB is accused of funneling corporate money into campaigns by spending it on print and broadcast advertising that benefited certain Republicans while working against certain Democrats who were running in 2002. The counts are repetitive, each naming a different candidate who was either getting helped or attacked, and accusing TAB of coordinating its efforts with TRMPAC and other political committees and individuals.

Criminal Action No. D1-DC-05-900669

The State of Texas v. Texans for a Republican Majority PAC, Counts 1 & 2: Unlawful Acceptance of Corporate Political Contribution.

TRM-PAC was named on two counts of "unlawful acceptance of corporate political contribution." Both are third degree felony charges. The indictment says the group accepted an illegal $100,000 political contribution from the Alliance for Quality Nursing Home Care Inc., and that TRMPAC knew that was an illegal donation at the time. It said the same of another contribution, a $20,000 donation from AT&T Corp. All of that, according to the grand jury, "was authorized, requested, commanded, performed, and recklessly tolerated by a high managerial agent," identified as John Colyandro. He was indicted a year ago in the first round of charges stemming from Travis County's campaign finance inquiry.

Nearly 100 exhibits go along with the indictments. Those include two television commercials, one knocking Democrat John Mabry and boosting Republican Holt Getterman, the other promoting Rep. Gene Seaman, R-Corpus Christi. And they include more than 80 examples of printed direct mail advertising used in those campaigns, allegedly to the benefit of Republican candidates and the detriment of Democrats. We worded it that way in the previous sentence because the two groups have defended their advertising as "educational" — not the sort of politicking that corporations and labor unions are barred from doing. See for yourself; the indictments and the exhibits are available on our website, at this link:

Lawyers will notice that the indictments don't carry the time stamps that get attached when these things are officially filed. These electronic files were obtained from the Travis County District Attorney's office, and represented to us as duplicates — sans stamps — of what got filed with the Travis County District Clerk.

Schrödinger's Cat

You can't tell from outside whether a comptroller is playing footsie with taxpayers or not, unless a taxpayer jumps up and opens the company books and the political checkbook and starts telling a tale. And that's the difference between the actual substance of an audit of comptroller tax settlements and the political substance of that same audit.

The State Auditor didn't find any wrongdoing, but without saying any such thing ever happened, recommended some changes in law that might prevent future comptrollers from using tax settlements as bait for political giving. But just the fact of the report opened a question about whether Comptroller Carole Keeton Strayhorn — who's running for governor — has been encouraging and/or rewarding political contributions with favorable treatment in tax cases.

Strayhorn called it a win, saying the auditors looked at her agency for three years and found nothing wrong. Gov. Rick Perry went the other way: "The audit report is very troubling because it raises serious questions about the independence of the state's tax collector, and whether she has provided favorable tax treatment in exchange for campaign contributions."

Here's a problem that has plagued questions like this one for a long time: Tax records are private. Unless the taxpayer in the middle of a fight with the comptroller opens up the books voluntarily, the public can't peek inside to see who's zooming whom. An attacker in Perry's position can raise questions but can't bring proof. A defender in Strayhorn's position can say politics weren't in play, but can't prove it.

The system is built to look the same to outsiders whether it's run honestly or not.

The auditors — prompted by a Legislature that, at the time, was steaming mad at Strayhorn — started with a question about politics and state business: Is there any linkage between settlements of tax cases and political contributions to the state's elected tax collector?

But after searching for stains in the spreadsheets, they opened with a disclaimer: "We make no conclusions regarding the information in this report. We are not implying any wrongdoing on the part of any individual or group associated with the information in this report..."

But the question turns up some damning numbers. Auditors said they found 3,656 tax settlements involving 755 different taxpayers that took place within a year of a related political contribution. The audit assessments in 146 of those cases were lowered by at least $10,000. They identified 19 named firms and unnamed individuals who represent taxpayers in cases before the comptroller's office and who, during the 1998-2004 time frame, contributed a total of $1.7 million to the sitting comptroller. (Strayhorn took office in early 1999, succeeding Democrat John Sharp; the 1998 contributions to Sharp made up $137,650 of the total for those seven years.) One firm — Ryan & Co., which now employs Sharp — topped the contribution list with $812,928. Most of that money went to Strayhorn; the firm and its principals are among her top contributors.

The auditors recommended some changes in law, saying lawmakers should prohibit contributions to comptrollers from taxpayer representatives, requiring those consultants to register as tax folk with the Texas Ethics Commission, require comptrollers to keep a registry of which representatives are working on which cases, and move the tax courts that decide these cases out of the comptroller's office and into the State Office of Administrative Hearings.

The full audit report is available at the State Auditor's website if you want to read it before the campaign season begins. You'll certainly be hearing more about it then. Oh, yeah, about the cat in the headline. It's an allusion to indeterminacy — things that can't be known for certain — in physics.

Things That Make You Go Hmmmmm...

The State Auditor's Office didn't officially release its audit of the comptroller's tax settlements until 3 p.m. on Thursday, September 8. That was roughly nine hours after newspapers bearing the details of the audit started hitting driveways in Dallas and Houston. And it was almost 24 hours after the reporters who wrote those stories started working the phones to put the details together.

State Auditor John Keel stuck to his schedule even after the news broke and didn't put the final audit report on his agency's website until the scheduled hour. He says he didn't let it loose to anybody outside of his own shop and the comptroller's office — which gets a chance to respond in writing to a draft, and to have that response included in the final audit report — and to the members of the Legislative Audit Committee. That lets the obvious beneficiary — Gov. Rick Perry, who's being challenged for his job by Comptroller Carole Keeton Strayhorn — off the hook, at least directly. On the same grounds, it also lets the Democrats off the hook.

So who leaked? Dunno. But we'll quote Benjamin Franklin: "Three may keep a secret, if two of them are dead." There's the comptroller and her aides, who showed at least some of the draft report to at least some reporters, the better to spin it their own way. And there are the members of the LAC: Lt. Gov. David Dewhurst, House Speaker Tom Craddick, Sens. Steve Ogden, R-Bryan, and Tommy Williams, R-The Woodlands, and Reps. Jim Pitts, R-Waxahachie, and Jim Keffer, R-Eastland.

Hanging Up the Filibuster Shoes

Only six members of the current Legislature were here when Gonzalo Barrientos, D-Austin, first took the oath of office in 1975. But he's decided that this term — which ends in January 2007 —will be his last. Barrientos has been a liberal bellwether during his 30 years in the Legislature, but has been pushed well out of the legislative mainstream with the surge of the Texas GOP that began in the mid-1980s and crested over the last ten years. He lost his first run for the House in 1972 and then won in 1974. He served there for ten years before winning his current spot in the Senate in the 1984 elections. And he escaped a scary challenge in 2002, when Republican Ben Bentzin came within six percentage points of knocking him off.

Now it's a Democrat — former Austin Mayor Kirk Watson — who's been breathing on his neck. Watson, who lost a bid for attorney general in 2002 but without damaging his prospects, didn't say publicly that he wanted to run for the Senate, at least not until Barrientos announced. But he's been privately building his argument and some political folk who like both men have been suggesting quietly that they'd be open to a change. As it stands, Watson never had to say he would run against Barrientos, and Barrientos got to say he would have beat Watson or any other challenger without actually testing that theory.

There could be others. State Rep. Elliott Naishtat, D-Austin, says he'll have something to say in a few days. He didn't say what, but that's not generally the answer you get from someone who isn't interested. Barrientos' territory overlaps that of three other Democratic House members — Dawnna Dukes, Eddie Rodriguez, and Mark Strama — and Austin doesn't lack for politically ambitious aides and staffers and campaign workers. That's a description that at one time fit all four of the people in this paragraph, for instance.

Barrientos said he's open to new possibilities and said he'd like to look into doing a Spanish-English radio show. He didn't rule out future public service, either, saying he might be interested in running a government agency. But he said he's unlikely to be on the 2006 ballot in any capacity.

Lacing Up the Running Shoes

Earlier this year, Sen. Todd Staples, R-Palestine, said he'd be running for the top job at the Texas Department of Agriculture, but that his announcement would come later. He did it this week, and so far, his is the only name in the hat.

• There aren't any secrets left inside, but you can lick the envelope: Rep. Richard Raymond, D-Laredo, will run for Congress next year against freshman U.S. Rep. Henry Cuellar, also D-Laredo. Cuellar knocked off U.S. Rep. Ciro Rodriguez, D-San Antonio, after redistricting and several recounts in 2004. Rodriguez has been maneuvering for a rematch, and now Cuellar also has competition in his hometown. Raymond's first endorsement came from a former employer: Bob Krueger, the former congressman, senator and ambassador from New Braunfels.

• Charlie Baird, a Democrat who served two terms on the Texas Court of Criminal Appeals, says he'll run for district court in Travis County. Judge Jon Wisser is leaving after this term, and Baird wants the gig. Baird has been working as a visiting judge and teaching at several law schools here and elsewhere (including Loyola University in New Orleans). He lost a reelection bid to the state's top criminal court in 1998, the first time in modern history that Republicans swept every statewide office on the ballot.

• You might have heard a rumor, as we did, that Rep. Beverly Woolley, R-Houston, wanted to hang it up. She was on vacation when we called about it, but aides relayed a message: Woolley, the chairman of the Calendars Committee, will be running for reelection.

• Rep. Linda Harper-Brown, R-Irving, says she doesn't have an opponent yet, but the big gun might help: U.S. Sen. Kay Bailey Hutchison endorsed her — in person — when she announced.

• Rep. Bob Griggs, R-North Richland Hills, wrote a goodbye letter to other educators around the state, urging them to run for legislative offices to overcome the legislative problems with public education. Griggs is leaving the House after two terms. But the former school superintendent says in his letter that people who know education are in short supply in Austin. "...I and a handful of other elected officials with education experience have witnessed and battled a misguided and widely held belief in the Legislature that established educators are the problem with education and that the system cannot be fixed without wiping the slate clean and starting over from scratch," he wrote.

• Bill Welch is now "officially" in the race for the HD-47 spot now held by Rep. Terry Keel, R-Austin. Welch lost an election for a House spot by a handful of votes to Susan Combs several years ago. He's back, after active duty stints in Iraq and Afghanistan — he's in the Air Force Reserves. His website is That has the makings of a crowded race if everyone who's talking about it actually runs.

Phones, Pay, Emergencies, and Flags

Signed: Two bills from that last special session now have Gov. Rick Perry'ssignature on them. He's okay with legislation that raises the pay of judges and the retirement benefits of legislators and other state officeholders. And he signed telecommunications legislation pushed by the phone companies and resisted by the cable TV companies.

The cable guys were on the case right away, filing a federal lawsuit to challenge the law. They contend the phone companies' ability to get statewide franchises gives the new players an edge over cable companies that are locked into a variety of local franchise agreements for years to come. And they say the legislation would allow the phone companies to skip poor neighborhoods when they're pitching new services, violating federal redlining laws.

• Just one example of what the legislative retirement change can do for somebody. Gonzalo Barrientos, D-Austin, announced this week he won't seek reelection to the Senate next year. He'll have 32 years on the job (22 in the Senate, 10 in the House) when he leaves. Under the old system, he'd be eligible for $74,851.20 per year. The new legislation raises that annual pay to $92,000.

• Comptroller Carole Keeton Strayhorn put out the (fiscal) year-ender on the state of the state's piggy bank, and there's a surplus of some $1.2 billion. That's money that didn't get spent when state leaders didn't work out a deal on school finance. Strayhorn followed by suggesting a quick special session to appropriate some of the surplus to use for Katrina assistance, to use some of the money to help with added loads on schools, police, and the like. It didn't take. The governor's response was tepid at best; aides said they'll wait to see the extent that the federal government will step up and help. And with their boss riding  a wave of good will for the state's Katrina efforts, they don't want to resurrect the specter of special sessions.

• Perry ordered flags to the half-mast position on state property for two weeks — until September 20 — in memory of Hurricane Katrina victims, U.S. Supreme Court Chief Justice William Rehnquist, and the victims of the 9/11 attacks four years ago.

Political People and Their Moves

A little more than a year after she left private practice to work for the Texas Supreme Court, Lisa Hobbs has been named the court's new general counsel. She's replacing Bill Willis, who retired after 27 years with the Court. Hobbs was the rules attorney for the court. Before working for a private law firm in Dallas and Austin, she clerked for former Justice James Baker and interned with Justice Nathan Hecht. Among other duties, she'll be the court's liaison with legislators and others in the Pink Building.

David Weber, most recently House Speaker Tom Craddick's resident wonk on insurance, workers' comp, economic development and banking, has moved to the Texas Department of Insurance. He's the special counsel to the commissioner for policy development.

Jamie Story, who just finished being Miss Texas 2004, is joining the Texas Public Policy Foundation. She's an honors graduate of Rice University, where she majored in Mathematical Economic Analysis and Sport Management. She'll work on education policy issues.

Quotes of the Week 

Aaron Broussard, president of Jefferson Parish, Louisiana, on NBC-TV: "Nobody's coming to get us. The secretary has promised. Everybody's promised. They've had press conferences. I'm sick of the press conferences. For God sakes, shut up and send us somebody."

Former First Lady Barbara Bush, taped by American Public Media's "Marketplace" while touring a survivors' site in Houston: "What I'm hearing, which is sort of scary, is they all want to stay in Texas. Everyone is so overwhelmed by the hospitality. And so many of the people in the arena here, you know, were underprivileged anyway so this is working very well for them."

New Orleans Deputy Police Superintendent Warren Riley in The Dallas Morning News: "This city has been destroyed, has completely been destroyed. There's absolutely no reason to stay here. There are no jobs. There are no homes."

Mary Joseph of New Orleans, talking to the New York Daily News about living in the Astrodome: "These people in Houston have done good by us. We thought the world had forgotten about us."

Fordham Foundation President Chester Finn, in the Austin American-Statesman: "I'm persuaded by what I've already seen that with rare, eccentric exceptions, charter schools in Texas — like charter schools almost everywhere in America — are sorely underfunded in comparison with traditional, district-run schools. Indeed, it does not exaggerate to say they're being asked to make bricks with far too little straw."

Republican gubernatorial candidate Carole Keeton Strayhorn in The Paris News: "I have many fine friends who are Democrats and independents and strong Republicans, but there is no presidential election in 2006, and the governor's race will be decided in the primary... March 7 is governor's election day in Texas."

State Sen. Gonzalo Barrientos, D-Austin, announcing he won't seek reelection next year, ending a 32-year legislative run: "What I did more than anything else was to follow my heart. And now, after 30 years of pursuing this high calling, my heart is telling me to continue fighting for the things I believe in, but to find another way to wage that fight." 

Texas Weekly: Volume 22, Issue 13, 12 September 2005. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2005 by Printing Production Systems, Inc. All Rights Reserved. Reproduction in whole or in part without written permission from the publisher is prohibited. One-year online subscription: $250. For information about your subscription, call (800) 611-4980 or email For news, email, or call (512) 288-6598.

Texans need truth. Help us report it.

Support independent Texas news

Become a member. Join today.

Donate now

Explore related story topics