Tom DeLay's funny-money trail

The GOP strongman's political machine has stopped at nothing to extend its power. Now it's facing indictments for violating Texas campaign finance laws.

By Lou Dubose

March 12, 2004 | The weekly pen-and-pad press briefings in the office suite of the house majority leader are almost formal events. Thirty to 40 reporters take their seats at a long table and at a second tier of chairs placed against the east and west walls. "The leader" enters, escorted by two aides, Jonathan Grella and Stuart Roy. Roy closes the door at the south end of the elegant dining room and stands beside his boss, who sits at the head of the table; Grella takes his position at the opposite end of the room. Tom DeLay takes his seat, opens with a bit of friendly banter, and begins to work through his agenda. There's so much decorum that DeLay's arrival and departure are almost ceremonial. And there is never any doubt about who is in control. The 56-year-old congressman from Sugar Land, Texas, is smart, authoritative and in charge.

Recently the leader's grip has begun to slip. The first press conference in February ended with a Fox TV news reporter pressing DeLay for answers about the ethics committee's failure to investigate allegations of bribery on the House floor. DeLay didn't respond. The last press conference in February ended with Fort Worth Star-Telegram reporter Maria Recio asking about a campaign finance investigation in Texas. "That's not on the agenda," DeLay snapped.

Then he went on to answer the question with an unbidden attack on the "vindictive and partisan" district attorney in Austin.

The "vindictive and partisan" D.A. DeLay referred to is Ronnie Earle. For almost six months, Earle and a grand jury have been investigating possible violations of Texas campaign finance law in the 2002 election. Because the state capital lies within the jurisdiction of Travis County, Earle is far more powerful than the D.A.s in larger cities, such as Houston, Dallas and San Antonio. His Public Integrity Unit has a mandate and legislative funding to prosecute public officials who break the law. He's held office for 27 years, and is the only Democrat with statewide prosecutorial authority. His ongoing investigation of two political action committees that spent a combined $3.4 million on 22 Republican Texas House races is now focused on a PAC founded by DeLay and directed by a DeLay operative. "This is an attempt to criminalize politics," said a visibly angry DeLay. Ronnie Earle, he told reporters at his Feb. 24 press conference, is a "runaway prosecutor."

Before Jon Grella could cut off questioning, DeLay was asked about two of his close associates billing Indian tribes a staggering $45 million in lobbying and consulting fees. DeLay said Jack Abramoff had never been on his staff. And he warned: "Anybody trading on my name to get clients or to make money, that is wrong and they [should] stop it immediately." The warning was a little late. Mike Scanlon, the 33-year-old former press aide who helped coordinate DeLay's impeachment of President Clinton in 1998, had pocketed a $30 million cut of the fees paid by the Indian tribes. Abramoff resigned from his lobbying position. Sen. John McCain subpoenaed Abramoff's files. And the D.A. in Austin subpoenaed DeLay's daughter in a separate investigation.

It will only get worse.

Now it appears that Abramoff and Scanlon are "off the reservation" for good. And DeLay can't be much help to these associates facing a Senate inquiry. At the same time, the majority leader is confronted by grave problems in his home state. Just as he needs to distance himself from Abramoff -- a close friend and longtime member of his "kitchen cabinet" -- DeLay must to try to avoid the clutches of Ronnie Earle. The Travis County D.A., after all, can put him in a place and position he'd prefer to avoid: in an Austin courtroom under oath.

Prison is an unlikely fate for DeLay, though he is very close to the center of the investigation. It is equally unlikely for his daughter, Danielle Ferro. "She's not responsible for the fact that she was paid with illegal money, assuming a court decides the money was illegal," said an Austin attorney who asked to remain anonymous. But jail is not out of the question for DeLay's operatives in Texas, who are looking at third-degree felony charges that carry a 10-year sentence.

According to courthouse sources in Austin, some witnesses will soon begin to roll in what is being compared to the Sharpstown scandal of the early '70s: a banking stock scheme that sent the speaker of the house to jail, ended the career of the lieutenant governor, and fueled a reform movement aimed at curbing influence buying in the Legislature.

That's not to say Texas is no longer the wild west of campaign finance. You can't hand out checks on the Senate floor, as chicken tycoon Bo Pilgrim did in the late '80s. (A senator who didn't get a check said the $10,000 was a "poultry sum" he never would have accepted.) But when it comes to political contributions in the Great State, the only limit is the size of your bank account. Any citizen of the U.S. can give any amount to any elected official or candidate for public office. All you have to do is declare your contribution to the Texas Ethics Commission. Political action committees also are only restrained by the give-and-declare law.

There are two clear prohibitions: Corporate money and union money cannot be spent in election campaigns. The ban was passed into law in the early 1900s as a response to robber barons buying up railroads, timber, oil and legislators. A "speaker's statute," enacted after the Sharpstown scandal, prohibits a candidate for speaker of the house from handing checks to House members or candidates in exchange for support. It is these two state laws that have placed U.S. Majority Leader Tom DeLay and his handpicked speaker of the Texas House, Tom Craddick, under investigation by the Travis County Public Integrity Unit.

The back story is one of intrigue and power grabbing. Tom DeLay badly wanted to redraw the state's congressional districts to add some half-dozen Republican representatives to the Texas U.S. House delegation. To do so he required a Republican majority in the Texas statehouse.

For four election cycles, Craddick had been expanding that majority. Working with an Austin political operative (one of 58 individuals subpoenaed in Austin), Craddick did it the old-fashioned way: establishing a PAC, raising huge amounts of money, and spending it where Democrats were vulnerable. He was racing against the calendar. Republicans controlled the Senate. But they needed a majority in the House by 2001, so they could redraw the state's congressional districts after the 2000 census.

They fell a few seats short. And after the Democratic House and Republican Senate failed to reach an agreement on reapportionment in 2001, congressional district lines were redrawn by a panel of three federal judges. The Democrats had held the future at bay and it appeared that the Republicans would have to wait until the next census to redraw the lines. Or so the Democrats reasonably assumed, as reapportionment must be done in the first legislative session following the census. Republicans fell short, according to a party source quoted in the Texas Observer (which has extensively covered the story), because "the Hammer had too many balls in the air."

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