The newspaper examined records released by the Texas Association of Business that indicated the identity of 18 corporations – 15 of them insurance companies – that helped finance the mailings.

The Texas Supreme Court last month ordered the association to release the records to 2002 Democratic legislative candidates who sued the association after losing their races.

Those Democrats contend the TAB worked with Texans for a Republican Majority, a political action committee formed by U.S. House Majority Leader Tom DeLay, to funnel corporate money into the Texas House races.

About the issues

The business association has argued that the mailers, which criticized Democrats, were meant to educate voters about issues, not to urge votes a particular candidate.

State law generally prohibits use of corporate or union money in political campaigns.

The court ordered the TAB to provide a list of how many businesses donated and how much each donated. It did not require the association to release specific names of the corporations that contributed a total of $1.7 million to the 4 million-piece mailing.

The association had argued that releasing the names would violate the donor’s First Amendment rights.

But the documents released by the association disclosed almost two-thirds of its 30 or so corporate donors, the American-Statesman reported.

The TAB blacked out some names and many other identifying marks but left other documents untouched. Other documents showed bank account numbers that could be compared to other checks or invoices. On some documents, signatures were visible.

Releasing information

The association’s lawyer, Andy Taylor, invited reporters to examine the pages, assuring them “nothing’s there.” He denied Thursday that the association may have made a mistake in editing the documents, except in two or three instances when original checks or invoices were released without the corporate names adequately blacked out.

He said the group had no choice but to follow the court order in releasing the information.

“We had to give everything but the names. We didn’t have the right to redact anything else,” Taylor said.

The association will continue to fight to protect the names of the donors that have not been revealed, Taylor said.

Austin lawyer Buck Wood, who represents Democrats suing the TAB, said he will add those companies as defendants in the lawsuits.

Insurance firms prominent

“I was surprised there was information given to me to allow us to identify the donors,” Wood said. “I think we’ll get them all now.”

Of the 18 corporations the newspaper identified, three are not involved directly in insurance but have an interest in insurance costs and lawsuits. They are AT&T Corp., the National Federation of Independent Business and a small data company in the Rio Grande Valley.

The insurance firms include United HealthCare, Cigna, Aetna, Liberty Mutual, Humana, PacifiCare, Blue Cross of California, State Farm and Allstate.

The insurance industry was successful in fighting the harshest regulatory proposals in the 2003 legislative session.

Most companies donated $40,000 each, while other donations ranged from $100 to $300,000, the American-Statesman reported.

Officials with most of the corporations declined to comment because of the threat of litigation and a grand jury criminal investigation, or did not respond to inquiries from the American-Statesman.

Representatives of Liberty Mutual, Allstate and the business federation confirmed the donations.

They said the money was used to educate voters, not to campaign for candidates.

The disputed election prompted a flurry of civil and criminal court cases. Defeated Democrats sued TRMPAC and TAB. Travis County District Attorney Ronnie Earle indicted DeLay and other TRMPAC and TAB leaders on charges of criminally tapping more than $2 million in corporate funds to influence the election. The indictments effectively evicted House Majority Leader DeLay from the U.S. House.

The criminal case still crawls along. The Texas Association of Business recently copped a guilty plea, retirement is looming for prosecutor Ronnie Earle, and a fix may be in on the criminal charges against DeLay. Some major players who pushed the electoral limits in 2002 have paid a price. Many others have eluded repercussions, been appointed to political offices or find themselves awash in political-consulting fortunes. Six years after the Republican champagne flowed, the Observer checked up on lead players in the DeLay scandal.

First Family

Recent years have brought upheaval to the First Family of the TRMPAC scandal. In September 2005, Tom DeLay was indicted in Texas on money-laundering charges stemming from TRMPAC’s campaign shenanigans. In the eight months following his indictment, DeLay went from being one of the most powerful men in the nation to a veritable has-been.

DeLay resigned from Congress in April 2006 amid serious questions about his ability to win re-election in his own Sugar Land district. Out of Congress, he launched two ventures that operate out of the same office building in Washington. One is the consulting firm First Principles LLC. While corporate clients may be flocking to the firm, political campaigns don’t appear to be buying its advice. A search of federal political committees, courtesy of Congressional Quarterly’s MoneyLine, reveals that First Principles has received just one PAC payment. Chicago’s conservative Family-PAC paid DeLay—the former PAC-money king—the royal sum of a $4,000 honorarium.

Last year DeLay also launched the Coalition for a Conservative Majority, which he billed as his camp’s answer to MoveOn.org, the decade-old online hotbed of liberal activism, which operates one of the nation’s fattest PACs. Despite its prominent links on DeLay’s blog, the Coalition has had little visible impact.

DeLay’s slipping traction is not surprising, given his sudden, enormous loss of power. DeLay blames his downfall, at least partly, on reporters. “I haven’t been found guilty of anything,” he told the Houston Chronicle at the recent Republican National Convention, “yet my first name is ‘Discredited’ in the media.”

One discrediting of the DeLay name occurred in April 2005. That’s when The New York Times reported that DeLay’s political committees—including TRMPAC and Americans for a Republican Majority Committee (ARMPAC)—had paid DeLay’s wife and daughter more than $500,000 during the past four years. To counter any suggestion of impropriety, ARMPAC issued a statement at the time saying “Mrs. DeLay provides big picture, long-term strategic guidance” and the DeLays’ daughter, Danielle Ferro, “is a skilled and experienced professional event planner.”

Yet it is not clear that the market for these skills survived DeLay’s fall. Christine DeLay received no payments from PACs unaffiliated with her spouse in recent years and received her last ARMPAC checks in December 2005. The $12,500 that TRMPAC paid Danielle Ferro in late 2003 were the last major political payments that TRMPAC ever made. Ferro still works for her father, handling appointments for First Principles.

DeLay’s brother, Randy, appears to be the family member least affected by the scandals, perhaps because he parted company with his relatives before Tom DeLay’s fall. To bounce back from a 1992 bankruptcy, Randy DeLay formed the DeLay Group lobby firm, which has grossed an average of more than $400,000 a year during the past decade. Some of Tom DeLay’s earlier ethics troubles occurred when he intervened on behalf of his younger brother’s lobby clients. These problems may have contributed to the reported estrangement of the DeLay brothers. Yet Randy DeLay’s business has continued apace, even after he dropped “DeLay” from his firm name in 2002 and after his brother lost power. Randy DeLay’s clients today include Time Warner Cable, the Brownsville Navigation District and Motor Coach Industries. (This summer a Motor Coach bus crashed on a highway near Sherman, killing 17 Vietnamese-American church members.)

Randy DeLay and his niece, Danielle Ferro, did not respond to requests for comment. Tom DeLay’s spokesperson at First Principles, Shannon Flaherty, made one attempt to respond but could not be reached by press time.

Electoral Lawsuits

For six years, TRMPAC and TAB have defended themselves from civil and criminal cases alleging that they improperly influenced Texas’ 2002 elections to establish a Republican majority in the Texas House. In the first case to come to trial, five Democrats defeated by TRMPAC-backed Republicans sued three TRMPAC officials for allegedly violating Texas election laws. The state district judge overseeing the case ruled in 2005 that TRMPAC broke state law by failing to report more than $600,000 in corporate contributions (it’s illegal in Texas for candidates to spend corporate money on political activities). In the end, Judge Joseph Hart agreed with the plaintiffs and ordered former TRMPAC Treasurer Bill Ceverha to pay $196,600 in damages.

Ceverha is a former state lawmaker with close ties to Dallas oil magnate Louis Beecherl, who bankrolled TRMPAC and Craddick. After the 2002 election, Ceverha served on Craddick’s speaker transition team. Craddick then appointed him to the board of the Texas Employees Retirement System (ERS). This trustee of the $24 billion state pension fund then declared personal bankruptcy in 2005 to avoid paying his TRMPAC judgment. In addition, TRMPAC donors helped pay some of the more than $800,000 that Ceverha owed to the legal team that lost his case. TRMPAC’s No. 1 donor, Houston homebuilder Bob Perry, gave Ceverha $100,000. Ralph Ellis of Irving, who heads an oil company that pumped corporate cash into TRMPAC, loaned Ceverha $50,000. A school-voucher group maintained by TRMPAC donor James Leininger also handed Ceverha a 2005 lobbying gig. Ceverha’s bankruptcy filings note that his income jumped from less than $85,000 a year in the first four years of the millennium to more than $235,000 a year when his trial heated up at mid-decade. Ceverha’s more recent lobby disclosures suggest diminishing returns, with lobby contracts worth up to $35,000 in 2007 and none in 2008. All the while, Ceverha has continued to serve on the board of the state employees pension fund.

Asked about the meaning of the TRMPAC scandal, Ceverha said, “What I would like to say is so outrageous that, knowing the slant of your paper, I don’t think I should tell you.” Encouraged to do so, Ceverha said, “Think about the fact that there have been people out there dangling in the wind for years and spending a personal fortune for no good reason.”

Two of the three attorneys who tried the civil case against Ceverha came from the now-defunct Austin firm Ivy Crews & Elliott. Cris Feldman has since joined the Houston criminal defense firm Rusty Hardin & Associates. In an odd twist, that firm now represents TRMPAC fundraiser Warren Robold, one of four TRMPAC defendants indicted by Earle (the firm reportedly has Feldman sealed off from the Robold case). Feldman’s ex-partner Joe Crews is now at his own firm. Crews and the third plaintiff lawyer, David Richards (who once was married to the future Gov. Ann Richards), intend to eventually resume their civil case against two DeLay cronies, John Colyandro, the former TRMPAC director, and Jim Ellis, the former ARMPAC director. The plaintiff attorneys must wait until the criminal case against Ellis and Colyandro is resolved.

A former employee of Karl Rove’s direct-mail shop, Colyandro’s main job has been running the Texas Conservative Coalition, which he founded in 1985. The Conservative Coalition accounts for most of the $180,387 that Texas PACs have reported paying Colyandro since 2003. Colyandro’s lawyer said the criminal charges have made it difficult for his client to make a living and “cost him a marriage.” “As a Democrat, I’m still angry at what happened in the Lege in 2002,” said Austin attorney Joe Turner. “From a legal standpoint, I don’t think [Colyandro] violated the law. It’s time to end this nightmare for everyone and move on.”

When the TRMPAC mess erupted in 2003, Colyandro and Ellis landed supplemental income, reporting their first Texas lobby contracts. ARMPAC was one client that paid Ellis to lobby that year in Austin, where Ellis camped out to help DeLay pass congressional redistricting. Ellis and Colyandro both reported receiving 2003 lobby contracts through Virginia-based Performance and Results International LLC (see “There is Always a Bright Side,” March 4, 2005). That firm’s main business number had been disconnected when the Observer called recently. Jim Ellis’ attorney, J.D. Pauerstein of San Antonio, said that his client is “working in some consulting capacity” in the Washington area but that he did not know the details.

Then there are two lawsuits involving the Texas Association of Business. Defeated Democratic House candidates sued TAB and its corporate contributors. The plaintiffs alleged that TAB illegally spent $1.7 million in corporate funds on ads promoting 24 Republican legislative candidates in 2002. Plaintiffs also sued lobbyist Mike Toomey, who raised corporate funds for TAB, mostly from insurance companies. Toomey, TAB and the corporate donors agreed this fall to settle with some of the plaintiffs for an undisclosed sum. But a few plaintiffs are still pressing their case against TAB President Bill Hammond and three of the insurers that bankrolled TAB’s political ads.

Meanwhile, defense attorney Andy Taylor continues to benefit from the DeLay-TAB scandal. Taylor is representing defendants in the TAB civil cases. That’s after Taylor profited handsomely from the redistricting fight in 2003. He billed taxpayers more than $750,000 to vet DeLay’s redistricting plans for Texas Attorney General Greg Abbott.

Legal discoveries

Regardless of how the remaining TRMPAC and TAB litigation turns out, these lawsuits pulled back the curtains on Texas’ 2002 elections. Plaintiffs in lawsuits have the right to inspect documents relating to their case and may compel key sources to answer case-related questions. This “legal discovery” process is the source of much of what is known about the roles of TRMPAC and TAB in the 2002 election.

TRMPAC’s fundraising consultants were key sources of information about DeLay’s money machine. For instance, in September 2002, GOP fundraiser Susan Lilly and state Rep. Beverly Woolley solicited business leaders in Woolley’s hometown of Houston on TRMPAC’s behalf. A typed memo of their itinerary—obtained through discovery—contains handwritten notes about the political wish list of each donor visited that day and how much money they committed to TRMPAC. The Republicans who took control of the Texas House in 2002 helped enact much of this wish list (see “Rate of Exchange, TO, March 12, 2004). The TRMPAC scandal does not appear to have hurt the careers of Lilly or Woolley, neither of whom has been charged with wrongdoing. Speaker Craddick appointed Woolley chair of the powerful House Calendars Committee. Meanwhile, Lilly & Co. of Austin has collected almost $5 million from Texas and federal PACs since 2003. Susan Lilly’s firm remains a leading fundraiser for the Republican Party of Texas and many GOP candidates.

The now-indicted Warren Robold, DeLay’s longtime fundraiser, collected most of TRMPAC’s legally troublesome corporate money. Robold mostly solicited companies that had few interests in Austin but a keen interest in DeLay’s congressional pull. Unlike Lilly’s, Robold’s fundraising business doesn’t appear to have survived DeLay’s fall. In 2003, he received payments of $13,000 from Florida Congressman Dave Weldon, $13,650 from the Republican Party of Texas and $33,009 from ARMPAC. Robold collected his last federal PAC payments in the first quarter of 2004 and then fell off the political-fundraising radar screen. Robold’s attorney, Andy Drumheller, didn’t return calls about his client.

Legal discovery also revealed how a few men made up the nerve center that controlled the TRMPAC and TAB operation. Colyandro, TAB President Bill Hammond, Texans for Lawsuit Reform PAC Director Matt Welch and lobbyist Mike Toomey met regularly during the 2002 campaign to coordinate support for a core slate of Republican House candidates. And discovery showed that TRMPAC paid Kevin Brannon, a onetime aide to former Senator Phil Gramm, to vet which GOP House candidates would receive TRMPAC support. Many Brannon interviews broached the topic of Craddick’s speaker campaign.

Kevin Brannon recently helped launch a GOP consulting firm called the Patriot Group. Other Patriots include Matt Welch and homebuilder Bob Perry spokesman Anthony Holm (see “Patriots for Hire,” TO, June 1, 2007). After the 2002 election, Mike Toomey served as Governor Rick Perry’s chief of staff for two years before returning to the lobby, where he since has billed clients up to $5.5 million.

Criminal cases

Two weeks before Travis County voters elected Earle aide Rosemary Lehmberg to succeed her retiring boss as district attorney, Ronnie Earle settled the remnants of his criminal case against TAB. Mirroring the civil cases, Earle initially charged TAB with illegally spending $1.7 million in corporate funds on ads that promoted 24 Republican legislative candidates. From the outset, TAB was a tougher criminal case than TRMPAC. Unlike TRMPAC, which funneled corporate funds to state candidates, TAB spent corporate money on independent political expenditures, a practice invoking greater legal protections. State District Judge Mike Lynch dismissed the heart of Earle’s TAB case in 2006. He ruled that TAB’s ads—which attacked Democrats and lauded Republicans—did not explicitly tell people whom to vote for. Lynch wrote that the TAB ads “severely test, but do not cross” this line.

In the recent settlement, TAB pleaded guilty to a misdemeanor carrying a $10,000 fine. The association admitted that it illegally used its corporate money to pay President Bill Hammond and another TAB lobbyist to barnstorm the state to promote Republican legislative candidates. In an apology that he read at the time of the settlement, Hammond said, “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.” Hours later he shifted gears. “Six years of political persecution by Ronnie Earle has come to an end,” Hammond said, “with a misdemeanor over a bookkeeping error.”

This dual response may explain why plaintiff attorney Joe Crews has not been able to convince himself that the legal showdown over the 2002 election will safeguard election laws. “My guess is that it has made the cheaters more sophisticated,” he said. “I’m not real optimistic about these kinds of people.” A bit more optimistic, Feldman said the legal cases demonstrated that “no one is above the law” even as they showed that “the relationship between state officials and large corporate interests necessitates constant vigilance.”

Earle now bequeaths to Lehmberg the remains of the criminal cases against the TRMPAC four: DeLay, Colyandro, Ellis, and Robold. The most clear-cut of these charges accuse Colyandro, Ellis and Robold of soliciting or accepting corporate contributions.

DeLay, Colyandro and Ellis also face criminal money-laundering charges. A panel of the Austin-based 3rd Court of Appeals ostensibly ruled in August against constitutional claims that Colyandro and Ellis raised in a pretrial appeal. Yet that ruling—written by Justice Alan Waldrop (who had helped Texans for Lawsuit Reform fend off TRMPAC-related subpoenas before he joined the court)—contained an unsolicited gift for the TRMPAC defendants. The opinion said that the Texas money-laundering law in effect in 2002 applied to cash but not to the checks that TRMPAC allegedly used to route $190,000 in illegal corporate cash to Texas House candidates via a Republican Party account in Washington (see “DeLay’s Blank Check,” TO, September 19, 2008). If it stands, this ludicrously literal interpretation of the law eviscerates the remaining case against Tom DeLay. Initially, District Judge Pat Priest must decide what to do with Waldrop’s editorializing about the TRMPAC money-laundering charges. Ultimately, Republican-dominated appeals courts likely will decide the issue.

With TRMPAC money-laundering charges teetering, the greatest legal threat to DeLay appears to have shifted from Austin to the U.S. Department of Justice in Washington. Imprisoned lobbyist Jack Abramoff—who was a big promoter of both Bush and DeLay—pleaded guilty to federal corruption charges that could have earned him a 12-year sentence. Because Abramoff helped prosecutors win related charges against seven high-level Washington officials, however, a federal judge sentenced Abramoff to just four years in September.

Given Abramoff’s unusually light sentence, DeLay must consider the possibility that Abramoff, whom he once called one of his “closest and dearest friends,” will help the Obama Justice Department continue this ongoing corruption investigation. The biggest fish investigated—but not indicted—in the Abramoff probe are DeLay and retiring California Congressman John Doolittle, the king of earmarks. Ratting out Tom DeLay may have been part of the plea bargain that the feds hammered out with Abramoff. Six years after his political machine delivered in Texas, Tom DeLay still may get his day in court.

Read the media release and accompanying documents:

Media Release

A List of the 54 Corporations

Chart of Corporate Contributors

What, you may ask, made TRMPAC so “productive” that it could accomplish what “other” political organizations had been unable to do in a century of political campaigning?

It continues: “Rather than just paying for overhead, your support will fund a series of productive and innovative activities designed to increase our level of engagement in the political arena.”

Specifically, TRMPAC took corporate money in 2002 from companies with business before the Texas Legislature or the U.S. Congress and used it for fund-raising, phone banks, polling, and campaign support for individual state candidates. The interpretation of what constituted legal administrative expenses—up until now—consisted primarily of items such as rent, utilities, and clerical needs. Spending corporate or union money on candidates has been illegal in Texas since 1905, when farsighted legislators recognized that if the vast treasuries of corporations and unions were applied to elections, they could easily overwhelm our democratic system.

All told, TRMPAC spent $1.5 million, of which more than $600,000 was undeclared corporate money. (The PAC’s use of corporate cash went unreported to the Texas Ethics Commission.) TRMPAC documents, entered as exhibits during a week-long civil trial brought by losing Democratic candidates that ended March 4, refer to the historic opportunity that presented itself in 2002. (At press time, Senior District Judge Joe Hart, before whom the case was tried, had yet to reach a verdict.) Redistricting in 2001 had created new, solidly Republican House districts. And a number of corporate interests were bursting with pent-up desire for goodies past legislatures had failed to bestow.

And then there was Representative Tom Craddick (R-Midland). (See “Scandal in the Speaker’s Office,” Feb. 27, 2004.) Documents from the trial reveal that Craddick was intimately involved in TRMPAC activities: distributing checks, accepting corporate donations, attending fundraisers, reviewing prospective candidates, and talking with contributors. He did all of this while running for speaker of the Texas House, the crown on a 34-year legislative career. Craddick’s participation in the TRMPAC campaign may have violated a Texas statute designed to prevent outsiders from influencing a race to elect House speaker and a speaker candidate from trading favors for votes. Craddick’s attorney Roy Minton argues that no laws were broken and that all Craddick did was try to get Republicans elected, which he had been doing for 34 years.

An e-mail—one of several—from TRMPAC corporate fundraiser Warren Robold gives a glimpse of how the PAC saw Craddick’s involvement. Robold wrote Drew Maloney, a former DeLay legislative director turned lobbyist, on the eve of a Craddick visit to Washington, D.C. The e-mail hints that the selling point for corporate funders is Craddick as “the likely next Speaker.” Robold suggests that someone from the Kansas-based energy giant, Koch Industries, might be interested in meeting Craddick. (It’s not clear if the meeting ever happened.) The match would make sense. Charles Koch is a founding member of the Cato Institute and a big campaign donor. (The company’s PAC gave $3,000 to TRMPAC in 2002 and $913,359 in corporate money to federal Republican candidates, according to TPJ and the Center for Responsive Politics.) In recent years, Koch’s facilities in Texas have been fined millions of dollars for environmental and safety violations.

The thread that runs through the TRMPAC scandal is the appearance of influence peddling. Unlike other organizations, TRMPAC often spelled out exactly what corporate contributors might expect for their donations. (See “Rate of Exchange,” March 12, 2004.) In another e-mail exchange, Robold asks Maloney for the names of companies facing asbestos liability claims that might support TRMPAC. (Five months after the election, the Fort Worth Star Telegram reported that the state of Texas hired Maloney for a sizeable fee to lobby on its behalf in the nation’s Capitol. The Texas Office of State Federal Relations confirms that Maloney is still working with the agency.) Tort reformers, who wanted to liberate companies from civil lawsuit damages, were a major force in the TRMPAC coalition. Although Speaker Craddick and the TRMPAC majority in the House passed a mammoth tort reform measure in 2003, tort reformers couldn’t surmount opposition to asbestos “reform” in the Senate. They are trying again this session.

Maloney also relates in his e-mails that he will be delivering “2 checks from Reliant” to “TD” (Tom DeLay). The circumstances under which DeLay sealed the Reliant deal earned him a rebuke from the U.S. House ethics committee in 2004. In early June 2002, DeLay held a two-day golf tournament at the Homestead resort in Hot Springs, Virginia. The cost of attending the event was a corporate contribution of $25,000 to $50,000. Five energy companies were invited by Maloney to attend: El Paso Corp., Mirant, Reliant Energy, Westar Energy, and Williams Companies. (DeLay’s dealings with Westar would earn a separate rebuke from the committee.) The golfing took place just before a House-Senate conference on an omnibus energy bill. (It’s understandable why, four months later, Maloney would complain about Reliant’s tardiness.) The Homestead event was supposed to benefit equally TRMPAC and DeLay’s Americans for a Republican Majority (ARMPAC), according to an e-mail from an ARMPAC staffer to TRMPAC’s accountant.

The Majority Leader has insisted that there was no relationship between the solicited money and any actions to influence the legislative process in Congress. Furthermore, DeLay has claimed—while lashing out at Travis County District Attorney Ronnie Earle—that he had no more than an advisory role in TRMPAC. Still, it’s not hard to see why the Williams Company might be confused about where to send the check and who was in charge (see here ).

If Tom DeLay set the tone for TRMPAC, Mike Toomey may have been a key player in keeping the operation moving forward on the ground. (Toomey refused to comment for this article.) During the civil trial, political consultant Chuck McDonald testified about regular meetings between himself, Colyandro, Texas Association of Business (TAB) President Bill Hammond, and then-lobbyist Toomey. Together they coordinated aid to the 23 candidates that the corporate-backed campaign had decided to support. “If they [TRMPAC] were doing something in a race, then the TAB effort could be expended elsewhere,” testified McDonald.

Toomey, who would go on to be the governor’s chief of staff after the election, was a TAB board member during the campaign. It may not surprise his adversaries—he is known in some quarters of the Capitol as “the Knife”—that Toomey had a role in hiring a private investigator to dig for dirt on Democratic candidates in 2002. The total amount paid for this service was $4,412.53, according to the Houston Chronicle. It is not clear whether or not TRMPAC paid for the service with corporate “soft” dollars as an “administrative” expense. Less than a week later, Colyandro also sent an e-mail advising the TRMPAC accountant, Russell Anderson, to cut a check to Toomey for $444 in corporate “soft” money for “office copies.”

AT&T Corp., insurance companies Aetna Inc. and Cigna Corp., all TAB members and Toomey’s clients, were among the corporations that helped pay for the ads, according to a source. Company officials confirmed TAB membership, but declined comment, citing the continuing grand jury investigation.

Another Toomey client, Texans for Lawsuit Reform, the state’s top-spending political committee, sent its executive, Matt Welch, to numerous Toomey-led meetings whose goal was to elect more Republicans to the Texas House of Representatives. Rounding out the meetings were business association lobbyists, public relations specialists and John Colyandro with Texans for a Republican Majority, the political committee chaired by U.S. House Majority Leader Tom DeLay, R-Sugar Land.

Texans for Lawsuit Reform and Texans for a Republican Majority brought additional political muscle to the table — about $3.5 million in campaign spending.

Under Toomey’s guidance, that vanguard of political professionals helped undertake the complete Republican takeover of state government. The GOP victory led to a legislative agenda favoring business, opposing taxes and curbing lawsuits, while also giving DeLay the Republican map he needed to defeat Texas Democrats in Congress.

Toomey, who became Gov. Rick Perry’s chief of staff shortly after the 2002 election, refused to discuss his role last week.

The TAB contends its $1.9 million paid for direct-mail pieces that were unregulated free speech about issues — not political ads advocating election or defeat of a candidate. The state law barring use of corporate money to pay for political activity does not apply, it argues.

The meetings become relevant, however, if prosecutors continue to argue that coordination among several political groups undercuts the legal defense that the association’s ads did not advocate the election or defeat of candidates.

Until now, published reports of Toomey’s role had been limited to his part in two or three meetings with public relations specialists to help create ads.

The whole affair might have gone unnoticed but for Bill Hammond, association president and a former House colleague of Toomey’s. Shortly after Republicans swept the November 2002 election, he boasted that the $1.9 million effort “blew the doors off” the election. He told reporters the level of corporate money behind the effort — at $1.9 million — was unprecedented in Texas.

Travis District Attorney Ronnie Earle, a Democrat, soon initiated a grand jury investigation into the corporate spending, prompting a protracted legal battle by the association to keep its donors secret.

Andy Taylor, the association’s lawyer, criticized confidential sources’ disclosure of the names of TAB’s corporate donors pending the results of the criminal investigation and a legal determination whether TAB’s ads were political.

“Every Texan has a constitutional right to criticize our government and its elected officials without fear of retribution,” Taylor said. “By publicly disclosing TAB’s donors or members, the Constitution of the United States has been trampled.”

A key question

Defenders and critics of the business association are reluctant to comment publicly about the Toomey-led meetings because of the risk they’ll be dragged into the ongoing investigation. But sources confirm the meetings, as many as two or three a week, in the final weeks leading up to the Nov. 5 election.

While the association’s detractors view the meetings as an attempt to hide corporate financing of political campaigns, its defenders say the meetings were not unusual or illegal.

Taylor acknowledged that the business group would forfeit its free speech argument if prosecutors proved that the advertising campaign — its size, scope, message and timing — were coordinated with a candidate’s campaign. But he insists there is no such evidence.

“Illegal coordination presupposes substantial contact between the sponsor of the ad and the benefitted candidate, not political dialogue between political action committees,” Taylor said.

Prosecutors argue that the association’s mail pieces are political ads. But they further argue that cooperation between the business group and political action committees constitutes the kind of coordination that would undercut the association’s free speech argument.

But without a specific law on the matter, a judge will have to determine from court opinions whether the Toomey-led meetings amount to illegal coordination.

Toomey in charge

The meetings occurred at the offices of McDonald Public Relations Inc. near the Capitol.

People in the room had multiple ties — political and business — to one another.

Publicist Chuck McDonald worked for Texans for Lawsuit Reform, as did Toomey. McDonald also did public relations for the Texas Association of Business, where Toomey was a director. McDonald and his associate, Rickey Dailey, wrote the ads.

Jack Campbell, a lobbyist, represented Texas Association of Business and its political committee, BACPAC, which counts Texans for Lawsuit Reform as one of its biggest contributors. Welch, who refused to comment for this story, would come from Houston to attend the meetings on behalf of Texans for Lawsuit Reform.

From time to time, Toomey brought along Hammond and Colyandro, his “kitchen cabinet,” according to a source in the meetings.

“Toomey was the man in those meetings,” said another source at the meetings. He brought a folder with charts on every campaign. It showed what the money was going for and how much was needed, according to the source.

At times there were disagreements over the money, particularly whether TAB was doing more than others.

“He and Jack (Campbell) would argue,” the source said. “A lot of people’s money was involved. A lot was riding on it.”

Given his experience and temperament, Toomey would be expected to lead the meetings.

He has a reputation for being hard-working.

In the 1980s he served as a Republican lawmaker from Houston. He was a fiscal conservative and one of the first lawmakers to champion curbing lawsuits against businesses.

His nicknames were “Mike the Knife” for his budget-cutting ways and “O.W.,” as in One Way — Toomey’s way. In 1985, Texas Monthly named him one of its 10 best legislators: “Bureaucrats feared him. Democrats respected him. But Republicans deferred to him.”

Between stints as chief of staff for governors Bill Clements and Perry, Toomey worked as a lobbyist for more than a decade, sometimes billing $500,000 to $1 million a year, according to state records. Just days after the Nov. 5, 2002, election, Toomey resigned from his lobbying firm to join Perry, who served with Toomey in the House.

Mailings targeted

The Toomey-led meetings are just the latest chapter in the expanding story about TAB’s direct-mail effort for the 2002 campaign. TAB mailed about 4 million pieces of mail to voters in about two dozen legislative districts without anyone questioning how the business group paid for them.

Immediately after the Republican electoral sweep in 2002, when Hammond was bragging about blowing the doors off the election, he said he tapped corporate donors instead of individuals because it was easier to get CEOs to part with other people’s money instead of their own.

Indeed, Hammond let BACPAC, the association’s publicly reported account, lie almost dormant until Houston homebuilder Bob Perry and Texans for Lawsuit Reform gave $143,000 in the final weeks of the campaign. Most of the money was used to mail ads that the association’s lawyer deemed too political for the corporate-funded project.

After the election, Hammond’s critics complained that the corporate-funded ads endangered the trade-off in Texas campaign finance law: Politicians can accept as much money as they want from individuals as long as it’s publicly disclosed and corporations and labor unions don’t spend money on political activity.

From the beginning, Hammond defended the direct-mail program as educating voters and not advocating the election or defeat of candidates.

He also characterized it as a self-contained effort by the business group.

Then four postcards were discovered in February 2003. Created for the business group, one postcard was mailed under the logo of Texans for a Republican Majority, and three were sent to voters by Law Enforcement Alliance of America, a Virginia-based group supported by the National Rifle Association.

When the investigation began, Hammond hired a lawyer and stopped talking.

At first Colyandro said he created the mail piece with the logo of his group, Texans for a Republican Majority. But ad proofs showed the postcard was first created for TAB. That prompted prosecutors to question Colyandro in front of the grand jury about the direct-mail program.

Then prosecutors expanded their investigation to determine whether Texans for a Republican Majority illegally spent as much as $600,000 in corporate donations on political activity. In a deposition in December, Colyandro said he contacted the law enforcement group about helping distribute the postcards created by McDonald for the business association.

The involvement of Texans for a Republican Majority with Hammond’s advertising effort began much earlier than the November general election. In March 2002, Colyandro’s group gave TAB $10,200 from its corporate donations to pay for mail pieces in two Republican primary races. The ads were TAB pieces touting the pro-business records of two Republican incumbents who had drawn primary opponents.

Toomey also was involved with Texans for a Republican Majority outside of the meetings at McDonald’s offices. According to Colyandro’s deposition, he and Toomey met often to discuss the campaign and politics in general. In one instance, Toomey asked Colyandro’s group to help pay for detectives to investigate the backgrounds of Democratic candidates.

More money

Despite Hammond’s success in raising corporate donations, there was an incessant need for money, particularly at the end of the legislative campaign.

Even Toomey solicited money.

Todd Olsen, an Austin consultant, said Toomey called him during the fall searching for names of more wealthy Republicans to assist the business association.

Hammond has refused to say how many corporations donated the $1.9 million.

The Republican sweep of the 2002 elections paid dividends to business lobbyists and their clients.

Lawmakers protected doctors from soaring insurance bills, created a fund to entice companies to move to Texas and rewrote homeowners insurance rules that consumer groups complained were too friendly to the industry.

Despite a $10 billion shortfall, lawmakers balanced the budget without raising taxes and gave up on expanding the state’s primary business tax, the franchise levy, which many corporations, including the Austin American-Statesman’s parent company, have legally avoided paying for years.

The pro-business tilt of the Legislature prompted Democrats and consumer groups to nickname the gallery section where business lobbyists sat “the owner’s box.”

The biggest victory, however, was House Bill 4, which curbed the ability of workers and consumers to sue Texas businesses. Hammond summed up its impact: “Virtually everything that’s been on the list for a long, long time was passed and put into law.”

In the current special session, when state officials are searching for revenue to allow them to reduce property taxes, the clout of the business lobby is being tested again as lawmakers debate whether the new tax load falls more on consumers or business.

“The dark shadow of corruption of our system of justice looms over this case,” Earle wrote in a brief. “Every lawyer has a duty to raise questions of corruption that go to the heart of our judicial system, and it is in the discharge of that duty that the State pursues this effort.”

Without naming names, Earle aimed his remarks Monday at a panel of three Republican judges who last month upheld the constitutionality of a law used to indict DeLay and associates Jim Ellis and John Colyandro on money-laundering charges dating from 2002 legislative elections.

In that ruling in the cases against Ellis and Colyandro, the judicial panel volunteered that the state’s money-laundering statute in 2002 did not cover checks. That prompted DeLay’s lawyers to declare victory because the three men are accused of laundering $190,000 in corporate donations, which are generally banned from state campaigns, into legal political donations — all by check.

A fourth justice on the court, Democrat Diane Henson, objected to her colleagues’ handling of the case. She criticized the three-judge panel for sitting on the constitutional questions for two years and then going beyond the question before them in the pretrial challenge. She also disagreed with their interpretation, saying the money-laundering law included checks.

Henson urged that all six of the court’s justices rehear the constitutional challenge, a suggestion the panel turned down.

Earle, a Democrat, adopted Henson’s complaints in his brief. But his strong language implying corruption caught defense attorneys off-guard, the Austin American-Statesman reported in Tuesday’s editions.

“It is just way out of line,” said San Antonio lawyer J.D. Pauerstein, who represents Ellis. “That sounds like it was written by a politician instead of a lawyer.”

University of Texas law professor George Dix suggested Earle’s language might be interpreted more than one way. He said it would be unusual to imply the judicial system is corrupt without offering specifics.