Dec. 6, 2004
Rep. Tom DeLay Accepted Lobbyists' Contributions to Legal Defense Fund in Likely Violation of House Rules; Public Citizen Urges DeLay to Return the Funds and for the House Ethics Committee to Investigate This Alleged Violation

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WASHINGTON, D.C. – House Majority Leader Tom DeLay (R-Texas) may have once again violated the rules of the House of Representatives, this time by accepting contributions to his legal defense fund from three registered lobbyists, according to an investigation by Public Citizen.

Under House rule XXV (5)(c)(3), registered lobbyists are prohibited from making contributions to a member's legal defense fund. Yet Public Citizen's investigation of the contributions made to DeLay's Legal Expense Trust found three such contributions totaling $4,000:

Jeffrey Fedorchak of Impact Strategies, who donated $2,000 between April 1 and June 30, 2003. During that period, Fedorchak was registered as a lobbyist and his clients included Servicemaster Co. and Tuolumne Utilities District, according to U.S. Senate lobbying disclosure records.

Robert Odle Jr. of Weil Gotshal & Manges, who donated $1,000 between July 1 and Sept. 30, 2001. During that period, Odle was registered as a lobbyist for Nomura International, according to Senate records.

Vin Weber of Clark & Weinstock, who contributed $1,000 between July 1 and Sept. 30, 2001. During that period, Weber was registered as a lobbyist and his clients included the Greek government, Microsoft and the Pharmaceutical Research and Manufacturers of America (PhRMA), Senate records show.

"Representative DeLay should promptly return these funds, and the House ethics committee should evaluate whether this was an intentional breach of House rules," said Joan Claybrook, Public Citizen president. "Given the majority leader's enormous power, Congress must ensure that other lobbyists with business before the House aren't trying to curry favor by contributing to DeLay's legal defense."

Public Citizen also found three additional checks totaling $4,500 from Locke Liddell & Sapp and two of its lawyers. Locke Liddell & Sapp was a registered lobbying firm when those contributions were made in 2001. The firm of Becker & Poliakoff also made a $1,000 contribution in 2002, when it was a registered lobbying firm. However, it is unclear if House rules apply to firms and their non-registered employees in addition to individual, registered lobbyists.

Under House rules, donors may contribute a maximum of $5,000 per year to a legal defense fund, and contributions can be made by individuals, political action committees (PACs), and corporate and union treasuries.

Public Citizen's probe also found that two corporations involved in an ongoing Texas district attorney's investigation of alleged illegal campaign contributions into Texas state elections by PACs formed by DeLay also have contributed to DeLay's legal defense fund.

Reliant Energy Inc. and Bacardi USA are alleged to have made the illegal contributions at the heart of the Texas prosecutor's investigation. Bacardi has also been charged with making an unlawful political contribution. Public Citizen found that the two companies have contributed a total of $23,000 to help DeLay defray his legal costs.

"It's ironic that the corporations financing the majority leader's defense are the very same ones whose relationships with Mr. DeLay are being investigated," said Frank Clemente, director of Public Citizen's Congress Watch.

Three top DeLay aides, John Colyandro, Jim Ellis and Warren Robold, already have been indicted in the case. It has been speculated that DeLay himself may be the next target of the Texas grand jury.

DeLay's legal fund was formed in 2000, soon after he was sued by Rep. Patrick Kennedy (D-R.I.), the chairman of the Democratic Congressional Campaign Committee. The lawsuit alleged that DeLay had violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by engaging in money laundering and threatening legislative consequences to those who did not back Republican candidates or causes.

The Democrats dropped the lawsuit the following year. But the death of the legal action did not mean the demise of DeLay's legal fund, which has continued to survive and even prosper. A complete analysis of DeLay's Legal Expense Trust and background on his previous violations of House Rules is posted on Public Citizen's Web site, http://www.DethroneDeLay.org.

Major findings of an analysis of the more than $748,471 contributed to DeLay's legal fund since 2001 include:

A state-by-state breakdown shows that the largest amounts were contributed by donors from ($233,200), Kentucky ($112,800), Virginia ($47,500), the District of Columbia ($46,000), Florida ($39,500), California ($35,850) and Missouri ($22,750). The sizable amount from Kentucky came from a fundraiser organized by Rep. Harold Rogers (R-Ky.), who is seeking DeLay's support in his bid to become the new Appropriations Committee chairman.

Sixty-eight percent of the contributions ($507,496) came from corporations and their employees. Leading industry contributors were energy and natural resources ($107,300); construction ($80,800); finance, insurance and real estate ($45,290); communications and electronics ($44,250); and lawyers and lobbyists ($39,000).

Current and former members of Congress and their PACs contributed $178,000, or 24 percent, to DeLay's legal fund. Leading the pack are Rep. Roy Blunt (R-Mo.), who contributed $20,000, Rep. Billy Tauzin (R-La.), who contributed $15,000, and Rep. Todd Tiahrt (R-Kan.), who contributed $10,000.

Press Release November 10, 2003 concerning DeLay's Former PACs:

Joint News Release
Public Citizen and Citizens for Responsibility and Ethics in Washington

FOR IMMEDIATE RELEASE
November 10, 2003

Contact: Craig Holman, PC, (202) 454-5182
Angela Bradbery, PC, (202) 588-7741
Naomi Seligman, CREW, (202) 628-7772
Melanie Sloan, CREW (202) 588-5565

DeLay's Former PACs Have Failed to File Full Financial Reports with the IRS and the State of Texas
Public Citizen and Citizens for Responsibility and Ethics in Washington Call Upon the IRS to Enforce Section 527 Reporting Requirements

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WASHINGTON, D.C. – Public Citizen and Citizens for Responsibility and Ethics in Washington (CREW) today filed a letter of complaint with the Internal Revenue Service (IRS) calling upon the agency to enforce its disclosure requirements regarding contributions made to Section 527 groups originally founded by House Majority Leader Tom DeLay (R-Texas).

The complaint calls upon the IRS to require Texans for a Republican Majority Political Action Committee (TRMPAC) and its related entity, Americans for a Republican Majority Political Action Committee (ARMPAC), to comply with federal disclosure laws. It also calls upon the IRS to conduct a forensic audit of those groups.

Both groups operate Section 527 organizations, which permits them to collect unlimited "soft money" donations from corporations and wealthy individuals. The groups have either recently failed to file any financial disclosure statements or filed incomplete statements with the IRS in direct violation of the law.

TRMPAC's reporting violations are the most egregious. Since the end of November 2002, TRMPAC has stopped disclosing to either the IRS or the state of Texas the amount of contributions raised from corporations and how these corporate funds have been spent. The Section 527 group was originally organized by DeLay as a means of raising and spending money from corporations and individuals in Texas state elections. TRMPAC's spending in support of electing Republican legislators has been widely credited with helping DeLay achieve his goal of securing Republican control of the Texas House of Representatives, which was needed to push a new Republican redistricting plan in Texas that would jeopardize incumbent U.S. House Democrats and ensure DeLay's continued status as House Majority Leader. TRMPAC has become the focus of a grand jury investigation as to whether TRMPAC violated the state's prohibition on spending corporate money in state elections.

"It appears that they are deliberately hiding their corporate sources of money because they want to stay out of the public eye," said Public Citizen President Joan Claybrook. "The public has a right to know who is contributing money, where it goes and whether it is illegal, especially if the money was used to undermine the current congressional district maps."

TRMPAC is required by Section 527 of the Internal Revenue Code to file all of its contributions and expenditures, including funds from corporate sources, with the IRS through the agency's online reporting system – unless the state of Texas requires TRMPAC to file comparable reports with the Texas elections agency. Texas has no requirement that TRMPAC file its corporate contributions and expenditures with the state, and TRMPAC has not made any such filings with either the IRS or the state of Texas.

DeLay remains associated with both TRMPAC and ARMPAC, DeLay's leadership PAC, although implementation of the Bipartisan Campaign Reform Act of 2002 required that DeLay sever his controlling role in the day-to-day activities of TRMPAC's soft money operations. Nevertheless, DeLay appointed his former political director and close confidant, Jim Ellis, to help lead TRMPAC, former Karl Rove associate, John Colyandro, to be TRMPAC's executive director, and DeLay's former deputy chief of staff, Tony Rudy, to run ARMPAC's soft money division. TRMPAC also shares many of the same donors as DeLay's election campaign.

"This is yet another example of Congressman Tom DeLay's skirting of ethics laws," said Melanie Sloan, executive director of CREW. "DeLay and his PACs have been either violating the law or on the edge of the law for years. It is time for the Commissioner of Tax Exempt and Government Entities Division, Evelyn A. Petschek, to take action to stop this egregious conduct."

In a second component of the complaint, ARMPAC appears to qualify as a "related entity" to TRMPAC under IRS regulations, since the groups share a principal officeholder, but ARMPAC has not declared any such relationship in its IRS filings. ARMPAC has also filed incomplete financial reports, overlooking contributions from such corporate entities as Bacardi and Epiphany Productions, Inc.

Click here to view the full complaint on the Web.