Welcome to Tomstown

A visitors guide to the scandal that Delay and Craddick built

Welcome to Tomstown
Illustration By Doug Potter

Tomstown? Newcomers to Austin may not realize that the town was once known as "Waterloo," and only later renamed in honor of the colonizer, slave master, and transient real estate speculator Stephen F. Austin, who began the long and very uneven tradition of Keeping Waterloo Weird. The Texas capital city has also gone by other names, some more flattering than others: City of the Violet Crown, Austintatious, Red Austin, Berkeley Southwest, and the People's Republic of Texas. In recent months, a new sardonic moniker has emerged, following Austin's wrenching dissection into congressional fragments by the Two Toms – DeLay of Sugar Land, the U.S. House majority leader, and Craddick of Midland, the speaker of the Texas House. Both Toms are now embroiled in the investigation of what's shaping up to be Texas' biggest political scandal since the Sharpstown affair of the early 1970s. As you tour Tomstown, you'll see how the re-redistricting fracas and the campaign-cash follies are intertwined.

Our Glorious Founders

Tom DeLay, a licensed exterminator with a peculiar nostalgia for DDT, was for six years a Republican member of the Texas House known for ... very little, except certain colorful aspects of his personal life. (The nickname "Hot Tub Tom" rings a bell.) Elected to Congress in 1984, DeLay has steadily become the ideological dictator of the national Republican Party and, as majority leader, the real power in the House, at the apex of an unprecedented campaign-cash machine. Meanwhile, Tom Craddick, a taciturn man who made his fortune in oil-field drilling supplies, has served in the Texas Legislature since 1968, committed to little else but the goal of making that body a GOP stronghold.

The Toms' parallel lives and ambitions began to merge at the turn of the century, when the Texas House emerged as the last Democratic redoubt in an otherwise all-GOP state government. And thus a strategy – and, in the view of investigators, a bargain – emerged: State GOP leaders imposed a Republican-friendly redistricting plan on the Texas House, DeLay's money machine helped pack the House with Craddick loyalists, and in return Craddick would give DeLay a new congressional map that would provide the Bug Man with more friends and fewer enemies in D.C.

The Tomstown Scandal

The Tomstown Scandal refers to a series of grand jury investigations and lawsuits – and propaganda barrages and mudslinging – spawned during the execution of the Toms' strategy of conquest. The two main groups whose activities are under scrutiny are the Texas Association of Business, a pro-GOP group with connections to both Toms, and the Texans for a Republican Majority political action committee, created by DeLay to secure GOP control of the Texas Legislature. Both groups are accused of violating Texas election law during the 2002 state elections – into which TAB and TRMPAC poured around $4.5 million – and during Craddick's subsequent campaign to become speaker of the house.

The Election Laws

Campaign finance law in Texas is notoriously generous, allowing virtually unlimited individual donations to candidates as long as those donations are fully disclosed to the Texas Ethics Commission. But the Election Code (Chapters 253 and 254) does forbid 1) contributions by corporations or labor unions to political campaigns (a provision that dates back nearly 100 years); 2) "coordination" between corporate-funded efforts and political candidates; and 3) campaign expenditures that are unreported to the TEC. The Tomstown Scandal involves alleged violations of all three areas of the law, as well as of the "Speaker Statute" – a law passed in the wake of Sharpstown that forbids speaker candidates from exchanging "anything of value" in return for pledges of support from House members. Investigators are now reviewing the records of Craddick, his predecessor Pete Laney, and other 2002 speaker candidates, following allegations of irregularities by PACs in the speaker campaigns.

The Players

In addition to the two Toms, major players in the Tomstown Scandal include:

Bill Hammond, president of the Texas Association of Business and a former Republican House member. Hammond directed the TAB 2002 direct-mail campaign, funded with undisclosed corporate dollars. Hammond says the mailers were nonpolitical "issue ads" that were protected by the First Amendment; critics say they were corporate-funded campaign ads, illegal under Texas law.

Jim Ellis, aide to Tom DeLay and one of the creators of TRMPAC (modeled on DeLay's Americans for a Republican Majority, headed by Ellis). Ellis says his role in TRMPAC was minimal and should not be subject to legal review.

John Colyandro, director of TRMPAC and the Texas Conservative Coalition, former political consultant to Attorney General Greg Abbott, and before that an associate of Karl Rove. His TRMPAC salary was apparently paid with corporate money under the group's very broad definition – questionable under Texas law – of "administrative overhead." Colyandro has testified to the Travis Co. grand jury, under limited immunity.

Bill Ceverha, former TRMPAC treasurer, former Republican House member, and longtime political adviser to Dallas oil and gas tycoon Louis Beecherl, a major Texas GOP donor and one of TRMPAC's founding underwriters.

Mike Toomey, currently chief of staff for Gov. Rick Perry, also a former House member. Toomey was a lobbyist for Texans for Lawsuit Reform and other clients when he worked with TRMPAC in 2002, hiring private investigators for opposition research and consulting with Colyandro about the campaign.

The Law Enforcement Alliance of America, a Virginia-based anti-gun-control group recruited by Colyandro and TRMPAC to contribute a $1.5 million late-hit TV campaign against Abbott's opponent Kirk Watson, Austin's former mayor, in the 2002 AG race.

The Underwriters

Of the approximately $1.5 million that TRMPAC raised and spent in the 2002 campaign, at least $600,000 (and perhaps more) was corporate ("soft") money from 30 corporations, including longtime financial supporters of DeLay such as AT&T ($20,000), Bacardi USA Inc. ($20,000), El Paso Corp. ($50,000), and Philip Morris ($25,000). Others are less well known: the Alliance for Quality Nursing Home Care, an umbrella group of nursing home operators ($100,000); the Maryland-based Constellation Energy Group ($27,500); Diversified Collection Services Inc. ($50,000); Questerra ($50,000). Whatever interest they may have in Texas politics, they were apparently recruited to the cause by TRMPAC's D.C.-based corporate fundraiser, Warren Robold. None of these firms were included on TRMPAC's filings with the Texas Ethics Commission, appearing only on the list the PAC provided to the Internal Revenue Service.

The funders behind the TAB's $1.9 million 2002 direct-mail campaign are (at present) more mysterious. The group insists that its corporate donors underwrote only "voter education" efforts that didn't advocate the election or defeat of specific candidates – even though the mailers attacked specific Democrats by name – and are thus exempt from Texas disclosure requirements. But it's possible to deduce the general categories of donors from the traditional kings of the Texas lobby – energy, construction, finance, real estate, petrochemicals, and in recent years, big insurance. In the fall of 2002, a Texans for Public Justice analysis of TEC filings found that more than a quarter of the state's political funding was generated from only 50 wealthy families and 30 institutional donors, many with overlapping interests in legislative and regulatory issues.

Following the Money

The money rolled in, and the money flowed out. By law, corporate money can only be used in Texas campaigns for "administrative overhead" – office rent, utilities, supplies, and other basic expenses that would be necessary in any business. Apparently, TRMPAC either decided to ignore those restrictions or to redefine "overhead" to mean all expenses not directly spent on specific campaigns. So corporate cash paid for polling, fundraising, telemarketing, and salaries for Colyandro and others. More than $100,000 in soft money went to political "consultants," including Robold, Susan Lilly, Kevin Brannon, telemarketing firm Contact America, and even DeLay's daughter Danielle Ferro (of Coastal Consulting of Sugar Land). Those expenditures were not disclosed to the state Ethics Commission.

Meanwhile, the TAB's own public relations contractor, Chuck McDonald, says he was occasionally uncertain whom to bill for those nonpolitical "voter education" mailers; both Colyandro and Mike Toomey consulted with Hammond and McDonald about the nature and targets of the TAB ads, suggesting illegal coordination to critics and investigators. But "communication," says TAB lawyer Andy Taylor, "is not coordination."

Also intriguing is the $190,000 in corporate money that TRMPAC donated to the Republican National Committee in September of 2002. Two weeks later, the RNC obligingly donated the identical sum to a handful of Texas candidates. Laundering of corporate dollars? "Coincidence," say the TRMPAC lawyers. It appears, however, that TRMPAC provided a blank check to Jim Ellis for the RNC, with the precise amount to be determined later – and it just happened to total $190,000.

But wait, there's more. Funds totaling $152,000 from the Union Pacific railroad's PAC – by agreement with TRMPAC – were distributed to Texas House candidates either by Craddick himself or by his staff. This revelation piqued interest into whether Craddick had exchanged cash for support of his speaker's race, in direct violation of the speaker's statute.

The Lawsuits ...

Four defeated Democratic House candidates (including Austin's Ann Kitchen and James Sylvester) targeted by TAB's "educational campaign" sued the group last year for Election Code violations. Those suits are pending in district court.

The TAB sued Travis Co. District Attorney Ronnie Earle early last year, seeking to quash grand jury subpoenas concerning the corporate money; it also pre-emptively sued 17 other defeated candidates, seeking to prevent them from suing TAB. The group lost numerous court actions and appeals, all the way to the Texas Supreme Court.

Kitchen and three other defeated Democrats have also sued TRMPAC for Election Code violations, alleging illegal use of and failure to disclose corporate money. The first court hearing in those cases occurred last week.

The Avengers

Travis Co. District Attorney Ronnie Earle began investigating the TAB campaign when the group started bragging about its victories in those legislative races in which it supposedly stood by, innocently "educating" voters, which prompted the defeated Democrats' lawsuits. Meanwhile, Texans for Public Justice reviewed TRMPAC's state filings and discovered that they didn't match its IRS filings – particularly in the matter of corporate donations and expenditures – thus suggesting misdeeds similar to, and linked to, those of the TAB. Common Cause, Public Citizen, and the Texas Consumer Association all weighed in, asking the authorities to investigate what they called "numerous, admitted, and blatant criminal violations of state campaign finance laws."

The Investigators

The Travis Co. district attorney's Public Integrity Unit, headed by Earle's deputy Gregg Cox – given unique responsibility under state law to police Texas state government – has been proceeding with its grand jury investigation since early last year, focusing initially on TAB and then expanding to TRMPAC and now the speaker's race. Dozens of subpoenas have been issued over the last several months, and depositions are accumulating in the civil lawsuits. (Other than the subpoenas themselves, the grand jury proceedings are secret; the lawsuit filings are generally public and have been the primary sources for published reports on the scandal.)

Republican officeholders and operatives, from Gov. Perry on down to the specific targets of the probe, accuse Earle – a Democrat – of engaging in a "partisan witch hunt" of legal political activities. Earle responds that he is just doing his job – and the evidence thus far supports him. The GOP has called for cutting off the state's funding of the PIU, or transferring its authority to Attorney General Abbott's office. But local prosecutors from throughout Texas – not exactly bleeding-heart liberals – have opposed such a move as undermining the authority of district attorneys to investigate crimes in their jurisdictions. The grand jury's term expires at the end of March, when it is expected to hand over its unfinished work to a new group.

Winners and Losers

After a year's worth of investigation, it's likely that Earle, Cox, and the grand jury will hand down indictments of at least a few players, but that still may be months away. In the meantime, the civil suits methodically proceed. On Friday, the TRMPAC trial was postponed from March 29 until the summer. Defendant Jim Ellis is expected to contest being forced to return to Austin from D.C., where he officially resides, for that trial.

Perhaps Ellis is bored with Austin, because he spent lots of time in Tomstown last year helping his boss Tom DeLay re-redistrict the Texas congressional delegation – the ultimate object of the Tomstown Scandal. For a decade, the Republicans had been repeatedly foiled in their efforts to capture the Legislature and thus control redistricting. DeLay, Craddick, and the GOP were determined that 2002 would be their year, and as Bill Hammond acknowledged, corporate money is always faster and easier to accumulate than individual donations. Thus the new Texas map was drawn in Tomstown with green ink – perhaps illegally. It's not clear what price will be paid by those who may have broken the law to build Tomstown. But for now, it has proven a pleasant place for the GOP to live. end story

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campaign finance, Tomstown, Tom DeLay, Tom Craddick, Sharpstown, Texas Association of Business, T.A.B., Texans for a Republican Majority, TRMPAC, Texas Ethics Commission, Bill Hammond, Jim Ellis, ARMPAC, Americans for a Republican Majority, Jim Ellis, John Colyandro, Greg Abbott, Texas Conservative Coalition, Bill Ceverha, Mike Toomey

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