Playing the House
Timo, the Casino Politico, Craps Out
BY ANDREW WHEAT
he most striking aspect of the December indictment of then-Rep. Timoteo Garza, his parents, and three Kickapoo leaders for allegedly conspiring to steal $900,000 in tribal funds is the political nature of the alleged crimes. Human avarice is the stock and trade of criminal indictments. Yet this indictment suggests that—to feed their greed—the Garzas and Kickapoo leaders conspired to expand their monopoly over Texas’ only legal casino. Along the way, the casino house bought a seat in the Texas House and made a play for the powers of Congress. Thanks to the casino, once-poor tribal leaders were awash in enough money to purchase political power at every level of government. Easy money is the hothouse of corruption. Prosecutors allege that the defendants treated the Kickapoo tribe’s money as if it were their own, spending it on themselves and to purchase political power. The federal grand jury made these charges at an interesting time—as some Texas politicians promote gambling as a painless source of educational revenue. Count one of the grand jury’s 19-count indictment charges the defendants with stealing $385,533 from the tribe in 34 “overt acts” of theft from 1998 through June 2004. The defendants allegedly blew less than 25 percent of this money on garden-variety stuff such as furniture, vehicles, and cash for themselves. In one personal expenditure, the casino allegedly paid false payroll checks to the “co-habitant” of tribal chair Raul Garza (who is not related to Timoteo Garza’s family). Most of these allegedly criminal expenditures were political. Timoteo Garza and his father allegedly spent at least $146,739 of the tribe’s money on their own political campaigns. Prosecutors also say that the defendants improperly diverted more than $150,000 in other Kickapoo funds to influence local, state, and federal politicians from Eagle Pass to Washington, D.C. A key hurdle for prosecutors in trial will be to demonstrate that the defendants spent tribal money without obtaining proper approval from the tribal council. This point was made by prominent Houston attorney Richard “Racehorse” Haynes, who is defending Timoteo’s father, Isidro Garza, Jr. “Isidro was responsible to the chairman and the tribal council,” Haynes told the San Antonio Express-News after a preliminary court hearing in December. “If it [the disputed expenditures] was OK with them, where’s the crime?” The indictments followed a two-year federal probe by the IRS, FBI and the Interior and Justice departments. This crackdown demonstrates the government’s commitment “to combat criminal activity in the Native American gaming industry,” San Antonio FBI agent Patrick Patterson said in a news release. “These defendants were trusted by the tribe to manage their money,” added prosecuting U.S. Attorney Johnny Sutton. “Sadly, they betrayed that trust.” imoteo “Timo” Garza’s family is not Kickapoo but his father, Isidro, nevertheless oversaw the tribe’s largesse. After serving as city manager of the border town of Eagle Pass, Isidro Garza became manager of the Lucky Eagle Casino—and ultimately managed all Kickapoo tribal business under the Kickapoo’s now-indicted ex-chair, Raul Garza. When the Lucky Eagle opened in 1996, its status as Texas’ only legal casino made it a glorified cash machine despite its remote location on the border in South Texas. Grossing some $25 million annually, the casino reportedly paid Isidro Garza more than $500,000 a year. The indictment portrays Isidro as the conspiracy’s mastermind, alleging that he “manipulated” casino “accounts for his personal benefit” in an apparent effort to build an empire in Eagle Pass. Citing legal advice at the outset of an Observer interview, Isidro Garza limited himself to a brief statement. “We always have had tremendous faith in our Lord and the system,” he said. “When this is all said and done, we hope this will be good testimony for our Lord and the magnificence of what he can do.” He referred further questions to his attorney, who did not return calls. Garza and the tribal leaders had a good thing in this casino monopoly—albeit a fragile one. Internal tribal rivals fought to topple their regime, even as external forces sought to shatter the Kickapoo gambling monopoly. Other Texas tribes and ordinary businessmen lobbied to open competing gambling operations around the state. Answering these threats demanded staggering amounts of clout for a once-impoverished tribe. Yet Isidro Garza and tribal leaders were not content just to protect their monopoly. They wanted to expand it. So they pressed state and federal officials to upgrade their “Class II” bingo-style gambling permit to “Class III,” which would let them offer the full monty of slot machines and casino games. Isidro Garza took the casino’s vast political needs into his own hands in 2000, when he mounted a self-funded Democratic challenge to incumbent Congressman Henry Bonilla (R-San Antonio). In his younger days, Garza earned a reputation as a fiery Tejano activist for such causes as a living wage and subsidized health care. The almost $300,000 of his own money that he poured into a sometimes nasty campaign proved no match for Bonilla’s $1.2 million war chest. Some Democrats believe that it was Congressman Bonilla who alerted the feds to questions about the casino’s books. A spokesperson for Bonilla’s office acknowledged hearing those rumors as well but said the congressman had no role in the investigation and indictments. After his own defeat, the father appears to have abandoned his earlier populism and transferred his political ambitions to his son. This time the campaign wouldn’t be underfunded. Timo Garza narrowly won his first and only Texas House term, drawing 813 more votes than incumbent Tracy King in a Democratic primary runoff in the spring of 2002. By the time of the runoff, King reported raising $213,883 and Timo reported just $750 in contributions (led by $500 from then-Kickapoo lobby firm Akin Gump). Timo’s challenge would have been laughable but for Isidro Garza, who lent his son’s campaign $200,000 for 10 years—without interest. (Special interests bid for Timo after the primary, led by $5,000 from Texans for Lawsuit Reform and followed by arch-rival Texas Trial Lawyers Association, which contributed $4,500). Although generous, the term of the father’s loan is shorter than the maximum prison sentences that the Garzas face if convicted. Prosecutors say Timo Garza faces a maximum of 25 years; his dad faces up to 95. Timo was personally indebted to Isidro Garza and the casino as well. In Texas Ethics Commission disclosures, Timo revealed a personal loan of at least $25,000 from his father and reported that the casino employed him in an unspecified capacity in 2001. Yet Timo’s one-term fate in the Texas House may have been sealed even before he was elected, took office, and got appointed to—of all things—the House Law Enforcement Committee. One week before Timo’s November 2002 election, the 500-member Kickapoo tribe elected a new slate of tribal leaders who accused their predecessors of mismanagement and corruption. he indictment alleges that the defendants improperly spent some Kickapoo funds, secretly subsidizing the political campaigns of both Isidro and Timo Garza. Prosecutors charged Isidro with using the casino’s corporate credit card to pay for $3,664 worth of flyers for his campaign against Congressman Bonilla. Two years later, they allege, the casino poured $143,075 into Timo’s House race, including paying for signs, campaign workers, and musicians for campaign rallies. During this period, the Garza campaign disclosed just one payment to the Lucky Eagle Casino: a big, round figure of $10,000 for “Copies and Supplies.” Although the campaign said this payment occurred on April 10, 2002, it did not list this check in an initial report filed with the state in July 2002. The fact that the campaign only disclosed this huge reimbursement in a “corrected” report filed in early October could indicate that Garza foresaw the possibility of an audit if the Kickapoo elected new leadership—as they did several weeks later. Timo’s attorney Robert Garza, who is not related to the defendants, noted that, “the casino apparently subsidized many other campaigns, too.” He added that his client “is innocent and plans to aggressively defend himself.” Apart from Isidro and Timo Garza, the grand jury convened by U.S. Attorney Johnny Sutton, a George W. Bush appointee, mentions just one other recipient of questionable Kickapoo political contributions by name: the Washington-based Democratic Congressional Campaign Committee (DCCC). It received a total of $30,000 from the Lucky Eagle Casino in 1999 and 2000. More obliquely, the indictment mentions four specific contributions totaling $40,000 to certain unnamed statewide elected officials—a class of politicians who are all Republicans. Yet—given the dates and amounts of these contributions—the recipients almost certainly were Governor Rick Perry ($30,000) and Comptroller Carole Keeton Strayhorn ($10,000). A spokesperson for the U.S. Attorney’s Office declined to say why the indictment names some recipients of disputed Kickapoo contributions while referring to others generically. A Strayhorn spokesperson said that prosecutors have not contacted her office about the Kickapoo case. The governor’s office and Perry campaign director Luis Saenz did not return calls asking if prosecutors had contacted them. (When Timo fled with other House Democrats to Ardmore, Oklahoma, to postpone the 2003 Congressional redistricting vote, Governor Perry called the Eagle Pass representative directly in an unsuccessful attempt to get him to return to Texas.) A further indictment mystery is why the grand jury focused on the four Kickapoo contributions that Perry and Strayhorn apparently received. The indictment never mentions $70,000 worth of contributions that the old Kickapoo regime made to other statewide and legislative candidates between 1997 and 2002. The U.S. Attorney’s Office declined to comment on this point. One explanation is that prosecutors only cited contributions that they believe were made without proper tribal approval. Although the indictment does not mention Texas attorney general candidates, no other kind of state politician received more contributions from the old Kickapoo regime. The top recipient of this cash was Democrat Jim Mattox, who lost the 1998 attorney general race to Republican John Cornyn. In a swan song before his 2002 election to the U.S. Senate, Attorney General Cornyn (who did not receive Kickapoo contributions for his attorney general or senate races) shut down the Tigua tribe’s El Paso casino, thereby enforcing the Kickapoos’ state casino monopoly. Office of Attorney General visitor logs reveal that representatives of the old Kickapoo regime visited Cornyn’s office in June 2002, four months after Cornyn shuttered the Tigua casino and four months before the Kickapoo kicked out their old leaders. The Kickapoo delegation to Cornyn’s office included: both of Timoteo Garza’s now-indicted parents; an attorney from the law office of indicted Kickapoo General Counsel Jose Ruiz; and then-Akin Gump lobbyist Barry Brandon. Brandon and Senator Cornyn’s office did not return calls inquiring about that meeting. In their last days in power in 2002, the old Kickapoo regime contributed $10,000 apiece to both finalists seeking to succeed Cornyn. Since then, tribal gambling issues have kept new Attorney General Greg Abbott busy. Ten days after Abbott took office in December 2002, then-gubernatorial Chief of Staff Mike Toomey held strategy meetings on how to legalize slot machines for Texas’ racetracks and Indian tribes. Abbott’s office then took Lottery Commissioner Jim Cox’s recommendation to hire Las Vegas gambling law firm Lionel Sawyer & Collins to draft such a bill—ostensibly because the AG’s office lacked in-house gambling expertise. During the special session that Governor Perry convened for this legislative proposal in 2004, the bill failed loudly. Politicians and watchdogs have complained that: the state lacked authority to hire the firm; the firm’s gambling clients posed conflicts of interest; and the firm’s $367,204 legal bill exceeds its contractual limit by more than $100,000. The strangest part of this episode came in December 2004, when Abbott issued a legal opinion that contradicted the very legislation that he had jobbed out to the Vegas firm a year earlier. That legislation, which could resurface in some form this year, was supposed to grant the state’s racetracks and three Indian tribes a slot-machine monopoly. Abbott’s new opinion says that tribes lacking official federal recognition (including Texas’ Alabama-Coushatta and Tigua tribes) cannot legally operate slot machines. It also says that the courts even might bar the federally recognized Kickapoo from having slots. ome politicians and political groups received their Kickapoo money as campaign contributions, but others, according to the indictments, got their money as straight cash or checks “cashed at the Lucky Eagle Casino.” This cash issue is significant, given that federal and state laws bar candidates from accepting more than $100 in cash in a single reporting period. Citing the ongoing investigation, a spokesperson for U.S. Attorney Johnny Sutton’s office in San Antonio declined to say if prosecutors believe that recipients transferred these funds to their campaign accounts or simply pocketed the money. The indictment charges Isidro Garza and another defendant, for example, with arranging four separate casino payments totaling $30,000 to one or more unnamed state district judges in the weeks preceding the 2002 primary. The casino allegedly paid half of this money in cash and the other half in casino-cashed checks. The Express-News reported that Eagle Pass State District Judge Amado Abascal III disclosed receiving 15 separate campaign contributions of $1,000 apiece around this same time. All but two of these contributions came from donors linked to the tribe, including Isidro Garza and Arthur Martin—the very men accused of doling out $30,000 in casino money to state district judges. One reported $1,000 donor, Eddie Moreno, said he told the grand jury that he never contributed a dime to the campaign of Judge Abascal, who did not return calls seeking comment. If Kickapoo leaders surreptitiously moved $15,000 to Judge Abascal’s campaign in this way, they may have broken several state and federal laws. In addition, this scheme would only account for half of the $30,000 in Kickapoo funds that the indictment charges went to
tate district judges. Eagle Pass’s two s
ate district courts handle a steady stream of Kickapoo cases. The town’s other state district judge, Cynthia Muñiz, did not report receiving any money from casino employees for her 2002 campaign. Judge Muñiz did not return calls seeking comment. In another judge-related charge, the grand jury alleges that Timo and another defendant moved $45,000 in casino funds to “the Zavala County Judge” during the 2002 campaign. Although the casino booked this money as “legal fees,” the indictment says that the unnamed judge used it to pay Timo’s campaign workers. A clerk at the Zavala County Courthouse said her office has no contact information for then-County Judge Pablo Avila. Even Avila’s brother, a local jail administrator, said he does not have a number for his sibling. “All I know is he’s not here in Crystal City,” Roger Avila said. The indictments suggest that the Lucky Eagle’s masters also sought control over local governmental fiefdoms. The San Antonio Express-News reported that Garza threatened local businessowners in 2002 with losing the tribe’s business if they supported incumbent Tracy King. Prosecutors allege that the defendants diverted a total of almost $46,000 in tribal funds to an unnamed school board candidate, as well as an incumbent city council member and justice of peace. Apart from Isidro Garza once serving as Eagle Pass’s city manager, the local school district has employed Timo’s wife as a speech pathologist. Prosecutors allege that the defendants moved another $8,200 in tribal funds to the mayor of Pearsall for “services rendered” to Timo’s 2002 campaign. Then-Mayor Roland Segovia had a reputation for not paying his bills and flipping off critics, according to the Express-News. Police arrested him on two occasions, only to drop charges that he had threatened a deputy and his own sister. Segovia resigned under pressure in late 2004 after violating city rules prohibiting sitting council members from running for another office. Segovia, who could not be reached for comment, previously attributed his ouster to racism and politics. The Garza-run Kickapoo regime sought to influence a staggering array of politicians stretching from the local school board and courthouse all the way to Congress. That this empire eventually collapsed is perhaps less surprising than the fact that a handful of casino politicos in Eagle Pass managed to erect it in the first place. Such a feat is unimaginable absent a mountain of casino cash. From the time it opened, the Lucky Eagle has been thoroughly dependent upon the state and federal government. This is why Kickapoo leaders moved so much casino cash—legal or otherwise—to politicians. In the end, however, Kickapoo leaders lost the one political contest upon which their whole empire was built: the tribal vote. When new tribal leaders took over in October 2002, they said that their predecessors left them with $60,000 in the bank to cover $20 million in debts. Although the new Kickapoo leaders pledged to end graft, the only game in town is the casino. The tribe spent $15 million on a new gaming establishment and has considered building a 400-room hotel nearby. Yet these investments are still political gambles. Kickapoo representatives say that their business would be wiped out if Texas approves proposals to legalize slot machines for other tribes and at racetracks around the state. Governor Rick Perry, who promoted this controversial plan in 2004, backpedaled in January, telling the Fort Worth Star-Telegram that the idea was “on life support at best.” Capitol insiders are not yet writing off the well-funded lobby that has been hired to push slot machines this session. When Timo entered the Legislature in 2003, he faced suspicion from many Democratic colleagues. After narrowly beating an incumbent he received financial support from the tort reform lobby that was allied with the new Republican speaker. Some of these former colleagues privately say they were struck by how Timo acted as if he was still in his father’s house. “It was almost a joke that whenever there was a tough vote where [Speaker Tom] Craddick needed Timo, his father would show up,” recalls one member of the House Democratic caucus. In particular, Democrats remember the fight over a 2003 constitutional amendment that now authorizes state lawmakers to cap the damages that juries can award in lawsuits. Timo joined the Republican leadership in supporting the amendment, as his father looked down from the gallery—where he sat with business supporters of the legal caps. In his 2004 reelection campaign, Timo ran with an incumbent’s advantage but his father no longer controlled a casino that could supplement his son’s personal and political finances. For some in his district, the time had come for pay back. Now listing his occupation as “real estate agent,” no-casino Timo crapped out. Former Representative Tracy King, who suspected that the casino subsidized his opponent’s first campaign, returned in 2004 to capitalize on the Kickapoo coup. This time King, who did not return calls seeking comment, beat Timo—first at fundraising and then in the Democratic primary. Perhaps the most telling contribution in King’s war chest was $1,000 from the new Kickapoo regime. Today the Garza family is passing the hat again—this time for the Garza Legal Defense Fund. Elizabeth Guillot of Spring, Texas helped organize the fund shortly after the first indictments came down. She says fundraising is “going well,” but declined to elaborate on what has been raised—or who the top supporters are of the Garza family’s latest campaign. Andrew Wheat is research director of Austin-based Texans for Public Justice. Jake Bernstein provided additional reporting for this column. _______________________________________________________________ GREAT CHIEF BUSH | BY ANDREW WHEAT he Kickapoo tribe’s quest for a high-powered, Class III gambling franchise predates the 1996 opening of its current casino. U.S. Indian gaming law directs federally recognized tribes such as the Kickapoo to negotiate these gaming compacts with the states. When Kickapoo tribal representatives attempted to negotiate such a compact with then-Governor George W. Bush’s staff in 1995, General Counsel Alberto Gonzales turned them down. Following procedures in the same federal gaming law, the rebuffed Kickapoo filed a federal lawsuit accusing the state of negotiating in bad faith. Winning that case would have allowed the U.S. Interior Department to approve the Kickapoo’s casino permit—even without the state’s cooperation. These procedures went out the window in 1996, when the U.S. Supreme Court ruled in a Florida case that states are constitutionally guaranteed immunity from lawsuits filed in federal court by sovereign tribes. Responding to this Seminole tribe decision, Clinton Interior Secretary Bruce Babbitt adopted new rules in 1999 to let his office independently approve Class III gaming compacts—even for tribes that had not prevailed against a state in federal court. Babbitt adopted these rules over the objections of several state leaders, including Texas Governor George W. Bush, who argued that Babbitt’s rules exceeded his legal authority. Less than two years after Babbitt adopted these rules, the big chief in Austin became the big chief in Washington. Chief Bush then began enforcing the Babbitt rules he once decried. Last year, Bush’s Interior Secretary notified Texas that she would use Babbitt’s rules to process the Kickapoo gambling application. Texas Attorney General Abbott retaliated by filing a lawsuit against the Interior Secretary. That pending federal lawsuit echoes Bush’s gubernatorial claim that the Interior Secretary lacks independent authority to process the Kickapoo gaming application. One of many U.S. attorneys of record defending the Bush administration from this lawsuit is U.S. Attorney Johnny Sutton, the same Bush appointee who is prosecuting the old Kickapoo regime.