The tale of the money transfer that toppled the House majority leader
What could turn out to be the most important meeting in Tom DeLay’s career started at 10:15 a.m. on October 2, 2002. The Sugar Land Republican who was then U.S. House majority leader met that morning for 30 minutes in his Capitol office with his top campaign aide, Jim Ellis. Ellis is executive director of DeLay’s leadership PAC, Americans for a Republican Majority (ARMPAC). Both men are currently under indictment for the alleged laundering of $190,000 in corporate money. The allegation is a simple one. A local ARMPAC clone called Texans for a Republican Majority had raised $190,000 in corporate money it could not legally spend on Texas political candidates. It sent the money to the Republican National Committee in Washington, D.C. The RNC, following specific instructions from Ellis as to the recipients and the amounts, sent back a total of $190,000 to seven candidates for the statehouse in money that could be spent legally. According to the allegations, the entire operation existed to circumvent Texas campaign laws.
October 2 was a key date in the story of that $190,000. The importance of the meeting, first reported in the Houston Chronicle, is underscored by the fact that DeLay and Ellis cannot seem to get their stories straight about what happened during it. Ellis’ lawyer, J.D. Pauerstein, claims that the $190,000 was not discussed at the meeting. He also says that Ellis has not testified before the grand jury nor have any of his documents been subpoenaed. DeLay, talking about the case on Fox News Sunday on October 7, 2005, described it as a “scheduling meeting.” According to DeLay, as the two men were leaving the office, Ellis remarked, “by the way, we sent money.” Speaking with Wolf Blitzer on CNN on October 3, 2005, DeLay said, “I didn’t know they did this legal activity with the Republican National State Election Committee. I did not know who they had targeted. I did not know where the money went. I had nothing to do with the day-to-day operation of TRMPAC.”
But documents from a separate civil trial involving TRMPAC indicate that DeLay was actively involved in the political action committee he created. The majority leader participated in a number of conference calls about the PAC’s activities, raised money for the effort, received corporate checks for TRMPAC, and traveled to Texas and Virginia to attend fund-raising events.
The first public documentation of the saga of the $190,000 appeared on Tuesday, September 10, 2002. On that date, John Colyandro sent an e-mail to TRMPAC accountant Russell Anderson. The e-mail asked Anderson to Fed-Ex overnight a blank check to Jim Ellis in Washington, D.C. “Needs to arrive tomorrow,” wrote Colyandro. (In a civil deposition a year later, Colyandro cited a pending meeting between Ellis and the RNC as the need for urgency.)
Three days after Colyandro sent that first e-mail message, Jim Ellis—”the decision-maker on the PAC,” according to TRMPAC treasurer Bill Ceverha—met with RNC officials, including its political director, Terry Nelson (see Andrew Wheat’s column, page 13 of this issue). Ellis had filled in the check for the amount of $190,000. It was the largest single expenditure TRMPAC ever made.
Ellis gave the check to Nelson along with “a document that contained the names of candidates for the Texas House of Representatives and amounts to be contributed to each of the said candidates,” according to the indictment. Whether that document still exists is an open question. It has never been released to the public.
TRMPAC officials then turned their attention to planning a fund-raiser to be headlined by Marc Racicot, the RNC chairman. On September 18, 2002, Colyandro sent an e-mail to Ellis and others confirming a “reception/dinner” in Houston for the beginning of October.
On September 20, the TRMPAC check for $190,000 was deposited in the nonfederal section of the RNC, known as the Republican National State Election Committee (RNSEC), in an account designated for corporate money. On September 26, Colyandro had another exchange with Anderson about the check, which further buttresses the theory that DeLay knew about it. Colyandro was planning a trip to Washington, D.C., to show the PAC’s disclosure reports to the TRMPAC board, of which DeLay was the most prominent member. Anderson couldn’t complete the report without more information, a point he emphasized with capital letters. “I NEED THE DETAILS ON THE 190,000 CHECK WRITTEN BY JIM ELLIS TO THE RNC,” he e-mailed back to Colyandro. It’s unclear whether Colyandro ever made the trip.
Six days later, Ellis had his fateful meeting with DeLay. At this point, they were just a month out from the election. In order for money to have an impact, they needed it right away. They had delivered the check to the RNC almost three weeks before. Why the hold-up, if this was a straight transaction, as the indictment and the evidence seems to suggest? One possible answer is bureaucracy. Jay Banning, director of administration for the RNC, testified in the civil case that the RNC legal division reviews “all such transactions.” Another, more intriguing possibility, is that someone at the RNC had qualms about the plan.
It’s unknown whether DeLay and Ellis called anyone at the RNC that morning of October 2. The very next day, Marc Racicot was flying to Fayetteville, Arkansas, for an RNC finance meeting. The day after that, his schedule had him flying to Houston for a TRMPAC fund-raiser. His schedule reads: “Dinner FR for Tom DeLay’s PAC.” What is known is that at some point on October 2, the RNC drafted memorandums for seven unusual checks to Texas candidates.
On October 3, the RNC cut seven sequential checks numbered from 7470 to 7476 to Texas state representatives. Four of the checks were for $20,000. Two of the checks were for $35,000. The largest check, for $40,000, was for Glenda Dawson. Together they totaled $190,000. RNSEC did cut checks for other Texas legislative candidates during that period. Not one, however, was for more than $500.
It’s understandable why the RNC would not give larger contributions. According to Bloomberg News, outside of the Texas 7, the RNC did not give more than $2,000 to any single state legislative candidate anywhere in the United States. In 2002, Democrats held the U.S. Senate by one vote. There were contested Senate races all over the country. Why would the RNC divert its resources to a Texas legislature that was already largely controlled by Republicans?
In John Colyandro’s deposition in the civil trial, he explained TRMPAC’s decision to give almost $200,000 to the RNC. Colyandro claimed that TRMPAC had all along budgeted $200,000 for party building. “We initially wanted it to stay in Texas, but then at which point they were fully funded, it went to the Republican National Committee for similar activities,” he testified.
However, in the weeks after the $190,000 came back to Texas, TRMPAC’s corporate fund-raiser, Warren RoBold, was sending out urgent e-mails begging for money. In one, he wrote, “I have raised 40% of the dollars that TRMPAC needs [in] the final weeks. We still need $125,000 of Corporate funds to finish the project and pay our obligations. The House is looking good. But we take nothing for granted. We want to get to 84-95 Texas State House seats and insure [sic] the election of the first Republican Speaker in the State’s history.”
It would take two years for the 2002 campaign to catch up with Colyandro and Ellis. On September 21, 2004, a Travis County grand jury delivered first-degree felony indictments for money laundering against the two men. Almost a year after that, another grand jury re-indicted Colyandro and Ellis and, for the first time, indicted DeLay on criminal conspiracy charges over the $190,000. (Six days later, prosecutors subsequently re-indicted DeLay.) The original indictment forced DeLay to step down as House majority leader—he hopes temporarily. Money laundering is a first-degree felony punishable by five years of probation to life in prison and a fine of up to $10,000. Conspiracy to commit money laundering is a second-degree felony punishable by 2 years of probation to 20 years in prison and a fine of up to $10,000.
Those involved in the money transfer insist it was perfectly legal. There is nothing wrong with sending corporate money to the RNC, and there is nothing wrong with sending hard money to Texas candidates. The contention is that these were two separate, unrelated events. But that theory is proving a hard sell. District Judge Joe Hart, ruling in a civil case against TRMPAC’s treasurer Bill Ceverha, rejected it and factored the $190,000 into his damage awards. The burden of proof in a criminal case is higher. Despite their insistence that everything was aboveboard, participants in the transfer, especially Tom DeLay, appear eager to put themselves as far away from the scene of the alleged crime as possible.