Saturday, August 02, 2008

Texas politicians divert money from donors and special interest groups into their family bank accounts

Mix of campaign and family business draws criticism

Aug. 3, 2008

Associated Press
Copyright 2008

AUSTIN — It's been almost a year since the Legislature made it illegal for lawmakers to use political funds to rent property from themselves or their spouses, but some legislators have managed to still keep campaign business in the family.

Sen. Eliot Shapleigh, D-El Paso, has campaign space in an office building his wife owns, and records show he makes payments to her company for computer usage and paper.

Sen. John Carona, R-Dallas, meanwhile, has reimbursed from campaign funds nearly $600,000 to two of his companies in recent years. He doesn't pay rent anymore but still advertises the address and a phone number at his Dallas management company, Associa, as his campaign contact information, records indicate.

Neither Shapleigh nor Carona reported a donation of office space on their recent campaign reports.

"If the space has value, which it clearly does, and it's donated to the officeholder or the campaign, it needs to be reported," said Fred Lewis, an Austin-based political activist who favors stricter campaign finance laws. "That's as clear as can be."

Controversy over mixing campaign spending with personal business prompted the Legislature to clamp down on perceived abuses in 2007. Though elected officials were prohibited years ago from using campaign money to buy real estate, many made payments to their spouses for the use of homes and offices. Critics said the loophole allowed politicians to acquire second homes in Austin and benefit from fat campaign accounts.

The Legislature closed the loophole last year and made it illegal for elected officials to rent property from companies they own or control.

Sens. Kim Brimer, R-Fort Worth and Jane Nelson, R-Flower Mound, quit paying campaign rent for luxury condos listed in their spouses' names, records show. Both had made more than $150,000 each in rent payments and related expenses to their spouses since 2000, records indicate.

Nelson's husband and Brimer's wife have since sold the condos, located in the tony Westgate building next to the state capitol. Spokesmen for both senators declined to give additional information.

Elsewhere, Sen. Royce West, D-Dallas, adapted to the new law by moving his campaign office out of his Townview Professional Building. Until early last year, while the new law still was being debated, West had rented space from his own company, Skyview Development Corp..

As for Shapleigh, the El Paso Democrat said he saw nothing wrong with continuing to make payments to his wife's company for Internet service, computers and paper. Records show he has paid the company, 701 N. St. Vrain Joint Venture, $2,423 for those purposes since the law changed last year.

"I'm over there and I'm responding to something that has to do with Senate activities," Shapleigh said. "I think we've followed the law."

Carona, chairman of the powerful Senate Transportation committee, since 2000 has reimbursed two of his companies $582,000 for various services, including rent and corporate jet travel. Carona no longer charges his campaign for rent. However, the Dallas Republican's political headquarters, as listed on his campaign Web site, has the same address and phone number as Associa, his successful Dallas-based property management company.

Neither Carona nor Shapleigh reported the office space as an in-kind, or non-cash, contribution on their campaign reports.

"I don't do campaign work out of my business office," Carona said.

Natalia Ashley, general counsel for the Texas Ethics Commission, said if candidates for elective office, their spouses or their business entities give their campaigns "something of value" — whether it's money or not — the gift must be reported.

It is not uncommon for elected officials to put family members on the campaign payroll.

House Speaker Tom Craddick, R-Midland, pays his daughter, Christi, thousands of dollars a month for consulting work, records show. But while the law allows payments to adult offspring and siblings, payments to dependent children and spouses living in the same household are heavily restricted.

Complaints were filed last year against two House members who paid their wives for accounting work. One of them, Rep. Rob Eissler, R-The Woodlands, acknowledged he had erred and has since begun paying the money back — more than $50,000 — out of personal funds.

"I found out it wasn't permissible," Eissler said. "When I found out it wasn't, I stopped."

But Rep. Carl Isett, R-Lubbock, continued to make payments in 2007 to his wife's company, Lubbock Bookkeeping Services, after the complaint was filed. Isett told the Austin American-Statesman in late May he saw nothing wrong with paying her company a total of $39,158 last year.

However, when contacted by the Associated Press last week, Isett's consultant, Todd Smith, said the Lubbock Republican had decided to stop.

"Carl just thought it was better to end the practice altogether so there wouldn't be any questions," Smith said.

Ethics watchdogs say laws prohibiting or restricting the mingling of campaign and family business are in place for a good reason: to ensure that politicians don't divert money they get from donors and special interest groups into their family bank accounts.

"Texas law is designed to prevent campaign contributions from being used to enrich the officeholders or their spouses," said Tom "Smitty" Smith, director of the liberal watchdog group Public Citizen of Texas. "There are firewalls and clear standards that have been set."

© 2008, Associated press:

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