June 20, 2005,
Ronnie Earle, the Texas prosecutor who has indicted associates of House Majority Leader Tom DeLay in an ongoing campaign-finance investigation, dropped felony charges against several corporations indicted in the probe in return for the corporations' agreement to make five- and six-figure contributions to one of Earle's pet causes.
A grand jury in Travis County, Texas, last September indicted eight corporations in connection with the DeLay investigation. All were charged with making illegal contributions (Texas law forbids corporate giving to political campaigns). Since then, however, Earle has agreed to dismiss charges against four of the companies retail giant Sears, the restaurant chain Cracker Barrel, the Internet company Questerra, and the collection company Diversified Collection Services after the companies pledged to contribute to a program designed to publicize Earle's belief that corporate involvement in politics is harmful to American democracy.
Some legal observers called the arrangement an unusual resolution to a criminal case, at least in Texas, where the matter is being prosecuted. "I don't think you're going to find anybody who will say it's a common practice," says Jack Strickland, a Fort Worth lawyer who serves as vice-chairman of the criminal-justice section of the Texas State Bar. Earle himself told National Review Online that he has never settled a case in a similar fashion during his years as Travis County district attorney. And allies of DeLay, who has accused Earle of conducting a politically motivated investigation, called Earle's actions "dollars for dismissals."
YOU'VE BEEN A BAD, BAD CORPORATIONOn September 21, 2004, a grand jury in Travis County indicted three associates of DeLay John Colyandro, the head of DeLay's political-action committee, Texans for a Republican Majority (TRMPAC), Jim Ellis, a DeLay aide and officer of the committee, and Warren Rebold, a Washington fundraiser. The indictments received front-page coverage, with a number of commentators suggesting that Earle was moving toward ultimately indicting DeLay.
Receiving less attention was the grand jury's decision to indict the eight companies for making allegedly illegal contributions to TRMPAC. In addition to Sears, Cracker Barrel, Questerra, and Diversified Collection Services, the group of indicted companies included Bacardi USA, Westar Energy, Williams Companies, and the trade group Alliance for Quality Nursing Home Care. Under Texas law, corporations are not allowed to contribute directly to political campaigns, but are allowed to fund the administrative expenses of a political committee.
After the indictment, Earle announced that his prosecutors had uncovered "the outline of an effort to use corporate contributions to control representative democracy in Texas."
The companies denied wrongdoing. Two sources with extensive knowledge of the case involving one of those companies, Sears, spoke at length to NRO and say that Sears executives were convinced the company had done nothing illegal when it contributed $25,000 to TRMPAC. Given that, according to the sources, Sears lawyers were not interested in a plea bargain to end the case. "We were pretty confident that we would win," one source says.
When the company's representatives spoke to Earle, they discovered that the prosecutor was not as adamant about prosecuting them as his public words might have suggested. Indeed, the sources say Earle was willing to drop the charges, providing Sears met a few of his conditions.
First among those, according to the sources, was that Sears make a significant contribution to an organization known as the Center for Deliberative Democracy at Stanford University. The Center is devoted to something called "deliberative polling," which was developed by a Stanford professor (and Earle acquaintance) named James S. Fishkin.
Deliberative polling, according to Fishkin, is designed to measure public opinion on issues about which many members of the public are essentially uninformed. According to the Center's website, it works like this:
Deliberative Polling is an attempt to use television and public opinion research in a new and constructive way. A random, representative sample is first polled on the targeted issues. After this baseline poll, members of the sample are invited to gather at a single place for a weekend in order to discuss the issues. Carefully balanced briefing materials are sent to the participants and are also made publicly available. The participants engage in dialogue with competing experts and political leaders based on questions they develop in small group discussions with trained moderators. Parts of the weekend events are broadcast on television, either live or in taped and edited form. After the deliberations, the sample is again asked the original questions. The resulting changes in opinion represent the conclusions the public would reach, if people had opportunity to become more informed and more engaged by the issues.
Earle and Fishkin know each other. Earle told NRO that he became aware of Fishkin's work a few years ago and had become "casually acquainted" with Fishkin when Fishkin was a professor at the University of Texas in Austin, before moving to Stanford. Fishkin, who told NRO that "I don't know [Earle] really well, but I know him slightly," says he once sent Earle a tape of a deliberative-polling production done in Britain, and that Earle "has talked to me vaguely about doing some kind of project."
Earle says a program based on deliberative polling would be a good way to "educate" Americans about the threat that he believes corporate political activity poses to the country's political system. Such a program's influence, he says, would extend far beyond Texas, which is one of 18 states that ban corporate giving. To be most effective, the program would be televised nationally; Fishkin has in the past done polls in conjunction with MacNeill-Lehrer Productions, the company that produces >The NewsHour with Jim Lehrer" on PBS.
"My concern has been that there needed to be a conversation about the role of corporations in American democracy," Earle told NRO. "How do you do that? I think it is vitally important to the future of the country that there be a discussion of this concept."
THE $1 MILLION POLITICAL LESSONThat's where the indicted corporations came in. According to the sources with knowledge of the Sears case, Earle told company representatives that he wanted Sears to contribute to the Deliberative Democracy group at Stanford, and that a program devoted to the dangers posed by corporate political money might cost as much as $1 million.
"They asked for an outrageous amount of money," says one Sears source, noting that the maximum penalty the company would have been forced to pay if it had gone to trial and lost would have been $20,000. "All the defendants would pay in similar amounts to a fund that would fund a symposium or seminar or event that would be produced in conjunction with PBS, and it would be televised, and the goal of it would be to explore the evils of corporate money in politics and why that is a bad thing."
Sears representatives balked at the offer. Not only was the dollar figure too high, but they believed that the resulting program would be devoted solely to bashing the political activities of corporations, while leaving untouched those of labor unions and other interest groups like trial lawyers. The two sides agreed to talk again later.
Sears was not dead set against paying some money into some sort of project, but company officials were determined that it not go to Stanford, which, Sears believed, would produce an anti-corporation project. When Sears raised its objections, Earle was adamant that Stanford get the money. In response, Sears suggested an alternative, saying it might be interested in contributing some amount of money to the LBJ School of Public Affairs at the University of Texas. Even though the university was in his own back yard, Earle still wanted Stanford.
The two sides agreed to talk yet again. The impasse was resolved when, a short time later, Earle changed his mind and agreed that the money the final figure would be $100,000 could go to the University of Texas. (As it turned out, a top protégé of Fishkin, professor Robert Luskin, does deliberative polling work at the University of Texas.) The final agreement says that, "The defendant, after discussions with the district attorney, has decided to financially support a nonpartisan, balanced and publicly informative program or series of programs relating to the role of corporations in American democracy, which shall include a program conducted through the Lyndon B. Johnson School of Public Affairs at the University of Texas."
The agreement contained a number of other conditions. First, Sears agreed to "modify [its] website to provide for public access to and disclosure of corporate contributions made by the company." Second, Sears agreed to "not make any illegal corporate political contributions," either in Texas or any other state where such contributions are illegal. Third, Sears agreed to "cooperate with the State of Texas in its prosecution and investigation of any other person for any offense related to the corporate contribution made by defendant." And fourth, Sears agreed to a statement defining its political activity as a danger to the country. "The defendant further acknowledges that the historical basis for the Texas prohibition against corporate political contributions is that they constitute a genuine threat to democracy," the agreement said.
In return, Earle stipulated that the alleged offense charged in the indictment "appears to be restricted to a single incident within the State of Texas and does not constitute a continuing course of conduct." Earle also conceded that Sears had no intent to break the law and "has a history of good citizenship and high ethical standards." Earle noted that Sears had hired a compliance officer, and "has already begun a thorough review of the company's contributions policies and practices." Finally, the agreement said Earle believed that dropping the charges "will serve to cause corporations to more closely monitor and evaluate their political contributions in Texas and throughout the United States."
Earle made similar deals with Cracker Barrel, Questerra, and Diversified Collections Systems. (Cracker Barrel agreed to pay $50,000, and the amount paid by the other two could not be determined by press time.) Cracker Barrel included the text of its agreement with Earle in a filing with the Security and Exchange Commission, where it can be viewed on the SEC's "Edgar" database.
FLIPPED?Earle's deals with the corporations received relatively little press coverage in light of reporters' continuing interest in the DeLay angle of the story. What coverage there was, was not entirely accurate, according to the Sears sources.
On January 12 of this year, the Los Angeles Times reported that the corporations had "flipped," that is, agreed to cooperate with prosecutors. Citing unnamed sources, the paper reported that "information gleaned from the companies could be used as leverage to pressure remaining defendants and, potentially, to target more powerful members of the Republican Party in Texas and Washington."
The "flipped" reference rankled insiders. "That was absolutely not true," says one Sears source. "There was no shred of truth to it." Sears officials, the sources say, had already cooperated fully, telling Earle everything they knew about Sears' lone contribution to TRMPAC. In addition, the sources say, Sears had no knowledge of any illegal activity on the part of anyone else. The implication that Sears had turned state's evidence and might finger other companies involved in similarly illegal acts which, of course, Sears denied it had committed was, the sources contend, simply wrong.
In any event, the agreements between Earle and the corporations struck some outside observers as not only unusual but also indicative of the highly political nature of the case. "What does funding think tanks and polling organizations have to do with a violation of the criminal law?" asks former United States Attorney Joseph DiGenova, who has publicly supported DeLay. "This is an extortionate use of the indictment power." One close ally of DeLay calls it a "dollars for dismissals" scheme.
Making the situation worse, say DeLay allies, is what they believe is Earle's political motivation in pursuing DeLay. As an example, they point to Earle's attendance at a Democratic fundraiser in Dallas on May 12, in which Earle publicly discussed DeLay. For his part, Earle, an elected Democrat, has denied have any partisan purpose in the investigation. Whatever the case, Earle's dismissal of the charges against Sears, Cracker Barrel, and the other corporations has at least raised the question of whether his allegations were very strong in the first place.
Byron York, NR's White House correspondent, is the author of the new book The Vast Left Wing Conspiracy: The Untold Story of How Democratic Operatives, Eccentric Billionaires, Liberal Activists, and Assorted Celebrities Tried to Bring Down a President and Why They'll Try Even Harder Next Time.