DeLay's Former PACs Have Failed to File Full Financial Reports with the IRS and the State of Texas; Public Citizen and CREW File Complaint With IRS.

Business Editors/Political Writers

WASHINGTON--(BUSINESS WIRE)--Nov. 10, 2003

Public Citizen and Citizens for Responsibility and Ethics in Washington Call Upon the IRS to Enforce Section 527 Reporting Requirements

Public Citizen and Citizens for Responsibility and Ethics in Washington (CREW) today filed a letter of complaint with the Internal Revenue Service (IRS) calling upon the agency to enforce its disclosure requirements regarding contributions made to Section 527 groups originally founded by House Majority Leader Tom DeLay (R-Texas).

The complaint calls upon the IRS to require Texans for a Republican Majority Political Action Committee (TRMPAC) and its related entity, Americans for a Republican Majority Political Action Committee (ARMPAC), to comply with federal disclosure laws. It also calls upon the IRS to conduct a forensic audit of those groups.

Both groups operate Section 527 organizations, which permits them to collect unlimited "soft money" donations from corporations and wealthy individuals. The groups have either recently failed to file any financial disclosure statements or filed incomplete statements with the IRS in direct violation of the law.

TRMPAC's reporting violations are the most egregious. Since the end of November 2002, TRMPAC has stopped disclosing to either the IRS or the state of Texas the amount of contributions raised from corporations and how these corporate funds have been spent. The Section 527 group was originally organized by DeLay as a means of raising and spending money from corporations and individuals in Texas state elections. TRMPAC's spending in support of electing Republican legislators has been widely credited with helping DeLay achieve his goal of securing Republican control of the Texas House of Representatives, which was needed to push a new Republican redistricting plan in Texas that would jeopardize incumbent U.S. House Democrats and ensure DeLay's continued status as House Majority Leader. TRMPAC has become the focus of a grand jury investigation as to whether TRMPAC violated the state's prohibition on spending corporate money in state elections.

"It appears that they are deliberately hiding their corporate sources of money because they want to stay out of the public eye," said Public Citizen President Joan Claybrook. "The public has a right to know who is contributing money, where it goes and whether it is illegal, especially if the money was used to undermine the current congressional district maps."

TRMPAC is required by Section 527 of the Internal Revenue Code to file all of its contributions and expenditures, including funds from corporate sources, with the IRS through the agency's online reporting system - unless the state of Texas requires TRMPAC to file comparable reports with the Texas elections agency. Texas has no requirement that TRMPAC file its corporate contributions and expenditures with the state, and TRMPAC has not made any such filings with either the IRS or the state of Texas.

DeLay remains associated with both TRMPAC and ARMPAC, DeLay's leadership PAC, although implementation of the Bipartisan Campaign Reform Act of 2002 required that DeLay sever his controlling role in the day-to-day activities of TRMPAC's soft money operations. Nevertheless, DeLay appointed his former political director and close confidant, Jim Ellis, to help lead TRMPAC, former Karl Rove associate, John Colyandro, to be TRMPAC's executive director, and DeLay's former deputy chief of staff, Tony Rudy, to run ARMPAC's soft money division. TRMPAC also shares many of the same donors as DeLay's election campaign.

"This is yet another example of Congressman Tom DeLay's skirting of ethics laws," said Melanie Sloan, executive director of CREW. "DeLay and his PACs have been either violating the law or on the edge of the law for years. It is time for the Commissioner of Tax Exempt and Government Entities Division, Evelyn A. Petschek, to take action to stop this egregious conduct."

In a second component of the complaint, ARMPAC appears to qualify as a "related entity" to TRMPAC under IRS regulations, since the groups share a principal officeholder, but ARMPAC has not declared any such relationship in its IRS filings. ARMPAC has also filed incomplete financial reports, overlooking contributions from such corporate entities as Bacardi and Epiphany Productions, Inc.

The full complaint can be found on the Web at: http://www.citizen.org/congress/campaign/issues/nonprofit/articles.cfm ?ID=10656. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.)

Public Citizen is a national, nonprofit consumer advocacy organization, and CREW is a nonprofit government watchdog organization. Both are based in Washington, D.C. For more information about Public Citizen, please visit www.citizen.org.