DeLay's Corporate Fundraising Investigated

Terry Scarborough, a lawyer for TRMPAC, similarly said he considers the transaction legal.

Jonathan D. Pauerstein, a lawyer for Ellis, who signed the TRMPAC check, said he also considers the transaction legal and noted that matching dollar exchanges of this kind between state organizations and federal parties are common among Democrats as well as Republicans. If they constituted improper laundering, "lots of Democrats and Republicans around the U.S. would have soap on their hands," he said.

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TRMPAC played a central, but not unique, role in DeLay's project, which included other political organizations and was assisted in the end by a key Texas lawmaker.

The nonprofit Texas Association of Business spent $1.9 million in corporate money in 2001 and 2002 to send 4 million letters to voters in many of the same districts where TRMPAC's efforts were concentrated. The group is now a target in the investigation, but its lawyer, Andy Taylor, said it is not subject to the same laws as TRMPAC and did nothing illegal.

The Texas lawmaker who played a critical role in the project was state Rep. Tom Craddick (R), a DeLay ally who was running for House speaker in 2002. On Oct. 21 of that year, TRMPAC sent checks for 14 Republican House candidates to Craddick's office; his office then mailed the checks. The grand jury is now looking into whether this or other actions taken in connection with the speaker's race amounted to using "money or things of value" to influence the outcome of the speaker's election, a violation of state law.

Craddick's lawyer, Roy Minton, said that "there is absolutely nothing illegal" about any actions Craddick took in connection with the race.

In all, 17 House members who received money from TRMPAC were elected. Craddick was elected speaker in a secret ballot, and in May 2003, as the redistricting plan came to the Texas House floor, he ordered state police to help track down Democratic lawmakers trying to boycott the vote. The effort was closely coordinated with DeLay, whose chief political aide Julie Ann Sullivan telephoned the Federal Aviation Administration to find a plane used by some of the Democrats.

The House approved the redistricting plan on Oct. 12, 2003. TRMPAC never reported the bulk of its corporate spending to the Texas Ethics Commission; it was reported only to the Internal Revenue Service, a discrepancy first noticed by a nonprofit advocacy group called Texans for Public Justice. Scarborough, the TRMPAC lawyer, said he believes reporting of this spending in Texas was not required by law.

But Karen Lundquist, the Ethics Commission's nonpartisan executive director, said all expenditures derived from corporate money -- whether for administrative purposes or not -- should have been reported. She also said the rules governing spending by political action committees are clear: Corporate money cannot be used for politically related expenses, such as fundraising and vote drives.

Staff researcher Lucy Shackelford contributed to this report.