McCain Returns Donations Made to PAC

Sen. John McCain (R-Ariz.) returned $20,000 in campaign contributions from two prominent Texas businessmen after staff members for his political action committee discovered that there was an investigation into one of their companies.

The donations were made to Straight Talk America -- McCain's leadership political action committee -- by Sam and Charles Wyly, billionaire brothers who have been major players in Republican fundraising for years. Each cut a $5,000 check to Straight Talk, as did Sam's wife, Cheryl, and Charles's son, Charles III.

The contributions drew notice because the two brothers bankrolled Republicans for Clean Air, a soft-money 527 group that attacked McCain for his environmental record during his 2000 presidential campaign -- an attack that was widely interpreted as being motivated less by concern about pollution than an eagerness to help then-Texas Gov. George W. Bush, for whom the Wylys have been key backers. McCain is planning another presidential run in 2008.

The Wylys are the subject of state and federal investigations centered on their transfer of revenue from stock options to offshore family trusts. The Internal Revenue Service has alleged that more than three dozen companies may have used the offshore accounts to avoid paying taxes on the options. Susan Tiholiz, a spokeswoman for the Wylys, said that they "respect the senator's position."

Craig Goldman, the executive director of Straight Talk, said the federal inquiry into the Wylys was uncovered during a routine background check of donors to the committee. "Once that was discovered, we have a policy internally not to accept contributions from people in that situation, so the checks were returned," he said.

The Wylys were also disinvited to a May 15 Dallas fundraiser for Straight Talk, Goldman said. McCain's political operation initially touted the event as a sign of the inroads he had made among donors who worked against him in the 2000 presidential race.