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Saturday, Nov 28, 2009
To anyone reading Federal Election Commission filings, it would seem that workers at Cloeren Inc. had joined together in a rare show of support -- in the form of $1,000 contributions for the congressional campaign of a dentist from a small town sixty miles away. A Beaumont Enterprise reporter looked at the list and didn't buy it. Maybe it was the Enterprise news story that caught the attention of the FBI. Whatever did it, Pete Cloeren was suddenly the target of a criminal investigation. Cloeren cooperated, phoning Babin to discuss the campaign contributions while FBI agents recorded their conversations.
The investigation wasn't exactly deep cover. When Cloeren called to get Babin's comments on tape, the dentist began to grouse about the Feds coming at them, probably, he said, because one of Cloeren's disgruntled employees tipped them off. According to Cloeren's affidavit, Babin reassured him that at least he had picked up the checks, so they couldn't be investigated for mail fraud. Ben Ginsberg, a lawyer who once worked for the Republican National Committee, had warned Babin about mail fraud.
Cloeren also taped conversations with Walter Whetsell, the Babin campaign consultant who steered Cloeren toward Triad. Whetsell must not have shared Babin's concern about the FBI investigation. According to Cloeren's sworn account, Whetsell talked freely about the conversation Cloeren had with DeLay and Babin at the country club in Orange. Whetsell also had been in touch with Ginsberg regarding possible exposure to criminal prosecution. Yet he seemed unaware the Feds were watching (and listening).
Cloeren cut himself a deal, though federal prosecutors didn't cut him much slack. He wouldn't do any jail time but would plead guilty to misdemeanor violations of federal campaign finance law. He paid a $200,000 fine, and his company paid another $200,000 fine. His relationship with DeLay, Babin, and Triad cost him a half million dollars if you take into account attorneys' fees, fines, and his actual contributions. His candidate didn't even win the election. "I presently have no business or personal relationship with Representative DeLay, Mr. Babin, Mr. Whetsell, or Mr. Mills," Cloeren wrote at the end of the affidavit he submitted to the House Committee on Government Reform. "It seems like they really took advantage of him," said a local businessman who knows Cloeren casually. There's a certain journalistic economy of scale in the Triad story. Its small size makes it easier to follow the money. From Cloeren to his employees and finally to Babin. Or from Cloeren to Triad in Washington, to one of the Triad entities, then back to the Babin campaign. Or from Cloeren to the Thurmond and Gill campaigns then back to Babin. Soft money (corporate funds illegal to spend) sent to an entity not required to report it, or to a congressional campaign that could turn it around and send it back as hard money (individual, PAC, or organizational money legal to spend). This is precisely what the fundraising operation that has come to be called DeLay Inc. does on a much larger scale, and with the extra incentive a leader of Congress brings to the process of asking for money.
The Triad affair also illustrates the impunity with which campaign fundraisers operate. A Democratic member of Congress who asked that his name not be used said Clinton Attorney General Janet Reno's lack of enthusiasm for prosecuting illegal fundraising didn't help. Reno had put herself in a box. Once she refused to appoint a special prosecutor to look into allegations about improper fundraising in the Clinton White House, any Department of Justice enforcement action against Republicans would appear to be partisan.
Congressional oversight was equally politicized. Committees in both houses were controlled by Republicans and largely focused on Clinton's fundraising. Democrats were pointing to Triad, arguing that there was more to investigate than the phone calls President Clinton and Vice President Al Gore made to funders, and the names of donors who had slept in the Lincoln Bedroom. Considering the magnitude of the White House fundraising operation and the serious questions raised about it, it's not surprising that Republicans in Congress had little interest in a small-time shell game in Texas. Yet Government Reform Chair Dan Burton's conduct was so egregious that it gave partisan excess a bad name. Burton had his sights set on ClintonGore '96 and wouldn't look at what Triad had done in the same year.
Not only did Burton refuse to look at Triad. He blocked committee Democrats from conducting their investigation. Burton held his ground until California Democrat Henry Waxman put him on the spot in public. Waxman made such a compelling argument at a mid-May '98 committee hearing that Burton agreed to allow minority members of the committee to subpoena summaries of FBI interrogations of Triad subjects. Burton quickly reneged, however, implying that Waxman was coordinating his investigation of DeLay with other congressional Democrats who had filed a racketeering suit against DeLay and his fundraising operations.
Though he wasn't able to hold hearings or subpoena witnesses, Waxman persisted, and Peter Cloeren was able to tell his story to Congress. Waxman sent a minority staff member to Texas to look into Babin, DeLay, Triad, et al. But the scope of his investigation was limited. There is no doubt that the Triad/Babin affair was dwarfed by Clinton-Gore's fundraising. But Triad was never adequately examined by the House and Senate committees looking into fundraising irregularities. Lacking the authority to issue subpoenas and schedule hearings, committee Democrats were checkmated. (Much of the material here cited is in the public record because it was in the minority reports of House and Senate committees.)
When no one was prosecuted after Peter Cloeren cooperated with the Feds and paid a $400,000 fine, he filed a complaint with the Federal Election Commission. After conducting an investigation, the FEC legal staff recommended $4,544,000 in fines: $1,149,000 against Triad; $1,818,000 against Citizens for the Republic Education Fund; and $1,577,000 against Citizens for Reform. The commissioners, always responsive to political pressure, ignored the recommendations of their own staff, dropped the fines against the two nonprofits, and reduced Triad's fine to $200,000.
Tom DeLay got a walk on the deal he had done on Peter Cloeren, which DeLay claimed involved no more than speaking to Cloeren for three minutes at lunch. ("I don't know this man from Adam," said DeLay.) Whether it was DeLay's three minutes or the ninety minutes Cloeren swore to in his affidavit, DeLay's visit to Orange, Texas, occurred as he was moving into major league fundraising. By the time he opened a Texas branch in 2001, DeLay Inc. was raising money in volumes never seen in the United States Congress. Nothing compares. No member of Congress -- except members raising money for their own presidential Campaigns -- had ever raised the amount of political money raised by Tom DeLay. The Texan elected majority leader in 2003 is in a class of his own.
