Five years ago today, at a hearing before the House Government Reform Committee investigating the 1996 Clinton-Gore fundraising scandals, Rep. Henry Waxman (D-CA) expressed his outrage that the committee chairman, Rep. Dan Burton (R-IN) had refused to investigate another scandal surrounding an obscure Texas businessman named Peter Cloeren.
The conservative Republican and tools manufacturer had plead guilty to participating in a conduit scheme, in which campaign contributions were funneled through various vehicles to support the candidacy of one Brian Babin, who later lost his race for a Texas House seat.
According to Cloeren, the scheme was orchestrated by then-House Republican Whip, Tom DeLay. As reported in The Hammer, by Lou Dubose and Jan Reid, Cloeren told a Waxman investigator how the scheme worked:
“Congressman DeLay turned to me and told me that Mr. Babin's campaign needed more money because Mr. Babin was being out-spent by his Democratic opponent.
“Congressman DeLay told me that the Democratic candidate was receiving a lot of money from liberal interest groups like labor unions and trial lawyers. I told Congressman DeLay that I could not help Mr. Babin raise more money because I had run out of vehicles. Congressman DeLay specifically told me that it would not be a problem for him to find, in his words, 'additional vehicles,' since he knew some organizations and campaigns which could serve as these vehicles. Mr. DeLay turned to his aide, Mr. Robert Mills and stated that money could be funneled to the Babin campaign through both Triad a corporation that ran two nonprofit foundations and other congressional campaigns. Congressman DeLay then specifically told me that Mr. Mills would follow up with me on the details of how to funnel additional monies to Mr. Babin's campaign.”
According to Cloeren, Mills suggested that the Texas businessman contribute to Strom Thurmond’s Senate campaign in South Carolina and to Stephen Gill’s House campaign in Tennessee. He also wrote checks to several organizations associated with the Triad Management Services, the for-profit corporation that ran nonprofits that in turn ran issue advertisements supporting Republican congressional candidates.
Cloeren ended up paying $400,000 in fines, served a two-year probated sentence and hundreds of hours of community service. Tom DeLay was cleared by the FEC and walked away unscathed. Larry Noble, who served as general counsel at the agency (and is now executive director of the nonpartisan campaign finance watchdog, Center for Resonsive Politics) and oversaw the Cloeren case later told the Dallas Morning News that while DeLay wasn’t convicted, "He's one of those people who pushes the envelope and plays on the edges." (Dallas Morning News, July 16, 2004)
This posting was researched and written by Nancy Watzman.
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