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Campaign Funds Flow to Relatives

For House Majority Leader Tom DeLay (R-Texas), politics is now a family business.

DeLay has both his wife and daughter on the payroll of political organizations he controls or is affiliated with, and the two women have raked in nearly $350,000 in just under three years from those groups.

Most of the money has gone to Danielle DeLay Ferro, the only daughter of the Majority Leader, who serves as his campaign manager.

DeLay, though, is far from the only lawmaker to hire relatives through his campaign or other fundraising organizations.

Other lawmakers with family on their campaign payrolls include Reps. Richard Pombo (R-Calif.), Howard Berman (D-Calif.), Major Owens (D-N.Y.), Bart Stupak (D-Mich.), Hal Rogers (R-Ky.), James Clyburn (D-S.C.), Henry Bonilla (R-Texas), Barbara Cubin (R-Wyo.), Jim Turner (D-Texas), Nick Rahall (D-W.Va.), Scott McInnis (R-Colo.), Pete Stark (D-Calif.) and Jim Walsh (R-N.Y.).

Campaign watchdog groups note that while such actions are legal, Members must demonstrate that hiring a relative for a campaign position is not simply a way to transfer political donations to personal use, which is illegal. The family member also cannot be paid more than fair market value.

“Since there is this prohibition on the personal use of campaign funds, the first question is whether the person has the requisite skills” to actually justify being hired by a campaign, said Larry Noble, executive director and general counsel of the Center for Responsive Politics. “The problem is that it doesn’t look good. It has to be carefully watched.”

DeLay’s political operation, in particular, has generated large fees for his daughter.

During the 2001-02 election cycle, Ferro, though her consulting company, Coastal Consulting, was paid more than $113,000 by DeLay’s re-election campaign. She received an additional $5,000 from the DeLay campaign for “contract services.”

Americans for a Republican Majority, DeLay’s leadership PAC, is another client of Coastal Consulting. Coastal was paid $22,088 by ARMPAC last cycle.

Ferro herself received an additional $34,479 in her own name directly from ARMPAC. That money was also listed as “fundraising fees.”

Texans for a Republican Majority, another DeLay-affiliated organization, paid Ferro and Coastal Consulting a total of $30,893 during the last six months of 2002. TRM has been caught up in an investigation of whether it and the Texas Association of Business violated state law by pumping corporate money into Lone Star State legislative races last cycle.

Altogether, Ferro and Coastal Consulting received more than $227,000 for her political activities during the last cycle from DeLay-controlled entities.

That comes on top of the $60,000 Ferro was paid in the final half of 2000 by ARMPAC and the Republican Majority Issues Committee, another DeLay-linked organization

So far this year, Ferro has received $18,876 from the Tom DeLay Congressional Committee and ARMPAC.

Stuart Roy, Delay’s spokesman, defended the payments as commensurate with the political acumen that Ferro has displayed.

“With Dani as campaign manager, Tom successfully boosted his re-election margin to 63 percent last year,” said Roy. “And with her skill in running events for ARMPAC, the organization had its strongest fundraising year ever. With that type of success, she comes as a bargain to the organization.”

In recent years, Christine DeLay, the wife of the Majority Leader, has been paid a salary as “CEO” of ARMPAC through the Alexander Strategy Group, a lobbying firm set up by former DeLay Chief of Staff Ed Buckham. That firm’s clients include AT&T, drug manufacturer Eli Lilly and the Nuclear Energy Institute.

But the DeLays insist the payments going to Christine DeLay, roughly $40,000 per year, are not for lobbying work.

Starting last June, however, ARMPAC began to pay Christine DeLay directly. She was paid $27,398 from ARMPAC in the period covering June to December. She has also received an additional $15,688 this year through March.

Christine DeLay no longer receives any money from Alexander Strategy Group, according to DeLay’s office.

“For obvious reasons, Christine, in her role at ARMPAC, has final signoff of Tom’s travel schedule, what events he attends and what his name appears on, among other duties,” said Roy.

“As much as Tom appreciates those who work for him in his political organization, there is no one he trusts more than Christine to ensure his name is protected and his time is spent wisely.”

Pombo, the new chairman of the House Resources Committee, has also paid out large sums to a family member.

Randall Pombo, the longtime campaign manager for his brother, earned more than $149,000 last cycle to help the California Republican win a sixth term in the House. Randall Pombo has received another $21,600 so far this year. Running his brother’s campaign is the only source of income for Randall Pombo.

Rep. Pombo did not return calls seeking comment.

Berman, the former vice chairman of the House ethics committee, paid $75,000 to Berman & D’Agostino, a political consulting and direct-mail firm co-owned by Michael Berman, the lawmaker’s politically well-connected brother.

“If you could find me somebody who is more skilled at political campaigns and political advice than he is, I’d be happy to hire them because they’d probably be cheaper,” joked Berman, who pointed out that his brother has been a political consultant since 1980.

“This is not one of those situations where you create a [job] to get a relative money,” Berman added. “The guy who happens to be the best happens to be my brother and his partners.”

Berman, however, noted that his colleagues have to be careful about their “intent and motivation” when hiring relatives, who are banned from working for a Member’s personal office under House rules.

“If the reason that you’re hiring that person was a way of getting money to your family, as opposed to that’s the most sensible decision based on background and training … it raises questions about personal uses of political funds,” said Berman.

Freshman GOP Rep. Tom Cole (Okla.) had a unique experience during the last campaign, his first run for the House. He handed out nearly $75,000 to the consulting firm Cole, Hargrave, Snodgrass & Associates, which he was a name partner in until his election to Congress.

John Woods, Cole’s campaign manager, called Cole, Hargrave the “premier consulting firm” in the Sooner State. Woods said the Congressman “made no profits” from the company’s work on behalf of his own campaign.

Some Senators also pay family members with their campaign funds.

Sen. Barbara Boxer (D-Calif.) funneled $115,000 last cycle to Douglas Boxer & Associates, a company run by her son, from PAC For A Change, her leadership political action committee.

Sen. Ben Nighthorse Campbell (R-Colo.) paid his wife and sister-in-law a total of more than $14,000 last cycle for campaign work, according to a report in the Denver Post, although the Colorado Republican isn’t scheduled to face the voters until next year.

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