Tom DeLay Sets Up Bogus Children's Charity to Rake Unlimited Corporate Contribututions
Delay's at it again. Using charity as a scam to raise campaign money.

http://www.nytimes.com/2003/11/14/politics/14DELA.html?hp=&pagewanted=print&position=

November 14, 2003

G.O.P. Leader Solicits Money for Charity Tied to Convention

By MICHAEL SLACKMAN

It is an unusual charity brochure: a 13-page document, complete with pictures of fireworks and a golf course, that invites potential donors to give as much as $500,000 to spend time with Tom DeLay during the Republican convention in New York City next summer — and to have part of the money go to help abused and neglected children.

Representative DeLay, who has both done work for troubled children and drawn criticism for his aggressive political fund-raising in his career in Congress, said through his staff that the entire effort was fundamentally intended to help children. But aides to Mr. DeLay, the House majority leader from Texas, acknowledged that part of the money would go to pay for late-night convention parties, a luxury suite during President Bush's speech at Madison Square Garden and yacht cruises.

And so campaign finance watchdogs say Mr. DeLay's effort can be seen as, above all, a creative maneuver around the recently enacted law meant to limit the ability of federal officials to raise large donations known as soft money.

"They are using the idea of helping children as a blatant cover for financing activities in connection with a convention with huge unlimited, undisclosed, unregulated contributions," said Fred Wertheimer, president of Democracy 21, a Washington group that helped push through the recent overhaul of the campaign finance laws.

Other lawmakers may well follow Mr. DeLay's lead. Already Senator Bill Frist, the majority leader, is planning to hold a concert and a reception in conjunction with the convention as a way of raising money for AIDS charities.

Mr. DeLay's charity, Celebrations for Children Inc., was set up in September and has no track record of work. Mr. DeLay is not a formal official of the charity, but its managers are Mr. DeLay's daughter, Dani DeLay Ferro; Craig Richardson, a longtime adviser; and Rob Jennings, a Republican fund-raiser. Mr. Richardson said the managers would be paid by the new charity.

Mr. Richardson said the goal was to give 75 percent of the money it raised to children's charities, including some in the New York area. He said the charity also planned to hold other events at the Super Bowl.

But because the money collected will go into a nonprofit organization, donors get a tax break. And Mr. DeLay will never have to account publicly for who contributed, which campaign finance experts say shields those who may be trying to win favor with one of the most powerful lawmakers in Washington.

Mr. Richardson dismissed such criticism. He said that every convention had parties and that by doing this Mr. DeLay was giving some money to worthy causes. He said Mr. DeLay had a long record of providing money to neglected children through his own DeLay Foundation for Kids, based in Houston.

"We are using the opportunity to throw parties, which happen anyway, but to give money back to abused and neglected children," Mr. Richardson said.

The brochure was obtained by The New York Times last Friday and aspects of it were reported yesterday in the newspaper Roll Call in Washington.

When both parties hold their presidential nominating conventions next summer, it will be the first time that they are staging the events under the constraints imposed by the new election law that limits the ability of federal officials to raise soft money. Though most Congressional leaders raised soft money over the years, Mr. DeLay has often been distinctively aggressive in his efforts.

Mr. DeLay is not alone in trying to find a way to continue to offer entertainment to those attending the convention, including a seat at his dinner table.

Like Mr. DeLay, Dr. Frist, a Tennessee Republican, is tying charity fund-raising to the convention. He is planning to play host to a reception and a concert at Rockefeller Center during the convention that promises to donate money to five AIDS charities.

In a letter sent out on behalf of the "Senator Frist Charitable Event," potential donors — the top tier is $250,000 — are advised, "This is the only event during the convention which Senator Frist will personally host."

A spokesman for Dr. Frist said that the effort was in the early planning stages and that the senator had not yet set up a charitable organization to collect the money.

But his plan is not as ambitious as Mr. DeLay's. Mr. DeLay, among other things, is offering donors private dinner with himself and his wife; the chance to participate in a golf tournament; a late-night party with a rock group; access to a luxury suite for elected officials and donors; as well as the yacht cruise, tickets to Broadway shows and more. Other elected officials are welcome at all of these events.

But by holding events at the convention — and working under the auspices of a charity — Mr. DeLay has stepped into an ethical gray area, election law and tax law experts said.

"The event itself is being put on in a political atmosphere," said Larry Noble, executive director of the Center for Responsive Politics in Washington and a former general counsel to the Federal Elections Commission. "It is clearly playing off DeLay's political leadership, and playing to people who find it in their political interest to be at the Republican convention."

"In that sense it is political," he added. "But does it make it a political activity on behalf of the charity?"

Mr. Richardson said the new charity has filed a request with the Internal Revenue Service for tax exempt status, which if granted would prohibit the organization from supporting a political candidate.

It would also mean part of the donations would be tax exempt — the amount contributed, minus the fair market value of what the donors get, or enjoy, in their time with Mr. DeLay.

The I.R.S. is barred by law from confirming or denying it has an application. But Marcus S. Owens, who served for 10 years as director of the exempt organization division of the I.R.S., said the link between the charity sponsored event and the Republican convention could raise a red flag at the tax agency.

"It's a factor that suggests the organization may not be nonpartisan, that there may be an element of endorsement involved in the organization's activities," Mr. Owens said.

Whatever its ultimate virtues, the DeLay fund-raising brochure displays a certain out-of-date understanding of the New York scene.

The brochure, in which the size of donations are named for more — or less — exclusive neighborhoods, starts at the Upper East Side as the top $500,000 tier and it ends with Greenwich Village for $10,000, perhaps suggesting Mr. DeLay's people have not surveyed the recent asking prices of town houses in the downtown neighborhood. He also placed Midtown (at $50,000) above SoHo (at $25,000).

"Midtown would be a lot less expensive than SoHo or the Village," said Tory Masters, of Intrepid New Yorker, a relocation firm in Manhattan. "I don't know what they are talking about."