'DeLay Inc.' Lobbying Firm Has Links to Three Capital Scandals

Published on Friday, January 6, 2006 by Bloomberg News

Representative Tom DeLay's campaign to get Republicans to dominate Washington lobbying may have worked too well for Alexander Strategy Group.

The firm has links to no fewer than three of the scandals convulsing the U.S. capital. One partner, former DeLay aide Tony Rudy, is now a focus of a federal investigation of lobbyist Jack Abramoff. The group's founder, former DeLay chief of staff Ed Buckham, set up a South Korea junket for his old boss that violated ethics rules. And the firm represents a company whose owner, prosecutors allege, bribed former Representative Randy Cunningham.

Alexander Strategy's links to lawmakers are an outgrowth of a decade-long effort by DeLay, 58, to force lobbying firms to hire more Republicans, who can direct corporate money to the party. The system, known as ``DeLay Inc.'' or ``the K Street Project,'' has fueled a surge of money in politics, and critics say it has also created the potential for greater corruption.

``Alexander Strategy Group is really part of DeLay Inc. and Abramoff Inc.,'' said Melanie Sloan, a former federal prosecutor who now heads Citizens for Responsibility and Ethics in Washington, an ethics watchdog group. ``There have been some aggressive prosecutors trying to unravel those ties. I am sure that Alexander Strategy is going to have more than Tony Rudy as a problem when this is over.''

Rapid Growth

Alexander's ties to DeLay, a Texas Republican and the former House majority leader, helped it become one of Washington's fastest-growing lobbying firms, with revenue surging 20-fold from 2000 to 2004, according to lobbying- disclosure reports.

Its DeLay ties go well beyond Rudy and Buckham. Jim Ellis, the head of DeLay's political action committee, Americans for a Republican Majority, also worked for the firm as a lobbyist. Karl Gallant, who preceded Ellis as head of DeLay's political action committee, is currently an Alexander lobbyist. And the firm employed DeLay's wife, Christine, from 1998 to 2002, paying her from $3,200 to $3,400 a month, according to Richard Cullen, a lawyer for the former majority leader.

Another congressional spouse, Julia Doolittle, wife of California Republican John Doolittle, helped Alexander with bookkeeping for one of its clients, according to Justice Department records.

Ellis faces money-laundering charges in Texas along with DeLay, who was forced to give up his leadership post after his September indictment. The case involves his PAC's alleged attempts to steer corporate money to state legislative races.

From 2000 to 2003, the PAC paid at least $388,000 to Alexander in fund-raising fees, FEC and Internal Revenue Service records show.

`Nothing Wrong'

Buckham and Rudy didn't return phone calls seeking comment. Cullen, DeLay's lawyer, denied his client engaged in any wrongdoing. DeLay ``knows that he has done nothing wrong,'' Cullen said on Jan. 3, after Abramoff pleaded guilty to conspiracy, mail fraud and tax evasion in the Justice Department investigation of political corruption.

The DeLay-Buckham connection helped Alexander thrive. The company, whose offices are along the Potomac River in Washington's fashionable Georgetown district, brought in $7.8 million in 2004, an average of $650,000 for each of its 12 registered lobbyists, according to disclosures filed with Congress. That compares with an average of about $250,000 per registered lobbyist last year at Patton Boggs LLP, Washington's biggest lobbying firm by revenue. Patton Boggs had revenue of $30.6 million in 2004.

Giving to Republicans

Some of Alexander's money found its way to the Republican Party. Its lobbyists gave at least $376,608 to Republican candidates and party committees since 2001, according to Federal Election Commission records. The 12 gave a total of $1,000 to Democrats during that period.

``The largest public image of DeLay Inc. would be Alexander Strategy Group,'' said Kent Cooper, a former FEC official who co-founded PoliticalMoneyLine, a Washington-based company that tracks political finance. The firm's relationships with DeLay and other lawmakers and spouses ``might be what prosecutors are looking at.''

Prosecutors are clearly looking at Rudy, 39, DeLay's former deputy staff chief. Abramoff's plea agreement states that in 2000 a DeLay aide the government called ``Staffer A'' helped the lobbyist defeat legislation that would have restricted Internet gambling. People familiar with the case later said the staffer was Rudy. In return, the wife of ``Staffer A'' was paid $50,000 through a charity, according to the plea. Rudy hasn't been charged with a crime.

Measure Defeated

In July 2000, DeLay was one of 44 Republicans who voted against the Internet Gambling Prohibition Act, while 165 party members supported it. The legislation, which required 270 votes to pass, fell short by 25 votes.

Alexander was also employed by Abramoff associate Michael Scanlon, a former communications director for DeLay. Scanlon's public-relations company, Capitol Campaign Strategies LLC, paid $120,000 to the firm in 2002, according to records released by the Senate Indian Affairs Committee in November.

Justice Department records show that Alexander was behind a nonprofit association -- the Korea-U.S. Exchange Council -- that was financed by South Korea's Hanwha Group and that flew DeLay to Korea in August 2001. Congressional ethics rules ban registered foreign agents from funding travel by members of Congress; the trip added to the cloud of controversy surrounding DeLay when it was reported by the Washington Post in March.

Possible Violation

Alexander, whose lobbyists signed the council's tax returns, may be in violation of the law, says the IRS's former head of nonprofit groups. While the council is registered with the Internal Revenue Service as a nonprofit organization, its business-oriented purpose documented in Justice Department disclosures ``suggests tax-exempt status was not warranted,'' said Marcus Owens, who headed the IRS division of tax-exempt groups from 1990 to 2000.

Kelly Kramer, a lobbyist for the council at Nixon Peabody LLP, didn't return phone calls and e-mails asking for comment.

In the years before the Korea trip, Buckham and Abramoff had a close association. They used their credit cards to help pay for a 2000 trip to the U.K. for DeLay and his wife, the Washington Post reported in April. House rules bar members from accepting travel from registered lobbyists. DeLay's office said it had been told that a nonprofit group sponsored the trip.

``He is someone on our side,'' Buckham said of Abramoff in a 1995 interview with the National Journal. ``He has access to DeLay.''

The Cunningham Connection

One of the biggest clients Alexander landed was Group W Advisors, a San Diego-based defense consultant. The company is owned by Brent Wilkes, a businessman who is one of the four un- indicted co-conspirators in a Nov. 28 criminal complaint for allegedly bribing Cunningham, his lawyer, Michael Lipman, told USA Today. Cunningham pleaded guilty and resigned his House seat on Nov. 28.

Alexander took in at least $525,000 in fees from 2002 to 2004 from Group W to lobby on defense appropriations. Those appropriations are among the legislative favors Cunningham gave to receive his gifts, according to the former lawmaker's plea agreement. It isn't clear what role, if any, Alexander strategists had. Lipman didn't return a call seeking comment.