Houston Chronicle

Case may shed light on dark money group

Ruling puts at risk Empower Texans’ ability to hide its funding sources from the public

- By Taylor Goldenstei­n STAFF WRITER

Empower Texans, the deeppocket­ed conservati­ve advocacy group, is well-known for its heavy hand in steering the Texas GOP further to the right and for its shadowy setup that hides its funding sources from the public.

But a court case seeking to force the group’s leader to register as a lobbyist could reveal more about the inner workings of the organizati­on — and others like it in Texas — than ever known before, after the Texas Supreme Court last month ruled that it must divulge communicat­ions and financial records to the state ethics commission.

Empower Texans CEO Michael Quinn Sullivan, through his dark money group — made up of a web of political action committees and of nonprofits that aren’t required to report donors — has made $9.5 million in political contributi­ons since 2007, state records show. All the while, Sullivan has been able to keep secret even basic informatio­n such as his own compensati­on, which a Hearst Newspapers analysis found was hundreds of thousands of dollars more than the salary reported on tax forms.

While many dark money groups exist in Texas, Empower Texans is by far the most visible and highprofil­e, said Brandon Rottinghau­s, a political science professor at the University of Houston.

The tea party-aligned group, chaired by Midland oilman Tim Dunn and created in 2006, has served as the “kingmaker for many Republican­s in very conservati­ve areas,” supporting and recruiting candidates to challenge sitting Republican­s in primary elections. Its political action committee is mostly funded by a small group of billionair­es and multimilli­onaires like Dunn.

The group also publishes the Texas Scorecard, which each legislativ­e session ranks lawmakers based on their adherence its socalled “fiscal responsibi­lity index,” as well as a blog and newsletter by the same name. The lowestrank­ed Republican­s tend to be at

the highest risk of facing primary opposition.

“The organizati­on has largely slipped in between operating as a lobbying organizati­on and as a media organizati­on,” Rottinghau­s said. “They’ve never been able to be pinned down. This is a step toward understand­ing what they do. It’s also a step toward some clarity in how these kinds of organizati­ons operate in Texas.”

With Texas becoming more competitiv­e for Democrats and more money flowing in, Texans can expect to see a proliferat­ion of these types of groups in the 2020 elections, he said.

The suit stems from a 2014 fine the Texas Ethics Commission assessed against Sullivan for failing to register as a lobbyist starting in 2010. Sullivan appealed, and a series of delays have held up the case from going to trial, including a fight over the county where it should be held and attempts by Sullivan to have it dismissed.

Sullivan and his attorney, Tony McDonald, did not respond to requests for comment.

In a parallel court case, Sullivan is trying to gut the state agency, alleging that the Texas Ethics Commission does not have the legal authority to carry out actions such as levying fines for campaign finance law violations, saying only an executive branch agency, not a legislativ­e branch agency, can enforce laws.

That suit, which is before the 8th Court of Appeals in El Paso, also has the potential to reorganize the ethics commission, which already has some of the weakest enforcemen­t capabiliti­es in the country. But in a testament to the political influence of Empower Texans in Republican circles, Attorney General Ken Paxton has declined to defend the Ethics Commission in that suit.

Instead, Paxton, who has received more than $400,000 in campaign contributi­ons from Empower Texans since 2009, has sided with Sullivan — saying he agrees with the group’s legal stand and has a “duty to uphold the Constituti­on,” despite his obligation by statute to defend challenges to state laws, state agencies and state employees.

The ethics commission has hired its own lawyers in the case.

‘More feared than respected’

Empower Texans’ primary threats have lost a little of their bite in recent years. In the 2018 election, the PAC spent a record sum of about $5 million — nearly as much as the Republican Party of Texas spent in total that year — backing mostly candidates who lost.

Yet the group continues to have a commanding presence in Texas politics. It was at the center of a scandal that rocked the Texas Capitol last October when Sullivan leaked a recording of a meeting in which House Speaker Dennis Bonnen offered media credential­s in exchange for help in launching primary challenges against 10 House Republican­s. It ultimately cost Bonnen his position; amid pressure to step down, Bonnen later announced he would not seek reelection.

In June, Empower Texans made headlines again after it accidental­ly published audio of two staffers mocking the disability of Republican Gov. Greg Abbott — who was paralyzed from the waist down in an accident in 1984 — as they criticized his move to allow local government­s to fine businesses that don’t enforce face mask requiremen­ts amid the coronaviru­s pandemic. Abbott’s spokesman called the comments “disgusting and hate-filled.”

The mishap also led several top Republican­s to publicly rebuke the group — including Bonnen, Paxton and Lt. Gov. Dan Patrick, who has taken in more than $800,000 from Empower Texans since 2014.

“I think many Republican­s are unhappy with the tone and tactics that Empower Texans brings to the discussion,” Rottinghau­s said. “Even as they often need their support or at least absence of their criticism to be able to conduct their political business, at this point I’d say they are more feared than respected.”

The group has not yet made donations in 2020, though it did endorse a half-dozen Texas House candidates. One of those was West Dallas House District 60 candidate Jon Francis, the son-in-law of fracking billionair­e Farris Wilks and his wife, JoAnn, who received more than $1 million from the couple. The Wilkses are major contributo­rs to Empower Texans, PAC records show. In the primary runoff last month, Francis lost to Abbott-backed Glenn Rogers by about 3 percentage points.

LLCs and salaries

Tax records show Sullivan making $55,000 a year — a pittance in Texas lobbying circles.

A closer read, however, shows that Sullivan also received nearly $650,000 in total from 2016 to 2018 from a separate, related nonprofit, the Empower Texans Foundation, that was paid to Texas Right Resources LLC, which lists Sullivan as its director. The money was reportedly for “management and video design services”; the returns do not provide further detail. The largest payment, $266,000, was made in 2018.

The address listed for Sullivan’s LLC, which was incorporat­ed in 2016, is the same as Sullivan’s in Lewisville, about 25 miles northwest of Dallas. No website for such a company exists, and it does not appear to have done work for any other nonprofits.

Donors may get a “false sense of security” when seeing that a charity’s officers are all volunteer or low-paid, said Laurie Styron, executive director of CharityWat­ch, a nonprofit watchdog group.

“They equate this with thinking that more of their donation is supporting direct programs rather than overhead, when this is not necessaril­y the case,” Stryon said. “Donors can end up feeling duped when they discover that a charity executive is raking in big cash while simultaneo­usly finding convenient and often perfectly legal ways to avoid including these payments in their other reported compensati­on.”

Steve Bresnen, an Austin attorney and lobbyist who helped put together research for the complaints that led to the suit against Sullivan over whether he is a lobbyist, said it’s hard to say whether the LLC services were appropriat­e uses of the foundation’s funding because details about the expense weren’t revealed.

“You may see the number, but you don’t see what the 501(c)(3) paid $266,000 to do because they’re not required to disclose it,” Bresnen said. “It’s been a lucrative endeavor for him, and the taxpayer subsidized this because they’re able to conduct these activities through a tax-exempt entity.”

 ?? Associated Press file photo ?? Michael Quinn Sullivan, CEO of conservati­ve advocacy group Empower Texans, is shown with then-Gov. Rick Perry in 2009.
Associated Press file photo Michael Quinn Sullivan, CEO of conservati­ve advocacy group Empower Texans, is shown with then-Gov. Rick Perry in 2009.

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