Case may shed light on dark money group
Ruling puts at risk Empower Texans’ ability to hide its funding sources from the public
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.”