NOVEMBER 26, 2010

http://online.wsj.com/article/SB20001424052748703678404575636942232850932.html

AUSTIN, Texas—Former U.S. House Majority Leader Tom DeLay's conviction for money laundering in a state court here could inspire prosecutors in other states to target the methods used by politicians to raise and deploy corporate contributions.

A jury on Wednesday found Mr. DeLay knowingly funneled $190,000 in corporate donations to fellow Republicans running for the Texas Legislature in 2002, violating state laws that ban companies from contributing to candidates' campaigns.

He was convicted on one count of money laundering, which carries a maximum prison sentence of 99 years, and one count of conspiracy to commit money laundering, which has a penalty of up to 20 years. Mr. DeLay, whose sentence will be determined by a judge, could also receive probation.

Prosecutors said they haven't discussed whether to seek a prison term; sentencing is tentatively set for Dec. 20.

The outcome will likely reverberate throughout the other 22 states with similar bans on corporate contributions, discouraging politicians from employing similar techniques and emboldening prosecutors to go after them using the same strategy, some legal experts say.

The district attorney's office in Travis County, where the Texas state capital is located, successfully argued that swapping corporate contributions for those made by individuals for use in a political campaign constituted money laundering.

"It will put more people on notice that something which by one perspective might be considered as legal on the other can be characterized as money laundering," said Richard Briffault, a professor at Columbia University Law School.

Mr. DeLay, 63 years old, who once commanded the House with a hard-hitting style that earned him the nickname "The Hammer," had been chatty and smiling for most of the trial. But he listened to the verdict with a somber expression. Afterward, he hugged his wife and daughter, then put his hands on his hips and sighed.

"This is an abuse of power," Mr. DeLay told reporters outside the courtroom. "It's a miscarriage of justice and I still maintain that I am innocent."

His lawyer, Dick DeGuerin, said he would appeal the conviction, which the jury reached after 19 hours of deliberation. If the judge hands down a sentence of less than 10 years, Mr. DeLay would be eligible to stay out of prison on bond while he appeals.

The defense had said from the start that the charges were a political witch hunt aimed at punishing Mr. DeLay for his political prowess. The case against him was originally brought by Democratic district attorney Ronnie Earle, who has since retired. Prosecutors said their only motivation was to enforce the law, adding that they recently tried a Democrat, State Rep. Kino Flores.

The prosecution alleged that Mr. DeLay skirted the state ban on direct corporate donations to candidates using a sort of shell game. Corporate donations to Mr. DeLay's political action committee were transferred to an arm of the Republican National Committee; the same amount of cash, raised by the RNC from individual donors, was then donated to the candidates.

Those campaign dollars were credited with helping more Republicans win seats in the Texas House; they used their power to redraw congressional districts that favored Republicans, prosecutors argued.

The defense said the transfer of funds was legal, and that the money the RNC ultimately gave to the candidates didn't come from corporations. Mr. DeLay didn't testify.

The campaign-finance landscape has changed since Mr. DeLay's indictment in 2005, and companies now have other ways to influence elections. The Supreme Court ruled this year that corporations are allowed to spend their money on advertising or other efforts to support or oppose a candidate.