Senator Eliot Shapleigh - El Paso, Texas

Another chapter in the campaign finance controversy of 2002 has ended as it began — in secrecy.

Lawyers for eight corporate donors to the Texas Association of Business and for Austin lobbyist Mike Toomey quietly settled lawsuits last month brought by Democratic candidates who had claimed that corporate money was illegally used to defeat them.

The settlement is sealed by mutual agreement so the terms are not available to the public. But Houston lawyer Andy Taylor said, "TAB expended no funds to settle this lawsuit." Other defendants, however, paid undisclosed amounts, according to sources familiar with the settlement, to settle separate lawsuits brought by Austin lawyers Joe Crews and Buck Wood.

"They came to us with a package deal," Wood said.

The deal, however, does not end all litigation. Crews settled with the business association, but Woods did not. He has a lawsuit pending against the group; its president, Bill Hammond; its political committee; and three corporate donors: Ace American Insurance, Cigna Corp. and Connecticut General Life.

"It's far from over," Wood said.

In 2002, Hammond wanted the business association to become a major player at the Capitol, but he couldn't raise much money from its individual members. He borrowed an idea from a Florida business group, raising almost $1.7 million from secret corporate donors and spending the money to send 4 million mail pieces to voters in two dozen legislative districts.

He found a receptive group of donors among many of the state's insurance companies, which were out of favor with state officials because of escalating homeowner rates and threats to stop writing insurance in Texas.

The mailings were coordinated with Texans for a Republican Majority, a political committee organized by former U.S. House Majority Leader Tom DeLay, in an effort to elect the first Republican majority in the Texas House in more than a century. DeLay's committee spent an additional $600,000 in corporate donations.

Corporate money, however, is generally banned from state campaigns.

A criminal investigation and multiple lawsuits brought by losing Democratic candidates followed.

Former Rep. Ann Kitchen, defeated in 2002 by Republican Todd Baxter, was the only Austin-area lawmaker to bring a lawsuit.

Only one case has made it to trial.

In 2005, state District Judge Joe Hart ruled that Bill Ceverha, the treasurer for DeLay's political committee, violated state law by not disclosing the corporate money.

Pending are criminal charges that DeLay and two campaign associates laundered corporate money into campaign donations. The Texas Association of Business also is scheduled to stand trial in November on criminal charges that it illegally paid two employees with corporate money to campaign.

The business group has won several times on its major point: Corporate money could be spent — and the donors not be disclosed to the public — because the mail pieces were issue ads, not campaign material.

The pieces criticized Democratic candidates and touted their Republican opponents, but avoided using so-called "magic words" urging the public to vote for or against a candidate.

The identities of the 30 secret donors were disclosed after the election because checks and other documents surrendered during the litigation inadvertently identified the donors. The lawyers representing the business association had done a poor job of blacking out the corporations' names on the documents.

The most recent settlement came after Hart last year dismissed a lawsuit against the business group. The Democratic candidates had appealed that ruling before settling and dropping their appeal.

Besides the business group and Toomey, eight corporations were parties to the settlement: AT&T Corp., Great West Life & Annuity Insurance Co., Liberty Mutual Insurance Co., Allstate Insurance Co., Travelers Property Casualty Corp., J.F. Thompson Inc., USA Managed Care and the Alliance for Quality Nursing Home Care.

Toomey, a board member for the business association, solicited money from some of his corporate clients for the election effort, and he also participated in strategy sessions during which the ads were created.

Although the settlement does not end all litigation, the business association's lawyer claimed victory.

"We have long held that TAB's 2002 public information campaign was constitutionally protected free speech," Taylor said. "And that position has again been vindicated."

List of corporate donors to TAB's 2002 election effort

Alliance for Quality Nursing Home Care $300,000

AT&T $300,000

U.S. Chamber of Commerce $131,573

Aetna Inc. $100,000

Blue Cross of California $100,000

Humana Inc. $100,000

PacifiCare $100,000

United HealthCare of Texas $100,000

Cigna Corp. (Connecticut General Life) $80,000

Dannenbaum Engineering $50,000

Great West Life & Annuity Ins. Co. $50,000

J.F. Thompson Inc. $50,000

Fortis Insurance $25,000

Health Insurance Association of America $25,000

Liberty Mutual Insurance Co. $25,000

State Farm Mutual Automobile Ins. Co. $25,000

Travelers $25,000

USA Managed Care $25,000

Allstate Insurance Co. $20,000

Corrections Corporation of America $12,000

Ace American Insurance Co. $10,000

MetLife Insurance $10,000

Boeing $5,000

Kemper Insurance Cos. $5,000

Nationwide Mutual Insurance $5,000

Royal Sun & Alliance $5,000

USAA $5,000

National Association of Independent Insurers $2,000

National Federation of Independent Business $1,000

IET&R Inc. (Quality Data Imaging) $100

Total $1,691,673

Source: Travis County district attorney's office