The big paychecks of predatory lenders in Utah; is Texas next?

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SAN ANTONIO – Hollywood screenwriters dreaming of their worst nightmare of covert “black money” corruption might not live up to what happened in Utah – with a lot of help from the Texans. The scoop, taken from a recent Utah House investigation report, is timely.

Last year, Governor Rick Perry vetoed a bill to clarify that Texas black money groups must disclose their contributors. Now, Empower Texans, Texas’ main black money group, has gone to court to fight the Texas Ethics Commission subpoenas over who is funding its attacks on moderate Republicans.

To understand why Texas officials – including the next governor – must prevent nonprofits from funding political ads without disclosing contributors, consider how black money has recently corrupted Utah.


This caveat is particularly instructive in Texas, as Texas consultants helped orchestrate this corruption with black money provided by Texas payday lenders.

Beginning in 2008, Utah Attorney General Mark Shurtleff recruited the general counsel for payday lender Check City to be his main political fundraiser, as well as his main aide. To raise stacks of political funds from the gaming and salary industries, Utah investigators concluded that this aide, Chief Deputy Attorney General John Swallow, “hung a real ‘for sale’ sign at the office door “.

Pledging to defend predatory lenders against regulators, Swallow called on the industry to fund his expensive 2012 attorney general tenure against main Republican rival Sean Reyes.

Yet Swallow feared election fallout if the public viewed his campaign as a “pay run.” The campaign therefore concealed the sources of more than $ 450,000.

By conducting 165 interviews and amassing 20,000 pages of documents, investigators found that most of that money came from payday lenders. The main supporters of Swallow outside the state appear to have been Texas-based companies including Cash America and Cottonwood Financial.

To cover up this salary dependence, Swallow’s consultants created a dizzying chain of seven political committees and nonprofits that were ostensibly independent of his campaign. Yet the Swallow campaign solicited money for these entities, shifting the most radioactive funds to nonprofits that did not disclose their contributors.

Swallow personally approached Cottonwood Financial, based in Irving, led by Texan Trevor Ahlberg. “If Trevor wants to make a contribution, he can give it to Protect Utah PAC,” Swallow wrote to Cottonwood in 2011. “If it’s directly from Cottonwood, I can ask you to send it to our PAC fundraiser for the reasons we discussed earlier. “

Two Texas consultants helped convert predatory black money into attacks on Swallow’s opponent. After serving as national deputy political director of Perry’s presidential campaign, Jason Smith formed a political and nonprofit committee both named “It’s now or never.”

By raising $ 172,000 from three other Swallow shells, Smith funded “deep polls,” a Swallow consultant later said. These “polls” asked voters if their opinion of Sean Reyes would change if they knew he was a con artist or the son of an illegal immigrant.

Smith also donated $ 140,000 to the media arm of Karl Rove’s American Crossroads. Crossroads Media and Smith have flooded the airwaves in Utah with commercials attacking Reyes. One ad ended with the following line: “Sean Reyes, Bypassing Election Laws, Not The Ethics We Need For The Attorney General.”

In classic Rove jiujitsu, Crossroads took black money from the corrupt Swallow campaign to smear his opponent’s ethics.

With an advertising agency briefing Swallow on the spread of these “unrelated” attacks, the campaign wrote a script to deny any involvement.

We “had nothing to do with these ads,” a Swallow spokesperson told a reporter. “We are actually very proud of the fact that we have had a positive campaign.”

Another black money group Swallow has repaid its sponsors by funding attacks that helped take down a Republican Utah lawmaker who led efforts to curb predatory lenders. Although Rep. Brad Daw lost and Swallow won, the ensuing scandal forced Attorney General Swallow to resign last November (as Smith joined Barry Smitherman’s failed campaign to become Attorney General of Texas). Utah federal and local authorities continue to investigate numerous potential criminal charges.

With Empower Texans, Texas’ largest black money group, arguing in court that the Texas Ethics Commission has no right to investigate who is funding its attacks on moderate Republicans, it’s time to wonder how much black money will infect the Lone Star State.

It was almost unimaginable that predatory lenders could completely corrupt a state’s top legal official – until they did.

Don’t privatize the Texas public election. Tell Texas officials that without a disinfecting sun, black money donors are corrupting themselves.

Andrew Wheat is Research Director of Texans for Public Justice.

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