Strayhorn Allows Secret Group of Contributors to Make Tax Policy

Donors who gave $2.4 million get to make the rules they live by

AUSTIN – Today Carole Strayhorn tried to deceive Texas voters into
believing that ethics is a priority for her campaign at the same time a
secret group of her largest campaign contributors are making tax policy
for the comptroller’s office hidden away from public view. This secret
group, know as the Taxpayer Advisory Group, is the latest in a career
of ethical violations made by Carole Strayhorn.

The Taxpayer Advisory Group meets in secret to devise
recommendations on tax policy, rules and regulations for the
Comptroller’s Office, and they also comment on proposed legislation.
Many are tax consultants and attorneys who represent clients in
disputed tax cases with the Comptroller, and their clients will
directly benefit from the tax policy they help create. Members of the
Taxpayer Advisory Group, their associates, PACs and spouses have
contributed more than $2.4 million to Carole Strayhorn’s campaigns.

“This is just one more way Carole Strayhorn gives special access to
large contributors, allowing them to draft the rules and legislation
that benefits their clients and delivers them million dollar paydays,”
said Robert Black. “Every time Carole Strayhorn gets caught with her
hand in the cookie jar she first denies that it’s her hand, then she
denies the existence of a cookie jar and finally she attacks you for
being against cookies. When you have the most corrupt politician in a
generation talking about ethics reform you know Carole Strayhorn is
willing to say anything to get elected.”

In August 2005, the independent State Auditor released the results
of an investigation in the relationship between Carole Strayhorn’s
campaign contributions and her tax decisions. The state audit found
that Carole Strayhorn’s campaign contributors had received more than
$461 million in favorable tax decisions. Strayhorn’s Taxpayer Advisory
Group consists mainly of people, organizations and firms that have
business with the Comptrollers office.

“If Carole Strayhorn is serious about ethics reform, she doesn’t
have to wait until after the election, she can act right now by
cleaning up the ethical mess she has made at the comptroller’s office,”
said Black. “She should stop taking campaign contributions from anyone
who has business before the Comptroller’s Office, shed the light of day
on the secret process by which she makes tax decisions, and immediately
implement the recommendations of the state auditor that have been
pending for the last 12 months.”

Members of Strayhorn’s Taxpayer Advisory Group include former
employees of the Comptroller’s Office and individuals who have clients
with business before the Comptroller Office business, such as:

• G. Brint Ryan- Founder and Managing Principal, Ryan and Company, a tax consulting company
  • Carole Strayhorn’s largest campaign contributor
• William H. Allaway, Jr.- President, Texas Taxpayers and Research Association
  • Member and former chairman of the Comptroller’s Industry/
    Practitioner Liaison Group and E-Commerce and Technology Advisory Group.
  • Served as Director of Revenue Estimating for the Comptroller.
• Linda J. Fontaine- National Tax Director, Whole Foods
  • (Previous Experience) Member, Industry/ Practitioner Liaison Committee, Texas Comptroller of Public Accounts.
• Mark W. Eidman- Lawyer, Scott, Douglass, and McConnico, L.L.P.
  • (Previous Experience) Served as Director of the Hearings
    Division of the Texas Comptroller of Public Accounts supervising all
    contested tax assessments in the state of Texas.
  • (Previous Experience) Served as Chairman of the Comptroller of Public Accounts Industry/ Practitioner Liaison Group.
  • (Previous Experience) Served on the Texas Bar Association’s Liaison Committee with the Texas Comptroller of Public Accounts.
• Harold Lee- Partner, DuCharme, McMillen, and Associates, Inc.
  • (Previous Experience) Director, Tax Administration Division, Texas Comptroller of Public Accounts
• Dan Martinez- Managing Partner/ CEO, Dan Martinez and Associates, Inc.
  • (Previous Experience) Senior Auditor, Texas Comptroller of Public Accounts
• Daniel J. Micciche- Partner, Akin, Gump, Strauss, Hauer and Feld, L.L.P.
  • (Previous Experience) Member, Industry/ Practitioner Liaison Committee for the Texas Comptroller of Public Accounts (1996-1998)
• Garry Miles- Partner, Locke, Liddell, and Sapp, L.L.P.
  • (Previous Experience) Member, Industry/ Practitioner Liaison Committee for the Texas Comptroller of Public Accounts
• L.G. Skip Smith- Partner, Clark, Thomas and Winters
  • (Previous Experience) Hearings Examiner, Texas Comptroller of Public Accounts
  • (Previous Experience) Director of Legal Services, Texas Comptroller of Public Accounts
  • (Previous Experience) Administrative Law Judge, Texas Comptroller of Public Accounts
• Tom Tourtellotte- Partner, Hance, Scarborough, Wright, Ginsburg, and Brusilow
  • Member, Comptroller Liaison Committee to the Texas State Bar
  • Auditor and audit trainer, Texas Comptroller of Public Accounts
  • Attorney, Texas Comptroller of Public Accounts
• Wendell Westlake- Partner, Cummings, Westlake, L.P.
  • Member, Technical Advisory Committee, Texas Comptroller of Public Accounts
• Harlan Hall- President, The SALT Group

Total Contributions of Tax Advisory Group Members to Carole Strayhorn
= $641,532.00

Total Contributions of Group Members’ Firm Associates, PACs, and Spouses to Carole Strayhorn
= $1,798,350.00

[[ Grand Total Contributions for the Tax Advisory Group= $2,439,882.00 ]]

Pattern of Corruption

In recent weeks, news organizations reported that consultants,
including some of Carole Strayhorn’s largest campaign contributors,
pocketed over $51 million in fees as a result of the comptroller giving
a single company one of the largest tax refunds in Texas history –
nearly $130 million. The tax consulting firm Ryan & Co., and the
law firm of Scott, Douglass & McConnico (SD&M) represented the
company before the Comptroller’s Office.

Millions in Campaign Contributions

Since 2000, Ryan & Co and their known associates have
contributed $1.9 million to Carole Strayhorn’s campaigns for
Comptroller. Since the state auditor recommended that Ryan & Co. be
barred from giving campaign contributions to the Comptroller, Carole
Strayhorn has accepted over $800,000 from Ryan & Co and their
associates.

Since 2000, SD&M and their known associates have contributed $142,600 to Carole Strayhorn’s political campaigns.

State Audit Report

In August 2005, the independent State Auditor released the results
of an investigation in the relationship between Carole Strayhorn’s
campaign contributions and her tax decisions. The state audit found
that Carole Strayhorn’s campaign contributors had received more than
$461 million in favorable tax decisions.

The auditor specifically pointed to the relationship between tax
consulting firms and Strayhorn and even singled out Ryan & Co. as
the largest contributor to Strayhorn among those firms with tax cases
before the Comptrollers Office. In fact, the state auditor was so
disturbed by what he found his recommendations to the legislature
included, “Enacting legislation to prohibit campaign contributions to
the Comptroller of Public Accounts or a person seeking election to the
Office of the Comptroller of Public Accounts from any individual or
entity representing taxpayers before the Office of the Comptroller of
Public Accounts.”

The state auditor also recommended that the Comptroller should be
stripped of her authority to determine tax cases because of, “the
appearance that hearings are not processed in an objective and
impartial manner and that independence could be impaired.”

Using State Resources

Last month, two major newspapers documented that Carole Strayhorn
has been using her taxpayer-funded official state office for campaign
business. This news reports come 10 months after an Austin TV station
investigative report found that Strayhorn had been using
taxpayer-funded official state publications to promote her campaign and
almost a year after she went to a campaign event in an official state
vehicle.

Carole Strayhorn’s blatant use of taxpayer funded resources to
benefit her campaign has been chronicled extensively by the media:

• In October 2005 the Austin American Statesman found that
  Carole Strayhorn was paying her senior campaign advisor and campaign
  communications director $12,000 per month from the state payroll.
• In
  December 2005 an investigative report from KVUE TV found that a series
  of newsletters, mailed from the comptroller’s state office at taxpayer
  expense were intended to benefit Strayhorn’s campaign and were being
  used to promote agendas not relevant to the official duties of the
  Comptroller of Public Accounts. Despite the media report, she has
  continued to use state publications to attack Gov. Perry and benefit
  her campaign.
• And in September 2005, Strayhorn was
  transported in a state vehicle to a Waller County event where she urged
  the defeat of Gov. Perry and urged supporters to visit her campaign web
  site.