Big Jolly Politics

politics in Harris County and Texas

In Defense of James Dickey

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By Mark McCaig

 

 

“I encourage all Republicans to promote and strive for the truth each and every day. I hope this important race can focus on vision, goals, and facts, rather than mistruths for political expediency.”- Cindy Asche, Candidate for Republican Party of Texas State Chairman, April 12, 2018 (via Facebook)

 

Earlier today, I received an e-mail from the Cindy Asche campaign with the subject line “BREAKING NEWS: RPT Chairman Involved in Hedge Fund Fraud.” As an attorney, former SREC member, and interested observer of this race, I found this headline shocking to say the least.

In the text of the e-mail, Asche accuses her opponent, incumbent Republican Party of Texas State Chairman James Dickey, of “classic hedge fund fraud”, “knowing and blatant manipulation of investors for [his] own monetary gain”, and lacking honesty and integrity. In short, Asche attempts to paint a picture of Mr. Dickey that resembles Bernie Madoff and his ilk.

The basis of Ms. Asche’s allegations is a civil enforcement action brought by the Securities and Exchange Commission in 2004 against Dickey and a former business associate relating to a group of hedge funds that Dickey was involved in marketing. Even the SEC’s own complaint did not allege that Dickey got rich as a result of his alleged wrongdoing, making only $85,092 over a 19-month period for marketing efforts that the SEC acknowledged were targeted to sophisticated high net worth and institutional investors. At no time were any criminal charges brought against Mr. Dickey.

Dickey settled the matter in early 2006, whereby he did not admit or deny the allegations, agreed to pay back $35,000 over a 25-month period to an investor that lost money, and agreed not to engage in any violation of securities law. The settlement also contained a provision, required by SEC regulations for such settlements, that prohibits Dickey from making or permitting to be made any action or public statement denying any allegation made in the SEC’s complaint. The funds Dickey agreed to pay back were a disgorgement of a portion of the funds he made in connection with the hedge funds. He was not required to pay any fines or civil penalties.

My personal impression from reading some of the documents in the case file, including the SEC’s complaint against Dickey and his settlement, is that it was a flimsy case. All too often, overzealous Federal regulators pursue questionable enforcement actions against innocent individuals or based on technical violations of the law.

The SEC, in particular, had a notorious reputation for an overzealous enforcement staff at the time it filed the complaint against Dickey. In an article for National Review, Larry Kudlow described the SEC’s then-chairman, Bill Donaldson, as having “generally voted with the commission’s two Democrats and their frequent attempts to hogtie and re-regulate American business. He often followed the overzealous regulatory instincts of the SEC staff bureaucracy while opposing Republicans Paul Atkins and Cynthia Glassman.” When Donaldson stepped down as Chairman of the SEC, The New York Times reported he was leaving “after repeated criticism from his two fellow Republican members of the agency and from some business groups and administration officials who contended that his enforcement and policy decisions had been too heavy-handed.”

I suspect that Dickey was faced with a Hobson’s choice when given the opportunity to settle the matter with the SEC: he could pay a modest sum, not admit any wrongdoing, and make the matter go away, or he could incur financially ruinous legal bills (that would almost certainly be exponentially higher than what he would have to pay to settle) to fight the virtually unlimited resources of the Federal Government. I don’t think anybody can blame a father of a young family for choosing the first option.

Unfortunately, Mr. Dickey is legally unable to substantively address the allegations against him due to a provision in his settlement required by SEC regulations. Ms. Asche is unfairly exploiting this for her political advantage.

Again, it is important to note that at no time did Mr. Dickey ever admit to violating any law, nor did any court, judge or jury, ever find that Mr. Dickey violated any law, nor did Mr. Dickey ever have to pay any fine or civil penalty in connection with the allegations made against him.

As Ms. Asche noted in her Facebook post just last week, Republicans should strive for truth and avoid using mistruths for political expediency in the race for RPT Chairman.

I do not have a relationship with either of the candidates in this race. I cannot recall having ever met or communicated with Ms. Asche and I have only had very brief interactions with Mr. Dickey on a couple of occasions.

I have friends that are deeply committed to the success of the Party that are supporting each of the candidates. I agree with the statement that Ms. Asche made last week- a race that focuses on a vision forward for the Party is a good thing. I believe that an exchange of ideas about where our Party is, and ought to be, especially with what is shaping up to be a challenging election cycle, will only strengthen our Party.

Before receiving Ms. Asche’s e-mail, I was planning on voting for Mr. Dickey, largely as a result of two reasons:

  • I support the work he has done to increase the transparency of Party operations.
  • The Republican Party of Texas has undergone 2 leadership transitions in just over 3 years. With a tough election mere months away, I do not think a third leadership transition in as many years is in the best interest of the Party.

Ms. Asche’s decision to engage in the exact type of conduct she denounced last week only reinforces my decision to vote for Mr. Dickey. It is my hope that the candidates and their supporters will use this race as an opportunity to discuss ways to grow and strengthen the Republican Party. A State Convention marred by rancor and divisive conduct will not help elect Republicans in November.

The Texas Association of Business is an Enemy of Grassroots Conservatives

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mark-mccaigWith the legislative session in the rear view mirror and candidate filing set to kick off in a matter of days, a number of interest groups have published scorecards rating members of the state legislature. One of these groups is the Texas Association of Business, a powerful Austin lobby group. Over the years, the Texas Association of Business has given Republican voters the perception that they are a conservative organization. The truth, however, is quite different.

In recent weeks, a number of articles have been published in national media outlets regarding a well-funded effort by allegedly “pro-business” groups to get involved in Republican primaries against candidates and officeholders associated with the “TEA Party” movement. These news reports have identified the U.S. Chamber of Commerce and the National Association of Manufacturers as major players in this effort to defeat principled conservative candidates.

A quick look at the website of the Texas Association of Business website shows a list of their associated organizations. Topping this list are none other than the U.S. Chamber of Commerce and the National Association of Manufacturers.

The Texas Association of Business has not yet publicly acknowledged any plans to fight the TEA Party here in Texas. However, a review of their 2013 legislative scorecard clearly shows that such efforts are underway.

In their ratings of the Texas House of Representatives, The Texas Association of Business ranked libertarian-leaning conservative David Simpson dead last with a score of 47, the same score earned by several of the most outspoken liberals in the legislature such as Lon Burnam and Mary Gonzalez. TEA Party backed freshman Jonathan Stickland earned a score of 71 on their scorecard, placing him behind 15 liberal House Democrats and tied with notorious Houston liberal Hubert Vo. Six other conservative Republicans earned scores of 73, the same score earned by El Paso Democrat Naomi Gonzalez (who made headlines when she was arrested for DWI after causing a car accident during the legislative session).

The Texas Association of Business’ ratings of State Senators are even more laughable. State Senators Ken Paxton, Donna Campbell, and Dan Patrick are generally considered three of the most conservative members of the State Senate. They each earned a score of 82 from the Texas Association of Business- the same score earned by liberal Democrats Eddie Lucio, Carlos Uresti (a rumored Democratic candidate for Attorney General), and Leticia Van de Putte (a rumored Democratic candidate for Lt. Governor).

If one were to base their votes solely off the Texas Association of Business scorecard, there would be no difference between Ken Paxton and Carlos Uresti should they face each other in a race for Attorney General, nor would there be any difference between Dan Patrick and Leticia Van de Putte in a race for Lt. Governor.

12 of the 31 members of the State Senate earned scores of 91- including Democrats John Whitmire and Juan “Chuy” Hinojosa.

Any legislator who earns a score of 90 of above on the Texas Association of Business scorecard is given the distinction of “Champion for Free Enterprise”, which is described as “the highest honor that a legislator can receive” from their organization. Their apparent belief that John Whitmire, who has been a leading champion of liberal causes during his four decades in public office, is a stronger supporter of “free enterprise” than Dan Patrick, Ken Paxton, or Donna Campbell, is absurd.

I challenge Bill Hammond, the President of the Texas Association of Business, to publicly explain exactly how and why particular votes were chosen to be included in his scorecard and to also explain why any conservative should listen to an organization that bestows its highest honor upon John Whitmire while simultaneously giving its lowest rating to David Simpson.

Members of the Texas Legislature should not lend credibility to this scorecard by touting their “Champion for Free Enterprise” or “Fighter for Free Enterprise” designations if so earned. Republican legislators who make the decision to promote such a designation as if it was some kind of meaningful honor should be questioned both as to why they are touting support from an organization that is so closely tied to efforts to marginalize the “TEA Party” and why they are proud to have received the same honor also given to liberals such as John Whitmire.

Mark McCaig is President of Texans For Individual Rights and hosts “The Mark McCaig Show” every Sunday at 4pm on AM 1070 The Answer. 

 

A Response to Dick Weekley/Fraud Against Texas Taxpayers Resolution

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Dear GOP Leaders,

You may have recently received correspondence from Mr. Richard Weekley, Chairman of Texans For Lawsuit Reform, regarding the “Fraud Against Texas Taxpayers Resolution.” I would appreciate a few moments of your time to address some of the accusations and misrepresentations Mr. Weekley makes.

First, I have had the opportunity to work alongside many of you for our shared conservative cause during my tenure on the State Republican Executive Committee. For those of you who I do not know, please allow me to introduce myself. My name is Mark McCaig and I have spent much of my life working in the Republican Party and on behalf of various conservative causes and candidates. I first became involved in the Republican Party as a high school student. While an 18 year old Senior in High School, I ran for my local school board because I felt the district was wasteful and inefficient. As a student at Texas A&M University, I became active in the Young Conservatives of Texas and College Republicans, holding statewide leadership positions in both of those organizations. After graduating from Texas A&M, I joined the staff of Congressman Tom DeLay, where I worked until his departure from office. In 2008, at the age of 25 and while still in law school, I was elected to the State Republican Executive Committee from SD 18. I held that position for two years and I continue to serve as a Republican precinct chairman in Fort Bend County. I am a proud conservative that believes strongly in the principles articulated in the Constitution and in the Republican Platform. I have never made a contribution to a Democrat, nor have I ever contributed to a Political Action Committee that makes contributions to Democrats.

I encourage each of you to take a very close look at the activities of Texans for Lawsuit Reform. While they attempt to portray themselves as conservatives, such claims are demonstrably false. They are nothing more than a self-interested special interest group that has actively worked against conservatives on many occasions. I have detailed much of this information on a new website, www.stoptlr.com. I encourage each of you to visit this website, watch our short video, and read the information presented. I hear frustrations on a regular basis (that I share) that wealthy special interest groups wield far too much power and influence at the Capitol and are responsible for the obstruction of conservative public policy. At www.stoptlr.com, I put a name and faces on these pernicious “special interests” that we hear and complain so much about.

Over the past several years, Texans For Lawsuit Reform has contributed nearly $3 million to Texas Democrats, including Democrats running against viable Republican candidates in the General election. The candidates that TLR has supported financially include some of the most prominent voices against legislation supported by the RPT including the sonogram bill, the sanctuary cities bill, and photo voter identification. TLR’s President, Dick Trabulsi, is the uncle of liberal Austin legislator Mark Strama (who has been funded by TLR against Republican challengers) and is a longtime supporter of Democratic candidates.

Mr. Weekley has himself made significant personal financial contributions to Democrats including Steve Wolens, Jessica Farrar, Juan Hinojosa, Garnet Coleman, Rodney Ellis, Judith Zaffirini, Mario Gallegos, Mike Villarreal, Eddie Lucio, David Farabee, Tara Rios Ybarra, Carol Alvarado, Patrick Rose, Ellen Cohen, Sylvester Turner, Ron Reynolds, Senfronia Thompson, John Whitmire, Rick Noriega, Leticia Van De Putte, Kino Flores, Frank Madla, Solomon Ortiz, Jr., Kevin Bailey, and Norma Chavez. Unless he has recently made a very large contribution that has yet to appear in public filings, Mr. Weekley has personally contributed more money to Democrats than he has to the Republican Party of Texas!

The Republican Party of Texas stands up for our platform proudly and without apology. This is able to happen because the RPT is run by, and accountable to, the grassroots conservative base that makes us so strong. We are not afraid to tackle issues such as protecting innocent human life, reducing the size and scope of government, opposing government bailouts and other taxpayer funded handouts, and the absolute necessity of securing our border. Unfortunately, taking strong and unequivocal stands on these and other issues carries a price.

As detailed at www.stoptlr.com and elsewhere, TLR’s largest contributors fought the efforts of RPT and other grassroots conservatives on the sanctuary cities bill and other important legislation regarding illegal immigration. Many of these donors have also benefitted from Solyndra-style handouts that have been opposed by RPT and others. It is precisely because the RPT and its leadership at all levels take principled conservative stands on issues important to the average Republican voter that Mr. Weekley and his associates at Texans for Lawsuit Reform choose to control the vast majority of their political contributions and activities through TLR and its Political Action Committee. TLR routinely receives and spends more money than the Republican Party of Texas because the RPT is held accountable by the grassroots while at TLR they are accountable only to themselves.

Texans For Lawsuit Reform fancies itself as a “shadow party” of sorts, engaging in candidate recruitment and other efforts that are traditionally handled by political parties and grassroots activists. A strong and vibrant Republican Party of Texas organization is in many ways a threat to special interest groups like TLR because when the Republican Party is impotent and/or ineffectual, groups like TLR can fill the void and increase their already substantial power and influence.

The Republican Party of Texas cannot and must not allow special interest groups like TLR to bully it or otherwise prevent it from continuing to remain an unapologetic advocate for conservative principles and voice for those in the grassroots. Mr. Weekley and his mega-donor associates already own and control TLR. We must not allow them to own or control the Republican Party of Texas and silence the already faint voice the average Texas conservative has in the public policymaking process.

The “Fraud Against Texas Taxpayers” Resolution is a solidly conservative, pro-taxpayer resolution and I stand behind it 100{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. This resolution calls for a state law similar to the Federal False Claims act, which allows a whistleblower with knowledge of fraud committed against the government to bring suit against the alleged perpetrator of the fraud. The legislation amending the Federal False Claims Act to authorize these whistleblower lawsuits, known as “qui tam” lawsuits, as sponsored by Republican Senator Charles Grassley of Iowa and signed in to law by President Reagan in 1986. According to figures from the Department of Justice, over $21 billion has been recovered as a result “qui tam” whistleblower lawsuits filed under the Federal False Claims Act. Untold billions more have been saved as a result of the deterrent effect the Federal False Claims Act has on preventing fraud.

In 1997, the Texas Legislature passed SB 30, which allowed for whistleblower “qui tam” lawsuits, such as those authorized by the Federal False Claims Act, in cases involving Medicaid fraud. This bill passed the House and Senate unanimously and was signed in to law by then-Governor George W. Bush. Since its passage, Texas taxpayers have recovered approximately $1 billion under the Texas Medicaid Fraud Prevention act through the hard work of Attorney General Greg Abbott and others. This legislation has been wildly successful in preventing and punishing Medicaid fraud and there is absolutely no evidence that it has been used as a vehicle for frivolous lawsuits. Just recently, Attorney General Abbott settled a “qui tam” lawsuit brought by a whistleblower under the Texas Medicaid Fraud Prevention Act against a pharmaceutical manufacturer for $158 million. Prominent pro-life activist Abby Johnson, a former Planned Parenthood employee, has also filed a “qui tam” whistleblower lawsuit under the Federal False Claims Act and the Texas Medicaid Fraud Prevention Act against Planned Parenthood alleging Medicaid fraud.

In 2007, Republican state legislators offered SB 1309, a broad “qui tam” similar to the Federal False Claims Act, but applying to Texas state government, as called for in the “Fraud Against Texas Taxpayers Resolution.” The bill passed the Senate unanimously and was subsequently sent to the House Civil Practices Committee, where it also passed unanimously. Unfortunately, the bill died in the Calendars committee and did not receive a vote in the full House.

TLR’s claims that a “qui tam” law would open up the door to a flood of frivolous lawsuits are unfounded. Just this past legislative session, a “loser pays” bill supported by both TLR and the Texas Trial Lawyers Association was signed in to law making it even easier for frivolous lawsuits to be quickly dismissed in addition to strict sanctions that can be imposed on lawyers and litigants that file frivolous lawsuits. If the Texas legislature were to consider the kind of legislation endorsed by the “Fraud Against Texas Taxpayers Resolution” the end result should and almost certainly would include safeguards against its abuse.

The “Fraud Against Texas Taxpayers Resolution” does not reference any specific bill or legislative language- that’s the role of the legislature. It simply supports the concept that Texas taxpayers should have the same tools available to them to recover funds lost due to fraud at all levels of state government as they currently do at the Federal level under the Federal False Claims Act and at the state level in cases involving Medicaid fraud. Especially in the midst of a budget crisis, it is crucial to the continued financial wellbeing of Texas to have every tool possible at our disposal to prevent fraud and deprive those responsible for defrauding Texas taxpayers of their ill-gotten gains.

The Republican Party of Texas has been a leading voice supportive of fiscal restraint and taxpayer protection in state government and this resolution is in furtherance of those values. Mr. Weekley, as well as many other major donors to Texans For Lawsuit Reform, have financial interests in the construction industry. It doesn’t take a lot of imagination to figure out why they worked so hard against the Republican Party and the vast majority of Texas conservatives against the sanctuary cities bill and other legislation regarding illegal immigration. As I told a reporter when asked about this resolution and TLR’s subsequent response, why anybody, let alone an allegedly conservative organization like TLR would want to protect those who defraud Texas taxpayers is beyond my comprehension. The only people who should be afraid of this resolution are those who defraud or seek to defraud Texas taxpayers. I will not speculate as to TLR’s motives behind their vociferous opposition to this pro-taxpayer resolution and legislation that was supported by Ronald Reagan at the Federal level and passed unanimously by the Texas Senate in 2007.

Again, I encourage you to visit www.stoptlr.com to learn more about who the “Texans For Lawsuit Reform” really are, and to oppose this effort by a special interest group to wield inappropriate influence over the Republican Party of Texas. Please do not hesitate to contact me if you have any questions about this letter, my resolution, or any other issue. Thank you all for your hard work and dedication to our Party and our principles.

Best Regards,

 

Mark McCaig

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