The Insider

Consultant Smith has supplied documents under subpoena to the Harris County district attorney for an investigation probing whether Hotze's political activities violate Texas election laws. Smith alerted Assistant D.A. Chuck Noll last fall that he had proof that Hotze had failed to properly report contributions from local candidates.

"You know why I did this?" asked Smith of his role as a whistle blower on his former employer. "To get [District Attorney] Johnny Holmes and his boys to move their asses and get something done. This guy broke the law."

Moderate Republicans have long charged that Hotze uses his election-time endorsements to extort money from political candidates to further his own extremist political agenda. In a press conference last Friday at GOP headquarters, former Hotze associate Clymer Wright accused the doctor of abandoning conservative principles and charged that he was endorsing candidates simply to get their money. GOP activist Mickey Lawrence says documents provided by Smith will prove that a number of local officials illegally gave campaign money to Hotze's organizations.

According to Smith, Hotze runs a network of PACs and companies that route money to candidates and causes while evading federal and state laws requiring the reporting of such expenditures. The consultant says he was paid $5,000 by Hotze's America 2000 company to work for particular candidates, but the expenditure was never legally divulged on state-mandated campaign reports.

Smith came to Houston in 1996 to work for Republican candidates endorsed by Hotze. Hotze supported Christian conservative Judge John Devine in the District 25 congressional race, but Devine failed to make the runoff pitting McKenna against Bentsen. Hotze, according to Smith, detested McKenna for her moderate stance on abortion and other lifestyle issues dear to the religious-right agenda.

After Devine lost, Smith says Hotze asked him to raise money to undermine McKenna. Smith then called Bentsen political consultant McClung, and asked if he were interested in getting money to conservatives who opposed McKenna. McClung gave a $25,000 check to Smith, who says the money was routed to Life Advocates and other anti-abortion and pro-family Christian groups, who then produced ads and other campaign material attacking McKenna as being soft on abortion and other conservative lifestyle issues.

Smith also claims Hotze earlier took $15,000 from David Dewhurst, now a GOP candidate for Texas land commissioner, for generic Republican get-out-the-vote efforts, and illegally routed much of it to phone advertising supporting the candidacy of Judge Devine for Congress.

Democrat McClung says his payment to the DaVinci Group was reported as so-called "soft money" designed to get out the vote on general issues rather than a gift to the Bentsen campaign. Federal campaign regulations allow unlimited contributions by donors on an issue rather than specific-candidate basis.

McClung says he now regrets ever having talked to Smith. "It was the last five days of the campaign," recalls the consultant. "My client had wanted for a couple of weeks or more to have an impact on that race. I couldn't find a good way. I don't think I ever did find a good way. I think probably the worst way was Mark Smith."

McClung describes Smith as a "nut" whose testimony is unreliable. A Houston Republican activist counters that McClung denied last fall he had ever paid Smith to work against McKenna. Smith later faxed the activist McClung's canceled check to prove who was telling the truth.

McClung says he suspects Smith of pocketing the money without producing any campaign materials. In response, Smith faxed The Insider copies of fliers he says McClung's money generated, including a broadside entitled "The Liberal Agenda of Dolly Madison McKenna." The text accuses the candidate of being pro-homosexual, pro-abortion and anti-Christian.

Congressman Bentsen denies having any knowledge of the arrangement between McClung and Smith. He claims none of his campaign funds were involved and neither he nor campaign officials directed any funds to the religious right. "It is ludicrous in the extreme," says the congressman, "to suggest that conservative activist Steven Hotze would support my campaign or that I would ever seek his support."

Smith says that after he got $25,000 from McClung, Hotze pressed him to get another $100,000 from the Democrats to fuel the campaign efforts against McKenna and other GOP moderates. In one phone call, Smith says, Hotze even suggested he might keep some of the Democrats' money to pay for his daughter's upcoming wedding. Smith has produced a document he says Hotze approved that would have the DaVinci Group coordinating a campaign against McKenna for $120,000.

Hotze consultant Allen Blakemore denies the doctor had anything to do with Smith's arrangement with McClung.

McKenna says Smith told her a year ago that Democratic money had been funneled to conservative Republicans to help defeat her.

"I'm not surprised," says the former candidate. "It shows neither side cares as much about their convictions as about beating people and making money. Having principles doesn't necessarily help you win, and here I am."

The Narc Endorsement
Dr. Steven Hotze isn't the most unusual endorser of candidates in the upcoming judicial races. That distinction belongs to a group of Houston narcotics officers who also happen to be lawyers in their spare time, and have banded together in a for-profit group called P.O.L.I.C.E., Inc.

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