Texas Senator Joan Huffman’s Non-Disclosure and Perjury Swept Away Like AG Paxton’s Mistress

III. NATURE OF ALLEGED VIOLATION

Under Chapter 572 of the Texas Government Code, every state official must file an annual, verified financial statement with the Texas Ethics Commission. The statute specifies the kinds of financial activities that must be included in this statement.

Texas State Senator Joan Huffman appears to have violated the disclosure requirements of Chapter 572 of the Government Code, specifically § 572.023.

That statutory provision requires state senators, among other elected officials, to provide in their annual financial statements an account of the financial activities of themselves, their spouses, and their dependent children.

Section 572.023(b)(12) mandates that those disclosures include, inter alia, “any corporation, firm, partnership, limited liability venture or other business association” in which the official or his or her spouse has an interest.

The 2014 Personal Financial Statement (Form PFS) filed by Senator Huffman on January 14, 2014, and attested to under penalty of perjury, fails to include significant business interests of herself and her husband, Keith Lawyer, in violation of Chapter 572.

IV. STATEMENT OF FACTS

In January 2014, Senator Huffman filed with the Texas Ethics Commission a Personal Financial Statement, Form PFS. Senator Huffman affirmed, under penalty of perjury, that the financial statement she was submitting for the calendar year ending December 31, 2013, “was true and correct and includes all information required to be reported by me under chapter 572 of the Government Code.”

This statement was false.

Part 7B of the form requires the reporting of interests in business entities of both the filer and his or her spouse.

Senator Huffman and Donald Lawyer were married on February 5, 1997, according to Public Data.

Senator Huffman reported interests of herself and her spouse as including only an interest in LL Ranch Partners, Ltd, which she described as a family limited partnership. Records of the Secretary of State, however, show Senator Huffman’s husband, Keith Lawyer, has financial interests in over 35 separate businesses that filed with the State of Texas in

Victoria Club Venture
11258310
Boosier City Club Venture
11476610
Lafayette Club Venture, LTD
12242910
Greeley Club Venture, LTD
14772310
Denison Club Venture, LTD
14889910
***Above listed business created after February 5, 1997.

As the Texas Ethics Commission stated In the Matter of Linda Harper-Brown, Respondent, SC-31007211:

“A filer is required to report information about community property because the filer has ownership interest in the property. The actual control issue arises in the context in which the filer has no ownership interest.”

This is consistent with Texas Government Code Section 572.023(b)(6), which requires “identification by description of all beneficial interests in real property and business entities held or acquired…”, and Section 572.023(b)(12). See Texas Government Code Section 572.023(b)(6) and Section 572.023(b)(12).

All of the businesses created after February 5, 1997 would qualify as community property, and therefore Huffman would have a reportable ownership interest regardless of the issue of ‘actual control.’ (See Texas Family Code Section 3.002: Community property consists of property, other than separate property, acquired by either spouse during the marriage.)

Further, this was not a one-time omission. Senator Huffman’s Personal Financial Statement for 2011 and 2012, for example, include as the sole business interest of her and her spouse LL Ranch Partners Ltd, also omitting the additional considerable business interests of her husband Keith Lawyer.

On information and belief, Senator Huffman has underreported the financial business interests of herself and her spouse for years, all in violation of Chapter 572 of the Government Code.

V. LISTING OF DOCUMENTS AND OTHER MATERIALS

 Documents filed with this complaint include Senator Huffman’s Personal Financial Statements for the years 2011, 2012, and 2013.

Documents relevant to this complaint include records of the Secretary of State of businesses owned in whole or in part by Keith Lawyer. They also include all Personal Financial Statements Senator Huffman has filed with the Texas Ethics Commission.

Only five of those businesses were created prior to Huffman and Lawyer’s marriage on February 5, 1997. Those omitted businesses include the following:

Name / Filing No.

B.C. Squared, Inc.
127645700
M. Till, Inc.
127645800
West Houston Night Life, Inc.
131759000
Western Entertainment Management, Inc.
140588700
Sunstorm, Inc.
140722200
***Above businesses created prior to February 5, 1997
Greenstreet, Inc.
145579500
McCann Road Real Estate Ventures, Inc.
146810600
Temple Lawyer, L.P. Inc.
146810700
Longview Club Enterprise, Inc.
146811000
Lawyer Advertising Agency, Inc.
147736400
Louisiana Club Management, Inc.
151473700
Waco Tex Club Management, Inc.
151758200
Longview Tex N.P. Inc.
153901301
Lafayette Club Management, Inc.
154319200
Keith L.P. Club Management, Inc.
154399500
Lafayette Lawyer Enterprise, Inc.
154717400
Lawyer Airport Services, Inc.
159536300
Lawyer Harker Heights, Inc.
159995600
Lawyer Colosprings, Inc.
161174300
Lawyer Greeley, Inc.
162033800
Lawyer Denison, Inc.
162382600
Keith L.P. Investments, LLC
704425222
Chattanooga Partners, Inc.
800395566
Network Investors LP, Inc.
8004487270
Network Investors GP, Inc.
800487272
Participating Partners, LLC
800629407
KL Pub Investments, LLC
800878775
Kentucky Investments, LLC
801376490
ASKL Investments, LLC
801600995
WEM Aviation, LLC
801606053
Tier 1 Operations, LLC
801411524
DKL Family GP, LLC
802046821
DKL Dallas Investment Cedar Springs, LLC
8002050907
Lawyer Mineral Investments, LLC
801586805
LL Ranch Management
32017638365
K K & G Investments, LLC
800993122
Cal-Law Partners, LLC
801410550
Lukes Ice House Beaumont
801441710
Longview Enterprise, LTD
10360710

Joan Huffman really, really didn’t want anyone to know much about the business and financial dealings engaged in by herself and her husband, Keith Lawyer.

Since her first election to the state Senate, Huffman has refused to disclose the value and income derived from dozens of businesses in which she and Lawyer hold an interest.

Earlier this month, after failing to enact a loophole that would have allowed her to continue avoiding disclosure, and after a Houston citizen filed a formal ethics complaint against her – Huffman was finally forced to reveal her and her husband’s extensive business holdings.

Why has Joan Huffman been so desperate to avoid complying with state ethics laws? Why did it take an ethics complaint and legislative embarrassment for her to disclose financial information just like every other state elected official?

Pretty hard to hide an airplane

Did Huffman not want anyone to know about the airplane?

Among the businesses Huffman was hiding from Texans was WEM Aviation out of Houston. Though we don’t know a lot about the company, we do know that WEM Aviation owns an 11 passenger private plane. However, until a complaint was filed against Huffman and she was forced to disclose, ownership of the plane was hidden.

Why was Huffman hiding ownership of a private plane? It is a clear indication of significant wealth. Perhaps she’s worried that the plane shows that she’s out of touch with Texans who worry about tuition costs, utility bills, and insurance payments. Whatever the case, Huffman’s refusal to fully comply with state ethics laws helped shield a lot of money, a private airplane, and perhaps more that will be uncovered soon.

Big $$ in bars & booze

Is Huffman embarrassed about the large investments in various bars and drinking establishments?

Huffman and her husband own stakes in a lot of bars in Texas and around the country. Why hide ownership investment in bars and drinking establishments? Is Huffman worried about moral blow-back from fundamentalist Republicans? Perhaps Huffman didn’t want Texans to learn about some of the lawsuits filed against the bars her companies have owned. Maybe she didn’t want to reveal the conflict of interest between state and regulated businesses and her work as a Member of the Texas State Senate.

We’ll find out soon enough – more research ahead.

It’s our guess, though, that Huffman has not been hiding her income simply to save face.

It’s no secret that Texas legislators make poverty wages — $7,200 a year to be exact — so they generally must have some other source of income to make ends meet.

A look at Sen. Joan Huffman’s 2014 ethics disclosures, however, doesn’t shed much light on that: All she lists for “occupational income” is her Senate salary. Combined with some stock dividends, the grand total of disclosed income comes to no more than about $12,000 a year

— even though the Houston Republican reported living in a River Oaks home appraised at $3.2 million.

One explanation for the gap might stem from something that’s not included in her ethics reports: any mention of the income or vast business holdings of her husband, nightclub owner and manager Keith Lawyer, who is tied to dozens of businesses with current or past filings at the office of the Texas secretary of state.

Lawyer briefly became an issue in the Houston Republican’s 2008 Senate race, amid reports that Huffman received heavy support from interests tied to liquor, gambling and nightclubs.

Huffman says she has fully complied with state disclosure laws. And she lists interests in one business entity, a ranch partnership she owns with her husband, on her 2014 report.

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But the Houston senator’s last-minute advocacy of controversial amendments widening the so-called spousal loophole — quietly slipped onto bills that were supposed to increase transparency — will make it even harder for voters to untangle the finances of their elected representatives in Austin.

Meanwhile, her role in pushing for the changes has sparked criticism from government watchdogs and her former Democratic opponent.

“This amendment does not suggest that she is interested in allowing constituents, Texans, or other legislators who are voting on bills she may bring or sponsor or champion, [to] know anything about areas in which she may have a conflict of interest,” said Rita Lucido, a Houston lawyer and Democrat who ran unsuccessfully against Huffman last year.

Huffman said in an interview on Saturday night that she did not push the change in the law to shield her husband’s business interests from public view. And she said she has always disclosed what state ethics laws says she must.

“I think I report exactly what I’m required to report under the law, and I will continue to do so and follow the law utterly to its exact requirement,” she said.

Asked if she could afford to live on the limited income she reports on her ethics reports, Huffman said, “I don’t think that’s any of your business.”

The Huffman amendments — one version is already awaiting action from Gov. Greg Abbott — would roll back an ethics rule designed to ensure maximum disclosure of certain property held by the spouse of any elected official or high-ranking bureaucrat required to file personal financial statements at the Texas Ethics Commission.

Sen. Van Taylor, R-Plano, author of the sweeping ethics bill that fell apart in the final days of the session, tacked the provision onto a bill on May 26 that was otherwise designed to increase transparency and curb conflicts of interest on state boards and commissions. Taylor authored the amendment after Huffman requested it as minor clarification of existing law.

That measure, House Bill 3736, is likely to be approved Sunday.

Even if that measure fails, though, an identical version of Huffman’s amendment is already on Abbott’s desk. The amendment was tucked into House Bill 3511 in Huffman’s State Affairs Committee on May 21, passed by the Senate on the fast track “local and uncontested” calendar Wednesday and then approved unanimously by the House on Friday.

According to talking points, obtained by The Texas Tribune, that were prepared to advocate for the legislation, the amendment was tacked onto the bills in part to protect “nonrelevant information from unnecessary disclosure.”

Huffman said the change was needed to clarify an “unclear” rule adopted by the Ethics Commission last year.

“The law is simply codified to reflect what the law has been for years until the Ethics Commission by rule changed it on their own vote,” Huffman said.

The rule was created in the wake of a scandal involving a lawmaker who failed to disclose cars that were registered in the name of a transportation contractor who stood to gain from legislation the lawmaker sponsored. The stated reason for not disclosing the cars: They were given to her husband as compensation for accounting work he did.

After that controversy, the Ethics Commission sought to define a nebulous area of the law — still on the books unless and until Abbott signs the Huffman amendment into law — that had already been panned by ethics watchdogs as too weak. It says that the financial activity of a spouse must be revealed only if the elected official or bureaucrat has “actual control” over it.

For years, state officials have interpreted that vague rule on their own, with some leaning toward robust disclosure and others revealing the bare minimum — if anything — about spouses. The new ethics rule interpreted “actual control” as ownership in any community property, whether partitioned or not, and any financial activity he or she has “any degree of legal or factual control over.”

Huffman’s amendment doesn’t just repeal that rule. It removes the word “spouse” from the part of the law saying what type of financial activity must be included on a personal financial statement. In its place it says politicians and bureaucrats have to reveal community property that is considered separate and under their exclusive control, or when they exert “both factual and legal” control over the property.

Government watchdogs say the change, if ultimately adopted, would open up a far bigger loophole than current law, and moves away from Abbott’s call to “dedicate this session to ethics reform.” It’s unclear where Abbott comes down on the specifics of the spousal loophole.

“Abbott says transparency is a priority. Huffman’s amendment closes the door on transparency,” said Craig McDonald, director of the liberal watchdog group Texans for Public Justice. “It allows politicians to hide their assets and business deals behind their spouses. Abbott’s team is moving backwards on ethics reform, not forward.”