The Darsch Report: Jan. 28 – Feb. 3

Money Laundering and Russians

Court documents were released on Friday, Feb. 1 detailing a money laundering scheme of more than half a million dollars committed by a San Antonio luxury car dealer with Russian connections. Karen Mgerian, 40 — one of two men arrested in raids Thursday in which more than 100 high-end vehicles were seized — is accused of laundering $575,000 in four separate money-laundering sting transactions in 2018 with undercover IRS and U.S. Drug Enforcement Administration (DEA) agents.

Before his arrest Thursday, Mgerian was in negotiations to launder another $4.7 million for the undercover agents by selling his business, MGM Auto, to the agents in return for a 12.9 percent money laundering fee. He also admitted to undercover DEA agents that he had recently laundered $780,000 “through a real estate transaction with a California marijuana distribution organization.”

Mgerian, a naturalized US citizen who traces his roots to the countries of Georgia and Armenia, denies the allegations, according to one of his lawyers, Jay Norton. Norton and his law partner, former Bexar County district attorney Nico LaHood, jointly represent Mgerian with former federal prosecutor Mike McCrum.

From what it looks likes with what he admitted to the DEA agents, this appears to be a cut and dry case that should be resolved fairly quickly.

Texas Tax Relief

On Thursday, Jan 31, identical property tax reform bills were introduced into the Texas State House and Senate by State Rep. Dustin Burrows (R–Lubbock) and State Sen. Paul Bettencourt (R–Houston). House Bill 2 and Senate Bill 2 are also part of Gov. Greg Abbott, Lt. Gov. Dan Patrick, and Texas House Speaker Dennis Bonnen long-anticipated “big bill” on property tax reform.

Highlights from the bills include:

  1. Lower the rollback rate from 8 percent to 2.5 percent for taxing units that collect more than $15 million in tax revenues and establish election notice requirements based on whether a school district will or will not exceed a 2.5% rollback rate for Maintenance and Operation property tax.
  2. Requires an automatic tax ratification election in November if the rollback rate is exceeded in a taxing unit, and;
  3. Creates a property tax administrative advisory board that recommends improvements to the effectiveness and efficiency of the property tax system, best practices and complaint resolution procedures.

These bills are a huge step in the right direction for Texas in their effort to slow down property tax increases and provide tax relief to many across the state. Vance Ginn, Ph.D., TPPF’s senior economist and director of the Center for Economic Prosperity, stated:“This is a positive step toward providing taxpayers the support they are looking for and we are eager to work with leadership on securing the greatest relief possible.”

Texas Clergy Identifies Abusers

On Thursday, Jan 31, fourteen Texas dioceses identified 286 priests and others accused of sexually abusing children. This represents one of the largest collections of names to be released since an explosive grand jury report last year in Pennsylvania. The move by Texas Church leaders comes a month after the Illinois attorney general reported that at least 500 Catholic clergymen in that state had sexually abused children.

It is unclear whether any local prosecutors will bring up criminal charges as the majority of those identified have since died. Some investigations dated back to 1950 while other reviews, as in the case of the Diocese of Laredo, only went to 2000 because that’s when that diocese was established. Of the 286 men named in Texas, 172 are no longer alive, a percentage comparable with the national tally.

Marc Rylander, spokesman for the Texas attorney general’s office, went on record to state “Our office stands ready to assist local law enforcement and any district attorney’s office that asks for our help in dismantling this form of evil and removing the threat of those who threaten Texas children.”

With Catholic clergy and Texas law enforcement willing to work together on this issue, everything should hopefully be resolved by the end of the year. And with the Catholic Church taking a harsher stance on abuse committed by its clergy, this issue should hopefully largely disappear within the next few years.

Virginia Can’t Catch a Break

Over the past week, Virginian Democrats, and by extension Gov. Ralph Northam, have come under fire for various reasons that many have found appalling.

The first being a new bill that would allow a pregnant woman to have an abortion throughout the entire 3rd trimester. House Majority Leader Todd Gilbert asked bill sponsor Kathy Tran if this bill would allow a woman who was in active labor to request an abortion if a doctor determined that childbirth would impair her mental health. In response, Tran stated, “It would allow that, yes.”

Gov. Northam is especially under fire for what this bill allows after he made comments regarding it on a local radio on Wednesday.

“In this particular example, if a mother is in labor, I could tell you exactly what would happen: the infant would be delivered; the infant would be kept comfortable; the infant would be resuscitated, if that’s what the mother and the family desired. And then a discussion would ensue between the physicians and the mother,” Northam said.

These statements earned Northam the ire of conservatives, moderates and liberals across the nation as he described this scenario as one of “infanticide”. But the controversy doesn’t end there.

The governor is also now facing controversy for a supposed picture of him in his medical school yearbook wearing either a KKK hood or blackface in a manner that makes it look like a minstrel show. In the 24 hours it took the news story to circulate on Friday and Saturday, Northam has gone from apologizing for his behavior when he was younger to denying that the is even in the photo.

“When I was confronted with the image, I was appalled that it appeared on my page, but I believed then and I believe now that I am not either of the people in that photograph,” he said at a news conference at the governor’s mansion.

If this photo does indeed include him, then Gov. Northam needs to resign if he wishes to save face (no pun intended) following not one but two controversies within the span of a few days.

US Economy

It was a good week for US stocks, with quite a few gains in the stock market. The Dow Jones increased to 25,063.89 on Friday, increasing by +262.47 points, or +1.06% percent over its Jan 25 close of 24,737.20. The S&P 500 increased by +39.39 points or +1.48% percent on Friday. In addition, the Nasdaq had a decreased on Friday by +1.63 percent.

In addition to this, January gave the US an excellent jobs report despite the government shutdown. In January non-farm payrolls increased by 304,000, versus the expected number of 165,000, which analysts are calling the strongest number relative to expectations they’ve seen since June 2009. The labor force participation rate also increased to 63.1%, the highest since 2013, sending unemployment to 4.0%. Wages also continue to outpace inflation with yearly growth of weekly wages reaching 3.48% while inflation continues to stay around 2.0%.

With such a strong showing in January, despite the government shutdown, the US can look forward to continued excellent growth in the economy. All Trump needs to do now is finish trade negotiations with China and the US economy will be looking at growth rivaling that of 2018.

Five Things to Watch in the Texas Legislature this Session

From rabbit meat to nuisance chickens to guns at the school board, the 86th Texas legislature has already begun tackling the problems that plague our state with over a thousand newly filed bills—and it’s only been a week. Here are five issues in session which Texas conservatives should keep on their radar.

1. Taxes

For years, Texas conservatives have put property tax reform at the top of their legislative to-do list. Gov. Greg Abbott, Lt. Gov. Dan Patrick, and House Speaker Dennis Bonnen have especially come out against the state’s notoriously high property taxes, which rank 14th in the country. Texas has no statewide property tax; currently, property taxes are gathered locally, outside the control of statewide voters. Lifelong homeowners, such as elderly homeowners on fixed incomes, commonly lose their homes to tax foreclosures. Last Wednesday a senate resolution created the new Senate Committee on Property Tax to address the growing problem. Supporters hope that the new committee will take tangible steps to make property tax reform more than a conservative daydream.

State Representative Matt Krause (R-Fort Worth) also introduced a bill which would authorize local governments to replace property taxes with a “supplemental sales and use tax,” which cities would impose after eliminating the property tax to make up for any lost revenue. The bill aims to provide tax relief and help homeowners guard their equity by shifting local government costs to sales taxes. While it would necessarily result in a slight sales tax increase, Krause’s bill would mean people pay more for things they choose and less for their own homes.

2. Healthcare

State Rep. Drew Springer (R-Muenster) filed a bill to allow counties to create healthcare provider participation programs in counties not served by a hospital district or public hospital. While aimed at increasing access in rural areas, the bill would avoid new taxes by collecting funds from hospitals in the same area, thus draining already needy communities of existing resources and burdening hospitals where they are most scarce.

Many conservatives in Texas look to the deregulation of nursing as a way of expanding healthcare access. A house bill filed last session by State Rep. Stephanie Klick (R-Fort Worth) and endorsed by some members of the Texas Freedom Caucus proposed deregulating the use of nurse practitioners who are subjected to hefty contract fees and other restrictions that drive up clinic prices. Past sessions saw similar attempts to unlock nurses from costly restrictions, an idea currently supported by the Coalition for Healthcare Access, a group which includes the conservative Texas Public Policy Foundation as well as AARP and the Coalition of Texans with Disabilities. Authorizing advance practice registered nurses (APRNs) to practice with full authority would allow patients more options and would lower clinic costs for the rural and low-economic areas in which healthcare is especially expensive and scarce.

3. Marijuana

Several lawmakers in this session have proposed making marijuana legal in different capacities. Two bills, SB 90 and HB 209, would legalize marijuana for medicinal use. One joint senate resolution proposed an amendment to the constitution which would legalize cannabis entirely. Both ideas, medical legalization and entire legalization, include heavy regulation and taxation of cannabis. Introducing a new market ripe for taxation makes the cannabis issue more cut-and-dry for Democrats than for Republicans. Legalizing marijuana theoretically can cut down on our nonviolent prisoners and deal a blow to cartels. Criminals convicted of possession can potentially serve years-long sentences for a victimless crime. Others argue that simple decriminalization, rather than legalization, can solve the prison problem while still keeping a dangerous substance out of as many hands as possible. Even others point out that criminals serving long sentences for possession typically have pleaded down from not-so-victimless crimes, and that the criminalization of marijuana gives prosecutors a common bargaining chip. In the end, the marijuana issue strikes a fine divide between liberty and order, and conservatives in the Texas legislature will be forced to choose between these two pillars of their principles.

4. Abortion

State Rep. Valoree Swanson (R-Spring) filed a bill which would amend the occupation code to prohibit doctors from conducting abortions not intended to save the life of the mother, remove an ectopic pregnancy, or ensure that at least one child of many unborn children is born healthy. If passed, Swanson’s bill would mean a major victory for pro-life advocates in Texas. Pro-life legislators are seeking to capitalize on two laws passed in the Texas legislature in 2017, one which protected doctors from suits in the case of babies born with birth defects and another which would require doctors to make sure an unborn child is dead before conducting dismemberment abortions.

5. Guns

One proposed senate bill would ensure that firearms confiscated from the mentally ill should be returned within thirty days if the owner may otherwise lawfully possess firearms. Especially now when the definition of mental illness continues to expand, the bill may act as a preemptive defense against growingly popular suggestions to prohibit the mentally ill from owning weapons. While the mention of mental illness tends to conjure up dangerous conditions like schizophrenia, a mental illness prohibition would keep people with conditions as benign as depression or anxiety from protecting themselves. The silence of liberal ‘ableism’ activists on this issue is deafening, and conservatives should continue support the lawful second amendment rights of all citizens.

More broadly, another bill would institute constitutional carry in Texas. Thanks to lawmakers in the last session, Texans can now carry bladed weapons without restriction; this bill, known as the Texas Constitutional Carry Act of 2019, would effect the same freedom for firearms. Firearm owners would be allowed to carry any weapon without a permit. Texas would not be the first; other states like Alaska, Vermont and New Hampshire have already beaten us to the punch, without the catastrophic results predicted by liberal pundits. In addition to being perhaps the clearest interpretation of the second amendment, constitutional carry would eliminate the costly process of permits, allowing poorer people to defend themselves more easily.

Take-aways

Citizens have a little over a hundred days of session left to keep an eye on Bonnen and their lawmakers. Since former House Speaker Joe Straus stepped down and Republicans elected Bonnen as the new speaker, conservatives have their first real chance since 1993 to act fast without top-down obstruction, and they would be wise to take it.

Abbott Sets SD 19 Runoff Date for Sept 18

Governor Greg Abbott announced today the date for the runoff in the emergency special election runoff for Senate District 19. Election day will be September 18, with early voting running from September 10-14. This runoff will fill the seat previously held by the former state senator Carlos Uresti (D).

Former Colonel Game Warden and Republican Peter Flores came in first in the special election held on July 31. Pete Gallego, a former one term Democratic Congressman from TX 23, finished second. Flores and Gallego are battling to replace Uresti, who resigned in June after being convicted of 11 felonies.

On Aug. 10, the Republican Party of Texas (RPT) filed a lawsuit challenging the residency of Gallego. RPT Chairman James Dickey claims it is “common knowledge Gallego does not live in Senate District 19” and explains that Gallego has “for years lived with his family in Austin.” It is a state constitutional requirement that a candidate for the Texas Senate must live in the district he or she runs in for at least a year before the election. However, residency claims are particularly difficult things to contest in court given vagueness in state law.

Gallego’s wife, an attorney who practices primarily in Austin, claims a homestead exemption on a home she owns in Austin. State law only allows a person to claim one homestead exemption.

On Aug. 13, RPT attorneys requested a Temporary Restraining Order to keep the Texas Secretary of State from certifying Flores and Gallego for the runoff election. Dickey explained “Pete Gallego lives in Austin with his family, receives a homestead exemption there, and has twice sought loans from federally insured banks on his [Austin] house.”

Christian Archer, Gallego’s campaign manager, responded to the RPT lawsuit, focusing on Gallego’s property in Alpine (within SD 19). Archer asserted that Gallego “has lived in Alpine since 1989… [he] is registered to vote in Alpine, where he has always voted, and where he pays his utilities.” Furthermore, Archer claimed the RPT lawsuit to be “a desperate move on behalf of a failing campaign.”

Flores won 34.4% of the votes in the special election, while Gallego earned 28.9%. Flores came out ahead, but he was the only major Republican in the race. The Democratic vote was split mainly between Gallego and State Rep. Roland Gutierrez (D, HD-119), who received 24.4% of the votes. SD-19 has always been represented by a Democrat. However, the fraud convictions surrounding the resignation of Uresti and the mystery of Gallego’s true residence might be the perfect storm for a Flores victory next month.  

Republican Heavyweights Push Flores to First

Voting finished in the Emergency Special Election in Senate District 19 to fill the unexpired term of former State Senator Carlos Uresti. 8 candidates filed, but the race ultimately boiled down to 3: former Democratic Congressman from TX-23 Pete Gallego, State Rep. Roland Gutierrez (D-119) and former Colonel Game Warden Peter Flores, a Republican. Flores attracted endorsements from several prominent elected officials and organizations, being endorsed early by Texas Right to Life and Hispanic Republicans of Texas, followed by endorsements from former Congressman Francisco “Quico” Canseco, Sens. John Cornyn and Ted Cruz, Gov. Abbott, Lt. Gov. Patrick, and others. The endorsements and GOTV efforts from such high profile elected officials were likely crucial in helping Flores earn his place at the top of the ballot. 

Peter Flores and Pete Gallego took first and second place, respectively, with Gutierrez coming in third. Flores and Gallego will advance to the runoff election to fill the remaining two years of the term.

The 2 leading Democrats in the race largely worked against each other, paying little attention to Flores, or Sen. Uresti’s brother Rep Tomas Uresti (D-118), who scarcely made a splash. The 2 main avenues of attack were Gutierrez’s unpaid taxes, and Gallego’s dubious claim to actually being a resident of SD-19 (a requirement in Texas for state legislative districts). In sharp contrast, Flores conducted a squeaky clean campaign, with no hint of scandal, and in fact the opposite. Flores is known to community members as a dedicated public servant in law enforcement, faithful Churchgoer, and devoted husband.
Of the 26,077 votes cast, Flores earned 8965 (34.4%), Gallego 7541 (28.9%), and Gutierrez 6351 (24.4%). No other candidate earned more than 700 votes. 

Due to the unusual timing in the middle of the summer, and the short time period after the election was called by Gov. Abbott before voting began, turnout was low, with fewer than 17,000 people voting early, and around 8000 on election day, amounting to about 10% of the votes cast in the 2016 race. Turnout in the upcoming runoff will likely be even lower than the already historically low turnout so far.

Gallego will continue to struggle to answer questions about whether he truly lives in SD-19, and why voters should give him another chance to represent them, when he was already voted out of office in CD-23 in favor of another Republican, Will Hurd, whose district overlaps almost entirely with SD-19.

Matt Beebe Wins Primary in HD-121

 Matt Beebe, considered by many to be an underdog candidate for Texas House District 121, has successfully advanced to the May 22 runoff following the March 6 Republican Primary. He earned a plurality of the votes in a 6 way race, at 29.5%. He will be facing Steve Allison, who hired well-known political consulting firm Murphy Nasica to assist him in the race. William Negley, running in CD-21, also hired Murphy Nasica, but did not make it to the runoff, though he did come in second in Bexar County.

Beebe was considered to be an underdog in the race to some because of his own past showing in the 2014 Republican Primary against then-incumbent, and Speaker of the Texas House, Joe Straus. Beebe won only 37.1% of the vote that year. Additionally, in 2016, candidates Jeff Judson and Sheila Bean, who were supported by many of the same conservative groups as Beebe is, such as Texas Right to Life PAC, won a combined 39.8% of the vote against Straus. Straus announced several months ago that he was not seeking reelection to the House, opening up the seat to many more candidates than the district has historically seen.

The second place winner, Steve Allison, is largely considered to be the political and ideological successor to Straus. The results of the runoff in May could serve as a better indicator of whether the district is truly more moderate as Straus and Allison supporters tend to claim, or if previous unsuccessful runs from candidates to the Right have been unsuccessful less because of policy and more due to incumbency and speakership advantage. 

Straus has been the target of groups like Texas Right to Life, Texas Homeschool Coalition, Texans for Fiscal Responsibility, and many others for several years due to his obstruction of many conservative priorities during his time as Speaker.  

Governor Greg Abbott Endorses Upstart HD-122 Candidate Chris Fails

Texas Governor Greg Abbott has officially endorsed Chris Fails for State Representative from House District 122. In a video released Monday morning, Governor Abbott explains why he supports Fails for State Representative, touching on his desire to reform property taxes and to fight for conservative values in the state of Texas.

Fails is the current Mayor of Hollywood Park, and a co-owner of Alamo Shooting Sports, a Hollywood Park gun store. He announced his campaign last September, during his third year of serving as Mayor of the small town. On his campaign website, he describes himself as pro-life, pro-family, pro-Second Amendment, and a fighter for a smaller role of government.

He is running against the current HD 122 Representative, Lyle Larson. Larson has been described as a “[Speaker Joe] Straus loyalist”, with poor fiscal responsibility scores from Empower Texas. Larson has also had past issues with Abbott, such when he tried to restrict the Governor’s ability to appoint leadership who had donated to his re-election campaign.

Chris Fails’ decision to run came at the heels of Larson’s bill proposal, and has since gained momentum. Governor Greg Abbott’s endorsement is the most recent development in this growing campaign.