MORALES MAKES DRUG CASE ISSUE

AUSTIN - Behind in the polls and eclipsed in campaign funds,
Democratic gubernatorial candidate Dan Morales went on the offensive
by contending opponent Tony Sanchez should have known about millions
in drug money laundered through his Laredo thrift in the 1980s.

Sanchez said Morales is wrong and called his criticism "kicks from a
drowning man.

"Morales raised the Tesoro Savings and Loan matter Monday, the day
campaign finance reports were due and as a new poll showed the former
state attorney general trailing Sanchez by six percentage points among
likely voters in the March 12 Democratic primary.

Morales said it's fair to examine Sanchez's business record because
that's what Sanchez - with a fortune estimated at $600 million -
cites in his bid for the state's highest office.

"I do not allege that Mr. Sanchez knew that Mexican drug money was
being laundered through his business. But I absolutely do believe that
he should have known," Morales said.

"How can Mr. Sanchez claim to be able to keep drugs out of our schools
and our communities if he is unable or unwilling to keep drug money
out of his own business?"

Sanchez - after a speech at a downtown park - said he has
addressed the Tesoro issue.

"There are three federal agencies and a federal judge that have said
that we were not aware of it, we weren't involved and we didn't ever
participate in it," Sanchez said. "We cooperated with the government
fully. They all said that.

"These are kicks from a drowning man. The polls show that he's
plummeting, and that we're going to be victorious.

"According to a statewide poll completed Sunday, Sanchez leads Morales
among likely Democratic voters and has a sizable edge among Hispanics.
The winner of the March 12 primary will face Republican Gov. Rick
Perry in November.

In the poll by Montgomery and Associates, 39.7 percent of likely
Democratic voters said they either would vote for Sanchez or were
leaning toward him. Morales was favored by 33.5 percent.

Candidate John WorldPeace of Houston had 1.9 percent, and Bill Lyon of
Waxahachie had 0.3 percent. Twenty percent were undecided.

Hispanic respondents favored Sanchez by 48.2 percent and Morales by
33.5 percent.

The poll of 1,002 Texas residents who had voted in one of the past two
Democratic primaries was conducted Feb. 7-10. It has a margin of error
of three percentage points.

"The race is not over," pollster Jeff Montgomery of Austin said, "but
the numbers are certainly moving in the right direction for Tony and
in the wrong direction for Dan. The fact that Sanchez is doing so
well, not against an unknown but against a two-time attorney general,
suggests that his campaign is on the road to a win.

"Morales aims to put up a roadblock by focusing on
Tesoro.

In the 1980s, the U.S. government said two Mexican men had laundered
nearly $25 million in drug money through the thrift. After the
Internal Revenue Service put a hold on some accounts, about $9 million
was wired to Panama on customers' orders from other accounts.

A judge later ruled Tesoro officials acted properly and, the Sanchez
camp said, found that Tesoro could not have acted otherwise with
regard to the wired funds.