IN TEXAS, AD HEATS UP RACE FOR GOVERNOR

AUSTIN, Tex., July 29 (AP) - Gov. Rick Perry broadcast a new television
advertisement today that says his Democratic opponent, Tony Sanchez, knew
or should have known that his savings and loan company, now defunct,
laundered drug money.

Mr. Sanchez countered that neither he nor the company, Tesoro Savings and
Loan, was accused of wrongdoing.

The 30-second commercial, based on selected court records, is titled
"Suitcase" because of the way depositors suspected of being drug dealers
ran $25 million through Tesoro in 1983 and 1984.

"Can Texans really trust Tony Sanchez?" the advertisement asks.

The Sanchez campaign said the depositors, not Tesoro officials, were to blame.

"The accusation is false," Mr. Sanchez said.

The Sanchez campaign later unveiled an advertisement in response that said
the Internal Revenue Service, two federal judges and the Justice Department
"totally exonerated" Tesoro.

"In fact, the Sanchez bank worked with law enforcement to help the
investigation," the response stated.

Mr. Sanchez was chairman of Tesoro at the time of the money laundering.

He said thrift officials realized there was drug money in the savings and
loan when the Internal Revenue Service issued levies for accounts in June
1984 held by two men linked to Miguel Felix Gallardo, a kingpin in the
Guadalajara drug cartel in Mexico.

The next month, Tesoro released $7 million in wire transfers to Panama
requested by Mexicans who said they were the account holders on 68 accounts
placed by the two men.