Protecting Texas from Foreign Meddling in Our Courts: A Call for Transparency in Third-Party Litigation Funding
Texas is the heartbeat of American energy, innovation, and freedom, but our courts are under siege from shadowy foreign influences that threaten our sovereignty and economy. I’m talking about Third-Party Litigation Funding (TPLF), where foreign governments and Sovereign Wealth Funds (SWFs) pour billions into liability lawsuits right here in Texas. This is about foreign powers like China, Russia, and Middle Eastern countries using our legal system as a weapon to undermine American businesses, steal intellectual property, and advance their agendas.
TPLF is essentially venture capitalism for lawsuits. External investors, who have no direct stake in the case, bankroll plaintiffs’ legal fees in exchange for a cut of any settlement or award—often 30-50% or more. This practice turns justice into a high-stakes gamble, inflating claims and prolonging litigation to maximize profits. Take Abu Dhabi’s Mubadala Investment Company, a SWF that owns a majority stake in Fortress Investment Group. Fortress has funded massive liability suits in Texas, including patent infringement cases by VLSI Technology LLC against Intel, raking in over $3 billion in verdicts (though some were appealed). These cases, filed in Waco, Texas, targeted American chip technology—vital to our national security. Even worse, the CCP’s China Investment Corporation has been linked to funding similar suits, potentially gaining access to sensitive U.S. tech secrets during discovery.
Russia-linked entities have skirted sanctions through the TPLF, indirectly funding cases. These aren’t isolated incidents. Foreign SWFs see Texas lawsuits as low-risk investments with huge payoffs, often through intermediaries to hide their tracks. Proponents claim it “levels the playing field” for plaintiffs, but as a conservative, I see it as crony capitalism on steroids—foreign cronies, that is—driving up costs for Texas businesses and consumers while eroding our judicial integrity.
To rub salt in the wound, foreign funders structure these contracts to get capital gains tax treatment, and under IRC § 871, foreign persons are generally not taxed on U.S.-sourced capital gains. Yes, you read that right, these foreign funders pay $0 US tax for this practice.
In Texas, this issue hits home—our state leads in energy and tech, sectors targeted by foreign-funded suits. Liability claims against companies often drag on for years, costing jobs and hurting innovation. Economically, it stifles growth. Businesses face higher insurance premiums and settlement costs, passed on to Texans.
This is globalism run amok—allowing hostile regimes to weaponize our courts against us. We’ve seen how China uses similar tactics in trade and IP theft. Now they’re infiltrating our justice system. Without transparency, judges and defendants are blind to conflicts of interest, like when a funder controls case strategy or pushes for settlements that benefit foreign interests over justice. Undisclosed TPLF undermines the rule of law, a bedrock of conservatism. The risks are profound and hit at the core of conservative values: national security, economic freedom, and state sovereignty.
Transparency is the first step to accountability, and several Republican states have led the charge, but Texas is falling behind on this issue. At least eight states mandate some form of disclosure for TPLF agreements in civil litigation.
We must pass a comprehensive TPLF Disclosure Act requiring mandatory disclosure of all funding agreements in state civil cases. These measures aren’t burdensome—they’re common sense, ensuring fairness without stifling legitimate claims. Foreign investment in Texas lawsuits is a clear and present danger to our way of life. We must reclaim our courts for justice, not profit for our enemies. As your legislator, I’ll make this a top priority because Texas Strong means America Strong. Let’s drain the swamp in our courtroom, put Texans first and make Texas the gold standard for judicial integrity.
Fred Tate
Pol. Adv. Paid for by Fred Tate Campaign
