Attorneys for Jim Ellis and John Colyandro, who operated Texans for a Republican Majority during the 2002 campaign, argued that the 3rd Court of Appeals should toss out their indictments because the laws used against them were vague and too broad.
In arguments made to the appeals court two years ago, Travis County prosecutors disagreed, urging the court to let the prosecution continue.
In a lengthy opinion issued Friday, the court affirmed the finding of a lower court and declined to dismiss the indictments.
"The challenged statutes give constitutionally adequate notice of the conduct prohibited and sufficiently determinate guidelines for law enforcement," 3rd Court of Appeals Justice Alan Waldrop writes in the opinion.
In 2002, Texans for a Republican Majority sent $190,000 in corporate checks to the Republican National Committee. The RNC, in turn, sent $190,000 of money collected from individuals to seven Texas candidates.
A Travis County grand jury indicted Ellis, Colyandro and DeLay on money-laundering charges in 2005.
Prosecutors argue that the transaction was an attempt to turn corporate money that is illegal in Texas elections into legal donations to GOP candidates. The defense argues that it was separate, legal transactions.