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WORLD / Newsmaker
Clinton returns money, sets precedent
(AP)
Updated: 2007-09-12 15:40
WASHINGTON -- In returning $850,000 to donors associated with a disgraced
fundraiser, Sen. Hillary Rodham Clinton sets a significant new standard
for how campaigns should respond in the face of potential scandal.
Norman Hsu, right, prepares to surrender as he arrives with spokesman
Jason Booth, center, and attorney Somnath Raj Chatterjee, left, at a San
Mateo County Superior Court in Redwood City, Calif., in this Aug. 31,
2007, file photo. [AP]
Clinton's decision also underscores the price?- financial and political?-
that her campaign is paying for failing to spot trouble with the
fundraiser, Norman Hsu, even after receiving a warning. The campaign
announced it would now conduct background checks on its fundraisers, an
extraordinary and potentially time consuming step.
By returning the money, Clinton also puts pressure on presidential rivals
and other politicians with rainmakers who have dubious pasts or who have
employed questionable fundraising tactics, including the campaigns of
Barack Obama and John Edwards.
Hsu, a Hong Kong native who appeared suddenly in the New York political
scene about four years ago, is under guard in a Colorado hospital after
failing to show up for a bail hearing last week in California. He had
been wanted as a fugitive for skipping sentencing on a 1991 grand theft
case to which he had pleaded no contest.
In the past two weeks, news reports raised questions about his
fundraising practices and revealed his fugitive status. Law enforcement
authorities said the FBI is now investigating whether Hsu paid donors to
contribute to politicians. His lawyer has said Hsu did not break the law
and that donors he solicited contributed their own money.
Despite his high-profile political activity, California authorities were
apparently unaware of his whereabouts. And despite his abrupt entry into
the circle of political money "bundlers" during the 2004 election,
politicians did not inquire about his past.
"There were a few people who were scratching their heads, that he was
being so generous," said John Catsimatidis, a New York businessman and
longtime Clinton money man. "But he was a pleasant guy and nobody thought
anything of it."
The Los Angeles Times reported Tuesday that an Irvine, Calif.,
businessman cautioned the Clinton campaign in June that he suspected Hsu
was running an investment scam. The newspaper said the campaign's former
finance director for Western states, Samantha Wolf, denied the claim and
pronounced Hsu "completely legit."
Asked Tuesday what the campaign did in response to the warning, Clinton
spokesman Howard Wolfson said: "It prompted another search of publicly
available information which did not reveal the decade-plus old warrant."
Caught flat-footed by the Hsu revelations, the Clinton camp said it will
now take extra steps to examine their fundraisers, including conducting
criminal background checks.
"In any instances where a source of a bundler's income is in question,
the campaign will take affirmative steps to verify its origin," Wolfson
said.
Larry Noble, former general counsel at the Federal Election Commission,
said Clinton raised the bar on how to respond to troublesome fundraising.
"At one time the standard was if a person is convicted of a crime I'll
return the money; then it was if they are indicted," Noble said. "What
we're seeing now is the Clinton campaign being very proactive about
trying to get out in front of what experience has shown can be a very
distracting story."
Aggressive vetting of bundlers, Noble said, "is a big step because, one,
it's going to take resources and, two, it may well turn off or insult
some fundraisers."
With the cost of campaigns increasing exponentially, candidates are under
increasing pressure to rely on fundraisers, or money "bundlers," who help
solicit money on their behalf. This election, money is even more
important because several presidential candidates plan to forgo public
financing.
Clinton has raised $52 million from individual contributors, second only
to Obama who has raised $58 million.
"A great deal of fundraising comes from people who are established, have
homes, people in the community," Catsimatidis said. "I'd say 99.9
percent. But there is that oddball that occurs once in a while. It
happens and one has to be on the watch for that."
Last month, lawyer Geoffrey Fieger, who represented assisted suicide
advocate Jack Kevorkian, was indicted on charges of conspiring to make
more than $125,000 in illegal contributions to Edwards' 2004 presidential
campaign. Fieger pleaded not guilty and authorities have said the Edwards
campaign was unaware of the activity.
Edwards campaign spokesman Eric Schultz said the campaign will await the
outcome of the case against Fieger before acting on the money he helped
raise.
"From Day One, the campaign has taken their lead from and cooperated
fully with the Department of Justice," Schultz said. "Once this
prosecution concludes, if Geoffrey Fieger is found guilty, the campaign
will donate all the money in question to charity."
He said the campaign, like Clinton's has also stepped up its vetting of
fundraisers.
"We have always had an extensive vetting process for our raisers, but
based on the Hsu revelations, and to err on the side of caution, we have
begun doing criminal background checks as well," he said.
Obama has already given to charity money that Hsu contributed to his
Senate campaign in 2004 and to his political action committee in 2005.
Hsu did not assist Obama's presidential campaign but he helped host one
fundraiser for Obama during his Senate run. Obama's campaign sent letters
to donors potentially affiliated with Hsu, seeking assurances that the
money they donated was their own.
Campaign spokesman Bill Burton said the campaign was not returning any
money from those donors yet because it was still awaiting their response.
Obama has also given to charity about $37,000 in contributions to his
Senate campaign and political action committee that were linked to
Chicago businessman Antoin "Tony" Rezko, who faces extortion and fraud
charges related to an Illinois public pension fund. Rezko also raised
tens of thousands of dollars for Obama's state legislative and Senate
races. And while Obama has divested his campaign of money from some Rezko
associates, he has kept money from others.
"We're constantly reviewing and updating our processes for vetting
donations and donors, and we'll continue to do that," Burton said.
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