Posted on 09/11/2007 2:21:37 PM PDT by NormsRevenge
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.
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 form 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.
BTTT
Rush on this now...and the NYT connection.
The author and I have now spoken. I will get him up to speed. :)
AP on yahoo? Associated Propagandists are working overtime to create fiction for The Democrat Crime Syndicate.
“bundlers” = criminal money launderers
“Hsu is still being protected at a hospital in Grand Junction,Co.”
He better hope he is being protected, or his life isn’t worth a plug nickel! Hospitals can be dangerous places — accidental drug overdoses; unexplained MI’s; air embolisms in IVs, etc.
I think his guards are armed and dangerous. LOL
I heard that Hil gets a new latrine by FTD every day...
And she probably never will! Why on earth to people trust her? Yet here she is the leading Dem...incredible!
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