Court to Hear Other Hillary Fundraising Case

By Fred Lucas | July 7, 2008 | 8:32 PM EDT

( - Barely a week after questions emerged about suspicious donations to Sen. Hillary Clinton's presidential campaign, a three-judge panel in California will hear arguments Friday regarding an illegal fundraising event from her 2000 Senate campaign.

The California Court of Appeals, Second Appellate District, will hear arguments about whether Clinton, a New York senator and leading Democratic presidential candidate, should be a defendant in a lawsuit brought by Hollywood mogul Peter Paul.

Attorneys for each side will also debate the inclusion of a videotape as evidence -- a video in which Clinton can be heard apparently agreeing to plan a fundraiser, which was later determined to be illegal by the Federal Elections Commission (FEC).

The appeals court, made of two Democratic appointees and one Republican appointee, will issue a ruling within 90 days.

Paul's legal counsel, the United States Justice Foundation (USJF), filed a brief in July. It said the videotape "captures the very commission of a crime, namely, that of knowingly soliciting, coordinating and accepting federal campaign contributions far in excess of the legal limit of $2,000."

Clinton's attorney filed a brief in response that claimed the tape is "pure fantasy" and "much ado about nothing."

Paul is appealing a California Superior Court ruling that dismissed Hillary Clinton from an earlier lawsuit under a statute that protects politicians from harassing or frivolous lawsuits. Paul's legal team argues the statute does not apply to a political figure who violates the law.

"We will accomplish what Ken Starr wasn't able to achieve," Paul told Cybercast News Service, referring to the independent counsel who investigated several Clinton scandals in the 1990s. "We have three judges reviewing Hillary Clinton's illegal conduct. Presidential candidates have never been forced to defend themselves in court from being a felon."

Hillary Clinton, during her first campaign for U.S. Senate in 2000, is pictured with her largest donor, Peter Paul. Paul is now suing Clinton, alleging she contributed to the destruction of his business, Stan Lee Media.Paul is suing Sen. Clinton, former President Bill Clinton, and others. Paul claims that their actions cost him his multi-million dollar Internet venture, of which he was a majority owner, along with comic book icon Stan Lee.

Paul contends that in exchange for producing the fundraising event, President Clinton agreed to work as a rainmaker for the company after leaving the White House. Paul said the former president reneged on the agreement, causing investors to pull their money out of the company.

Clinton attorney David Kendall could not be reached for comment.

Paul wants to force the New York senator to testify in the case. Paul spent about $2 million to produce a star-studded August 2000 fundraiser that included Cher, Diana Ross, Brad Pitt, Sugar Ray and other Hollywood celebrities.

After failing to properly report the money raised, the Clinton Senate campaign had to pay a $35,000 fine to the FEC. Clinton's campaign finance director, David Rosen, was accused of lying to the FEC. He was indicted but eventually acquitted.

"Everything I complained about in 2001, and she denied, was supported in the Rosen trial and the FEC," Paul said. "Only her direct knowledge continues to be denied, and the tape contradicts that. Hillary's obstruction is worse than Nixon's obstruction in Watergate."

Over the last six years Clinton's staff said she played no role in planning the fundraiser. Yet the videotape shows Paul, Lee, and movie director Aaron Tonkin speaking with Hillary Clinton on speakerphone as she expresses enthusiasm about the event and telling Paul to contact her aide any time to further plan details.

If Clinton helped to plan the event, it could legally constitute a direct hard money donation to her Senate campaign, rather than to her joint fundraising committee, "New York Senate 2000."

If that is the case, the donation from Paul would be more than a thousand times the legal limit for an individual donation. Knowingly soliciting an individual contribution of $25,000 or more is a felony punishable by up to five years in prison.

At one point on the tape Tonkin said the celebrities are "coming out in full force knowing this is for your Senate race, it's unbelievable." Clinton replied, "I'm just thrilled. I'll check in with you from time to time because I know that putting something like this together is challenging even when people are enthusiastic and looking forward to doing it."

Clinton also says on the tape that Paul and her campaign aide Kelly Craighead "talk all the time, so she'll be the person to convey whatever I need."

Clinton's attorneys, in a brief, said, "The videotape shows that Senator Clinton is gracious to her supporters, that she has a sense of humor, and nothing more."

That fails to explain why Clinton instructed Paul to talk to one of her top aides, and why Clinton said on the tape that she contacted Cher about performing at the fundraiser, Paul's attorney D. Colette Wilson of the USJF said in an interview.

Cybercast News Service first reported the existence of the tape in April.

In a written declaration for the California court filed on April 7, 2006, Clinton said that she did not remember discussions with Paul about the fundraiser.

"I have no recollection whatsoever of discussing any arrangement with him whereby he would support my campaign for the United States Senate in exchange for anything from me or then-President Clinton," Clinton wrote. "I do not believe I would make such a statement because I believe I would remember such a discussion if it had occurred."

Even if the appeals court excuses Sen. Clinton, the lawsuit will still continue.

The lower court that excused the former first lady allowed the case to move forward against Bill Clinton and Clinton associate Jim Levin and producer Gary Smith, both involved in the planning of the fundraiser. That means, Paul said, Hillary Clinton will likely be called as a material witness.

Last week, after reports that one of Clinton's largest contributors, Norman Hsu, was a fugitive convicted of grand theft in 1991 in California, she gave $23,000 that Hsu directly donated to her present and past campaigns to charity.

However, she did not discard the more that $1 million that Hsu raised under questionable circumstances. (As this story went to press, Hsu reportedly had failed to turn over his passport to his lawyers and his whereabouts were unknown.)

"It's ironic and cosmic that this is happening the same time as the Hsu scandal," Paul's attorney Wilson said. "At least in that case, she has more plausible deniability, though I can't believe she didn't know. In this case, the charge is that she knowingly solicited Peter Paul to pay for her campaign fundraiser."

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