Experts Question Whether Clinton Campaign Finance Case Will Impact '08 Race

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

( - The legal and political implications of a Hollywood mogul's lawsuit against Democratic presidential frontrunner Hillary Clinton are not yet clear, but legal experts are not holding their breath.

In some ways, it's old news with a new twist. The alleged corruption in high places occurred in 2000, when the then-first lady was seeking her first term as a U.S. senator from New York. That's when Hollywood mainstay Peter Paul produced a fundraising event that he says amounted to a nearly $2 million in-kind campaign contribution.

Paul at the time was majority co-owner, with comic book icon Stan Lee, of a publicly-traded Internet company, Stan Lee Media. The company later collapsed -- as did Paul's relationship with Bill and Hillary Clinton.

What is new is the potentially incriminating videotape of Hillary Clinton speaking with Paul, Lee and director Aaron Tonkin in the summer of 2000 about the forthcoming fundraiser, which featured such celebrities as Cher, Diana Ross and Brad Pitt.

The star-studded August 2000 event was later deemed to be a violation of federal campaign finance laws: The Clinton campaign had to pay a $35,000 fine to the Federal Elections Committee. Clinton's campaign finance director David Rosen was accused of lying to the FEC, indicted, but eventually acquitted.

Throughout, Clinton's staff said she played no role in planning the fundraiser. Yet the tape depicts Clinton expressing 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 a contribution of $25,000 or more is a felony punishable by up to five years in prison.

If a California appeals court allows the video as evidence in the case, it may have some consequences for next year's campaign.

(The California Court of Appeals, Second Appellate District, is considering a case brought by Paul, who is appealing a California Superior Court ruling dismissing Clinton from an earlier lawsuit on the grounds it was frivolous. In his original lawsuit, Paul is suing Hillary and Bill Clintons and others, claiming their actions cost him his multi-million dollar Internet venture. 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 says the former president reneged.)

The case presents the classic question of what Clinton knew and when she knew it, said election lawyer John Armor. He said the tape shows that Clinton allegedly committed at least four felonies pertaining to illegal campaign fundraising and obstructing subsequent federal investigations into the matter.

"Following on that question is how many people lied for her in how many venues and violated how many laws in order to keep anyone from finding out how much she knew, when she knew it and what she herself did wrong," said Armor. He is not directly involved in the Paul case, but was interviewed for the documentary on the case, produced by Paul.

But according to Paul Ryan, associate legal counsel for the Campaign Legal Center, the tape is not necessarily a slam dunk against Clinton or her 2000 Senate campaign. In-kind contributions can be especially difficult, said Ryan, who when he spoke to Cybercast News Service had not yet seen the video.

"The problem with soft money was loopholes," Ryan said. "Hard money is determined by who the check is written to. Knowledge is not the defining factor - it's control and benefit. The further away a candidate gets from direct control, the harder it is to prove a coordinated in-kind contribution."


At no point on the tape did Clinton suggest that the event and the Paul donation were not going directly to her campaign, and the other three in the conversation referenced it repeatedly. At one point, 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 chief campaign aide "talk all the time, so she'll be the person to convey whatever I need."

Paul calls the release of the five-minute taped conversation -- which he obtained in April after the U.S. attorney's office in New York released about 90 tapes -- historic.

"No presidential candidate was ever caught on videotape engaged in felony," Paul told Cybercast News Service. "No candidate [has ever been] engaged in major civil fraud suit [that] she was forced to testify in."

If Clinton is required to testify, as Paul hopes, it could be a major distraction during her campaign.

Neither Clinton's campaign office nor her attorney, David Kendall, responded to requests for comment on this story.

In a written declaration for the California court filed on April 7, 2006, Clinton said only 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," she added.

The Clinton attorneys in recent briefs point out that Paul is a convicted felon. He pleaded guilty to manipulating his company's stock price in 2001 and pleaded guilty to a previous felony of defrauding the Cuban government in 1979.

Paul accuses the Clinton camp of bringing up his history in a bid to divert attention away from the facts of the case. "I was held accountable for what I did," he said. "When are they going to be held accountable?"

Even if Clinton is forced to testify under oath in 2008, and if Paul's assertions are proven true, some experts do not foresee significant political and legal ramifications.

From a political perspective, the public stopped caring about alleged misdeeds by either of the Clintons, said Gary Rose, political science professor at Sacred Heart University.

"When it comes to the Clintons, they are generally immune to public condemnation regarding ethical lapses and violations of the law," Rose told Cybercast News Service. "If this case continues into the general election, we'll see how it affects swing voters and independents, but it is not going to derail her bid for the nomination. I still remember Bill Clinton's polls, and two-thirds of voters said they didn't trust him but voted for him irrespective of his morality or ethics."

Even critics of Clinton don't think the case will harm her politically.

"She's going to hold the highest office in the country. She's got the money, the organization and the FBI files," James Nesfield, president of the Equal Justice Foundation of America (EJFA), said in an interview.

Nesfield, who helped the New York State Attorney General's office target corporate corruption, is not a disinterested party, having bought the troubled Stan Lee Media firm.

He said the EJFA's broad and longer-term aim is to inform government and corporate whistleblowers of their rights and encourage them to come forward, but its key focus for the immediate future will be educating the public about the Paul case.

If Clinton won't face justice, the public should at least know of her misdeeds, Nesfield said.

"I'm not anti-Hillary," he added. "I'm just anti-not following the law."

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