New Clinton Scandal Mirrors 'Chinagate,' Say Analysts

Fred Lucas | July 7, 2008 | 8:32pm EDT
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( - Clinton fundraising flashbacks erupted last week as critics of Sen. Hillary Clinton (D-N.Y.) demanded answers about some of her questionable campaign fundraising, aspects of which mirrored the "China-gate" fundraising scandal that plagued the 1996 Bill Clinton-Al Gore campaign.

Hillary Clinton's presidential campaign has returned money directly donated from a one-time fugitive, Norman Hsu, now in the custody of California authorities. But because she is keeping much of the money he raised for her, along with the history of Clinton fundraising scandals, the issue could linger, analysts say.

"It's not over as long as the press and other candidates keep pointing to it," Larry Sabato, a political science professor at the University of Virginia, told Cybercast News Service.

"It's a legitimate issue, given the Clinton fundraising scandals of the 1990s. There is a pattern here. ... We ought to want to find out if a wealthy person is illegally getting others to make donations, then reimbursing them. That is a serious offense," Sabato said.

When the story broke last week, comparisons were instantly made to the 1996 fundraising scandal that involved Chinese nationals donating to President Bill Clinton's reelection campaign and the Democratic National Committee.

Norman Hsu - a criminal fugitive since 1991 after pleading no contest to the charge of grand theft in a California court - has reportedly raised more than $1 million for Sen. Clinton's presidential campaign.

But it was the source of many of the donations - bundling individual donations of $2,300 for the primary and another $2,300 for the general election from unlikely donors - that raised the most suspicion among Clinton critics.

Though Clinton's campaign said the $23,000 that Hsu donated over the years to her presidential and Senate campaign and political action committee will be given to charity, she is not giving away the bundled money that Hsu raised.

Bundling is a term used to describe one person gathering a large number of political contributions under the names of many people. It is often done by heads of companies and other organizations who gather donations from employees to contribute to a candidate.

However, this is sometimes done to circumvent the individual contribution limits.

The most prominent example is the Paw family, who live in a one-story bungalow near the San Francisco International Airport. Having apparently never donated to a political campaign before 2004, the family has given $45,000 to Clinton's campaign organizations since 2005.

Combined, the family reportedly gave more than $200,000 to Democrats running for statewide office in New York. The Paw family is headed by William Paw, a mail carrier who reportedly earns $49,000 a year, and his wife Alice, a homemaker.

Another example was the Lee family in New York that ran a plastics packaging plant in Pennsylvania. They gave more than $200,000 to Democrats in the last three years. Nearly $40,000 of that went to Clinton's presidential or Senate campaigns.

Other Democratic politicians, such as Rep. Michael Honda and Rep. Doris Matsui, both of California, said they would give the money from the Paw family to charity. The Clinton campaign has not made such a pledge.

The Clinton campaign could not be reached for comment Friday despite repeated phone calls.

Hsu's attorney, E. Lawrence Barcella Jr., told reporters that his client did not reimburse anyone for their donations. It is a federal crime to contribute to a politician under someone else's name. It is likewise illegal for a politician to knowingly accept a contribution under someone else's name.

Still, the case already has unanswered questions, as the 1996 fundraising scandal still has unanswered questions, said Tom Fitton, president of Judicial Watch, a conservative government watchdog group.

"There is new money, there are straw donors," Fitton told Cybercast News Service, pointing to similarities.

The 1996 Clinton fundraising scandal, often called "Chinagate" involved numerous anecdotes but never produced a smoking gun. Reported events included the following:

- Clinton friend Yah Lin "Charlie" Trie pleaded guilty to charges of violating campaign finance rules in exchange for having pending indictments dropped against him in Washington and Arkansas.

- According to news reports in 1997, Democratic donor Johnny Chung received a $150,000 transfer from the Bank of China three days before he handed then-First Lady Hillary Clinton's chief of staff a $50,000 check.

- Then-Vice President Al Gore received political donations from Buddhist nuns who had taken a vow of poverty.

- President Clinton admitted in 1997 that he invited major campaign donors to spend the night in the White House. The Clintons hosted 404 overnight guests.

- During the investigation by the Department of Justice, about 120 people connected to "Chinagate" either fled the country or pleaded the Fifth Amendment to prevent testifying.

The Republican National Committee posted a fact sheet last Thursday entitled "Re-living History," which looks at parallels between "Chinagate" and the Hsu case.

But "Chinagate" was not the only Clinton fundraising scandal.

After fugitive Marc Rich's ex-wife and a Rich friend donated a combined $1.45 million to the Clinton Presidential Library, he was granted a presidential pardon just before Clinton left office in January 2001. Rich fled the United States after he was convicted of tax evasion.

Also, Hillary Clinton's 2000 Senate campaign was involved in an illegal in-kind contribution from Hollywood mogul Peter Paul. That incident resulted in a $35,000 fine by the Federal Elections Committee and the indictment and later acquittal of her finance director, David Rosen.

Hsu pleaded no contest in 1991 in a California court to a charge that he cheated investors out of $1 million to purportedly operate a business that didn't exist.

However, Hsu failed to show up for a sentencing hearing and went on to live a rather public life in New York as an apparel executive, donating to politicians and serving on the board of the New School. During that 15-year period, California authorities considered him a fugitive. He turned himself in on Friday.

Hsu's attorney told The Los Angeles Times that Hsu did not remember pleading guilty or facing jail time.

The issue could be a factor in the presidential race, said Larry Sabato, as some of Clinton's Democratic rivals have already talked about how it's time for a new, non-Clinton political chapter.

"My guess is that the Democrats will criticize her more than the Republicans," Sabato said. "It's the other Democrats who need to de-throne her by reminding Democrats that she will be just as controversial as the nominee or as president as she was in the 1990s. This is a good issue that connects the present with the past."

However, Gary Rose, a political science professor at Sacred Heart University doubts her Democratic opponents will pounce. He's not sure it would be effective if they did.

"Her support is so deep and so wide in the party," Rose told Cybercast News Service. "It's something that could come up in the general election with the Republican candidate and the Republican machine. But I don't think the Democrats are going to touch this one."

Fitton believes it will have some political impact even though the Clintons have been unscathed, to some degree, by scandal in the past.

"There is a group of people who believe Hillary Clinton is corrupt and won't vote for her," Fitton said. "Then there is a group who thinks she's a political hero and can do no wrong. A situation like this will give pause to those in the middle, which can make or break a presidential campaign."

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