High-profile campaigns confront tainted-money questions

By Dan Morain and Tom Hamburger - Los Angeles Times
Wednesday, September 12, 2007 12:47 PM PDT

WASHINGTON — The thorny question of tainted contributions — and how to check for them — gripped several election campaigns Tuesday in the wake of Sen. Hillary Rodham Clinton’s decision to turn back $850,000 raised by disgraced political patron Norman Hsu.

In a campaign that has seen unprecedented sums raised, nearly every candidate has received money from unsavory sources. Most quickly return it. But the knotty question remains: How deeply should campaigns delve into the backgrounds of people who seek to become their new best friends?

Clinton’s camp said Monday they would begin conducting criminal background checks on major donors. Details are being worked out, but Howard Wolfson, Clinton’s campaign communications director, said the campaign would obtain permission from donors before conducting such a detailed background check.

On Tuesday, former Sen. John Edwards, among Clinton’s rivals for the Democratic nomination, announced he would also start conducting criminal background checks on his top donors.

“We have always had an extensive vetting process for our raisers,” said Edwards spokesman Eric Schultz. “But due to the recent events involving Norman Hsu and the Clinton campaign, and to err on the side of caution, we have begun doing criminal background checks as well.” Sen. Barack Obama’s campaign, however, offered no change. Obama raised $58 million in the first half of the year, more than all other candidates. “(We) will continue to update our vetting procedures to best ensure we find any problems that could exist,” Obama spokesman Bill Burton said. Earlier this year, Obama donated to charities roughly $40,000 that was raised by his long-time benefactor Antoin Rezko, who was indicted last October in Chicago on federal public corruption charges. But that was just a portion of the Rezko money: A review of Obama’s campaign finance reports shows Rezko raised at least $160,000 for his state legislative and congressional campaigns dating back to 1995, and likely far more.

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Clinton’s decision to return $850,000 and institute criminal background checks on major campaign fundraisers is likely to have ripple effects beyond presidential politics.

“It reminds people that a normal routine check doesn’t give you the full facts,” said Bob Mulholland, campaign advisor to the California Democratic Party. “Every campaign will take notice.”

The Democratic Senatorial Campaign Committee, which raises funds to support candidates across the country, already had returned $43,700 donated directly by Hsu. On Tuesday, spokesman Matthew Miller said the committee is “looking into other donations to be sure they were made legally.”

In December 2005, Hsu was a “co-chair” for a fundraiser at the home of actors Rhea Perlman and Danny DeVito benefiting Democrats running for U.S. Senate.

It is not clear how much Hsu gave at the 2005 event. But Hsu and others associated with him contributed at least $175,000 to Senate candidates in the 2005-2006 election cycle, a review of campaign finance reports shows.

Other candidates also planned to follow Clinton by returning not just Hsu’s direct donations but money he raised from other people. Sen. Edward M. Kennedy, for one, plans to return $34,900 that Hsu raised for his campaigns and his political action committee, Kennedy’s office said. Rep. Kirsten Gillibrand, a Democrat from New York, announced plans to return as much as $20,000 donated by Hsu’s associates. Both had said earlier that they would give Hsu’s personal donations to charity.

Although Edwards announced stricter procedures, he declined to return 2004 donations from Michigan attorney Geoffrey Feiger, who was indicted last month on charges related to reimbursing others for campaign donations. Schultz said Edwards, who has cooperated with the prosecution, would donate contributions from Feiger and his associates to charity if Feiger is found guilty.

On the Republican side, one of Mitt Romney’s national finance committee co-chairs, Alan B. Fabian of Maryland, was indicted last month on 23 counts, including mail and bankruptcy fraud and obstruction of justice. Romney returned $2,300 given by Fabian, but not money given by other Fabian family members or money that Fabian raised.

“The money he helped raise was donated by people who have not been accused of any wrongdoing, and we saw no reason for returning it,” Romney communications director Matt Rhoades said.

Earlier this year, Romney returned $2,000 to Utah donor Thomas E. Mower, after the Los Angeles Times found that the contribution was dated in January — when Mower was in prison for tax evasion.

Romney did not return another $5,000 Mower gave to a Romney-controlled committee last year, after Mower was convicted. Attorney Kirk Jowers, who oversees the committee, said Tuesday he would review the Mower donation.

Former New York mayor Rudolph Giuliani severed ties with Thomas Ravenel, his South Carolina campaign treasurer, after Ravenel was indicted on cocaine-related charges in June. Giuliani returned Ravenel’s direct $2,300 donation, but not money from Ravenel family members or any of the $200,000-plus he raised in South Carolina. Ravenel pleaded guilty last week.

Former Tennessee Sen. Fred Thompson, a Republican, has a “thorough vetting process for donors,” spokeswoman Karen Hanretty, but would not offer details.

Sen. John McCain’s staff uses the database, LexisNexis, and Google to check the background of major donors and campaign leaders, said spokesman Brian Rogers.

Clinton’s staff spent Tuesday rechecking records, to ensure that all of those on the initial list of Hsu’s 260 contributors were in fact questionable donations that needed to be returned. “It’s possible that the number will shrink,” said Wolfson.

Hsu, a businessman who raised hundreds of thousands of dollars for candidates and causes while he was a fugitive from California, faces sentencing on charges dating back 15 years that he fleeced investors out of $1 million. Hsu turned himself in last week in San Mateo County, Calif., fled again and was apprehended in Grand Junction, Colo., where he remains pending a hearing seeking his return to California.

Morain reported from Sacramento and Hamburger from Washington. Times staff writers Robin Fields and Chuck Neubauer in Washington contributed to this report.