Clinton fund raising probed

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ASSOCIATED PRESS

The Justice Department is setting its sights on Sen. Hillary Rodham Clinton's 2000 Senate campaign in pursuit of suspected fund-raising violations. In targeting a rising star in the Democratic Party, prosecutors are trying to gain the cooperation of the indicted businessman who raised the accusations, interviews and documents indicate.

The FBI has told a U.S. magistrate in Los Angeles that it has evidence that the former first lady's campaign deliberately understated its fund-raising costs so it would have more money to spend on elections. And prosecutors say one of her fund-raisers helped because he wanted a pardon from her husband.

Noel Hillman, the Justice Department's top public-corruption lawyer and a career official, has met three times -- most recently in May -- with attorneys for Peter Paul to discuss a plea deal. Justice wants to interview Mr. Paul to see whether he can substantiate his accusations that Mrs. Clinton's campaign engaged in wrongdoing, the defense attorneys said.

Mr. Paul is a three-time felon who hosted a Hollywood fund-raising event for Mrs. Clinton in 2000 and is facing stock-fraud charges in New York. He says he underwrote most of the costs for the event. Prosecutors contend that he did so in an effort to win a pardon from President Clinton.

Attorneys for Mrs. Clinton and the former chief fund-raiser for New York Senate 2000, David Rosen, say their clients have done nothing wrong.

"New York Senate 2000 properly reported all donations in 2000," said David Kendall, Mrs. Clinton's attorney.

The investigation, which has dragged on for more than three years, could cast a shadow over the senator's career.

Mrs. Clinton is considered a possible presidential candidate in 2008 if Sen. John Kerry loses this year. But she first faces a re-election battle in 2006 -- possibly against former New York City Mayor Rudolph W. Giuliani or New York Gov. George E. Pataki.

Most accusations of campaign-finance irregularities are handled administratively through the Federal Election Commission, although the Justice Department has investigated such matters in the past.

During the Clinton administration, when Attorney General Janet Reno ran the Justice Department, a department campaign-finance task force charged more than two dozen persons and two corporations with fund-raising abuses that occurred in the 1996 election cycle. Many of the abuses involved Democratic fund raising.

Documents show an FBI agent told the Los Angeles magistrate two years ago that the government thinks Mrs. Clinton's campaign understated its costs for the Paul fund-raiser.

"The event's costs exceeded $1 million, but the required forms filed by New York Senate 2000 ... months after the event incorrectly disclosed that the cost of the event was only $523,000," said the 2002 FBI affidavit, which was unsealed in the summer. "It appears that the true cost of the event was deliberately understated in order to increase the amount of funds available to New York Senate 2000 for federal campaign activities."

The document also said a $366,000 donation to the gala was incorrectly listed as coming from the company that Mr. Paul co-founded, Stan Lee Media, when it really came from Mr. Paul personally.