- The Washington Times - Thursday, February 28, 2002

A fund-raising company used by Republican Rick Lazio in his New York Senate bid didn't disclose that prominent Democratic moneyman Terry McAuliffe was its "primary shareholder," the Lazio campaign said in a claim against the firm in bankruptcy court.
The company, EContributor.com, also failed to notify the Lazio campaign that it was processing contributions for use by his opponent in the 2000 race, Hillary Rodham Clinton, and withheld $206,000 in contributions, said Steven Castleton, Mr. Lazio's former director of Internet fund raising.
"If I knew Terry McAuliffe was a major shareholder, we would have stayed away from EContributor because of the potential for a conflict of interest," Mr. Castleton said this week. He discovered Mr. McAuliffe's involvement from reports published four months after Mrs. Clinton's victory.
Jeri Richardson, EContributor founder, said Mrs. Clinton was not a "direct client," but the company did work for the Democratic Senatorial Campaign Committee (DSCC).
"I'm sure some of the money went to her," Mrs. Richardson said. She also maintained Lazio 2000 received all of the campaign funds the company collected for it.
Last July, EContributor filed for Chapter 11 protection in the U.S. Bankruptcy Court in Alexandria. The privately held firm made money by taking a percentage of online credit card campaign contributions it processed. Mr. Lazio's campaign filed its claim in October.
A Democrat affiliated with a firm that did business with EContributor said, "Terry seems to have a blind spot when it comes to the appearance of impropriety. As a major shareholder in EContributor, he could have daily or monthly access to the fund-raising records of Hillary's opponent."
"That makes for the appearance of impropriety, whether he abused that access or not," he said.
The Federal Election Commission (FEC) requires candidates to file quarterly reports, and EContributor kept a daily record of each contributor and the amount contributed, which is considered vital tactical information. For instance, a campaign can conserve resources by delaying expensive TV ad buys if it knows its opponent's fund raising has hit a dry period.
"Terry was in a private business that profited from raising money for Lazio and Mrs. Clinton, while he was publicly helping her raise money for her campaign," the Democrat campaign adviser said. "He was taking Republicans for fools, making money from them, while raising money for the No. 1 Democrat Hillary."
Mrs. Richardson said neither Mr. McAuliffe nor "anyone outside of EContributor's officers and certain client service employees have access to any client data, records, funds or accounts."
Mr. McAuliffe, now Democratic national chairman, raised money for Mrs. Clinton's campaign and Vice President Al Gore's presidential run in 2000. He initially put up $1.3 million of his own money as guarantor for President Clinton and Mrs. Clinton when they purchased a home in Chappaqua to establish New York residency for Mrs. Clinton's senatorial bid. After criticism of the arrangement, Mr. McAuliffe subsequently withdrew the guarantee and the Clintons arranged a conventional mortgage.
McAuliffe spokeswoman Jennifer Palmieri called the Lazio campaign's accusations "pathetic."
"As a private investor, Mr. McAuliffe played no management role and never received nor sought client information," she said. "And, frankly, I find it sad that nearly 18 months after the election, Mr. Lazio clearly has not come to terms with his defeat."
FEC records indicate that the DSCC gave no money directly to Mrs. Clinton's campaign. Her campaign did establish a joint fund-raising committee, "New York Senate 2000," with the DSCC to raise unlimited "soft money" contributions for the party.
The joint committee transferred the contributions to the DSCC, which in turn sent the money to the New York state Democratic Party. The state party then spent the soft money on ads promoting Mrs. Clinton, as news stories noted at the time.
The client list of EContributor also included the political action committees for Democratic Sens. Edward M. Kennedy of Massachusetts and Tom Daschle of South Dakota.
It also signed on the Republican National Committee (RNC), which now claims it too was unaware of the involvement of Mr. McAuliffe, who was chairman of the Democratic presidential nominating convention in 2000.
"We didn't know that McAuliffe was involved in EContributor, or we would have had concerns about contracting with it to process our credit card donations," said RNC spokeswoman Mindy Tucker.
James Cox, who was the senior account manager for EContributor, said the company began to use employee 401(k) funds and client funds to pay expenses when it was losing money.
"Specifically, they apparently used close to $200,000 of funds from the Rick Lazio campaign," Mr. Cox said.


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