Friday, August 31, 2007

Sen. Hillary Rodham Clinton has been snagged in a fundraising scandal, prompting Republicans to dig up her ties to questionable donors over the years.

The New York Democrat defended taking thousands of dollars from businessman Norman Hsu, after it was revealed this week that he has an outstanding felony arrest warrant in California.

“When you have as many contributors as I’m fortunate enough to have, we do the very best job we can based on the information available to us to make appropriate vetting decisions,” she said. “This one was a big surprise to everybody.”

She will give the $23,000 in Hsu donations to charity and said the campaign would analyze other Hsu-related contributions and “take action if that’s warranted.”

Republicans used the news to attack the Clinton campaign, sending out statements from pundits who tried to link the incident with her husband’s 1996 fundraising scandal involving Asian donors.

A Republican National Committee release blared this headline: “Hillary’s fugitive fundraiser,” and the RNC called it “another chapter in long history of questionable Clinton finance practices.”

The Wall Street Journal this week suggested a link between Mr. Hsu and the Paw family in Northern California. The family, which has a meager annual income, has donated $45,000 to Mrs. Clinton and $200,000 to Democrats in contributions that closely track Mr. Hsu’s own donations, the Journal reported.

Republicans sent out this quote from Clinton spokesman Howard Wolfson, made before news hit about the outstanding arrest warrant: “During Mr. Hsu’s many years of active participation in the political process, there has been no question about his integrity or his commitment to playing by the rules.”

California authorities said Mr. Hsu failed to appear in court for sentencing in a fraud scheme more than 15 years ago.

Mr. Hsu, an apparel magnate living in New York, has given thousands of dollars to numerous Democrats, who scrambled this week to get rid of his cash via charities.

After an initial lag while reviewing two contributions from Mr. Hsu, Sen. Barack Obama’s presidential campaign donated $7,000 to charity yesterday, spokesman Bill Burton said. Mr. Hsu gave $2,000 to the Illinois Democrat in 2004 and $5,000 to Mr. Obama’s political action committee in 2005.

The Obama campaign also sent a letter to the Paw family “asking them to affirm that their contributions were from their own funds and not those of someone else,” Mr. Burton said, adding that the campaign will “continue to be vigilant” in reviewing donations.

Mrs. Clinton told the Boston Globe that the campaign will “increase our vigilance.”

Mr. Hsu said in a statement Wednesday he was unaware of the lingering warrant and that he would not raise campaign funds until the situation was resolved.

Republicans likened the situation to problems that surfaced in 1996 when President Clinton was accused of improperly receiving donations from Asian contributors.

In one case, Democratic fundraiser John Huang pleaded guilty to violating federal election laws while raising $1.6 million for the Democratic National Committee for the 1996 campaign. Johnny Chung pleaded guilty in 1998 to using “straw donors” to illegally funnel tens of thousands of dollars to the 1996 Clinton-Gore re-election campaign.

Chung, who visited the White House 57 times and gave $366,000 to Democrats, told prosecutors that the Chinese military was a major source for his contributions.

Charles Yah Lin Trie pleaded guilty to making false statements to the Federal Election Commission and to making political contributions in the names of others. Chung testified that Trie asked the Chinese government in 1996 for $1 million to help guarantee Mr. Clinton’s re-election.

Mrs. Clinton rejected comparisons between 1996 and the Hsu situation.

Bradley Smith, a former FEC commissioner who now teaches law, said the Clinton campaign also should return the Paw donations if it has any doubts.

“It really looks bad,” said Mr. Smith, now chairman of the Center for Competitive Politics. He said it is difficult to track “thousands of pages of contributions” and make sure each donation is legitimate.

This article is based in part on wire service reports.

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