Sunday, March 15, 2009

Terry McAuliffe orchestrated the most prolific fundraising machine in Democratic politics for more than a decade, transforming the pursuit of wealthy donors into a careful science that cajoled business executives with interests before government and rewarded big givers with intimate access to the politicians they supported.

His tactics helped commandeer hundreds of millions of dollars for Bill Clinton‘s campaigns in the United States and his charitable efforts abroad, put Democrats on even footing with Republicans in the chase for political dollars and stirred controversy and investigations.

Now Mr. McAuliffe is seeking to make the leap from fundraising extraordinaire for others to political candidate himself. And his fundraising prowess is already showing in his bid for the Democratic nomination for Virginia governor, in a state with no limits on campaign contributions.

“I’ve been out at the highest level of national politics for 30 years,” Mr. McAuliffe, 52, told The Washington Times. “I’ve got great relationships. I have a lot of friends.”

Those relationships have quickly produced campaign cash.

After announcing his plans to explore a bid for office in November, the former head of the Democratic National Committee raised nearly $950,000 in just two months — easily outpacing his Democratic primary competitors, Brian J. Moran and R. Creigh Deeds, but short of the amount raised by his Republican rival, Attorney General Bob McDonnell, who had four more months to campaign.

While many feared Mr. McAuliffe, a Syracuse, N.Y., native who now lives in McLean, Va., would flood the state with outside money drawn from his national connections, his early fundraising has been predominately within Virginia. Only 15 out-of-state donors gave more than $100, contributing a total of less than $3,000 to the former national party chairman.

Mr. McAuliffe said the focus on state donors was intentional. “We wanted to show people that we could do it in Virginia,” he said.

In more recent weeks, there are signs Mr. McAuliffe has expanded his fundraising more nationally to places like New York City.

Mr. McAuliffe’s January financial report included the usual top-end Virginia contributors: businessman Randal J. Kirk, a major donor to Gov. Tim Kaine’s political action committee who has doled out $1.7 million to Virginia candidates in the last 10 years; author John Grisham, who has given more than $400,000 since 1998 to state and local candidates; and James V. Kimsey, the founding chief executive officer of America Online, who has donated more than a quarter-million dollars to state and local candidates since 1996.

According to the Virginia Public Access Project (VPAP), Mr. Kirk gave $100,000 to Mr. McAuliffe, Mr. Grisham contributed $50,000, and Mr. Kimsey accounted for another $25,000.

“It was important for him in his initial report to … challenge that characterization of him as someone helicoptering into the state with bags full of money trying to buy an election,” Mark J. Rozell, a political scientist at George Mason University, said of Mr. McAuliffe.

Long and shared history

The financial disclosures show that some of Mr. McAuliffe’s Virginia donors have a long and shared history with the candidate, including Fairfax developer Albert J. Dwoskin, who handed over $25,000. Mr. Dwoskin is listed among the board of directors of the George Soros-founded Democracy Alliance and is on the board of managers of Catalist, a Virginia firm that, according to its Web site, “offers progressive organizations affordable access to a comprehensive, well-maintained national database of voting-age individuals in the United States.”

Despondent over President Bush’s 2004 re-election, Mr. Soros, an international financier and billionaire who contributed $18 million that year to support Democratic candidates and defeat Mr. Bush, brought together 70 billionaires and millionaires in April 2005 to help create the Democracy Alliance and put together a long-term strategy to regain power.

Democracy Alliance members, or “partners,” pay a $25,000 initiation fee, $30,000 in yearly dues and pledge to give at least $200,000 annually to groups the alliance endorses.

Mr. Soros also has funded Catalist, which was created by Harold Ickes, the deputy White House chief of staff for Mr. Clinton who chaired Mr. Clinton’s presidential campaign in New York in 1992, was a senior adviser to Hillary Rodham Clinton‘s 2000 Senate campaign and worked as a political strategist for Mrs. Clinton’s 2008 presidential campaign.

Mr. McAuliffe has described Mr. Dwoskin and his wife, Claire, as “great supporters of the Democratic Party for years,” and they have contributed more than $200,000 to Democratic candidates in the last federal election cycle. Mr. Dwoskin did not return phone calls seeking comment.

Others with long and shared financial histories include:

• A. Huda Farouki of McLean, chairman of F.I.I.C., an International firm that controls finance, construction and shipping companies and gave Mr. McAuliffe’s campaign $50,000. Mr. Farouki was among those who donated the $10,000 maximum to the Clinton’s Legal Expense Trust in 1998 and he was among the top donors who attended coffees at the Clinton White House.

• Jack Xi Deng of Oak Hill, Va., chief financial officer of Hybrid Kinetic Automotive Corp., who gave Mr. McAuliffe $25,000. The Hong Kong-based company paid Mr. Clinton a $300,000 honorarium in December, according to financial disclosure forms filed by then-Sen. Clinton, now secretary of state.

• Ed Haddock, chief executive officer of Florida-based Full Sail Inc., who donated $100,000 to Mr. McAuliffe. He gave more than $120,000 nationally during the last election cycle and collected more than $200,000 for the Obama campaign.

Campaign goes national

A week after Virginia’s Jan. 15 donations reporting deadline, Mr. McAuliffe took the first step toward national fundraising.

His first stop was the New York apartment of Hassan Nemazee, a multimillionaire Iranian-American investment banker and head of Nemazee Capital, who also served as finance chairman to Mrs. Clinton’s 2008 presidential campaign. Mr. Nemazee was a major force behind Democratic Senatorial Campaign Committee efforts to raise $115 million in 2006 to help Democrats take control of the Senate.

Also in attendance at that Park Avenue meeting was Mr. Clinton, who rallied others to come up with some campaign cash for his longtime friend. The others included Stanley S. Shuman, managing director of an investment banking firm; hedge-fund billionaire Marc Lasry; venture capitalist Alan Patricof; and grocery magnate John Catsimatidis.

By the end of the evening, those gathered reportedly had raised $350,000 for the gubernatorial candidate. Mr. Nemazee told reporters that the former president said it had been “an honor and a privilege to be … in a position to return the favor that he has done for me and Hillary for so many years.”

The two hours of talk, spring rolls and dumplings accounted for nearly a third of Mr. McAuliffe’s campaign cash at that point.

More recent fundraisers in Chicago, Phoenix and Los Angeles also show that the gloves may have come off of “The Macker’s” strategy to win the executive mansion.

Mr. McAuliffe confirmed to The Times that he attended a New York event, but campaign officials declined to say how much money was raised, noting that the campaign would release its fundraising details in its next quarterly report due in April.

Among Mr. Nemazee, Mr. Lasry, Mr. Shuman, Mr. Catsimatidis or Mr. Patricof, none has contributed to a Virginia statewide candidate since at least 1996, according to VPAP, although each is listed by the Washington-based nonprofit Public Citizen as having collected at least $100,000 for Mrs. Clinton’s presidential bid.

Only Mr. Lasry responded to a request for comment, but he declined to speak.

Mr. Shuman, Mr. Catsimatidis and Mr. Patricof were among the 938 close friends and top campaign supporters invited to stay overnight in the Lincoln Bedroom during the Clinton presidency. Mr. Shuman and Mr. Nemazee also attended a Nov. 1, 1995, coffee with Mr. Clinton and other DNC supporters at the White House.

Their loyalty and pocketbooks did not go unrewarded.

Mr. Shuman, who contributed $105,000 to the DNC between June 1995 and May 1996, was named by Mr. Clinton to the President’s Foreign Intelligence Advisory Board in 1997 despite PFIAB Chairman Thomas Foley’s concerns that the investment banker had no intelligence or national security experience.

In 1998, Mr. Clinton nominated Mr. Nemazee as the ambassador to Argentina, shortly after the investment banker had donated $60,000 to the president’s legal defense fund in the Monica Lewinsky scandal. Mr. Nemazee later withdrew his name when questions arose in the Senate concerning his fundraising and business records.

Sleepovers and coffees

Republicans at the time raised questions about the propriety of the sleepovers, coffees and political appointments, and so did the Justice Department. It created a campaign finance task force headed by Charles G. LaBella, a veteran federal prosecutor who had been handpicked by Attorney General Janet Reno.

Mr. LaBella recommended in a July 1998 report after a two-year investigation that Miss Reno seek an independent counsel to probe accusations of White House fundraising abuses, saying in a 94-page report, the “intentional conduct and the willful ignorance uncovered by our investigations … resulted in a situation where abuse was rampant, and indeed the norm.

“At some point, the campaign was so corrupted by bloated fundraising and questionable contributions that the system became a caricature of itself,” the report said.

Miss Reno rejected the recommendation.

During the Clinton-era fundraising controversy, Mr. McAuliffe advocated for “face time,” arranging for legions of deep-pocketed partisans to be ushered into the Oval Office for coffees, lunches or other sit-downs with President Clinton or given overnight accommodations at the White House, including the prestigious Lincoln Bedroom. Others were put in touch with top policymakers throughout the Clinton high command.

The fundraising guru was so confident he could get the job done that, according to a Democratic strategist close to the Clinton moneymen, Mr. McAuliffe assured the president during a 1994 re-election strategy meeting that he could raise whatever was necessary to win in 1996 and he could do it “faster than it’s ever been done before.”

Mr. McAuliffe penned a now-infamous 1993 memo to the White House requesting dates that “major supporters” could have lunch or coffee with the president and join him in activities like jogging and golfing. He has denied that the access he sought to Mr. Clinton was provided in exchange for campaign cash.

“My only recommendation was that the president needed to reconnect with his past supporters to get them excited about the upcoming campaign,” he has said.

Mr. McAuliffe was never charged with any campaign finance wrongdoing.

The perception that Mr. McAuliffe is an outsider to Virginia politics poses a hurdle to his gubernatorial hopes in a state loyal to its partisan veterans. To combat that image and to more closely connect with Virginians, Mr. McAuliffe has held workdays where he has done everything from busing tables at a Portsmouth restaurant to cutting hair at a Richmond salon.

A March 6 e-mail issued by the McAuliffe campaign cited stops on March 4 in Lebanon and on March 5 in Roanoke, but makes no mention of fundraisers on March 2 in Chicago, March 4 in Phoenix and March 5 in Los Angeles.

The Chicago event was hosted by billionaire J.B. Pritzker, listed among Forbes magazine’s 2008 richest Americans with an estimated fortune approaching $3 billion.

Mr. Pritzker, a longtime Clinton supporter and a Hyatt hotel heir, split in the last election with his sister Penny, who served as the campaign finance chairwoman for President Obama and was one of his bundlers, raising $200,000. She now serves on Mr. Obama’s Economic Recovery Advisory Board.

Phoenix headline

In Phoenix, Mr. McAuliffe headlined an Arizona Democratic Council fundraiser at Sylvia’s La Canasta Mexican Restaurant. The Los Angeles event was hosted by Haim Saban, a media mogul worth $3.6 billion who has donated more than $13 million to Democratic and Republican candidates nationwide since 1993, including a $2,000 donation to President Bush in 2003, according to the Center for Responsive Politics.

At the D.C. home of Mr. and Mrs. Clinton in 2002, Mr. Saban committed to a record individual political contribution of $7 million to help build a new DNC headquarters after watching a Power Point presentation by Mr. McAuliffe.

“I don’t say this lightly,” Mr. McAuliffe later told Fortune Magazine. “Haim Saban saved the Democratic Party.”

Mr. McAuliffe’s demonstrated ability to delve into deep pockets during his past fundraising roles remains a point of criticism.

At the Democratic Party of Virginia’s annual Jefferson-Jackson Dinner in Richmond on Feb. 7, for example, Mr. Moran — without naming his opponent — said the state needed “a fighter, not a fundraiser.” The remark elicited some boos from the crowd of roughly 3,000 in attendance, an event most saw as a forum for party unity.

“Will our party be dominated by big money and those who raise it, or will we be the party of the people?” Mr. Moran said.

Still, Mr. McAuliffe makes no apologies for an aggressive campaign that has featured radio and television spots and is likely to push fundraising for gubernatorial candidates past the state’s record mark of nearly $50 million in 2005 when Mr. Kaine, the current DNC chairman, defeated former Republican Attorney General Jerry W. Kilgore.

In that race, Mr. Kaine raised about $3.9 million of his roughly $20 million war chest outside of the state, according to VPAP records.

Republicans on the national level also are expected to pour resources into this year’s race — one of two gubernatorial contests in the country — and are hopeful they can reverse a string of Democratic victories in recent statewide elections that have colored the once-reliably red state of Virginia in a bluish hue.

Mr. McDonnell‘s January campaign finance reports also reveal five-figure contributions from donors in Louisiana, Texas, Arizona and New York. The Republican has more than $2 million on hand, his campaign said, and raised roughly $2.5 million since the beginning of 2008.

His donors include former Republican National Committee Chairman Ed Gillespie, who gave $10,000 and has since been named general chairman of Mr. McDonnell’s campaign; H. Gary Heavin, the Texas-based founder of the fitness chain Curves International who donated $25,000; Randy Kendrick, the wife of Arizona Diamondbacks managing general partner Ken Kendrick, who gave $30,000; and Edward Diefenthal, a Louisiana industrial company executive and big-money Republican backer who gave Mr. McDonnell $20,000.

Big-name GOP support

Mr. McDonnell already has lined up big-name Republican support, including Sen. John McCain of Arizona, Alaska Gov. Sarah Palin, Louisiana Gov. Bobby Jindal, former Arkansas Gov. Mike Huckabee and conservative talk show host Sean Hannity — all of whom either have appeared or are slated to appear in Virginia to support the McDonnell campaign.

Former New York City Mayor Rudolph W. Giuliani has held fundraisers for Mr. McDonnell in the District and in New York, and the McDonnell campaign stressed that the candidate will travel where he needs to in order to win in November.

“If national conservatives and national Republicans want to support us, we’ll welcome their support,” McDonnell spokesman Tucker Martin said. “We encourage it, we welcome it and we will travel to meet with people.

“This campaign will break every fundraising record in Virginia,” he said. “I think that’s the safest bet you can make.”

Mr. McAuliffe acknowledged that the contest has the potential to turn into a heavyweight financing fight.

“Everybody here understands this is a national race,” he said. “No one should have any illusions that Bob McDonnell [isn’t] going to have millions and millions at his disposal. I’m going to make sure that we have the resources so I can run the most aggressive grass-roots campaign that’s ever, ever been done in Virginia history.”

But Mr. Rozell said where Mr. McAuliffe gets his campaign money “is a little too inside baseball for outside voters.”

“At the end of the day, having the additional money to invest in grass roots and advertising is going to pay off for him, regardless of where the money comes from,” he said.

David “Mudcat” Saunders, a longtime Democratic strategist and former adviser to former Virginia Gov. Mark Warner and presidential candidate John Edwards, agreed.

“As long as he doesn’t go out of the United States of America to get his money, it doesn’t matter,” he said. “And Terry doesn’t have to.”

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