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Clinton sees fear realized in trouble with donor

Of all the possible vulnerabilities facing Senator Hillary Rodham Clinton’s presidential campaign, Mrs. Clinton has long believed that the one of the biggest was money, friends and advisers say. Yet nine months into her campaign, Mrs. Clinton is grappling with exactly the situation she feared.
/ Source: The New York Times

Of all the possible vulnerabilities facing Senator Hillary Rodham Clinton’s presidential campaign, Mrs. Clinton has long believed that the one of the biggest was money, friends and advisers say. Some sort of fund-raising scandal that would echo the Clinton-era controversies of the 1990s and make her appear greedy or ethically challenged.

As a result, Mrs. Clinton told aides this year to vet major donors carefully and help her avoid situations in which she might appear to be trading access for big money, advisers said. Also to be avoided, the senator said, were fund-raising tactics that might conjure up the Clinton White House coffees and the ties to relatively unknown donors offering large sums, like the Asian businessmen who sent checks to the Democratic National Committee.

Yet nine months into her campaign, Mrs. Clinton is grappling with exactly the situation she feared — giving up nearly $900,000 that had been donated or raised by Norman Hsu, a one-time fugitive and one of her top fund-raisers, whose actions raise serious questions about how well the campaign vetted its donors. As a result, Mrs. Clinton now finds herself linked to a convicted criminal who brought in tens of thousands of dollars from potentially tainted sources.

The Hsu case has revived ugly memories for voters about the Democratic fund-raising scandals when Bill Clinton was president, the senator’s campaign advisers acknowledge, a time when both Clintons were often photographed with people whose money later turned out to be dirty, including Johnny Chung and Charlie Trie. Mrs. Clinton is running on her White House experience in the 1990s, and any attention cast on past fund-raising controversies could threaten her image with voters.

Even some of her own major donors are aghast that, given the Clintons’ past problems with fund-raising, Mrs. Clinton’s vetting process did not uncover Mr. Hsu’s criminal history. Even though Mr. Hsu had previously donated to other politicians and charities without his past surfacing, these donors say, the Clinton operation had been widely considered one of the best-run in recent campaigns — until now.

“People have often said about the Clintons, they don’t care who they hang out with as long as the people can be helpful to them,” said one of Mrs. Clinton’s major fund-raisers. “The larger point in all of this is that the Clintons are the ultimate pragmatists in who they hang out with; if you can be useful to them, they will find a way to make it work.”

Advisers say Mrs. Clinton is not so much furious about the scandal, as she is worried about containing the political damage.

To that end, Clinton campaign aides refused yesterday to release the names of the 260 donors whom Mr. Hsu recruited to the campaign, preferring to wait until they finish their own research on the individuals. Mrs. Clinton and her advisers are concerned that rival campaigns or the news media will dig into the background of each donor, and they want to be prepared if some of the donors end up having money funneled to them from Mr. Hsu or have shady backgrounds.

The campaign is refunding $850,000 to these donors, viewing the money as tainted. Yet the campaign is also risking another public relations mess by saying that it would take back the money if it clearly came from the donor’s bank account, not from Mr. Hsu or another source. The risk is that Mrs. Clinton will appear to want more cash no matter whether it was once colored by a disgraced donor.

The campaign will try to get most of the donors to give the money back right after the refunds, said a senior Democratic strategist who advises Mrs. Clinton’s campaign. “That’s the plan,” the strategist said.

The strategist, who spoke on condition of anonymity to discuss internal campaign deliberations, added that the Clinton campaign was deeply worried that the controversy could grow.

“They are worried there are more out there,” the strategist said. “Bundlers. The feeling is there are a few more that will have Hsu problems.”

In defense, Clinton advisers note that her top Democratic rivals, Senator Barack Obama and John Edwards, have their own fund-raising problems that will prevent them from attacking her over Mr. Hsu.

Mr. Obama has taken only a measured approach when dealing with donations raised by Antoin Rezko, a Chicago developer facing federal corruption charges. While Mr. Obama has given to charity contributions from people connected to the criminal case involving Mr. Rezko, he has kept thousands of dollars more that Mr. Rezko raised from others.

Mr. Edwards, a former North Carolina senator, is saddled with Geoffrey Fieger, a lawyer who was indicted last month on charges of using straw donors to funnel illegally more than $125,000 to Mr. Edwards’s 2004 presidential campaign.

“The Clinton campaign has done as much if not more than any campaign to protect itself from situations such as this, and none of the other campaigns, other than hypocritically, can point a finger at the Clinton campaign on fund-raising problems,” said Hassan Nemazee, who is a fund-raising bundler for Mrs. Clinton, as Mr. Hsu had been.

Advisers to Mr. Obama note that Mr. Hsu has been convicted on a fraud charge while Mr. Rezko’s trial is pending next year. Asked whether the Rezko case would hamper an Obama attack over Mr. Hsu, an Obama spokesman, Bill Burton, said yesterday: “Ultimately we assume that voters will choose based on the record and the vision that candidates have in reforming the role of money in politics.”

An Edwards spokesman, Eric Schultz, declined to say whether his campaign had decided to attack Mrs. Clinton directly over Mr. Hsu. Mr. Schultz added, “If Geoffrey Fieger is found guilty, the campaign will donate all the money in question to charity.”

The Clinton campaign has been monitoring coverage of the Hsu case. “We don’t think the Hsu story has broken through with voters at this point,” one Clinton adviser said. “And we’re going to keep trying to make sure it doesn’t overshadow her message.”

Don Van Natta Jr. contributed reporting.