Bundlers Behaving Badly
Norman Hsu and the case for sunshine in fundraising

Tuesday, September 4, 2007

THE STORY of Norman Hsu offers a compelling demonstration of why it is so important for presidential candidates to reveal the names of their major fundraisers -- and why the existing system of voluntary, erratic and incomplete disclosure of these "bundlers" is unacceptable. In an era when the financial demands on candidates are so great, and the importance of bundlers is magnified, it makes no sense to leave the reporting of this information to the whim of candidates and the badgering of editorial pages. In short, there ought to be a law.

Mr. Hsu has been a bountiful bundler for Democratic candidates; this election, he is one of Sen. Hillary Rodham Clinton's "Hillraisers," a fundraiser who has pledged to bring in $100,000 or more. Mr. Hsu, it turns out, is a fugitive from justice (or, that is, he was until he was taken into custody last week and then released on bail), having failed to show up in 1992 for a sentencing hearing on grand theft charges stemming from an improbable-sounding Ponzi scheme involving nonexistent latex gloves.

A report by Brody Mullins in the Wall Street Journal last week also raised questions about the legitimacy of donations steered to the Clinton campaign by Mr. Hsu. The Journal reported that six members of a family linked to Mr. Hsu, the Paw family of Daly City, Calif., donated $45,000 to Ms. Clinton since 2005 -- and $200,000 to Democrats overall during that period. The Paws' apparent financial circumstances -- their house was recently refinanced for $270,000 and the family patriarch, William Paw, is a mail carrier -- calls into doubt their ability to make such generous contributions on their own. It is illegal to reimburse others for making political donations. Both Mr. Hsu and a business associate, Winkle Paw, denied any wrongdoing.

Ms. Clinton isn't the only candidate with bundler troubles. Michigan lawyer Geoffrey Fieger was indicted last month on allegations of conspiring to make more than $125,000 in illegal bundled contributions to the 2004 presidential campaign of John Edwards, who declined to identify his bundlers during that campaign. The indictment alleges that Mr. Fieger's law firm reimbursed employees for their contributions by disguising them as bonuses and repaid contractors by calling the amounts payments for services.

These episodes underscore the importance of disclosing bundlers, and they reveal the inadequacy of the current state of affairs, in which no such reporting is required and what reporting does occur is sporadic, insufficient and inaccessible. Some candidates (Ms. Clinton) list bundlers starting at $100,000; some (Sen. Barack Obama, Rudolph Giuliani) reveal bundlers at $50,000 and up; some (Mr. Edwards) list everyone who has raised money for the campaign. None have been as forthcoming as were President Bush or Democratic nominee John F. Kerry in 2004, when their campaigns provided at least some information about the bundlers' levels of fundraising.

The lobbying bill awaiting President Bush's signature offers a road map to a better approach. The measure would require campaigns -- including presidential campaigns -- to disclose the identities of bundlers who are lobbyists and the amounts they bring in over $15,000 in any six-month period. That's an important step forward. But given that the presidential campaigns know perfectly well how much their bundlers have raised, all bundles should be disclosed, not just those hauled in by lobbyists.