Clinton Campaign Cites Flawed Background Check
No Evidence of Fundraiser's Lawsuits or Bankruptcy Turned Up in Records Search, Spokesman Says

By John Solomon, Matthew Mosk and Anne E. Kornblut
Washington Post Staff Writers
Wednesday, September 12, 2007

A spokesman for Sen. Hillary Rodham Clinton's presidential campaign yesterday blamed a faulty background check for the campaign's failure to raise any questions about Norman Hsu, a previously unknown businessman who suddenly became one of its biggest fundraisers.

Though a commonly used public record search shows that Hsu had multiple business lawsuits filed against him dating to 1985, filed for bankruptcy in 1990, and was a defendant in two 1991 California court matters listed as possible criminal cases, the campaign said its computer checks used insufficient search terms that did not include the two middle names Hsu used in the California case. "In all of these searches, the campaign used the name Norman Hsu, which, like the search results of other committees and campaigns, did not turn up disqualifying information," Clinton spokesman Howard Wolfson explained.

Now, the FBI is conducting preliminary inquiries into allegations it has received about Hsu's fundraising and business dealings, according to a senior law enforcement official, who added that none has reached a point of warranting the opening of a formal investigation.

Hsu's troubled past eluded the Clinton campaign's detection even though he was a well-known figure who frequently appeared at campaign events and was one of the top 15 fundraisers for Clinton's 2008 presidential bid. He raised $850,000 in just eight months, more than most such "bundlers" connected to any candidate, without raising red flags.

Clinton campaign chairman Terence R. McAuliffe -- famous for his careful, methodical courting of big donors and fundraisers -- said in an interview yesterday that he does not know where Hsu came from. "I don't know how he became involved in the Clinton campaign," McAuliffe said. "I've never asked the man for a check."

Hsu twice attended events sponsored by Bill Clinton's global charitable effort, putting up $15,000 each time as an entrance fee. The donations allowed him to mingle with the corporate executives typically attracted by the former president's charitable endeavors.

Bill Clinton's aides said they knew little about Hsu's own businesses, save that he was involved somehow in the apparel business. Shortly after questions arose in late August about Hsu's background, the Clinton Global Initiative refunded the $30,000 -- more than a week before Hillary Clinton's campaign decided to refund the $850,000 that Hsu had raised.

The Clinton campaign has promised that future fundraisers will undergo criminal background checks. But many questions remain about the events leading to the donations.

That such a basic mistake could slip through the famously disciplined Clinton campaign has raised eyebrows among strategists in both parties. Clinton herself is known for doing background research on people before she meets them, digging for personal details she can introduce into a conversation. The sheer amount Hsu raised as a virtual unknown in a short period of time should have raised questions, some say.

"He is a bundler on steroids," said veteran Republican campaign lawyer Jan W. Baran. "Just think back to the 2004 campaigns: The highest level of bundler recognition was $250,000, and that was at the end of the campaign. Here we are in September of '07, and this guy has apparently raised $850,000 in a matter of months. And for that same reason, he probably should have set off alarm bells."

Hsu was unknown in political circles until late 2003, when he wrote his first political check to then-presidential candidate John F. Kerry. He was not anonymous for long. As the amounts he raised for Democrats across the country approached $1 million, Hsu's reputation as a source of political money soared.

"Norman's name was a name floating out there as someone who could deliver big-time," said a Democratic fundraising consultant, who spoke on the condition of anonymity because of the sensitive nature of the Hsu case. Hsu was based in New York, making it natural for Clinton's Senate finance team to gravitate toward him, the consultant said.

But several former regional fundraising advisers to the Clintons said in interviews yesterday that they could not recall whom, if anyone, had vouched for Hsu when he started raising money for the senator.

McAuliffe, the man who built his reputation by raising huge sums for Bill Clinton, said it was not until 15 months after Hsu wrote his first check to Clinton's Senate bid that they met, "and I had very little interaction with him after."

Major Clinton donors said this represents a departure for a campaign that prides itself on preparation and will not hesitate to lavish attention on those who raise money.

Irvine, Calif., businessman Jack Cassidy told the FBI that he sent at least three e-mails to a Clinton campaign official on the West Coast this summer, specifically raising concerns that Hsu was engaged in a risky investment scheme and was using Hillary Clinton's name "in vain" to solicit people for his business proposition, according to a person directly familiar with the matter.

Cassidy's concern was that Hsu was using the Clintons to give credence to his business venture, the source said, speaking only on the condition of anonymity because of the ongoing FBI inquiry.

Cassidy also raised his concerns with local police, the local prosecutor, California Democratic Party officials and the FBI, which dispatched agents to interview him and collect documents in recent weeks about Hsu's business and fundraising activities.

Clinton spokesman Wolfson said the campaign did an initial public records search in January when Hsu began raising money. The inquiries from Cassidy this summer prompted the campaign to do a second vetting of Hsu, which turned up nothing derogatory. "When the concerns were raised, we again checked publicly available information and unfortunately did not find this decade-plus old warrant," he said.

Research editor Alice Crites contributed to this report.

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