Several big donors to Hillary Clinton now facing criminal allegations

Washington Post Staff Writer
Saturday, February 19, 2011; 7:24 PM

The indictment of a top Northern Virginia fundraiser last week is the latest in a series of criminal cases that have ensnared campaign donors to Hillary Rodham Clinton, who relied heavily on wealthy bundlers in her failed 2008 bid for the presidency.

Federal grand jury indictments handed up in Alexandria allege that Galen Capital Group Chairman William P. Danielczyk Jr. and his treasurer illegally reimbursed nearly $190,000 in donations to Clinton's 2006 and 2008 campaigns, sometimes with corporate funds.

Under federal law, major fundraisers known as bundlers are free to help solicit and package so-called conduit contributions for favored candidates, but they are not allowed to reimburse other donors as a way to evade campaign finance limits.

Employees of Galen Capital, including Danielczyk and the other defendant in the case, company treasurer Eugene R. Biagi, gave more than $50,000 to Clinton's campaigns for the Senate in 2006 and for the White House in 2008, according to the Center for Responsive Politics, which tracks money in politics. Danielczyk helped raise about $100,000 for the Clinton presidential campaign, records show.

A number of major donors to Clinton, now secretary of state, have faced criminal allegations in connection with fundraising scandals since she dropped out of the race for the White House in 2008. Federal prosecutors have mounted four major cases involving six defendants, who together helped raise more than $1.1 million for Clinton's presidential and senatorial campaigns, records show.

None of the cases has revealed any wrongdoing by Clinton or her top advisers, and most of the money has been returned or donated to charity. But Craig Holman, government affairs lobbyist for the Public Citizen watchdog group, said Clinton effectively put her campaign at risk by relying so heavily on wealthy bundlers to help her raise money.

"When you turn to that traditional wealthy donor base, you're going to run into a lot of problems because they encompass the type of people who know that big money buys influence," Holman said.

The State Department referred questions to officials with Clinton's defunct presidential campaign, who did not respond to requests for comment Friday.

Perhaps the most well-known defendant linked with Clinton was Norman Hsu, a former top Democratic fundraiser who was convicted in 2009 of campaign-finance fraud for making nearly $100,000 in illegal donations through so-called "straw donors." Clinton returned about $850,000 to more than 200 donors linked to Hsu, who also pleaded guilty to separate fraud charges for bilking investors in a Ponzi investment scheme.

In another case involving Clinton's campaign in January, a former business manager for crime novelist Patricia Cornwell pleaded guilty to lying about the source of nearly $50,000 in donations to Clinton. Prosecutors said Evan Snapper used funds from Cornwell to reimburse donors without the novelist's knowledge.

Another major Clinton fundraiser, Manhattan investment banker Hassan Nemazee, was sentenced to 12 years in prison last year for defrauding banks of nearly $300 million. Some of the funds were given to Democratic politicians, including Clinton, Barack Obama and Joe Biden, court records showed.

Nemazee was national finance chairman for Clinton's 2008 campaign and served as New York finance chairman for the failed 2004 presidential bid by Sen. John F. Kerry (D-Mass.).

Clinton, Obama and other politicians either returned most of Nemazee's contributions or donated them to charity after his arrest, court records show. Hundreds of thousands of dollars in other donations to charitable foundations - including one headed by Clinton's husband, former president Bill Clinton - were forfeited to the government.

As the Nemazee case suggests, many presidential candidates have had to grapple with fundraising scandals over the years, heightening calls from watchdog groups for tighter campaign-finance regulations. During the George W. Bush administration, at least a half-dozen top Bush bundlers were caught up in allegations of illegal fundraising, influence-peddling or other financial crimes, including super-lobbyist Jack Abramoff.

Holman noted that Obama so far has avoided any major fundraising controversies in connection with his 2008 campaign, which broke new ground by relying more heavily on small donations than previous presidential runs.

But a major supporter of Obama's 2004 Senate campaign, Chicago businessman Tony Rezko, was convicted of 16 felony corruption charges in 2008 for shaking down companies seeking state contracts in Illinois. Republicans labeled Rezko as "Obama's longtime friend and money man" because of his past ties to the president, although Obama had no connection to the criminal case.

Obama gave past donations linked to Rezko to charity. During the 2008 campaign, Obama also said he regretted a "boneheaded" decision in which he bought a slice of property from Rezko to expand the size of his Chicago house lot.

In the most recent case, Danielczyk and Biagi are charged with conspiracy, illegal reimbursement of contributions and obstruction. A personal assistant to Danielczyk has agreed to cooperate with prosecutors in exchange for pleading guilty to a lesser charge.

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