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Cashing In on a Meeting With the President
S. Korean Made Big DNC Donation in Alleged Scheme to Bilk PartnerBy John Pomfret
Washington Post Staff Writer
Wednesday, April 16 1997; Page A01
Businessman John K.H. Lee was trying to broker a lucrative business deal here in March 1996 when a dazzling floral tribute arrived at a dinner honoring one of his many enterprises.
The wreath of lilies and roses originated, according to a pink bandanna wrapped around the bouquet, from "the American Clinton, president of the United States."
The flowers were impressive evidence of Lee's White House connections, a convincing factor in the decision by a South Korean electronics company to pour $1.3 million into a U.S. venture with Lee. The only problem, the White House says, is that President Clinton didn't send them.
In fact, according to documents filed with prosecutors here, the flowers were part of an elaborate alleged scam perpetrated by Lee, 37, to bilk the electronics company, using the U.S. president as bait. South Korean authorities are now investigating Lee based on a complaint filed by the company, investigators said.
Lee sent the flowers to himself as part of a plot to lure investors into believing that he had friends in high places in America, the company alleges. That impression was enhanced when Lee won a meeting with Clinton after making a $250,000 donation with company funds to the Democratic National Committee.
Lee's tale, revealed in documents and interviews in Seoul and Los Angeles, constitutes one of the strangest chapters in the Democratic Party's recent fund-raising troubles. It shows in the clearest terms the dangers inherent in the party's apparent practice during the 1996 campaign of selling "face time" with Clinton in return for cash.
While it has already been reported that Clinton played host to a convicted drug dealer, an alleged embezzler and a Chinese communist financier and head of a military-owned arms company, the Lee story is the first instance of an alleged scam being perpetrated with the assistance, albeit unwitting, of the DNC's lust for campaign donations.
The story of Lee's alleged scheme contains just about everything to make a bad airport novel. There is high finance a Rolls Royce, two new Mercedes Benzes and a Beverly Hills mansion rented from a Saudi Arabian prince. There is low culture an expensive karaoke machine and reports that Lee spent many nights entertaining South Korean nightclub hostesses at his rented California abode.
There is a damaged career: A California mayor, ironically a Republican, has been voted out of office, largely because of his involvement in the episode.
And there are lots and lots of apparent lies. Lee, who barely speaks English, claims to have a PhD from a university in St. Louis that is not listed in an exhaustive directory of accredited universities and colleges. The topic of his apparently nonexistent thesis? "Sin, Guilt and Guilt-feeling."
Lee, who left the United States after stories about his controversial DNC donation surfaced last fall, is now believed to be in South Korea. A former associate declined to arrange an interview with Lee.
According to sources in South Korea, the tale began in October 1995 when John K.H. Lee met Young Chull Chung, then president of the Ateck Co., a successful manufacturer of state-of-the-art billboard-size television screens. Lee was fresh out of jail, having spent at least three months in prison in the mid-1990s in connection with a bribery scam in Seoul.
Ateck Co. was a medium-size company, with annual sales of around $50 million, that was looking for new markets. Several of its billboard-size screens are in downtown Seoul showing programming from advertisements to live news.
Chung declined to be interviewed. But sources close to him said the South Korean businessman was impressed by Lee, a smooth-talking self-described devout Christian who once hosted a South Korean radio show called "Dr. Lee's Tales for Everyday Life," offering tips for an ethical lifestyle.
The pair met frequently and, according to sources close to both men, Lee tried to persuade Chung to invest Ateck's money in several projects. Lee, the company alleges, boasted of ties to politicians in South Korea and the United States. He said at one point that he was a stepson of South Korean President Kim Young Sam, Ateck sources said. He also said he knew people in the Democratic Party in the United States.
Ateck officials said Lee came up with an idea of manufacturing the TV billboards in the United States. He told Chung he wanted to become his partner and help spread the business abroad.
Chung said he would support Lee's idea to venture into the U.S. market if Lee could prove he had close ties with Clinton. Like many Asian businessmen, Chung believed that a direct conduit to the White House would guarantee success for his small firm.
Lee and Chung formed an American subsidiary, Cheong Am America, based in Century City, Calif., to handle the U.S. operation. But before he would release money to Lee, Chung insisted on a direct meeting with Clinton, Korean sources said. Lee and the Democratic National Committee obliged.
Lee hooked up with Michael Mitoma, the part-time Republican mayor of Carson City, Calif., who arranges investment opportunities in Asia and the United States. He is well known in Los Angeles' fast-growing Koreatown.
To secure Mitoma's help, Lee promised that he would locate the plant in Carson City. Mitoma said Lee told him he wanted a meeting with Clinton and was willing to pay top dollar to secure a private audience. Mitoma called the DNC and left a message. John Huang returned the call, Mitoma said.
Huang, a former Commerce Department official who went to work as the DNC's chief fund-raiser within the Asian American community during the 1996 campaign, is at the center of the Justice Department's probe of illegal campaign contributions to the Democratic Party. He raised about $3 million for the party, much of which has been returned because of questions about its origins.
Mitoma told Huang he had a South Korean businessman who wanted to donate, and he said Huang offered several options, each with a price tag. Lee chose the most expensive dinner with the president for five people at $50,000 a head, Mitoma said.
At no time, Mitoma said in an interview, did Huang inquire about the source of the cash. Under U.S. law, foreigners and foreign companies can contribute to U.S. political campaigns only if they are U.S. residents and only if the company has generated revenue for the contribution in the United States. Cheong Am had not done a penny's worth of U.S. business so it was not legally entitled to make a contribution. It is also illegal to knowingly solicit or accept a contribution from a foreign national such as Lee.
Huang arranged for Lee, Chung and several associates to meet Clinton in Washington on the evening of April 8, 1996. There was a brief introduction in the lobby of the Sheraton Carlton Hotel, Mitoma said.
The group spent five or 10 minutes with Clinton, Mitoma said, in which he explained the South Koreans' plan to manufacture billboard-size TV screens in Carson City. Clinton wished them luck. Somebody took a few photographs. And then Clinton walked away.
Huang took a $250,000 check back to the DNC, signed by John K.H. Lee. After the contribution was first questioned by the Los Angeles Times last fall, DNC officials said that they accepted the money only because they believed it was generated by a legitimate U.S. enterprise.
Ateck sources said Chung, who didn't understand Clinton, was told by Lee that the president's good-luck wish was as good as gold. Weeks later, Chung wired $1.3 million to a Korean-owned bank in Los Angeles, giving Lee effective control of the money.
Lee then launched a shopping spree of immense proportions in Los Angeles. According to receipts obtained by The Washington Post, Lee kicked it off on April 30 by plunking down $32,000 for a 1979 Rolls Royce Silver Shadow. A day later, he bought a $40,000 Cadillac Fleetwood and an $85,000 Mercedes Benz SL500R white convertible, both new. He also concluded a deal to rent the Beverly Hills mansion of Saudi prince Faisal Abdulaziz for $7,500 a month. On May 2, he bought a $4,000 leather chair. The next day, he nabbed a black 1996 Mercedes Benz S600V for $125,000.
He also bought three television sets, including a 53" big-screen model, an $8,500 stereo, a $1,400 home karaoke set, $12,000 worth of other stereo equipment, $2,000 of home video equipment, and several thousand dollars worth of cameras, clock radios and razors, the receipts show.
Finally, he bought an $18,949 Yamaha piano. Lee had told associates he longed to do a duet with Clinton, with him on piano and Clinton on sax.
Fernando Kang, who served as Cheong Am's executive secretary before its Century City office was abruptly abandoned in October, declined to arrange an interview with Lee. But he defended Lee's expenditures, saying he bought the fancy goods only because Chung wanted them. "Chung wanted to make Cheong Am America look like it was an important business," Kang said. "He ordered John Lee to buy all this stuff."
In March, Mitoma lost his bid to be reelected as Carson City's mayor. During the campaign, his Democratic challenger put out a leaflet accusing him of involvement in the "donorgate" scandal. Mitoma, for his part, said he wished he had never met Lee.
"You can't tell who's who in this world," Mitoma said. "I look stupid and this guy looks pretty smooth."
In a final twist, when the DNC returned Ateck's $250,000 contribution late last year, it gave the money to Lee, not the company. Kang said Lee has spent it.
© Copyright 1997 The Washington Post Company