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Fund-Raising Probes Drive DNC's Debt to $16.9 Million

By Dan Balz
Washington Post Staff Writer
Friday, August 1, 1997; Page A02

Burdened by the spiraling costs of multiple investigations into past party fund-raising, the Democratic National Committee (DNC) plunged deeper into debt over the past three months.

In its latest report filed last month with the Federal Election Commission and released yesterday, the DNC recorded a debt of $16.9 million, an increase of roughly $1.5 million since the end of March.

The committee reported that it raised nearly $19 million in the first half of the year, about $6 million more than it raised in the first six months of 1993.

But the DNC lost ground in its goal of showing steady progress in reducing the debt, despite an all-out effort to raise money this spring that has included major events around the country featuring President Clinton and Vice President Gore.

The rising debt already has forced belt-tightening at the committee, and many Democrats fear the bleak financial picture at party headquarters could hamper their candidates in next year's midterm elections. They say Republicans, who normally raise more than the Democrats, could have a huge financial advantage that could affect the outcome of close House and Senate races next year.

The cost of cleaning up after the mistakes and violations that occurred during the 1996 presidential campaign became clear in the report filed yesterday.

The committee owes nearly $6 million to the law firm of Debevoise & Plimpton, which has been handling the legal work related to the ongoing investigations. Those investigations include a Justice Department probe, Senate hearings already underway and House hearings that will begin later this year.

Other major debts include $1.5 million owed to the polling firm of Penn & Schoen Associates Inc., most of it for polling conducted for Clinton's reelection campaign, and nearly $700,000 to the firm of Squier, Knapp & Ochs, which prepared the television commercials during the presidential campaign.

The committee also owes nearly $500,000 to World Wide Travel, the Little Rock, Ark., firm that handled the committee's travel business last year. In addition, the DNC report listed debts of more than $2.7 million to direct mail and telemarketers who have helped raise small, individual contributions this year. The biggest of those debts is $1.3 million to the firm of Moore Response Marketing.

The report, which said the DNC had about $3.9 million in cash at the end of June, showed that 29 individuals gave $20,000, the maximum allowed by federal law. Earlier in the year, the committee put a limit of $100,000 on "soft-money" contributions, which are not covered by federal law. So far this year, it has received nine contributions of that size.

One of those was for $185,000, which appeared to violate the new ceiling. DNC spokeswoman Melissa Bonney said the dona tion, from the Communications Workers of America, was made in late 1996 before the cap was established, but was not deposited until early in 1997.

For the first time, the DNC released its FEC filing in electronic form, providing news organizations with computer disks detailing contributions for the first half of the year. But the committee released no detailed information about expenditures, and the data that was provided came in a form that hampered efforts to analyze it by computer.

© Copyright 1997 The Washington Post Company

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