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Justice Dept. Probing Possible DNC, Union Deal

By Brian Duffy and Jeff Glasser
Washington Post Staff Writers
Saturday, August 23, 1997; Page A01

The Justice Department is investigating whether officials of the Democratic National Committee improperly directed contributions to the reelection campaign of Teamsters President Ron Carey, in return for union contributions to President Clinton's election campaign, according to government officials and others with knowledge of the inquiry.

The Teamsters were among the biggest givers to the Democratic Party last year, and Carey was in an extremely tight race against James P. Hoffa for the Teamsters presidency and in need of funds.

Documents obtained by The Washington Post show that DNC officials discussed raising substantial sums for Carey, whose reelection was overturned by a federal official yesterday, setting the stage for a new face-off with Hoffa.

Despite yesterday's decision, a federal grand jury in New York will continue examining fund-raising activities by Carey's reelection campaign last year, government officials said.

It had previously been disclosed that Justice Department investigators were examining links between the Teamsters and the DNC. The Manhattan grand jury earlier this month indicted two union consultants who also worked for the DNC — telemarketer Michael Ansara and direct mail consultant Martin Davis — charging that they diverted union funds to Carey's reelection effort.

But the newly available documents suggesting that DNC officials directed contributions to Carey's reelection effort have prompted government investigators to examine the ties between the union and the DNC more closely, officials said this week.

"What's being looked at, quite simply, is whether there was a quid pro quo," one official said.

Individuals familiar with the inquiry said Ansara is cooperating with federal prosecutors and FBI agents in the investigation of whether other Democratic Party activists may have donated money to Carey's reelection effort.

Federal prosecutors have also questioned DNC Finance Director Richard Sullivan about notes he took indicating that Democratic contributors were directed to make contributions to the Carey campaign in exchange for contributions the Teamsters made to the Clinton campaign. Sullivan met with the prosecutors voluntarily in early August, according to sources, and answered questions for about two hours.

Among the many undated notations Sullivan made on a stack of legal pads was: "50,000 Carey. . . . Must be for Ron Carey. $100,000 Gail Zappa." The first part of the note appears to refer to a $50,000 contribution to Carey from an unnamed source. The reference to Gail Zappa is to a big Democratic contributor, the widow of musician Frank Zappa. She did not return a phone call seeking comment.

Another Sullivan notation states: "Lunch with Carey = 200 people $50,000 Mayflower 13th = American citizen = can't employ anybody = checks Teamsters for a Corruption Free Union = individual." The references appear to refer to a proposed fund-raising lunch at Washington's Mayflower Hotel and to union rules that prohibit unions and corporations from contributing to individual union election campaigns. The last reference is to the main fund Carey used to win his narrow election victory over Hoffa. John Bell, who served as a spokesman for the Carey campaign, could not say yesterday whether the fund-raising lunch occurred.

A third reference from Sullivan's notes states: "1 million Teamsters" and refers to Doug Sosnik, then-White House political director. The $1 million evidently refers to the amount William W. Hamilton Jr., the director of the Teamsters DRIVE political fund, pledged to contribute to Democratic state parties during last year's elections.

Sullivan said through an attorney, Robert F. Bauer, that "to the best of his knowledge," no action was taken as a result of the fund-raising discussions and that he knew of no one from the DNC who directed campaign contributions to the Carey campaign last year.

One indication of the close relationship between the Carey campaign and the DNC is reflected in computer notes taken by Carey's former scheduler, Colleen Dougher, who worked as a DNC fund-raiser in the late 1980s. Working for Hamilton in the Teamsters DRIVE operation, Dougher noted last month: "I raised money for Carey $150,000."

Dougher's attorney, Jeffrey Poston, said yesterday that her work on behalf of the Carey campaign was proper and did not involve the DNC. "To the extent that Ms. Dougher was involved in fund-raising for the Ron Carey campaign, it was done on her own personal time, not on the Teamster's time," Poston said. "It was cleared through the Teamsters general counsel's office, and it did not involve any DNC personnel or donors. It's 100 percent legal and proper."

Hamilton, who last month resigned from the union and said he would no longer cooperate with investigators, did not return a phone call seeking comment.

Carey's campaign manager, Jerry Nash, also has close ties to the Clintons. In the fall of 1996, Nash spent afternoons working for the Clinton-Gore campaign. His mornings were devoted to Carey's reelection. "According to Mr. Carey, Mr. Nash never said that he was working for other clients during this time period," according to a report released yesterday by the Teamsters federal election overseer, Barbara Zack Quindel.

Under federal law, it is illegal for an organization outside a union to pay, lend or give money to any officer or employee of a labor organization "with intent to influence him in respect to any of his actions or duties as a representative of employees."

A Washington Post analysis of internal Teamsters records shows that the Teamsters DRIVE and Education and Legislative funds donated at least $267,000 to Democratic state parties during October and the early days of November 1996. According to Federal Election Commission records, the Teamsters donated $2.9 million to individual Democratic campaigns for the 1996 elections. Until Carey was elected president of the union in 1991, the Teamsters traditionally contributed to Republicans in presidential elections.

According to several officials and others familiar with the inquiry, a central figure in the relationship between the DNC and the Carey campaign is Davis, the direct mail consultant who has worked for the union and the DNC. Davis is a business partner with Hal Malchow, whose companies received at least $19 million in DNC business last year. Malchow has not been accused of any impropriety.

Several individuals said this week that Davis lobbied Sullivan and other DNC officials hard last year to direct contributions to Carey's reelection campaign. "Martin tried to do the quid pro quo," said a person who discussed directing DNC-linked contributions to Carey. "But he pushed it over the edge. . . . He was hustling, and he wanted to look like a big deal to Carey, but we decided to have nothing to do with it."

David Schertler, an attorney representing Davis, declined to comment. Other individuals confirmed that Davis has been discussing the possibility of cooperating with federal prosecutors and FBI agents investigating improprieties in Carey's campaign. A federal judge delayed until Sept. 5 a status conference on the criminal charges against Davis while the conversations with prosecutors and the FBI continue.

Other documents raise the possibility of different improprieties by Teamsters officials in connection with last year's elections, government officials said. Several memorandums written last year by the DRIVE fund's Hamilton show that Teamster funds were directed to Democratic campaigns in several states that government investigators said were apparently intended to aid individual candidates. Federal election law prohibits union or corporate contributions to individual candidates.

An Oct. 15 memo states that the Teamsters "made a contribution to the Democratic Congressional Campaign Committee as part of our effort to try to take control of the House of Representatives out of the hands of New Gingrich through this year's election."

A memo from Hamilton to Carey written two days later, on Oct. 17, states that Project Vote, a Teamster-funded effort to increase participation in elections by minority voters, was "working hard . . . in North Carolina where Harvey Gantt is running very hard to defeat Sen. Jesse Helms. . . . We have been asked to provide $75,000 to Project Vote. I can't think of a more important goal that [sic] to turn out a huge vote that helps defeat Helms."

Hamilton noted that the allocation could be "properly done" by drawing the money from the Teamsters' general treasury, but investigators who have reviewed the memo referring to Gantt said directing union funds on behalf of a specific candidate appeared to violate federal election laws. Officials said the matter would very likely be reviewed by the Senate Governmental Affairs Committee this fall when it convenes "phase two" of the hearings on "soft money" contributions to political parties.

Another Hamilton memo, dated Oct. 16., that investigators are reviewing, said that the National Council of Senior Citizens asked the DRIVE fund for $85,000 for get-out-the-vote efforts. Hamilton recommended that Carey approve the payment, calling it, "a good opportunity that will be especially helpful in places like Florida, where we are trying to pick up a couple of congressional districts." The Senate Governmental Affairs Committee has issued a subpoena to the senior citizens council to determine how the Teamsters money was spent.

Another Hamilton memo, dated Feb. 27, 1996, referred to the notes from Sullivan concerning DNC efforts on behalf of the Carey campaign, officials said this week. "We're not ready to give the DNC $10,000," Hamilton wrote. "That will come, if we do it, on the basis of negotiations with the DNC over the role of the Teamsters in the fall election and the willingness of the party to be more supportive of labor than in the past."

A government official who was asked to review the memo said the language could indicate the Teamsters would cut back on contributions to the DNC unless Democrats were more supportive of labor. But the official said the language could also be construed as a veiled warning that if Teamsters contributions to the DNC were not reciprocated in the form of Democratic contributions to the Carey campaign, Teamsters money would dry up.

"There was a lot of money sloshing back and forth, we know that," the official said. "But there's a lot we still don't know enough about."

© Copyright 1997 The Washington Post

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