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John Huang. (AP file)

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Key Player: John Huang

Prosecutors' Approach to Huang Signals Shift in Probe

By Roberto Suro
Washington Post Staff Writer
Friday, October 2, 1998; Page A17

For nearly two years, campaign finance investigators have viewed John Huang, a friend of President Clinton's and a top money man in the 1996 campaign, as a key to discovering whether misconduct extended to the top ranks of the Democratic Party or even to the Oval Office.

Now, instead of pressuring Huang to say what he knows about White House officials in exchange for immunity from prosecution, federal prosecutors are bargaining to get his testimony against Maria Hsia, a California fund-raiser already under indictment who played a minor though controversial role in 1996, according to lawyers close to the case.

Granting Huang immunity for information about a subordinate rather than a superior would mark a major reversal for the Justice Department, which has frequently promised that the campaign finance investigation would proceed from low-level figures to those who allegedly masterminded illegal fund-raising schemes.

The change in course on Huang comes as Attorney General Janet Reno is conducting three separate preliminary investigations to determine whether an independent counsel should look into campaign-related allegations against Clinton, Vice President Gore and former deputy White House chief of staff Harold M. Ickes. Those investigations are due to be completed by early December.

So far, the Justice Department's two-year-old campaign finance task force has resulted in charges against 12 persons, most of them relatively low-level fund-raisers or contributors such as Hsia.

Last month, the task force suffered a major setback when U.S. District Judge Paul L. Friedman tossed out five of the six charges against Hsia, a ruling that could undermine the legal theory used not only in her case but also in several of the other prosecutions. Friedman found that prosecutors had used "highly technical and inventive reasoning" to charge Hsia with causing the submission of false statements to the Federal Election Commission about the true identity of campaign donors.

"The ruling potentially has major significance because it will make it more difficult to use criminal statutes in cases that involve election law violations which are usually treated as civil matters," said GOP election lawyer Jan Baran. Senior Justice Department officials said an appeal of the ruling is likely.

Friedman's ruling let stand a single charge that Hsia, an immigration consultant and longtime Democratic Party activist, conspired to disguise illegal contributions from a Taiwan-based Buddhist organization following a controversial 1996 campaign event at a California temple. The event was part of Huang's fund-raising drive in the Asian American community and was attended by Gore.

Prosecutors first sought Huang's cooperation in the Hsia case before Friedman's ruling, but were unable to reach an agreement with his attorney, Ty Cobb, according to lawyers familiar with the talks.

Huang's status in the overall Justice investigation remains unclear, and he could still face indictment. But the lawyers said there have been no discussions with prosecutors that would lead to his testimony against senior Democratic Party or White House officials. And since Friedman's ruling, they said, prosecutors have come back again to seek Huang's testimony regarding Hsia as part of a proposed deal that would remove the possibility that he would face any future charges -- either through a plea agreement or an outright grant of immunity.

Huang first befriended Clinton in the early 1980s when his longtime employer, the Indonesia-based Lippo Group conglomerate, made major investments in Arkansas. After some successful fund-raising for Democrats in California, Huang was named a deputy assistant secretary of commerce in 1994. When the presidential reelection campaign got underway, Huang moved to the Democratic National Committee as vice chairman for finance, where his efforts to raise money from affluent Asian Americans succeeded beyond expectations.

Following the 1996 election, however, the DNC returned $1.6 million raised by Huang because it came from foreign nationals, who are ineligible to make campaign contributions, or because the origin of the money was cloudy. Since then, Huang has been at the center of allegations ranging from the relatively minor claim that the DNC failed to adequately screen donations to the still-unsubstantiated charges that the government of China attempted to influence the 1996 election by directing money to the Clinton campaign.

Because his fund-raising brought him into contact with top officials in the campaign and the White House, including Clinton, some Justice Department investigators and many Republican critics of Clinton's campaign finance methods long argued that Huang could implicate top Democrats in an alleged scheme to knowingly collect illegal foreign donations.

But after a year-long, $3 million investigation of fund-raising in the 1996 presidential campaign, Republicans on the Senate Governmental Affairs Committee concluded that "what emerges from the Committee's investigation is a picture of Huang both complex and vexing, which raises as many questions as it answers."

And a senior Justice Department official said that some investigators have concluded that Huang does not have information that would support the prosecution of the Democratic officials who received and spent the funds he raised or the White House officials who promoted his career in Washington.

As a result, attention has turned to the possibility that Huang might be able to bolster the endangered case against Hsia.

© Copyright 1998 The Washington Post Company

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