Judge: 'Soft Money' Not Covered by Foreign Political Donor Ban
Washington Post Staff Writers
Saturday, October 10, 1998; Page A3
In an opinion that could undermine major campaign finance prosecutions, a federal judge yesterday concluded that the Justice Department has seriously misinterpreted the law governing political contributions by foreign nationals.
U.S. District Court Judge Paul L. Friedman ruled that citizens of other nations are only prohibited from making "hard money" contributions, funds that are used to directly support individual candidates for federal office.
Most of the investigations involving foreign contributions to the 1996 Clinton-Gore reelection effort have involved "soft money," which was used by the Democratic Party for general purposes, such as issue advertising and voter-registration drives.
The opinion was handed down during pretrial motions in the case against Yah Lin "Charlie" Trie, an Arkansas restaurateur and friend of President Clinton's who became a major Democratic fund-raiser. In January, the Justice Department brought a 15-count indictment against Trie, citing $600,000 in contributions he handled. At the heart of the charges is the allegation that he funneled illegal contributions from foreign nationals to the Democratic National Committee.
Friedman wrote that prosecutors contend that the prohibition on contributions by foreign nationals "applies to soft money donations as well as to hard money contributions . . . . The court disagrees."
While he did not dismiss the foreign contribution charges against Trie, Friedman said that at a trial scheduled to begin Feb. 1, prosecutors will have to convince the jury beyond a reasonable doubt that Trie's contributions went into hard money accounts.
"This undoubtedly will take a major piece out of the prosecution because the lion's share of the money, if not all of it, in this case and in others went to soft money accounts," said Kenneth A. Gross, an attorney who formerly served as the chief enforcement officer for the Federal Election Commission.
A Justice Department spokesman said yesterday the department is reviewing whether it will appeal Friedman's ruling regarding soft money.
Much of the government's case against Thai businesswoman Pauline Kanchanalak, another central figure in the campaign finance investigation, also covers a blend of hard and soft dollars. Kanchanalak is accused of illegally channeling $679,000 in campaign contributions to Democrats.
The judge's opinion hits on an area of law that "is a matter of considerable dispute among attorneys in the field and within the Justice Department," said Trevor Potter, a former FEC chairman. Potter, now a Washington attorney, said he felt that the opinion is an incorrect reading of the law, "but until the questions he raises are resolved, presumably on an appeal, it is going to be a problem for these kinds of prosecutions."
Yesterday's ruling comes a month after Friedman delivered a major setback to another important campaign finance case, dismissing five of six charges brought against Maria Hsia, another controversial Democratic fund-raiser. In that ruling, the judge found that prosecutors had stretched the law in a manner that "defies logic" in alleging that Hsia caused campaign and party organizations to file false statements to the FEC for donations she had helped collect. Friedman yesterday threw out three similar charges brought against Trie. The Justice Department has formally decided to appeal that ruling.
"Judge Friedman's opinion goes a long way to restoring sanity to this whole campaign finance investigation," said Reid H. Weingarten, Trie's attorney. "I'm hopeful that the Justice Department will take this opportunity to reevaluate the prosecutions they've already brought."
Weingarten, who also represents Kanchanalak, said he will challenge her prosecution on similar grounds.
Trie, Hsia and Kanchanalak are the only major figures from the 1996 fund-raising controversies under indictment, and the cases against all three of them are imperiled. Johnny Chung, another fund-raiser associated with alleged illegal foreign donations, is cooperating with the investigation under a plea agreement.
Trie, a naturalized U.S. citizen born in Taiwan, once owned a restaurant in Little Rock that was patronized by then-Gov. Clinton. In 1991, he opened an international trading business, which continued after he moved to Washington and began raising money for the DNC after Clinton became president.
Trie was the first person to be indicted in the Justice Department's long-running investigation. He voluntarily returned to the United States in February after spending more than a year in Asia, raising hopes among investigators that he would become a cooperating witness. That never happened, however, and Trie instead has waged a vigorous defense.
The 15-count indictment accused Trie of conspiracy, mail and wire fraud, witness tampering, obstructing a congressional investigation and causing the filing of false statements with the FEC.
He is charged with making campaign contributions from his personal account and then getting reimbursed by foreign sources, as well as setting up "straw donors" to disguise money coming from foreign sources. The indictment accused him of attempting to buy access to high-level government officials and cited more than a dozen occasions when Trie, often joined by business associates from Asia, attended major political events.
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