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Paula Jones
Paula Jones facing reporters in January (Post file photo)

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Firm Raising Money for Jones But Funds
Don't Go to Lawyers

By Peter Baker and Amy Goldstein
Washington Post Staff Writers
Saturday, February 28, 1998; Page A01

Paula Jones hired a direct-mail firm last fall to raise hundreds of thousands of dollars for her legal battle against President Clinton, but none of the money has gone to the foundation sponsoring her sexual harassment lawsuit or the lawyers pursuing it.

Jones signed a contract in November with Bruce W. Eberle & Associates Inc., which guaranteed her a minimum of $300,000 as long as the firm could make its own profit from the fund-raising campaign, according to a copy of the document obtained yesterday. About $100,000 has already been sent directly to Jones, said a source familiar with the effort.

Solicitation letters and a newspaper advertisement drafted by Eberle's company, a McLean-based firm long associated with conservative causes, said that the money raised would go to "litigation expenses." In one letter that went out over her signature, Jones said: "My lawyers can't keep fighting now without outside funding. And they'll need at least $250,000 to keep my case going. . . . This money is going to help my legal case and expenses related to it."

But the Rutherford Institute that is paying for expenses related to the lawsuit and the Dallas law firm that is representing Jones in the case said yesterday that they have not gotten any money from the venture.

"We've never received any money from them and our lawyers have never received any money," said John W. Whitehead, founder and president of the Rutherford Institute, based in Charlottesville. "The Rutherford Institute has been concerned about the fact that it appears the money's being raised for litigation expenses when the Rutherford Institute's paying for all litigation expenses."

The issue of who has been bankrolling the Jones effort has been a flash point in the legal battle over her claim that Clinton propositioned her in a Little Rock hotel suite in 1991.

Clinton's side has repeatedly asserted that Jones's motivation in pursuing the lawsuit is money, not to restore her name, and the president's lawyers have hired private investigators and issued subpoenas in a long effort to determine how she is paying for her case. The Eberle agreement was discovered as part of that research and first reported yesterday by the Chicago Tribune. Even before she signed the contract, Jones was being audited by the Internal Revenue Service, which she charged was exacting revenge on Clinton's behalf.

Brent C. Perry, a Houston lawyer serving as counsel for the Paula Jones Legal Fund, said there was nothing wrong with the fund-raising drive and that it was never intended to pay lawyers. Instead, he said, it is being used generally to pay for expenses related to the case not covered by Rutherford, such as Jones's travel to court appearances and "some investigative costs."

But Rutherford has privately objected to the arrangement, finding itself competing with Jones for the same donor base at a time when its own fund-raising has struggled to bring in just half of its $230,000 budget. According to sources familiar with the situation, Rutherford complained to Eberle about the language of the solicitations, saying it would deceive donors into thinking their gifts would go to lawyers or direct legal expenses. One source said Rutherford sent a strongly worded protest letter in December to a previous lawyer for the fund, who then resigned.

The Jones legal fund was created in 1994, but was recently transferred to the direct control of Jones and her husband, Steve Jones, for the first time. Perry said there are no written rules for how the money can be used, but said "the spirit" is well understood.

According to the fund-raising contract, Eberle committed to providing Jones a minimum of $300,000 in net income through a mail campaign that would continue until six months after the end of her court case, which is scheduled to go to trial on May 27. Eberle agreed to provide an advance of $100,000 within 10 days against the total net income "upon the Client's request." On the contract, the line for the client's signature was originally printed as "Paula Jones Legal Fund," but the last two words were crossed out and Jones signed it as an individual.

Perry said Jones "has never received $100,000 at one time." However, another source said Jones has been paid roughly that amount in total as contributions have flowed in.

For its part, Eberle's firm receives $77 for every 1,000 solicitations it sends out, according to the contract. Therefore, for every 1 million pieces sent, Eberle would be entitled to $77,000. In addition, Eberle gets a percentage of mailing list rental charges.

In an interview yesterday, Eberle said he contacted Jones last summer after noticing a newspaper article about her effort to raise money. "It's sort of a David-and-Goliath approach," he said. "Anytime you have someone who is an underdog, the American people are very generous and they're willing to support people like that."

He disputed the notion that contributors may have been misled about how the money would be used. "I believe the fund-raising appeals are accurate," he said.

Donovan Campbell, Jones's lead attorney, said his firm never expected that it would be paid by the legal fund. Instead, Campbell said he is working for Jones under a contingency fee agreement in which his firm would share in any settlement or judgment awarded in the case.

He also said, "It's fallacious to say none of the money raised has gone to case expenses" because some of the money Jones has received has been used for private investigators and travel expenses.

Joseph Cammarata, who was one of Jones's lawyers until quitting last September, said neither he nor his partner had received any money from the new fund-raising effort. In its previous incarnation before the Joneses took it over, the legal fund paid $23,000 each to him and attorney Gilbert K. Davis, Cammarata said, as well as paying for other legal costs. Cammarata and Davis have placed an $800,000 lien against any proceeds Jones wins in the case.

The legal fund was run for three years by Washington fund-raiser Cindy Hays, then taken over last year by Jones's California friend and adviser, Susan Carpenter-McMillan. Perry said Jones and her husband assumed personal control two months ago because they "weren't happy with the way it was managed" in Washington, citing inappropriate expenditures and high overhead costs.

Unlike most legal defense funds, Jones's does not have tax-exempt status and thus is not bound by restrictions on charitable organizations. If it were tax-exempt, for example, contributions could not go directly to the individual the fund was designed to benefit.

Nevertheless, one authority on tax law said yesterday that any fund, regardless of its tax status, is obligated to be forthright about the purpose of contributions. "Any lawyer would be worried about the use of funds contrary to representations," said Frances R. Hill, a professor at the University of Miami School of Law.

The fund's activities have attracted the attention of Virginia regulators. On Feb. 3, the Virginia Department of Agriculture and Consumer Services sent a letter to the fund saying it appeared to be soliciting in the state without registering as required by law. State officials said Eberle also had not filed with the office a required copy of his fund-raising contract with Jones. Eberle said he was not obliged to do so because the fund is not tax-exempt, a position rejected by the state.

Eberle has been in the direct-mail business for more than two decades. He said yesterday that his firm raises money for "everything you could imagine," including the Negro Leagues Baseball Museum. His firm has been associated with many conservative causes and candidates, including former president Ronald Reagan and Sen. Jesse Helms (R-N.C.).

Staff writer Lorraine Adams contributed to this report.


© Copyright 1998 The Washington Post Company

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