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Former senator David Pryor will oversee the fund. (By Ray Lustig – The Washington Post)


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_ Clinton Plans New Fund to Pay Legal Fees (Feb. 4)


Clintons Approve New Legal Fund

By John F. Harris
Washington Post Staff Writer
Thursday, February 19, 1998; Page A12

Mired in rapidly rising legal debts, President Clinton and first lady Hillary Rodham Clinton have blessed the creation of a new legal defense fund headed by a longtime Arkansas friend to come to their financial rescue, the fund's organizers announced yesterday.

Former senator David Pryor, a Democrat who left the Senate last year, announced that he had founded a trust that will operate under significantly looser restrictions than a previous defense fund that disbanded late last year after donations stalled.

Unlike the old defense fund, the new one will be allowed to engage in direct fund-raising, as long as the pitch does not come from Clinton himself. And contributions, which had been capped at $1,000 per individual, will have a limit of $10,000 under the new fund.

Among those who will play an instrumental behind-the-scenes role in raising the money -- though he was not formally named to be part of the trust fund -- is prominent Democratic fund-raiser Terence McAuliffe, the quarterback of Clinton's 1996 reelection fund-raising, according to a White House official and others who are planning the new fund.

When the old fund disbanded, it reported outstanding legal bills for the Clintons in the Whitewater and Democratic fund-raising controversies of at least $2.9 million -- and this was before the Monica S. Lewinsky matter began generating new legal bills. Combined with outstanding bills for mounting a defense in the Paula Jones sexual harassment case -- a portion of which were paid for by two insurance policies held by Clinton -- the family's total legal debt could quickly rise to several million dollars more than this, according to an adviser who has discussed the situation with Clinton.

Without an aggressive new fund-raising effort, Pryor said, "this couple will leave this White House impoverished, and I don't think the American people want that to take place."

The Clintons, according to current and former White House aides, are counting on the new fund to be considerably more effective than the old one. Their hopes rest on an arcane, but critical, difference in the legal status of the two trusts.

The Office of Government Ethics (OGE) ruled that because the Clintons were the "grantors" of the old trust -- in other words, it was set up by them -- the trustees were serving as their agents, and therefore barred under federal ethics rules from asking for money on their behalf.

Under the new trust, Pryor is the grantor, not the Clintons. OGE Director Stephen Potts wrote the lawyer for the new trust on Tuesday that this fund-raising body "will not run afoul" of ethics rules that bar Clinton from soliciting gifts.

While the Clintons did not formally create the fund, they are hardly far removed from its affairs. The Clintons have discussed the creation of a new fund with fewer legal and self-imposed restrictions with a wide variety of people, according to several advisers.

White House counsel Charles F.C. Ruff, officials said, helped research the legal rules that will guide the new fund. The fund's director, lawyer Anthony Essaye, said yesterday he was recruited to take the job by Ruff, a longtime friend.

Essaye said the main question the fund's trustees are facing is how to go about soliciting money. "The keystone," he said, "is to do this in a dignified and appropriate way."

But it is clear the fund does not intend to be bashful. In the middle of a news conference yesterday, Pryor unfurled for the television cameras a banner with the fund's address on it.

"Make no mistake, we're here to raise money," said trustee Kenneth Bartels, who runs a real estate investment firm in New York City.

Under the rules of the new fund, Clinton will not personally solicit money. Contributions will not be accepted from noncitizens, or from executive branch employees. Clinton supporters initially considered allowing registered lobbyists, labor unions and corporations to contribute to the new fund, but ultimately dropped the idea and money from these sources will be barred. The White House counsel's office will review the names of contributors. Like the old fund, the new fund will disclose its contributions twice annually.

The old fund included several former university officials and two former federal attorneys general as its trustees. The new fund is made up of less prominent individuals, most of them friends of the Clintons.

The five people Pryor asked to serve as trustees are Essaye; Bartels; New York lawyer Renee Ring, who met the Clintons in the mid-'80s at Renaissance Weekend celebrations; Little Rock lawyer Maurice Mitchell; and Roger Johnson, a Southern California business executive who served as administrator of the General Services Administration during Clinton's first term.

The old fund ran into controversy when Little Rock fund-raiser Yah Lin "Charlie" Trie walked into the fund's offices with some $600,000 in checks and money orders that auditors later found may not have really been from their ostensible contributors. Trie was later indicted in the Democratic fund-raising controversy, and organizers of the old fund said bad publicity from the Trie incident was partly responsible for its poor performance.

McAuliffe lately has also received some adverse publicity for his 1996 fund-raising activities, but a senior White House official said Clinton was welcoming his involvement in the latest fund-raising effort. "We fully expect to Terry to be actively involved in helping raise money for the president's fund," said White House adviser Douglas Sosnik.

© Copyright 1998 The Washington Post Company

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