Tennessee financier Franklin L. Haney, a longtime friend of Vice President Gore's family, was acquitted by a jury yesterday of 42 charges accusing him of violating campaign contribution laws.
The verdict in U.S. District Court was a setback for the Justice Department's investigation into Democratic fund-raising. Haney, a Chattanooga millionaire and developer, had been accused of illegally channeling $62,500 in contributions to the Clinton-Gore campaigns of 1992 and 1996, as well as $61,000 to campaigns for Tennessee Democrats James Sasser and Jim Cooper.
Haney's defense lawyers suggested in court that Attorney General Janet Reno had tagged him to be the fall guy for the fund-raising excesses of the 1996 campaign.
The verdict came just three hours after the jury had declared it was hopelessly deadlocked; Judge Richard W. Roberts broke the impasse by urging more deliberation.
"As difficult as this has been for my family and me," Haney said, "we're pleased that the system worked and that I was found innocent of these charges."
Gore's spokesman, Chris Lehane, issued a statement saying, "The vice president is pleased for Franklin and his family."
Prosecutors Eric L. Yaffe and Pamela Huff argued that Haney had conspired to skirt laws limiting individual contributions to $1,000 per donor by enlisting employees and other acquaintances as "straw donors" and then reimbursing them. The prosecutors said they had no evidence that campaign officials knew of Haney's activities.
The case against Haney relied upon a maze of financial records and materials submitted by the various campaigns to the Federal Election Commission. Although prosecutors presented testimony from witnesses who said they were reimbursed by Haney, none said they were aware of breaking any laws.
But prosecutors argued that Haney, who has run for office as both a House and a gubernatorial candidate and has made a career out of developing and leasing government offices, must have known that he was aggressively violating campaign finance law.
Ted Wells and other defense attorneys countered that Haney could not be expected to navigate his way through complex election regulations, and that he had seen nothing wrong with giving "gifts" to employees and acquaintances who had made political contributions.
In his closing arguments, Wells suggested that prosecutors wanted a "show trial" to make Reno appear tough, and to deflect Republican criticism that she went easy on the vice president.
Myron Marlin, a Justice Department spokesman, said prosecutors "are disappointed with the jury's verdict but we respect their decision."
The trial's witnesses included Peter Knight, chairman of the 1996 Clinton-Gore campaign and a leading fund-raiser for Gore's 2000 presidential bid. Although not part of the trial, business dealings between Knight and Haney have been scrutinized in the past. House Republicans alleged that Knight helped Haney acquire a government lease in exchange for contributions to Democrats and $1 million in lobbying and legal fees to Knight over three years. But earlier this year, Reno declined GOP requests for an independent counsel investigation, citing a lack of "specific and credible information."
Eighteen people have been charged to date in the campaign finance probe, and prosecutors have obtained 11 guilty pleas. Those still awaiting trial include Maria Hsia and Pauline Kanchanalak, two other Clinton-Gore fund-raisers accused of carrying out "straw donor" schemes. Both have denied wrongdoing.