Senator Clinton’s campaign spokesman announced last night that the massive amount of donations bundled by disgraced “Hillraiser” Norman Hsu would be returned to sender:
"An estimated 260 donors this week will receive refunds totaling approximately $850,000 from the campaign."
But wait. Read Wolfson's statement to AP about what happens after the money is "returned":
"We will accept their contributions and ask them to confirm for our records that they are from their own personal funds," he said in an e-mail.
This shell game will allow the Clinton campaign to report as much as $850,000 (mainly from maxed out donors) all over again for the third quarter (Q3) Federal Elections Commission (FEC) report that is due on October 15.
The goal: artificially inflating Clinton's take in the money contest by laundering money already given once to look like it will be raised anew in the third quarter.
That’s why, unlike with the $23,000 donated by Hsu himself, the Clinton campaign is not giving this $850,000 to charity.
It is the scam of the third quarter.
More details at the jump…
The reason for this desperate maneuver: More than 70 percent of Clinton’s donors had already given the maximum $2,300 allowed by law in the first half of 2007, placing Clinton at a severe disadvantage vs. Obama in Q3 fundraising. To fall behind again in the third quarter FEC report would mark the beginning of the fall of the "inevitable" candidacy. More on that in a moment. First, the background...
Norman Hsu raised $850,000 for the Clinton campaign. That massive amount of funds represents 1.6 percent of the $53 million raised by Clinton in 2007; about one-eightieth of all the funds raised, which would have given him huge influence and access, and not just for big-donor overnights in the Lincoln Bedroom.
But since reports began that he was bundling $2,300 and $4,600 donations from people he had paid money to himself, or from modest working people that probably would not be able to afford to give those large sums, the scrutiny upon his fundraising for Clinton, and on him, increased to a boiling point.
It then came out that there was a warrant for Hsu’s arrest in California stemming from his 1992 evasion of sentencing for the crime of defrauding one million dollars worth of investors (he faced up to three years in the pokey). On August 31, after 15 years on the lam, he turned himself into authorities, paid $2 million bail, but then ducked his hearing and was found in a pharmaceutical haze in an Amtrak sleeping car traveling through Colorado. Now he'll go from his hospital bed to jail.
The LA Times reported that the Clinton campaign had been warned not to trust Hsu long before the his story blew up:
In an e-mail obtained by The Times, a Clinton campaign staffer told a California Democratic Party official in June that the businessman's concerns were unwarranted.
"I can tell you with 100 certainty that Norman Hsu is NOT involved in a ponzi scheme," wrote Samantha Wolf, who was a campaign finance director for the Western states. "He is COMPLETELY legit."
But by early this month, major news organizations reported that the FBI was now on the trail, while others, including the Washington Post, were reminded of similar fundraising scandals that rocked the first Clinton administration:
The eerie echoes of the last Clinton campaign finance scandal are what make the Hsu case so problematic for the current Democratic presidential frontrunner. If it were just a matter of the facts of this particular case, it might be the sort of bad-news story that comes and goes, forgotten long before anyone shows up at a ballot box to case a vote. After all, Hsu also raised money for other Democrats as well, including Sen. Barack Obama (Ill.). But none of them has the same history to overcome.
The Hsu case illustrates the challenges for Hillary Clinton in defining her past. She has to this point managed to use her time as first lady and her marriage to a former president popular within her party ranks to her advantage while largely scrubbing those eight years in the White House of the more controversial chapters. The disputes that dogged her in the 1990s -- Whitewater, cattle futures, the White House travel office, Vincent Foster -- have been absent from the campaign trail this time, as have memories of the many issues that her husband had to contend with, including campaign finances.
As the Wall Street Journal noted, it’s not just the previous Clinton administration that has been mired in such problems, but also the current campaign of Senator Clinton:
As for Mrs. Clinton, her spokesman Howard Wolfson told the Los Angeles Times that she was declining to release the names of her bundled donors. No wonder. The Clinton campaign has been frequently beset by contributors running afoul of the law. Last week, a leading Clinton supporter and fund-raiser in New Jersey, Mayor Samuel Rivera of Passaic, was arrested on bribery charges in an FBI sting operation. In March, businessman Abdul Rehman "Ray" Jinnah fled the country after being indicted on charges he funneled illegal contributions to Mrs. Clinton and other Democrats.
So with the story now “going viral,” the Clinton campaign dumped the bad news on the eve of the September 11 media circus, last night, right after the evening news programs started, in an attempt to minimize the scrutiny of what the campaign’s “return” of $850,000 is really meant to accomplish.
MSNBC’s First Read understood that the move would impact the Q3 FEC report, but missed the real way that the campaign intends it to occur:
You've heard of dumping bad news on a Friday evening? Well, the Clinton campaign found an even better time to dump the bad news that it was returning $850,000 raised by Norman Hsu -- the evening before 9/11, which just also happens to coincide with the busiest news day in the Iraq war (at least in terms of Washington coverage) in six months. The campaign may have found as good of a day as they could to bury this story, but they ought to realize this will come back. The next time we'll hear Hsu’s name? In about 20 days when the campaign reports its 3rd quarter fundraising. Docking themselves nearly a $1 million is not good for the bottom line. By the way, did the campaign overlook Hsu's questionable tactics a few months ago because they were so desperate to keep up with Obama's fundraising?
The real problem stems from the lack of transparency offered by the Clinton campaign: Who are the 260 donors bundled by Hsu? Only if they release that information will the press and public be able to track how many of them simply launder their donations right back into the third quarter to provide a “mirrors and smoke” bounce to Clinton’s faltering fundraising efforts and complete failure to inspire large numbers of small donors to match Obama’s 213,000 donors of sums under $200.
I wrote a diary on Candidate Clinton’s Fundraising Problem on August 5, in which, by analyzing the FEC filings for the first and second quarters of this year, found:
Of the $53 million raised by Clinton’s campaign, only $19 million comes from donors that can give again.
Compare that to the $34 million of Obama’s $58 million worth of donors that can and will give again. (110,000 Obama donors have already given $17 million via the Internet alone.)
In early August, these numbers explained why Clinton refuses to join Edwards and Obama in rejecting DC lobbyist contributions.
In early September, they continue to explain the Clinton campaign scheme to pay abnormally high ‘returns’ to ‘investors’ (previous campaign donors) in order to deceive about its true level fundraising for the third quarter on October 15.
And because the Clinton campaign refuses to say who these $850,000 worth of “investors” (donors) are, it denies the public and press the ability to accurately track it.
I didn’t make this up. Clinton spokesman Howard Wolfson said so last night: "We will accept their contributions and ask them to confirm for our records that they are from their own personal funds."
And so Clinton’s third quarter FEC filing will be deceptively inflated by as much as $850,000. We’ll all remember that come October 15.
A February 2007 Washington Post editorial noted that the reticence to offer transparency was already a serious problem of the Clinton Campaign months before the Hsu scandal broke:
THE 2008 presidential field has already begun to sort itself into candidates willing to disclose the identities of their big financiers and those who balk at providing this critical information. On the side of real disclosure are three Democrats, Sens. Barack Obama (Ill.) and Christopher J. Dodd (Conn.) and former Iowa governor Tom Vilsack, along with two Republicans, Sen. John McCain (Ariz.) and -- in the latest addition to the ranks of openness -- Mitt Romney. Officials of the former Massachusetts governor's campaign told us that Mr. Romney will report the names of his big bundlers, the fundraisers who collect donations from large numbers of people and who thereby help their candidate far beyond the maximum of $2,300 they are legally allowed to contribute directly. Declining to provide this information are Democrats Hillary Rodham Clinton and John Edwards, and Republican Rudolph W. Giuliani.
Indeed, Ms. Clinton's campaign encourages "Hillraisers" to sign up on its Web site and set fundraising targets. For its biggest bundlers, the campaign has set the audacious goal of at least $1 million. Does the campaign really believe it's tenable to keep the identities of these financiers secret? What is its justification for doing so? We single out Ms. Clinton for a number of reasons, chief among them her front-runner status, her undoubted capacity for raising enormous sums and the unprecedented size of the bundles she is seeking.
Some have tried to make the case that Hsu wasn’t only a Clinton donor, based on that he’s given to other Democrats running for many offices. But for the presidential campaign, he indeed was Clinton’s man:
The Clinton campaign has signaled to donors that they should not stray to other candidates.
At a Beverly Hills fundraiser in January, Clinton campaign chairman Terry McAuliffe asked guests: “Who’s with Hillary?”
“This isn’t the John Kerry campaign,” he quipped, according to The Los Angeles Times. “You are either with us or against us.”
While McAuliffe may have veiled his words in humor, the message was clear to donors. One Democratic fundraiser told The Hill that the Clinton campaign has stressed the importance of donors maintaining an exclusive relationship.
The Clinton campaign's cynical and deceptive "return" of the Hsu-bundled money reminds of the P.T. Barnum adage that “there’s a sucker born every minute.” It’s handlers and big money fixers are laughing today, behind closed doors, at you and at me, that they’ve been able to pull the rug over the eyes of the pundits and the press with the charade that this move means a “return” of $850,000 worth of donations.
But it will take Clinton’s fundraising chief Terry McAuliffe and his staff only a few business days to contact those 260 donors bundled by Hsu, tell them the check is coming back (perhaps by express mail, with an enclosed express mail envelope to send in the new check?), but to please send in a replacement check before the September 30 deadline in order to artificially bolster the troubled third quarter fundraising numbers by a cool $850,000.
It’s a shell game.
Having trouble with third quarter fundraising, candidate?
Have 70 percent of your donors already maxed out?
Just give them back the money and have them give again.
Unfortunately for the perpetrators of this scam, the mere appearance of this information in this diary could raise enough eyebrows among the news reporters covering the campaign to dig a little deeper (If you think they ought to see it through this important context, then rec this diary up), and see the third quarter fundraising maneuver for what it is: a cheap scam that attempts to manipulate them and the Democratic primary and caucus voters.