Wash. Post editorial noted Edwards donor's indictment, ignored report that Edwards was absolved of wrongdoing

››› ››› RAPHAEL SCHWEBER-KOREN

A Washington Post editorial arguing for legally mandated full disclosure of campaign donation "bundlers" left out key facts about the two cases that it cited, Geoffrey Fieger and Norman Hsu. The editorial did not note that prosecutors have reportedly confirmed that John Edwards' campaign was unaware of alleged illegal contributions made by Fieger and absolved the campaign of any wrongdoing; similarly, the editorial failed to note that the Wall Street Journal article it cited offered no evidence implicating Hillary Clinton with regard to Hsu.

A September 4 Washington Post editorial arguing for legally mandated full disclosure of information about so-called campaign donation "bundlers" -- people who solicit donations for a candidate from friends and associates and are later given credit for the resulting donation -- left out key facts about the two cases of "[b]undlers [b]ehaving [b]adly" that it cited -- those of Geoffrey Fieger and Norman Hsu. The editorial noted that Fieger, a Michigan lawyer, was recently indicted "on allegations of conspiring to make more than $125,000 in illegal bundled contributions to" former Sen. John Edwards' (D-NC) 2004 presidential campaign, and that, allegedly, "Mr. Fieger's law firm reimbursed employees for their contributions by disguising them as bonuses and repaid contractors by calling the amounts payments for services." The editorial also said that Edwards "declined to identify his bundlers during" the 2004 campaign. However, the editorial did not mention that, according to an August 24 Detroit Free Press article, "A statement from the U.S. Justice Department's Office of Public Affairs absolved the Edwards campaign of any wrongdoing and said his campaign was unaware of the alleged illegal contributions and has fully cooperated with the investigation."

Similarly, the editorial noted that it "turns out" that Hsu, "a bountiful bundler for Democratic candidates" and a top fundraiser for [Sen.] Hillary Clinton's [D-NY] presidential campaign, was, until recently, "a fugitive from justice ... having failed to show up in 1992 for a sentencing hearing on grand theft charges." Citing an August 28 Wall Street Journal article, the editorial then echoed allegations that Hsu may have illegally reimbursed a family to which he had "link[s]" -- the Paws -- for their large contributions to Clinton and other Democrats. However, while the editorial stated that "[i]t is illegal to reimburse others for making political donations" and that "[b]oth Mr. Hsu and a business associate, Winkle Paw, denied any wrongdoing," it failed to mention that, as Media Matters for America has noted, the Journal presented no evidence implicating Clinton with regard to Hsu. Indeed, the Journal article reported that "[i]n the wake of a 2002 law that set ... limits [on campaign donations], federal and state regulators and law-enforcement officials said they have seen a spike recently in the number of cases of individuals and companies illegally reimbursing others for campaign donations. Those cases don't necessarily implicate the candidates, who sometimes don't even appear to be aware of such payments executed on their behalf." Further, upon learning that Hsu was a fugitive, Clinton, Sen. Barack Obama (D-IL), and other campaigns that received money from him said they would donate it to charity.

In addition, the editorial, in laying out the controversy surrounding Hsu and the Paws, said that the Journal article "raised questions about the legitimacy of donations steered to the Clinton campaign by Mr. Hsu." Specifically, the editorial suggested that those questions involved whether Hsu had illegally reimbursed "six members" of the Hsu-"linked" Paw family for some or all of their $200,000 in contributions to Democrats since 2005, including $45,000 in contributions since 2005 to Clinton. The questions arose, the editorial said, because "[t]he Paws' apparent financial circumstances -- their house was recently refinanced for $270,000 and the family patriarch, William Paw, is a mail carrier -- calls into doubt their ability to make such generous contributions on their own."

However, the editorial did not mention that, as Media Matters has documented, according to the Journal report, six members of the Paw family have donated to the Clintons, and "[t]he couple's [William and Alice Paw] grown children have jobs ranging from account manager at a software company to 'attendance liaison' at a local public high school. One is listed on campaign records as an executive at a mutual fund." As Media Matters has also noted, Hsu's lawyer, E. Lawrence Barcella Jr., said in a statement published on the blog TalkLeft.com that the Paws' financial information, which he claimed he offered to the Journal reporter in exchange for his agreeing not to run the story about the Paws, "clearly demonstrated that they easily had the financial wherewithal to make any level of contributions." Also, as Media Matters documented, half of the $200,000 in political contributions came from Winkle Paw, an adult son. An August 29 Los Angeles Times article reported that Barcella said Winkle Paw "was in business with Hsu."

The September 4 Washington Post editorial titled "Bundlers Behaving Badly":

The story of Norman Hsu offers a compelling demonstration of why it is so important for presidential candidates to reveal the names of their major fundraisers -- and why the existing system of voluntary, erratic and incomplete disclosure of these "bundlers" is unacceptable. In an era when the financial demands on candidates are so great, and the importance of bundlers is magnified, it makes no sense to leave the reporting of this information to the whim of candidates and the badgering of editorial pages. In short, there ought to be a law.

Mr. Hsu has been a bountiful bundler for Democratic candidates; this election, he is one of Sen. Hillary Rodham Clinton's "Hillraisers," a fundraiser who has pledged to bring in $100,000 or more. Mr. Hsu, it turns out, is a fugitive from justice (or, that is, he was until he was taken into custody last week and then released on bail), having failed to show up in 1992 for a sentencing hearing on grand theft charges stemming from an improbable-sounding Ponzi scheme involving nonexistent latex gloves.

A report by Brody Mullins in the Wall Street Journal last week also raised questions about the legitimacy of donations steered to the Clinton campaign by Mr. Hsu. The Journal reported that six members of a family linked to Mr. Hsu, the Paw family of Daly City, Calif., donated $45,000 to Ms. Clinton since 2005 -- and $200,000 to Democrats overall during that period. The Paws' apparent financial circumstances -- their house was recently refinanced for $270,000 and the family patriarch, William Paw, is a mail carrier -- calls into doubt their ability to make such generous contributions on their own. It is illegal to reimburse others for making political donations. Both Mr. Hsu and a business associate, Winkle Paw, denied any wrongdoing.

Ms. Clinton isn't the only candidate with bundler troubles. Michigan lawyer Geoffrey Fieger was indicted last month on allegations of conspiring to make more than $125,000 in illegal bundled contributions to the 2004 presidential campaign of John Edwards, who declined to identify his bundlers during that campaign. The indictment alleges that Mr. Fieger's law firm reimbursed employees for their contributions by disguising them as bonuses and repaid contractors by calling the amounts payments for services.

These episodes underscore the importance of disclosing bundlers, and they reveal the inadequacy of the current state of affairs, in which no such reporting is required and what reporting does occur is sporadic, insufficient and inaccessible. Some candidates (Ms. Clinton) list bundlers starting at $100,000; some (Sen. Barack Obama, Rudolph Giuliani) reveal bundlers at $50,000 and up; some (Mr. Edwards) list everyone who has raised money for the campaign. None have been as forthcoming as were President Bush or Democratic nominee John F. Kerry in 2004, when their campaigns provided at least some information about the bundlers' levels of fundraising.

The lobbying bill awaiting President Bush's signature offers a road map to a better approach. The measure would require campaigns -- including presidential campaigns -- to disclose the identities of bundlers who are lobbyists and the amounts they bring in over $15,000 in any six-month period. That's an important step forward. But given that the presidential campaigns know perfectly well how much their bundlers have raised, all bundles should be disclosed, not just those hauled in by lobbyists.

Posted In
Elections, Government, Ethics, Justice & Civil Liberties
Network/Outlet
The Washington Post
Stories/Interests
John Edwards, Hillary Clinton, 2008 Elections
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