Bundlers Lurking in the Smoky Backroom Again in 2008

Bundlers bring more to the table than just cash. Just ask anyone on the receiving end of a Norman Hsu or Jack Abramoff special delivery. While not all bundlers will be as obviously scandal-tainted as a man wearing a bright yellow prison jumper, Hsu and Abramoff weren’t the first, and likely won’t be the last big fundraisers to bring along a little corruption with the loot.

Bundling is the new smoked-filled room of campaign fundraising. In fact, bundlers are starting to knock other means of financing right off the map. They are swamping the candidates with more money from than the frontrunners could possibly get from the presidential public financing system, thus helping to hasten its tragic demise.

Whether bundlers deliver $50,000 or $1 million, they expect something in return. The favor may be as simple as a photo opportunity that allows them to enhance their status with business associates, or it may be even more nefarious, like a government contract or tax break. In a world of six- and seven-figure campaign contributions, corruption and scandal may not be far behind.

Citizen’s 2000 and 2004 investigations for www.WhiteHouseForSale.org revealed that the Bush administration treated its bundlers very well. Nearly 20 percent of all Bush bundlers received a government appointment, ranging from ambassadorships to cabinet posts. The electric utility industry, a major source of bundled contributions, was pleased when the Bush administration rolled back “new source review” requirements, allowing many in the industry to avoid upgrading their equipment to meet environmental standards. The pharmaceutical industry, yet another major source of bundling for Bush, received a boon from the 2003 prescription drug act that prohibited any price controls on drugs. The list of favors goes on and on…

Bundlers in the 2008 presidential election are not so different than the monied interests who were players in the 2000 and 2004 elections. In fact, many are the same people. And even this early in the 2008 presidential campaign, bundling scandals are already tainting several campaigns: 

In Hilary Clinton’s campaign:

• Norman Hsu. Hsu was on the lam since being convicted of fraud in 1992 for a ponzi scheme. Hsu began by raising money for the 2004 Kerry campaign and then was quickly tapped for funds by other local, state and federal Democratic candidates as well as Democratic party committees. By 2007, Hsu’s became a Hillraiser, or someone who had bundled more than $100,000 for Hillary Clinton’s campaign. In fact, Hsu co-hosted a $1 million fundraising event for Clinton. When news first broke of his criminal past, the Clinton campaign proposed refunding $23,000 in direct contributions received from Hsu and his family. But as the FBI announced expanding its investigation of Hsu to include possible money laundering through Hsu’s bundling sources, the campaign tracked all $850,000 in Hsu bundled contributions and returned them to contributors – an all-time record on returned campaign contributions. (The previous record was $460,000 returned from Bill Clinton’s legal defense fund to Charlie Trie in 1996.)
• William Danielczyk. Clinton held a fundraiser at the Washington, D.C., home of Pamela Layton, who donated the maximum $4,600 to the Clinton campaign. Layton later admitted: “It wasn’t personal money. It was all corporate money. I don’t even like Hillary. I’m a Republican.” [Wall Street Journal, Sept. 20, 2007] The allegation is that William Danielczyk, a bundler and employer of Layton’s husband, reimbursed Layton for the contribution. Danielczyk and his family, employees and friends donated a total of $120,000 to the Clinton campaign around the time of the fundraiser.
• William Stuart Price. William Stuart Price, an Oklahoma oilman also on the “Hillraiser” list, stunned a courtroom in 1995 when he detailed how his former gas company had tried to gain influence with the Clinton administration by providing $160,000 in money and membership in a Washington, D.C., golf club to the son of a Cabinet secretary. [Washington Post, Sept. 20, 2007]
• Marvin Rosen. Marvin Rosen’s biggest claim to fame is the reward program he developed as finance chairman of the DNC in the mid-1990s. This entailed giving White House coffees and overnights stays in the Lincoln bedroom to six-figure fundraisers for the party. Rosen is now a Hillraiser. [Washington Post, Sept. 19, 2007]

In Barack Obama’s campaign:

• Antoin Rezko. Rezko, a Chicago developer, has long supported Barack Obama. When Rezko was indicted in October 2007 on federal corruption charges, Obama donated to charity $40,000 that came directly from Rezko and people connected with the criminal case. But that was just a portion of the Rezko money; a review by the Los Angeles Times of Obama’s campaign finance reports shows Rezko raised at least $160,000 for Obama dating back to 1995. Obama has not said whether he will return the remainder. [Los Angeles Times, Sept. 12, 2007]

In John Edwards’ campaign:

• Geoffrey Feiger. Fieger, a lawyer and bundler for Edwards, was indicted in August 2007 on charges of funneling more than $125,000 to Edwards’s 2004 presidential campaign through straw donors. [New York Times, Sept. 12, 2007] Edwards has not refunded these donations because, his campaign says, he is awaiting the final outcome of the case.
• William Lerach. Lerach, another lawyer and bundler for Edwards, pleaded guilty to federal conspiracy charges related to his class action lawsuits in September 2007. He raised $80,000 for the Edwards campaign from his family and law firm partners. Edwards returned Lerach’s personal contributions, but not the bundled contributions Lerach raised from others. [Washington Post, Sept. 20, 2007]

In Mitt Romney’s campaign:

• Alan Fabian. A former finance chairman for the Romney campaign, Fabian was indicted in August 2007 of 23 counts of mail fraud, money laundering, bankruptcy fraud, perjury and obstruction of justice. Romney returned $2,300 in direct contributions from Fabian but none of the money raised by Fabian from others. [Los Angeles Times, Sept. 12, 2007]

In Rudolph Giuliani’s campaign:

• Thomas Ravenel. Ravenel, the campaign’s South Carolina finance chairman, was indicted on drug charges in June 2007. The Giuliani campaign returned $2,300 directly contributed by Ravenel, but none of the money Ravenel raised from family and colleagues. [Los Angeles Times, Sept. 12, 2007]

In August, Public Citizen sent letters to all the presidential candidates urging them to live up to their rhetoric of full and open disclosure. The response has been paltry.

However, bundling disclosure will improve slightly in the last half of 2008. The recently passed lobbying and ethics bill mandates that all federal candidates (presidential and congressional) disclose on semi-annual FEC reports bundling activity on their behalf by all registered lobbyists and lobbying firms. This requirement is scheduled to become effective in July 2008.

Of course, Public Citizen will continue to research and document the number of registered lobbyists raising money for 2008 presidential candidates.

The long 2008 campaign season has just begun. Bundlers are already dominating the frantic fundraising race of the presidential candidates, and the scandals are just beginning to break into the news. So keep watching – there may be many more hair-raisers to come.