Democratic Party Lacks Funds to Repay Donors

WASHINGTON —  When the Democratic National Committee called a news conference to announce the return of another $1.5 million in questionable or improper donations, top party officials neglected to mention one tiny detail: They don’t have any money to give back.

Following an election that shattered all previous spending records, the committee is between $10 million and $12 million in debt. Now the Democratic Party finds itself going in opposite directions--forced to obligate itself to return precious dollars because of the campaign finance controversy at the same time it is struggling to raise $50 million for operations this year.

Top DNC officials acknowledged Saturday, one day after revealing the results of a three-month audit of major contributors, that it will take at least several months to raise enough money to both erase the red ink and issue refunds to 77 donors whose contributions were deemed unacceptable. They hope to return the donations by the end of June.

“The lights are on and [our employees] are still getting paychecks,” said DNC spokeswoman Amy Weiss Tobe. “As we can give back donations, we will.”

However, campaign finance experts predict that the growing--and embarrassing--controversy surrounding the party’s fund-raising will only make it more difficult for the Democrats to raise the funds necessary to make refunds.

While an initial $1.5 million returned by the DNC last year went primarily to foreign donors and Asian Americans who made illegal or improper contributions, records show that many of the refunds announced on Friday are owed to felons, individuals under indictment and companies with criminal histories.

The DNC also plans to return $3,000 to the U.S. Treasury in lieu of a donation that records show was made on Aug. 21, 1996, by Michele Lima, a Washington woman who has been dead for a decade, according to party officials.

On Saturday, The Times reported that the DNC’s actions could put pressure on other Republican and Democratic leaders who have accepted donations from the same contributors whose money was returned by the DNC.

Aides to one such lawmaker, Rep. Robert T. Matsui (D-Sacramento), said Saturday that he returned $2,000 in donations last week to Yah Lin “Charlie” Trie, a former Little Rock, Ark., restaurant owner and personal friend of the president.

Trie has played a role in some episodes of the fund-raising controversy. He raised more than $600,000 in contributions to the president’s legal defense fund that were returned because their origin could not be firmly established. And he was responsible for bringing Chinese arms dealer Wang Jun to the White House for a political coffee with Clinton.

The DNC raised an unprecedented $120 million in 1996 to help reelect President Clinton, but entered this year nearly $12 million in debt. Moreover, committee officials said a series of self-imposed reforms, including a $100,000 annual limit for individual contributors and a ban on taking money from U.S. subsidiaries of foreign corporations, would reduce the committee’s collections by more than $10 million a year.

But Steven Grossman, national chairman of the DNC, said he is confident that the debt will be covered and the refunds paid by the end of June.

USC political scientist Herbert E. Alexander said national parties are often behind in their bills after a presidential race, but the DNC’s debt is “more than usual.”

And would-be donors will be “much more reluctant” to dig deep into their pockets to help, Alexander said. With reporters combing through donor lists, congressional committees gearing up for public hearings and a growing drumbeat for the appointment of an independent counsel to investigate the matter, many potential donors will naturally shy away, Alexander said.

Even Clinton acknowledged the problem when he told those gathered at a recent New York fund-raiser they were “brave” to attend, Alexander noted.

In its announcement Friday, the DNC said it plans to return $563,391 in donations that were “deemed inappropriate” because they were contributed by individuals with dubious backgrounds.

The donations to be returned include:

* $35,000 from Wireless Advantage Inc., a Florida firm partly controlled by Eric Wynn, a convicted stock swindler who was one of those who attended a White House coffee reception with the president.

* $10,300 from San Francisco businesswoman Chong Lo. The bulk of the money was given to the party in July 1996, the same month Lo was arrested on 14 counts of bank and mortgage fraud.

Lo was a member of the DNC’s Asian Pacific American Leadership Conference--a rich vein of contributions for the party--and had once attended a White House coffee, as well as fund-raising events involving First Lady Hillary Rodham Clinton and Vice President Al Gore.

Lo’s arrest came four days before she was to host a $400,000 Asian American fund-raiser featuring the president. The event was abruptly canceled.

* $10,000 contributed by Cherry Communications, an Illinois firm that has run afoul of federal and state regulators. The company was fined $500,000 by the Federal Communications Commission in 1993 after complaints that it switched long-distance service on its customers.

* $10,000 from Stanley P. Jobe, president of Jobe Concrete Products Inc. of El Paso. Jobe was convicted of bank fraud in September 1994, charges that led the U.S. Army Corps of Engineers in February 1996 to recommend that the government stop doing business with the firm. Four months after that recommendation, records show, Jobe gave his donation to the DNC.

* $10,000 from JSS Consultants. A top executive from the wireless communication company, Joseph S. Steingold, spent from 1986 to 1989 in Lompoc federal prison for defrauding hundreds of Detroit area mortgage owners and investors of $2.4 million in what Michigan’s attorney general called the “biggest mortgage scam” in the state’s history.

* $11,000 from Max Salas, a former Nashville fairgrounds concessionaire who was sentenced to five months in federal prison for embezzlement. Salas, who owned a firm called National Premier Services Inc., pleaded guilty in 1993 to skimming $200,000 from flea market table rentals and beer sales at the fairgrounds raceway. A little more than a year later, he made two donations to the DNC, records show.

* $12,500 from Aiwah Qi, dubbed New York City’s “Liver Lady” for peddling $160 bottles of pills she claimed cured hepatitis and liver cancer. A newspaper expose revealed that Qi was unlicensed and her pills were aspirin.

In May 1995, Qi attended a fund-raising dinner and created a ripple of concern when she held up a bottle of the pills about 6 inches from Clinton’s chin as the two were being photographed. White House aides ordered that the photograph not be printed.

* CAMPAIGN FINANCE: Disappointed with Congress, reformers turn to voters. A17