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FBI Probed Fund-Raising in 1992

May 22, 1998 GMT

WASHINGTON (AP) _ In a missed opportunity, the FBI gathered evidence as early as 1992 that a Democratic couple who helped start Asian-Americans fund-raising efforts for President Clinton were engaged in wrongdoing, Justice Department documents show.

The fund-raisers, Nora and Gene Lum, were not prosecuted until 1997 for making illegal donations to Democrats _ well after the controversy over the party’s Asian-American fund-raising efforts broke open.

Now investigators have gathered testimony alleging the Lums got help during the earlier investigation from Clinton administration figures Ron Brown and Webster Hubbell, according to documents and interviews.

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Among FBI memos obtained by The Associated Press, a 1993 document quotes a cooperating witness as saying that ``Nora Lum once stated to him that she transported $150,000 in cash in a travel bag to the mainland to be delivered as campaign contributions on the national level.″

Two years later, a former business associate of the Lums, Stuart Price, would tell investigators that ``Nora Lum told Price that she brought the two suitcases of money back to the United States and turned the money over to the DNC,″ documents say. In 1997, Mrs. Lum denied such an incident occurred.

The FBI also had developed information alleging the couple was defrauding the Asian Pacific Advisory Council, a Democratic Party group they created to raise money and support for Clinton in 1992, the records show.

``CW (cooperating witness) stated that Lum is taking money from the committee by forging expense vouchers and having the committee pay her,″ an FBI report from December 1992 said, relaying information from someone involved with the group.

APAC was the start of what would become a much larger Asian-American fund-raising effort for Clinton. It brought the Lums together with John Huang, who would later emerge as a central figure in the 1996 fund-raising controversy.

Three weeks before Clinton’s second inauguration in January 1993, FBI agents got permission from prosecutors to begin drawing up a search warrant for the Lums’ home, records show. But the search was never carried out.

According to documents released recently by congressional investigators, bank statements and canceled checks show the Lums had transferred $159,990 raised by APAC, some at an October 1992 fund-raiser in Clinton’s name, to their own accounts.

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The emergence of FBI files on the Lums comes as pressure is mounting on Attorney General Janet Reno to name an independent counsel to take over the fund-raising investigation.

Privately, some Justice Department officials acknowledge that the 1992 investigation amounted to a missed opportunity.

In a public statement, the department said the decision to shut down the inquiry was made by career prosecutors and there was ``not a scrap of evidence or inference that Hubbell ever attempted to inquire about or influence any matter concerning the Lums.″

Hubbell was the No. 3 official at the Justice Department during the first 15 months of Clinton’s presidency.

The department said prosecutors’ focus in 1992 and 1993 was not on fund-raising illegalities but a bribery scheme involving Hawaii officials that did not develop enough to warrant prosecution.

The decision to close the investigation was based on legitimate concerns, including that an FBI agent may have doctored affidavits in the case, the statement said.

The FBI recently removed a letter of censure accusing the agent of putting false information in affidavits, documents show.

The chairman of the Senate Judiciary Committee’s investigative subcommittee accused the department Friday of having ``miserably mismanaged″ the Lums. ``DOJ’s handling of the case has all the markings of a political quid pro quo. It shows the department’s inability or unwillingness to thoroughly investigate a series of campaign finance abuses by the Democratic Party,″ said Sen. Charles Grassley, R-Iowa.

Hubbell and his lawyer, John Nields, declined comment. Hubbell was indicted on tax charges earlier this month and remains under investigation by Whitewater prosecutors.

The Lums’ attorney, Cono Namorato, did not return repeated phone calls to his office seeking comment.

After their 1997 conviction, the Lums admitted to other infractions that the FBI had been investigating back in 1992, including bringing in $10,000 in donations to Hawaii’s governor from ``Japanese clients″ and laundering thousands of dollars in contributions to another candidate.

In a separate written offer, the Lums said that in exchange for immunity from prosecution they would testify to Congress that Democratic Party officials were aware of specific wrongdoing on their part.

The Lums also told prosecutors that Brown, then the Democratic Party chairman, tipped them off in 1992 that a businessman they were working with was in fact an undercover FBI agent.

Brown offered to ``check out″ the businessman and later ``came back to Nora Lum and told her to stay away from (the agent) because he was part of a sting operation,″ the FBI quoted Mrs. Lum as saying in 1997.

FBI undercover tapes indicate the tip-off came just days before the Lums were to travel to Arkansas in mid-1992 to visit with Clinton _ a meeting arranged by Brown.

Separately, two ex-business associates have told the House Government Reform and Oversight Committee that Mrs. Lum told them Hubbell may have helped stall the investigation.

According to sources outside the committee familiar with the interviews, these suggestions came from Richard Choi Bertsch, a Democratic fund-raiser who had a falling out with the Lums, and Price, former president of the Lums’ Oklahoma gas company.

Price told investigators the Lums had had some conversations with Justice Department officials about a legal problem. Asked whether Mrs. Lum had told him that Hubbell had arranged to get rid of their legal problem, Price answered: ``That describes it pretty well,″ the sources said.

By spring 1993, the FBI in Hawaii had gathered so much information of alleged wrongdoing by the Lums that it sent a teletype to Oklahoma, where they were moving.

The Lums ``are alleged to be facilitators and conduits for payments from private individuals involved in real estate developing to public officials,″ the teletype warned.

Also in 1993, an FBI agent wrote he had information the Lums were having difficulty getting a Clinton administration appointment in part because ``Gene Lum pledged $1 million to the Clinton campaign and has not made good on his pledge.″