Dick Morris: Another Hillary Scandal

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January 11, 2005 -- The indictment of Hillary Clinton's 2000 campaign-finance director, David Rosen, may pose a threat to the senator's presidential bid. For now, the federal indictment is focused only on Rosen, but it is not hard to see the process creeping up the campaign food chain to the senator herself.

At issue are the expenses the campaign incurred in an August 2000 fund-raiser for Hollywood glitterati. Rosen was indicted for claiming that the event cost $400,000 when, federal prosecutors allege, he knew the actual cost to be $1.1 million. Under federal campaign-finance rules, the Clinton campaign was obliged to pay for 40 percent of the cost of the fund-raiser. So, if the gala cost $400,000, the campaign had to pay only $160,000, but if the price tag was actually $1.1 million, the campaign would have been on the hook for $440,000.

By understating the cost of the party, Rosen was, in effect, giving Hillary's campaign an extra $280,000.

While there is no indication that the Senate candidate knew of the understating of the cost of the event, is it credible that she would not be aware of a decision that gave her campaign more than a quarter of a million dollars as it entered the final three months before the election?

Remember what was happening in August and September of 2000 in the New York Senate race. Republican Rick Lazio was gaining traction despite his late start (after Rudy withdrew) and had raised massive amounts of hard money through direct mail. Most of Hillary's money was in soft-money contributions.

Exploiting Hillary's long-time stand against soft money, Lazio challenged the first lady to eschew soft money and restrict her campaign to hard-money donations, raised under a limit of $1,000 per contributor.

This challenge threw Hillary's campaign into a panic. It could not hope to compete in hard money. It was at this time that Rosen chose to underestimate the cost of the Hollywood fund-raiser.

The sum involved was enough to pay for almost an entire week of television advertising in New York City and exceeds the total media budget of many smaller campaigns.

To raise this sum, Hillary would have had to get 280 donors to give the maximum $1,000 individual donation permitted under federal law at the time. A decision of this magnitude — how much to say the event cost — would have been a huge issue within the campaign.

This is no clerical error, nor is it likely to be one young man's decision to commit fraud to help the campaign. It is just not credible to believe that Hillary didn't know about and approve of the understatement of the event's cost.

Hillary has always been a detail person who kept a hawk-like focus on the cost of even her husband's campaigns. How much more involved and fixated she must have been on a major financial decision that affected her own election effort.

The federal indictment of the key financial officer in Hillary's campaign — an event The New York Times did not see fit to put on the front page — shows that Sen. Clinton has not escaped from the culture of scandal that dogged her husband's presidency.

The question of who understated the cost of the Hollywood event now joins the pantheon of questions that have haunted the senator's past — Who hid the billing records? Who ordered the travel office firings? Who helped Hillary to make a killing in the commodities market? Did the first lady know her brother was paid to secure a pardon for a major drug trafficker? Did Hillary represent the Madison Bank in a fraudulent real-estate deal? Who ordered the removal of the FBI files?

Hillary's ethical obtuseness is truly Nixonian. Usually campaign-finance filing errors are so mundane that they draw light fines from the Federal Elections Commission. That her campaign committed so important a breach of the finance laws that govern elections that her finance chairman is under a federal indictment is truly extraordinary.

If young David Rosen wants to take the fall for Hillary and join the likes of Web Hubbell and Susan McDougal, who chose to languish in prison rather than tell the truth, that is his decision. But don't ask us to believe something the average 8-year-old knows can't be true — that a gain to the campaign of $280,000 was beneath Hillary's notice.