The White House Shell Game: How the Clinton Campaign's Frantic Fund Raising May Have Crossed the Line

Article excerpt

How the Clinton campaign's frantic fund raising may have crossed the line

THERE WERE TWO weeks to go until Election Day, and the Democrats needed money--lots of it--to turn out their voters.

On the night of Oct. 22 Bill Clinton was working a $1,500-a-person fund-raiser at the stately Biltmore Hotel in Miami when one of the guests slipped the president a business card. On the back was written: "My associate has $5 million he is prepared to donate to the DNC." Clinton started to walk away, glanced down at the card and stopped. In political fund raising, $5 million is a giant figure. The president turned back and looked at the man, a south Florida exporter named R. Warren Meddoff. "Let me have another one of those cards," said Clinton. He explained he wanted to give it to "a member of my staff." This wasn't just small talk. A few days later Meddoff got a call from White House deputy chief of staff Harold M. Ickes, the president's loyal, workaholic political point man.

What happened next, as reconstructed by NEWSWEEK, shows how close to the line Clintonites were willing to go in their frantic efforts to funnel money into the president's re-election campaign. It is a glimpse into a White House shell game that may have skirted tax and campaign-contribution laws-and Hill Republicans and the Justice Department are now investigating just what the Democrats did. Judging from both the skill of the players and their anxiety about getting caught, it was a game at which the White House was well practiced.

When Ickes reached Meddoff on Oct. 29, the pol made it clear that he was speaking for Clinton. "The president asked me to handle this matter," he said. Meddoff replied that his "associate"-financial speculator William R. Morgan of Richardson, Texas-- wasn't looking for any special favors. On the other hand, he did want to claim a "favorable tax benefit" from the donation. This was a potential obstacle, since political contributions are not tax-deductible. But Ickes coolly responded that "we have a way to do this." The next day Ickes called Meddoff from Air Force One. Could Meddoff's associate make available $1.5 million in "the next day or so"? The next morning Ickes sent Meddoff a two-page fax, precisely spelling out how William Morgan could help the Democrats--and win a hefty tax deduction. The fax, obtained by NEWSWEEK, said "it would be greatly appreciated if the following amounts can be wired" into the bank accounts of several tax-exempt get-out-the-vote organizations. Ickes asked, for instance, that $250,000 be sent to Defeat 209, a group lobbying against the anti-affirmative-action referendum in California. Another $250,000 was to go to Vote Now '96 in Miami. Legally, none of the groups listed had any affiliation with the Democratic Party. But Ickes had their private account numbers, and they were all aimed at turning out blacks, who overwhelmingly vote Democratic. …