Magazine article Insight on the News

Clintons' Fall Guy May Turn the Tables; the SEC and the IRS Are Investigating Securities and Bank Fraud Allegedly Perpetrated by a Clinton Fund-Raiser Who Says He Is the Victim of a Political Vendetta

Magazine article Insight on the News

Clintons' Fall Guy May Turn the Tables; the SEC and the IRS Are Investigating Securities and Bank Fraud Allegedly Perpetrated by a Clinton Fund-Raiser Who Says He Is the Victim of a Political Vendetta

Article excerpt

Byline: Paul M. Rodriguez, INSIGHT

Peter F. Paul, the flamboyant Hollywood entrepreneur who says Hillary Rodham Clinton has hidden almost $2 million of in-kind contributions he made to her campaign in 2000, is back from Brazil and promising to raise a ruckus about the New York senator as he fights bizarre securities and bank-fraud charges on which he's been indicted. Aaron Tonken, a political operative in Hollywood and a former protege of Paul under indictment for a variety of alleged sharp deals with the rich and famous, also is promising to tell everything he knows about behind-the-scenes shenanigans of Clinton and many others.

Meanwhile, the Securities and Exchange Commission (SEC) and the IRS have embarked on extensive civil and criminal probes involving a cast of Damon Runyon characters and securities, tax and bank frauds that appear to center on a now-bankrupt company called Stan Lee Media Inc. (SLM). That company is in turn at the epicenter of charges brought against Stephen and Jonathan Gordon, Paul and at least two stockbrokers/advisers and alleged mob figures who helped to perpetrate government-alleged frauds that were used to finance political fund raising for Hillary and Bill Clinton.

Professionals at the Justice Department in Washington, along with prosecutors in the Eastern District of New York and the Western District of California (Los Angeles), also are pursuing ongoing investigations stemming from their probes of Paul, the Gordons and others. At least that's what government officials tell Insight when asked about the status of this battery of criminal cases triggered by the Paul et al. indictments issued almost three years ago.

First a recap: Paul and the Gordons were alleged in the indictments to have bilked SLM, Merrill Lynch, U.S. Bank and others out of millions of dollars by floating checks on margin accounts holding SLM stocks for various personal perfidies, with which he says he financed the Clinton fund raising. According to prosecutors, as much as $25 million was stolen or otherwise looted.

Paul, who was in Brazil at the time of his indictment and convinced that the Clintons were out to wreck his credibility lest he become a whistle-blower, decided to fight the charges from South America. Through a series of manipulations he soon was locked up in squalid and dangerous Brazilian jails until extradited recently to Brooklyn, N.Y. The Gordons stayed in California, fought the charges and were convicted this spring of (much) lesser offenses than initially charged. They are appealing. Others indicted in allegedly related schemes have yet to stand trial despite the passage of years.

Tonken was indicted earlier this year on unrelated charges of bilking mostly rich-and-famous types through mail fraud tied to charity events he led as a result of having worked closely with the Clintons and top Democrats in earlier political battles. He claims he has dirt to dish about a number of related high-fliers, including Hillary Clinton and financial supporters of her campaign. Prosecutors are reported to be listening.

Paul charges that the indictments which have kept him in danger in some of Brazil's worst jails were obtained on little evidence as political retribution for his whistle-blowing in early 2001 about the failure of Hillary Clinton and her campaign to report his huge contributions. Stephen Gordon, who was executive vice president of SLM, confirms the in-kind donations to Hillary but side-steps political aspects raised by Paul. Gordon says he can't understand why he was prosecuted for allegedly manipulating the stock of SLM as part of a cash-flow problem even as prosecutors ignored those more senior at SLM and at Merrill Lynch whom he says followed the same procedures and worse procedures he insists were researched carefully and found to be legal by company lawyers and accountants.

All of these defendants Paul, the Gordon brothers and Tonken have raised significant questions and issues concerning monies passed through the once promising SLM Internet company on the one hand, and alleged Clinton connections and abuse of prosecutorial discretion on the other. …

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