March 6, 1998
Leading Figure in Campaign-Finance Inquiry Agrees to Guilty Plea
The New York Times: Political Fund-Raising Debate
Join a Discussion on White House Fund-Raising
By DON TERRY
OS ANGELES -- Johnny Chung, a struggling businessman whose eager giving to national Democratic candidates turned him into a leading figure in the investigation of campaign finance abuses, was charged here on Thursday with four counts of fraud, tax invasion and conspiracy and will plead guilty and cooperate with the authorities.
Chung is the fourth person in five weeks to be prosecuted by the Justice Department, in addition to a former restaurateur in Little Rock, Ark., and good friend of President Clinton, Yah Lin (Charlie) Trie, who was charged in a 15-count indictment on Jan. 29 with obstruction of justice and other crimes related to fund-raising. Antonio Pan, a Democratic fund-raiser, was also charged in the indictment. Maria Hsia, a Democratic fund-raiser from Los Angeles, was indicted on Feb. 18 on charges of laundering campaign donations.
"This investigation is moving forward," Attorney General Janet Reno said on Thursday, "but we are not going to let up now."
Stacy Cohen, a spokeswoman for Chung's lawyer, Brian Sun, said on Thursday that Chung "wants to put this behind him as soon as possible so that he and his family can get on with their lives."
"He's taking a plea," Ms. Cohen said. "He's pleading guilty."
Chung is scheduled to enter his guilty plea on Monday morning in U.S. District Court in Los Angeles, a few miles from a 1995 Clinton/Gore '96 fund-raising event in a Century City hotel where federal officials said he used phony or "conduit" contributors to illegally give the campaign $20,000, $19,000 more than permitted for one person under the Federal Election Campaign Act, according to the charges filed on Thursday.
Chung is charged with using a similar scheme to funnel $8,000 into the campaign of Sen. John Kerry, D-Mass., during an event in Beverly Hills, Calif., at which Chung was the host in 1996, according to the indictment.
A spokesman for Kerry, Jim Jones, said Thursday that "the minute questions were raised in regards to Mr. Chung," the Kerry campaign returned the money.
"We didn't wait until the indictment," Jones said. "We helped in providing documents to investigators. We helped the FBI make their case."
Chung became one of the most visible symbols of the excesses of the 1996 Democratic fund-raising campaign because of his frequent visits to the White House and his aggressive efforts to turn photo opportunities with Clinton and other officials into evidence of his political influence.
Since mid-1994, Chung donated nearly $400,000 to the Democratic Party and visited the White House at least 50 times, often with foreign businessmen he was trying to woe and impress in tow.
One photograph of Chung, the president and his wife, Hillary Rodham Clinton, was hung on one of Beijing's busiest shopping streets as a display for a small Chinese beer and soda company. A former White House official has described Chung as a political "groupie" who would sometimes spend hours outside the first lady's office in the hope of catching a glimpse of her.
While it is not known what Chung could tell law-enforcement officials, his cooperation is important because officials have thus far been unable to determine the source of some of the contributions from Chung and others. Senate Republicans have questioned whether big donors like Chung may have contributed money that came from illegal offshore sources and Chinese business associates.
Nothing in the charges filed on Thursday make any mention of foreign influence.
But in past interviews, associates of the 43-year-old Chung said he used his considerable political access to seal business deals with investors from China, Taiwan and Hong Kong, wining and dining and impressing them with trips to the White House, a $25,000-a-plate dinner at the California home of director Steven Spielberg and a birthday party for President Clinton at Radio City Music Hall in New York City.
In the mid-'90s, Chung received more than $3 million in consulting fees and in investments made to his various companies, including his struggling fax services businesses. Chung's lawyer said last year that Chung used some of the $3 million to make political contributions.
In the charges filed on Thursday, the government said that on Sept. 21, 1995, Chung attended a fund-raising event for the Clinton/Gore '96 Primary Committee in Century City. The cost was $1,000 per person, the maximum amount under the Federal Election Campaign Act one person could contribute to the campaign.
But Chung instructed an employee at one of his businesses to recruit 20 conduit contributors and asked them to write individual checks for $1,000 on their own accounts, payable to the campaign. Chung personally delivered at least 20 checks from conduits to a representative of Clinton/Gore.
Chung had cash withdrawn from two of his personal bank accounts and his employee reimbursed the conduit contributors in cash, who in turn reimbursed the conduit contributors some of them had recruited.
A year later, according to the charges, Chung used the same scheme to get around the $2,000 contribution limit for Kerry's campaign - $1,000 for the primary and $1,000 for the general election.
On Sept. 9, 1996, the Kerry Committee held a fund-raising event hosted by Chung in Beverly Hills. The cost of attending the event was $2,000.
Chung attended the event with four guests.
Once again, Chung's employee had been dispatched to recruit conduit contributors. The conduits were asked to write $2,000 checks on their accounts, payable to the Kerry Committee and they were later reimbursed from Chung's personal coffers.
But Chung was not only quick with a campaign contribution. He was also quick with a quip.
When the issue of campaign finance abuses first arose, Chung said, "The White House is a like a subway: you have to put in coins to open the gates."