Thanks, but No Thanks

The return of $850,000 in suspect donations is raising questions about how the Hillary Clinton campaign handles big fundraisers—and it has other presidential candidates re-examining their own campaign funds.

Norman Hsu greets Clinton at a New York fundraiser in 2005.

(Steve Schwartz/Polaris)

The Clinton campaign said last week that it would return funds from about 260 donors recruited by Norman Hsu, a Democratic fundraiser now under arrest for fleeing after a theft conviction. Because Hsu had been a high-profile "bundler"—someone who solicits contributions—for Clinton, the campaign is coming under fire for not being more diligent in checking him out. Hsu pleaded no contest in 1992 to grand theft in an investment fraud scheme and is under criminal investigation for several questionable business deals.

Backgrounding. "It was very difficult for us to make any decision other than returning the contributions that were in any way connected to him," Clinton told reporters last week. The campaign had already returned $23,000 in direct donations from Hsu. In light of the controversy, Clinton says her campaign will begin running criminal background checks on all its bundlers—as will the campaign of Democratic hopeful John Edwards.

Nevertheless, the episode is reminiscent of past fundraising scandals and the criminal probes of Democratic fundraisers Johnny Chung and Yah Lin "Charlie" Trie during the Bill Clinton presidency. According to the Los Angeles Times, Hillary Clinton's campaign had brushed off warnings last June about Hsu's business dealings.

The affair may give a boost to her key rival, Sen. Barack Obama. He has introduced legislation that would require candidates to disclose all of their largest bundlers and how much they raise. Obama says he'll release details of his own bundlers soon.

But Obama has his own fundraising problems: His campaign found out that it received donations from people tied to the criminal case of Antoin Rezko, a Chicago entrepreneur facing federal corruption charges. Obama gave the money away to charity.