Fundraising Figures Agree To Guilty Plea

Couple's Democrat Ties Included Ron Brown

May 22, 1997|By David S. Cloud, Washington Bureau.

WASHINGTON — A Hawaiian couple with ties to the Clinton administration have agreed to plead guilty to making $50,000 in illegal campaign contributions in 1994, and to cooperate in a continuing Justice Department investigation of Democratic Party fundraising.

Nora and Gene Lum acknowledged they used "straw donors" to disguise contributions that far exceeded federal limits to the campaigns of Sen. Edward Kennedy (D-Mass.) and W. Stuart Price, an unsuccessful 1994 House candidate from Oklahoma.

The Justice Department said the Lums had agreed to plead guilty to conspiracy charges that carry a maximum penalty of 5 years in prison and a $250,000 fine.

The Lums are the first campaign donors to be prosecuted by a Justice Department task force investigating a wide range of alleged fundraising improprieties, mainly by the Democratic National Committee, from 1994 through last year's presidential election.

Although not the focus of the investigation, the Lums were closely involved in Democratic fundraising and are acquainted with John Huang, the former DNC official whose foreign fundraising sparked the inquiry.

Their cooperation could help prosecutors build a case against other Lum associates who remain under investigation.

The Lums' efforts to exploit fundraising connections with the Clinton administration were detailed in a November 1996 report in the Tribune.

It disclosed that the Democratic Party continued to accept donations from the couple last year, as well as money that they raised from other contributors, despite an FBI investigation.

Nora Lum, 54, who once ran a tourist shop on Waikiki beach, orchestrated the family's extraordinary rise and fall.

It was she who appeared to recognize that influence in Washington is often measured in dollars.

The Justice Department said Wednesday that she had supplied $10,000 to her daughter Trisha, 27, who gave the money to the Democratic Congressional Campaign Committee.

Federal law prohibits using a conduit to contribute funds. For participating in the scheme, Trisha Lum has agreed to plead guilty to a misdemeanor violation of federal campaign law.

At the time of the contribution, Trisha Lum was a $24,000-a-year assistant at the Commerce Department, a job she had gotten because of her mother's friendship with then-Commerce Secretary Ron Brown.

Nora Lum was a frequent visitor to the White House and had forged a relationship with Brown that went back to the 1992 Clinton-Gore campaign, when Brown was DNC chairman. In 1994, Nora Lum gave Brown's son, Michael, stock and eventually made him president of an Oklahoma pipeline company, Dynamic Energy Resources, in which she was majority owner.

Price, a partner in Dynamic Energy, later sued the Lums, claiming they mishandled the company's profits and funneled money to his campaign without his knowledge.

He testified that the Lums hired Michael Brown to "gain influence with the Department of Commerce."

Ron Brown's relationship with the Lums and Dynamic Energy was a focus of an independent counsel investigation under way in April 1996, when Brown was killed in a plane crash. After his death, the case was transferred to the Justice Department.

The Lums' scheme to funnel money to Kennedy began before the 1994 election, in which the Massachusetts senator was easily re-elected. They continued to send him disguised contributions into 1995.

Kennedy denied any knowledge of the scheme and has returned $19,000.

Price received a similar amount in campaign contributions, and his campaign may have benefited from additional spending undisclosed by Dynamic, records suggest.

According to the plea agreement, the Lums would arrange for associates to make the contributions to Kennedy and Price, then reimburse them with funds, either from Dynamic Energy or from personal bank accounts.

Most often, the contributions were made in the names of employees, officers, or stockholders of Dynamic, which declared bankruptcy in 1995 with debts of $1.6 million.

Investigators found checks in amounts ranging from $1,000 to $10,000 to the fictitious donors and their spouses drawn on Dynamic Energy accounts with the notation "reimbursement."

In some cases, the Lums would simply send money to the two campaigns without the knowledge of the so-called "straw donors."

Under federal law, individuals are allowed to give no more than $2,000 to a candidate in each election cycle.

One question for investigators is whether the Lums and their partners, to further their business aims, were using the cash that Dynamic's gas operation generated to curry favor with the Clinton administration.

Records and interviews show that the Lums considered various international business ideas, including a shrimp farm in Mexico and a shopping center in China, that could have benefited from Commerce Department assistance.