Not Guilty Verdict for Fundraiser

A former top aide to Hillary Rodham Clinton was acquitted Friday of charges that he deliberately concealed more than $700,000 in contributions to finance a fundraising gala for her 2000 Senate campaign.

David Rosen, who served as Clinton’s national finance director, embraced his lawyer and smiled broadly as U.S. District Judge A. Howard Matz announced the jury’s verdict after a three-week trial.

“I’m relieved this ordeal is over,” Rosen said afterward. “This has been going on for five years. I now have closure in my life.”

Although Clinton was not charged in the case, her political foes had seized on it, anticipating incriminating disclosures that might affect her possible 2008 presidential run. But their expectations were dashed on opening day when a Justice Department prosecutor told jurors that Clinton was not involved in any wrongdoing.

Jennifer Duffy, an independent analyst with the nonpartisan Cook Political Report, said that even if Rosen had been convicted, there would have been no political fallout for Clinton.

“Events of five years ago, that she was not personally involved in and has worked to distance herself from -- it’s hard to make that stick to her,” Duffy said. “You’d have to spend a lot of time making the case work, and it’s probably not worth the effort.”

In Washington, Clinton’s lawyer, David Kendall, said: “We have said from the beginning that when all the evidence is in, David would be vindicated. That has come to pass, and Sen. Clinton is very happy for David and his family.”

The case against Rosen revolved around an event attended by President Clinton, the first lady and Hollywood stars at a Mandeville Canyon estate before the Democratic National Convention in Los Angeles.

The gala, which raised $1 million for Clinton’s Senate campaign and the New York State Democratic Party, featured a $25,000-a-couple dinner and a $1,000-a-person concert with performances by Cher, Diana Ross, Michael Bolton and others.

Sponsoring the fundraiser was Peter Paul, a twice-convicted felon and businessman, then employed as chief executive of Stan Lee Media, a publicly traded Internet venture that he founded with Spider-Man creator Stan Lee.

According to prosecutors, Paul volunteered to underwrite $500,000 of the gala’s costs in hopes of currying favor with President Clinton. But expenses quickly rocketed out of control, forcing Paul to spend more than $1.1 million.

Those costs included $31,000 for a specially equipped private jet to fly Cher to Los Angeles, $5,000 for Patti LaBelle’s hairdresser and $35,000 for embossed director’s chairs that guests were invited to take home as souvenirs. The biggest charge, $605,000, went for putting on the concert.

By law, Paul’s payments were supposed to be reported in full. The Clinton campaign reported only $401,000.

Rosen was charged with two felony counts of causing the campaign to file false reports with the Federal Election Commission. Justice Department lawyers said Rosen, who had overall responsibility for the event, directed subordinates to remove expenditures from documents sent to the campaign’s compliance officer in Washington.

The motive, prosecutors said, was to free up money that the Clinton campaign, under campaign finance limits, otherwise could not have lawfully spent on advertising and other direct advocacy.

The prosecution produced witnesses who testified that Rosen was present when Paul complained loudly about the out-of-control spending.

Rosen, testifying in his own defense, disputed those accounts. He said he relied on financial figures provided by Paul and Paul’s associate, Aaron Tonken, through their representative, Bretta Nock, a professional event planner.

But prosecutors did not call Paul or Tonken to testify. Shortly after the Clinton gala, Tonken was convicted of defrauding charities through a separate business he ran. He is serving a 63-month sentence in federal prison.

Paul subsequently pleaded guilty to a massive stock fraud that caused the collapse of Stan Lee Media. He is awaiting sentencing.

With the assistance of Justice Watch, an organization long critical of the Clintons, Paul also brought a civil action against the former president and first lady in Los Angeles Superior Court. The suit, which is pending, accuses the ex-president of reneging on a promise to join Stan Lee Media after he left office. Paul also said he spent almost $2 million for the Clinton fundraiser.

During closing arguments, Rosen’s lawyer, Paul Sandler, zeroed on the prosecution’s decision not to call Paul or Tonken as witnesses. “Where is Peter Paul? Where is Aaron Tonken? Why are they not here?” Sandler asked.

Justice Department prosecutor Daniel Schwager insisted that Paul and Tonken had “absolutely nothing” to do with the alleged underreporting. He accused Rosen of trying to dodge responsibility by blaming the two felons.

One juror, Randy Hartland, 20, of Torrance, said after Friday’s verdict that he found it difficult to believe that Tonken and Paul were innocent pawns.

He also questioned the credibility of two Democratic Party fundraisers who worked on the gala and testified against Rosen.

James Levin, a Chicago businessman, said Rosen was alarmed about the mounting costs but told him privately, “The costs of this event will not be the cost of this event.” Rosen denied saying that.

Levin testified a few days after he agreed to plead guilty to federal bribery, fraud and conspiracy charges. He said he hoped for a lighter sentence because of his cooperation with Rosen’s prosecutors.

Also testifying against Rosen was Raymond Reggie, a member of a politically prominent Louisiana family whose sister is married to Sen. Edward M. Kennedy (D-Mass.). He said Rosen confided that he was being “crushed” by spiraling last-minute spending for the fundraiser. Reggie is awaiting sentencing after pleading guilty to federal bank fraud and check kiting charges.

The jury foreman, Michael Johnson, 40, of Los Angeles said the case came down to reasonable doubt.

“This was largely a paperwork case,” he said. “We tried to follow the money. But there were so many people involved that it was hard to pin down who was responsible.”

The jury rendered its verdict after five hours of deliberations over two days.

One leading expert on campaign law said after the verdict he was surprised that the government brought criminal charges against Rosen instead of resolving the violation through civil action and fines, if warranted.

“Frankly, I was quite surprised that they brought a criminal case,” said Robert M. Stern, president of the Center for Government Studies in Los Angeles and former general counsel of the California Fair Political Practices Commission.

Justice Department officials could not be reached for a response.

Rosen, 38, who lives in Chicago, said he plans to resume his career as a political consultant.

Times staff writer Maura Reynolds contributed to this report.