Sen. Clinton Aide Indicted in L.A. Fundraiser Probe

A veteran political fundraiser has been indicted by a federal grand jury on charges of lying about the amount collected and spent during a Hollywood gala that raised more than $1 million for Hillary Rodham Clinton’s 2000 Senate campaign, authorities announced Friday.

The four-count indictment charges David Rosen, 40, of Chicago with repeatedly misleading the Federal Election Commission about the contributions received to stage the Aug. 12, 2000, event two days before the start of the Democratic National Convention in Los Angeles.

Among the allegations in the indictment were that an unidentified wealthy contributor paid more than $1.1 million to produce the event, making payments that should have been disclosed as in-kind contributions or donations.

The indictment does not indicate what the motive was for the campaign finance reporting or whether it was intended to sidestep regulations limiting the amount of money individuals may contribute to political campaigns.

One government attorney versed in campaign election laws said it was unclear if the alleged misstatements about the event were the sole focus of the investigation.

“Typically, people mislead on contributions because they have already exceeded some limits or are taking money from a prohibitive source, like a foreign government, or don’t want to be publicly connected to the person giving money,” said the attorney, who spoke on condition of anonymity.

“But what happened here is unclear,” the attorney added.

The 10-page indictment does not indicate -- and federal authorities would not comment on -- whether others, including Clinton, were suspected of wrongdoing.

“All we can say is that there are no additional subjects at this time,” Justice Department spokesman Bryan Sierra said in Washington.

Rosen’s attorney, Paul Mark Sandler, said he and his client were not surprised by the indictment, which was handed down in late 2003 but unsealed, without explanation of the delay, on Friday in Los Angeles.

“We knew this was coming,” Sandler said.

“David Rosen has done nothing wrong, and we will prove our case in court. We are not going to try the case in the media,” he added.

Rosen, who has not been arrested, is scheduled to make his initial appearance in Los Angeles federal court Jan. 24. Clinton’s office referred calls about the indictment to the senator’s attorney, David Kendall, who said in a statement that “the Senate Campaign Committee has fully cooperated with the investigation. Mr. Rosen worked hard for the campaign, and we trust that when all the facts are in, he will be cleared.”

In announcing the indictment, the Justice Department echoed Kendall’s comments about the Clinton campaign committee’s cooperating with the government’s investigation.

Federal sources said Friday that the FBI’s investigation into the fundraiser began in 2001 and involved agents in at least three cities, Los Angeles, New York and Chicago. Since last summer, it has been known that federal investigators were focusing on Rosen, who was well known in Democratic Party circles and also worked on retired Gen. Wesley K. Clark’s failed presidential campaign.

Rosen runs a political consulting firm in Chicago called the Competence Group and orchestrated the Florida Democratic Party’s first-ever out-of-state fundraising campaign to oust President Bush’s brother, Jeb Bush, as that state’s governor in 2002.

The sensitivity of the case was, in some measure, underscored by the fact that, while it was being heard by a grand jury in Los Angeles, it was being directed by federal prosecutors with the Public Integrity Section at the Justice Department’s headquarters in Washington, who specialize in this type of case.

Although the indictment was handed down more than a year ago, sources familiar with the probe said last year it was all but certain that any criminal charges would not be made public until after last fall’s presidential election for fear they would be seen as a politically tainted vendetta by the Bush Administration.

The Times reported last year that a federal grand jury in Los Angeles was investigating the 2000 fundraiser and Rosen, who served as national finance director for Clinton’s senatorial campaign that year.

Aaron Tonken, a former Hollywood fundraiser and another key figure in staging the event, pleaded guilty in December 2003 to two counts of fraud in connection with other charity galas.

Tonken, who is serving time for fraud, cooperated with authorities in their investigation of the Clinton fundraiser.

The indictment alleges that on or about July 11, 2000, a month before the Democratic convention in Los Angeles, Rosen discussed the possibility of a fundraiser with a wealthy political contributor and officials from the senatorial campaign.

The contributor, unidentified in the indictment, pledged to underwrite the costs of the event. With another unnamed individual, the contributor agreed to host the fundraiser, the indictment says.

As is customary in such cases, the indictment also does not name Clinton or anyone other than Rosen, because he was the only person charged.

The Times has previously reported that the event was paid for by Internet entrepreneur Peter Paul, who is awaiting trial on unrelated federal fraud charges. He asked the Federal Election Commission years ago to investigate the event because he believed his efforts had been slighted by Rosen.

Federal authorities declined to comment on whether Paul is the unidentified wealthy contributor cited in the indictment.

As part of the planning for the event, the indictment says, Rosen knew the costs of the gala were skyrocketing and would ultimately exceed $1.2 million, including more than $600,000 for a concert that drew more than 1,200 people. More than $1.1 million of the gala’s cost was paid by the wealthy contributor, according to authorities.

Money from the gala also went to a national committee supporting Democratic candidates for the Senate and a state Democratic Party committee.

After the event, the indictment alleges, Rosen provided information about the costs, in-kind contributions and donations to the campaign committee and significantly underestimated the expense, as well as the money donated by the contributor.

Specifically, the indictment claims, Rosen on Oct. 15, 2000, declared $366,564 in in-kind contributions for the event. In the coming months, it alleges, he twice declared that $401,419 was received in in-kind contributions when he knew the amount was substantially more. And, the indictment contends, Rosen also led others involved in the event to create a fictitious invoice for $200,000 in purported expenses for the concert.

Each count of making a false statement carries a maximum penalty of up to five years in prison and $250,000 in fines.

Sierra, the Justice Department spokesman, declined to comment on any questions about the money collected or spent at the event.

In the summer of 2003, one of Paul’s associates told The Times that some money for the event came from brokerage accounts in the Century City office of Merrill Lynch & Co.

Although Paul had hoped the event would bring new attention to his company, his close associate, Stephen Gordon, recalled how Paul, furious, confronted Rosen when he saw the costs of the gala were spiraling out of control.

“ ‘Guess what, Peter. If you don’t come up with the money, we’ll just call it off,’ ” Gordon quoted Rosen as saying.

Paul and his associates, unwilling to cancel the event, continued to help pay its tab.

Also contributing to this report were Times staff writers James Bates in Los Angeles and Rick Schmitt in Washington.