Clintons Knew of Trust Fund’s Ills, Sources Say

In the six months leading up to last fall’s election, the trustees of President Clinton’s legal defense fund acted with the knowledge of the president and first lady to conceal the potentially embarrassing story of disciples of a Taiwan-based sect donating $639,000, according to interviews and newly available documents.

The decision to later refund the money and keep the matter under wraps followed two meetings with White House officials. Under its rules, the trust fund--which was set up to raise money for the Clintons’ personal legal bills--is to operate independently of political influence.

On May 9, 1996, six administration officials--including political operatives Bruce R. Lindsey and Harold M. Ickes--attended an hourlong White House briefing on the sensitive issue with three representatives of the private Presidential Legal Expense Trust. The trust reported that the checks and money orders were delivered in a Manila envelope by Yah Lin “Charlie” Trie, a former Little Rock, Ark., restaurateur and longtime acquaintance of the president, but had originated from the followers of the supreme master of a Buddhist “cult.”

To underscore the concern that public disclosure of the fund-raising affair would embarrass the president, one senior White House official at the meeting scrawled tabloid-style headlines linking Clinton to cult money.

By June, the trustees had settled on accounting steps that would allow them to refund the money without reporting the transactions until after the November election.

When the donations and refunds were finally revealed in December, six weeks after the election, the defense fund and White House contended that the trustees needed nine months to thoroughly review the contributions. But confidential congressional records, internal defense fund papers and private meeting notes reveal a concerted effort by the White House to deal with the issue months earlier. The documents show the depth of White House involvement and provide new details on how much top officials knew of the controversy.

White House special counsel Lanny J. Davis strongly denied any attempt within the White House to withhold information about Trie’s activities.

“It is false to suggest that anyone in the White House decided to conceal the Trie money . . . ,” Davis said. “The decision concerning public disclosure was made exclusively by the trustees and no one in the White House could have or should have challenged that judgment.”

The Clintons themselves were informed in the spring of 1996 about the delivery of Trie’s checks, as well as the decision not to inform the public, documents and interviews show.

Davis confirmed that President and Mrs. Clinton “were aware of the situation and they told the trustees to be extra careful.

“They did not second-guess the judgment of the trustees concerning . . . the nondisclosure of the return of the money,” Davis said.

The executive director of the trust insisted in an interview that its decisions were never influenced by the White House or guided by political motivations.

‘The President Was Extremely Well Served’

“We preserved the integrity of the trust, which was our legal obligation . . . and I don’t believe there is any obligation or responsibility of the trustees to do anything more than that,” said Michael H. Cardozo, a former White House deputy counsel in the Carter administration who also served as vice chairman of the 1993 and 1997 Clinton inaugural committees.

“I think [the trustees] executed their duties in an admirable fashion and I think the president was extremely well served . . . ,” he added.

One effect of keeping the Trie-related donations quiet was to postpone until late in the election cycle the controversy over campaign fund-raising abuses, now the subject of Senate hearings and a Justice Department probe. Trie himself continued to raise about $400,000 in questionable donations for the Democratic National Committee last year while receiving special treatment and access at the White House.

In hindsight, one trustee said that he would have opted for full disclosure if he had known that Trie was raising money for both the DNC and the trust fund while seeking access to the administration.

“It certainly deserved to be exposed in the context of the campaign contributions,” said Elliot L. Richardson, a former attorney general in the Nixon administration and one of two Republican trustees. “I think had we known this same guy was involved in both campaign fund-raising and contributions to us, we might well have concluded that we needed to do more about it than we did.”

In all, nearly $1.3 million in Trie-related contributions to the defense trust and the DNC have since been returned and are under investigation.

An Answer to Spiraling Legal Costs

The defense trust was established by the president and first lady on June 28, 1994, to defray the spiraling costs of their personal legal bills--fees related to the myriad Whitewater investigations and a sexual harassment suit filed by Paula Corbin Jones.

The Clintons appointed nine trustees to manage the fund. Under the guidelines, it was to operate independently of the administration and report directly to the president and first lady through the White House counsel. And although the private trust is not subject to federal laws governing political contributions, the Clintons imposed their own restrictions: limiting individual donations to $1,000 a year and prohibiting foreigners, corporations, labor unions, political organizations, lobbyists and federal employees from contributing.

From the outset, the trust encountered problems raising money. But its financial outlook brightened momentarily on March 21 of last year, when Trie entered a conference room in Cardozo’s downtown Washington office with a large Manila envelope under his arm. He dumped $460,000 in small checks and money orders on a round table.

A quick glance at the pile of mostly $1,000 and $500 checks raised immediate suspicions for Cardozo and the trust’s administrator. Some of the money orders were numbered sequentially and made out in the same handwriting, although the donors lived in different states. Also, many contributors, who appeared to be of Asian descent, shared the same surname.

Cardozo immediately rejected about $70,000 in money orders that were deemed ineligible because they contained no addresses.

The trust decided to alert the Clintons to the extraordinary nature of the donations. At an April 4 meeting in the White House residence, Cardozo briefed the first lady on the Trie money and the trust’s concerns. Ickes, the deputy chief of staff responsible for coordinating the president’s reelection campaign and political fund-raising, was also there--even though he had no role in overseeing the trust.

At the meeting, the first lady urged Cardozo to be exceedingly careful about scrutinizing and processing the funds, Cardozo said.

As more serious questions surfaced about the source of the money, the trust hired a private firm, the Investigative Group Inc., to research the background of Trie and the donors.

The trustees also discussed during an April 22 conference call whether the donors were linked to a political agenda and raised questions about Trie’s motivations.

Cardozo noted that Trie was “certainly no longer just a restaurateur in Little Rock. . . . He is actively involved in business development in Asia,” according to a transcript of the call.

Rev. Theodore M. Hesburgh, president emeritus of Notre Dame University and co-chairman of the trust, expressed concerns during the call that the president needed to be protected in the event of “some blow-up” involving the Trie funds.

“It seems to me that with the political choice in the country and the upcoming election, it might be a good thing to have a letter from the president and his wife requesting us to look into this with all scrupulous care. . . ,” Hesburgh said.

Trustee Didn’t Want Clinton ‘Crucified’

In an interview, Hesburgh said the trustees managed the fund “in an honest way” and that political considerations never entered into their deliberations. But when asked why he raised the president’s “upcoming election,” Hesburgh said: “We are trustees for him and I did not want him to be crucified in any way.”

On April 24, Trie paid a second visit to the trust, this time hauling in $179,000. He also carried $150,000 to the trust office on May 17. In both cases, the funds were rejected on the spot.

During the April 24 visit, Cardozo warned Trie that a list of his donors--many from Southern California--consisted of multiple pages of the last name “Nguyen” and would obviously attract intense media interest.

“I said that when the list of names is published that the Los Angeles Times will send a team of Vietnamese-speaking reporters and Chinese-speaking reporters out to these contributors and ask them why they have contributed to the trust. And that he, Charlie, needed to appreciate the fact that there would be great scrutiny of this group of contributors,” Cardozo told Senate investigators.

Cardozo then notified the White House counsel’s office of the need to discuss further developments. A meeting was held on May 9 for about an hour in the first lady’s conference room in the Old Executive Office Building. Attending were Lindsey, the president’s closest confidant, Chief White House Counsel Jack Quinn, White House attorney Cheryl Mills, Cardozo and two other trust officials. Also present were Ickes, then-White House Deputy Chief of Staff Evelyn S. Lieberman, and Maggie Williams, then the first lady’s chief of staff.

Cardozo said he neither requested the participation of anyone outside the counsel’s office nor sought an explanation of why they were invited. Quinn, who arranged the meeting, said he decided that the circumstances warranted the involvement of top White House aides who ordinarily had no direct dealings with the trust.

“These developments were quite extraordinary and so unusual that senior management of the White House would expect and want to know about them promptly,” Quinn said in an interview. “Any rational person would see the potential here that this would be quite a distraction from the campaign and the everyday business of the White House.”

Buddhist Sect’s Role in Donations Outlined

At the meeting, a trust official told White House aides that the Trie-related donors appeared to belong to Suma Ching Hai, a Taiwan-based religious sect. The group’s leader, Supreme Master Suma Ching Hai, was believed by her disciples to possess spiritual powers, and, as a form of worship, they drank her bath water. She was also said to sell expensive clothing that resembled attire worn in heaven.

The supreme master supported the president, and many of her disciples hailed Clinton as a “man of peace.” But investigators suspected that some sect members were coerced into donating to the defense fund.

Ickes told Senate investigators that meeting participants discussed different options for handling the Trie money: “. . . whether to return it all and say the hell with it, whether to return it all . . . with a note saying you could resend it if it came out of your checking account . . . or whether to keep some [and] return some.”

The officials also talked about the consequences of trust rules that required public disclosure of the names of all sect members whose donations were accepted.

This prompted Lieberman, a former White House deputy press secretary, to write a couple of headlines and lead sentences showing how newspapers would likely report the story. Participants said Lieberman wrote words to the effect of “Buddhist Cult Contributes Half Mil to Clinton Fund!” and “Followers Drink Bath Water!”

Lieberman also warned that the media would “use the word ‘cult’ and they’ll talk about bathwater, and they’ll talk about $500,000 and, you know, you can imagine what can be done with this story,” Cardozo told Senate investigators.

Despite the clear concerns about potential media reaction to news of the Trie money, White House special counsel Davis said in an interview “There was no discussion about whether to disclose return of the checks or the effect of disclosure on the election.”

But Ickes, when asked by Senate investigators if he recalled any discussion of not making the contributions public, said: “I know that there was discussion about when the next [legal defense fund] report was going to be filed and what it would show.”

Information Kept From Some Officials

After the meeting, few if any other White House officials were apprised of the information, including then-chief of staff Leon Panetta and Press Secretary Mike McCurry.

Panetta said in an interview that, in general, “There is a fundamental rule [in Washington] that is sometimes difficult for people to learn: It’s better to provide information to the public than have them find out through other means.”

Also excluded from the Trie information were Jane Sherburne and Mark D. Fabiani, lawyers on a White House team created to handle politically sensitive matters. They were known within the administration for advocating prompt disclosure of negative stories to the media before they fell into the hands of political opponents.

At first glance, notes Cardozo wrote to himself last December appear to confirm that three White House attendees at the May 9 meeting--Quinn, Lindsey and Mills--opposed making the Trie information public. “Jack, Bruce, Cheryl--not disclose info until after election . . . opposed disclosure,” Cardozo wrote.

When first shown his handwritten notes by Senate investigators, Cardozo said under oath that he had no idea why he wrote the passage. But in an interview last week, he said the notes reflected a question posed to him in December by a reporter.

White House officials said Quinn, Lindsey and Mills did not discuss the disclosure issue, leaving the decision about whether to reveal the Trie money in the hands of the trustees.

Details About Trie Withheld

Trie was well known to some White House and Democratic officials in March 1996, when he made the first of his three money runs to the trust fund. He had donated $177,500 to the Democratic Party in 1994 and 1995, and was one of about 80 managing trustees of the DNC. By then, records show, he had been cleared to visit the White House 31 times and Clinton had decided to appoint him to a presidential advisory commission on Pacific trade. Moreover, Trie was exchanging letters--reviewed by the National Security Council staff--with the president on U.S. foreign policy at the same time he was delivering the money to the defense fund.

The trustees were not provided any of these details about Trie.

Several of the administration officials who attended the May 9 briefing said they knew nothing of Trie or his fund-raising activities. Only Lindsey, a former Little Rock lawyer, said at the meeting that he recognized Trie as a restaurateur and someone who was “involved” in the Democratic Party, documents show.

In June of last year, the trustees decided to return all of the Trie money. At the same time, the donors were sent a questionnaire and given the opportunity to send back the funds.

The decisions were accompanied by two steps to keep the donations and subsequent refunds out of the public eye.

First, the trust eliminated the line “Less Ineligible Contributions” on the fund’s public disclosure form released last August.

“That was done to avoid the necessity to report the rejected contributions,” Cardozo said in an interview. Cardozo said the motivation was to protect the fund from any controversy, which might hurt fund-raising efforts.

Notes taken by Ickes during the meeting with Mrs. Clinton and Cardozo refer to “Less ineligibles,” indicating that the accounting procedure may have been discussed as early as April 4.

Cardozo passed up an opportunity to reveal the returned Trie money at a press conference last August when a reporter inquired about the amount of returned funds.

“Oh, it varies from time to time and for different reasons, but I don’t have a figure,” Cardozo replied.

Second, if any sect members decided to re-donate to the fund, their names would not be disclosed until the next biannual reporting period--in early 1997.

Loren Berger, one of the investigators hired by the trust, told the Senate she and a colleague considered the way the Trie money was returned to be a “political maneuver” to “elude any pre-election or campaign controversy.”

Cardozo denied this explanation, saying the trustees made the decision to return the funds without consulting the White House.

Trie’s name surfaced in news reports beginning in October as part of the Democratic campaign finance scandal.

At the time, reporters began asking questions about Trie, his frequent visits to the White House and his relationship to the president. Some of the queries were fielded by Sherburne, the damage-control specialist.

It was only after she raised concerns about Trie in mid-October that Sherburne learned from Ickes about the controversial defense fund donations, according to an administration official. Sherburne began researching the matter and contacted Cardozo in late October.

On Oct. 30, Sherburne briefed administration lawyers Lindsey and Mills on the potential trouble spots the administration faced in the expanding campaign finance scandal. When she came to Trie’s file, Sherburne recommended that the White House get the information out to the public, the administration official said.

But it wasn’t until an NBC News consultant contacted Cardozo on Dec. 2 that the defense fund, with the backing of the White House, decided to release the information. Documents show that Cardozo met with administration officials on Dec. 4 and 11 to discuss the NBC inquiry.

At his Dec. 16 press conference, Cardozo began by telling a roomful of reporters and TV photographers that he wanted to present a “complete, factual” account of Trie’s donations.

“This is a positive story,” Cardozo said.

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The Money Trail

THE OVERVIEW

For six months before last year’s presidential election, the White House kept secret Yah Lin “Charlie” Trie’s delivery of $792,000 in small checks and money orders to help pay the Clintons’ legal defense bills. At the same time, Trie enjoyed extraordinary access to the White House and received special favors to help promote his international trading firm.

The following timeline shows Yah Lin “Charlie” Trie’s activities during 1996 and the effort by the White House and the president’s legal defense trust to keep them from the American public.

Feb. 6, 1996: Trie escorts Wang Jun, head of a Chinese arms company, to a White House coffee with President Clinton. One of 11 White House visits by Trie last year.

March 21: Trie brings $463,000 in manilla envelopes to the presidential defense trust. Within two hours, former White House aide Mark Middleton faxes a letter from Trie to Clinton raising concerns about U.S. policy on the Taiwan Strait crisis.

April 4: First Lady Hillary Rodham Clinton and White House Deputy Chief of Staff Harold Ickes are notified by Michael Cardozo, executive director of the trust fund, of concerns about the Trie money.

April 14: The trust hires a private firm to investigate Trie.

April 19: President Clinton appoints Trie to the Commission on U.S. Pacific Trade and Investment Policy.

April 24: Trie delivers $179,000 to the trust in a brown shopping bag. National Security Council Director Tony Lake recommends that Clinton sign a response to Trie’s March 21 letter.

April 26: Clinton signs letter to Trie assuring him that deployment of U.S. aircraft carriers in the Taiwan Strait region “was not intended as a threat” to the People’s Republic of China.

May 9: Six top White House officials meet with Cardozo to discuss growing problems with the Trie money.

May 17: Trie takes about $150,000 to the trust, which rejects it. Trie also gives $10,000 to the Democratic National Committee, bringing his two-year total of party donations to more than $200,000.

June 26: Trust returns contributions delivered by Trie, but invites donors to resend their money, preventing it from having to disclose names of Asian American donors before the election.

Aug. 14: Defense fund issues bi-annual report, concealing refund of $388,000 in Trie-related donations.

Aug. 18: Trie pays $110,000 for 12 tickets to the president’s 50th birthday fund-raiser.

Oct. 30: Departing White House aide Jane Sherburne advises that administration disclose Trie money.

Nov. 4: President Clinton re-elected.

Nov. 8: Justice Department creates task force to investigate allegations of illegal campaign fund-raising, including activities by Trie.

Nov. 14: Cardozo meets with three top White House aides to discuss new concerns about Trie-related funds.

Dec. 2: Cardozo receives call from NBC News consultant inquiring about refunds of defense fund donations by Asian Americans.

Dec. 4: Cardozo meets with three White House officials to discuss returning $112,000 in re-contributions by Trie donors.

Dec. 11: Cardozo meets with five top White House aides to discuss disclosing Trie money.

Dec. 13: Trie attends DNC-sponsored holiday dinner at the White House, apologizing for any embarrassment he may have caused the president.

Dec. 16: Cardozo holds press conference disclosing Trie-related donations.