Senator Received $10,000 After Aiding DNC Donor

Sen. John F. Kerry (D-Mass.), a leading advocate of campaign finance reform and a potential presidential contender, received $10,000 in donations through controversial Democratic backer Johnny Chien Chuen Chung last year after his Senate office helped the entrepreneur arrange a high-level meeting at the Securities and Exchange Commission, The Times has learned.

Kerry campaign aides solicited the contribution “within a few days” of the SEC meeting, according to an attorney for the Torrance businessman.

A spokeswoman for the senator confirmed that Kerry’s office contacted the SEC on the donor’s behalf, but she said it involved no more than helping arrange “a tour.”

Chung’s $10,000 contribution, made by employees and associates of Chung and privately reimbursed by the businessman, now is the subject of a Justice Department probe into laundered donations, sources confirmed.

Federal agents also are investigating Chung’s contribution of about $20,000 through straw donors after a 1995 Clinton-Gore campaign fund-raiser in Century City, sources said.

The Kerry episode not only entangles a prominent Democratic lawmaker in the brier of campaign donation scandals, but the Clinton-Gore reimbursements represent the first time potentially illegal campaign gifts from one of the major Democratic Party donors went to Clinton’s own reelection committee.

Chung’s role in the Clinton-Gore fund-raiser could be particularly embarrassing for the president and his defenders who have repeatedly maintained that they took more care than the besieged Democratic National Committee to avoid questionable donations.

Representatives for Kerry and for Clinton and Gore said the campaigns had no knowledge that Chung reimbursed any donors. Kerry previously returned funds from Chung and his colleagues after Chung’s name surfaced in news accounts; the Clinton-Gore committee early placed the donations associated with Chung in an escrow account pending investigations.

Chung attorney Brian A. Sun says his client “did not knowingly violate any election laws.” The Santa Monica lawyer said “donors are being made the scapegoats” for missteps that might have been avoided if professional fund-raisers had not “failed to adequately advise” Chung and others about campaign finance rules.

Federal law requires disclosure of the true sources of campaign contributions and prohibits reimbursement of straw donors.

Election records show that from 1994 to ’96 Chung donated nearly $400,000 to the Democratic Party, its causes and candidates, in amounts up to $125,000.

Chung has become a high-profile figure, providing detailed accounts of his courtship by politicians as well as the extraordinary White House access that his campaign largess gained for him and foreign business associates. In the summer of 1996, shortly before the campaign finance controversy erupted, Kerry campaign aides were pressing Chung to support the Massachusetts senator in his costly reelection bid against then-Gov. William F. Weld.

Kerry spokeswoman Tovah Ravitz acknowledged that Kerry fund-raisers contacted Chung “numerous times because they were nearing the end of a tough campaign.” “

According to Chung’s account, provided by sources close to him, the aspiring international entrepreneur wanted to arrange an SEC meeting for an associate interested in learning how to clear the way for Chinese companies to get listed on U.S. stock exchanges.

One of Chung’s employees, who was aware of persistent inquiries for donations from the Kerry campaign, suggested asking the senator for help. It is unclear whether Chung’s employee first contacted Kerry campaign aides or his Senate office.

In any case, that initial request led to a Chung visit to Kerry’s office in late August, during which the businessman and several associates met the senator. According to Chung’s account, he asked for help in setting up an SEC meeting.

Ravitz described the encounter as a request for an SEC tour. Kerry said in a statement that helping someone get a tour “is something we’ve done for tens of thousands of people from Massachusetts and thousands of people from around the country.”

However, SEC officials said the request on behalf of Chung involved a briefing session.

According to Chung’s account, the request was faxed from Kerry’s office while Chung was there. The SEC meeting was immediately arranged and Chung’s group left Kerry’s office with an appointment at the SEC later that day.

The meeting was held in the third-floor office of Brian Lane, director of the SEC’s Division of Corporation Finance. Both Lane and his deputy, Meredith Cross, met with Chung’s entourage.

Chris Ullman, spokesman for the SEC, said Chung and his associates asked for information about getting foreign companies listed on U.S. stock exchanges. He said that information would have been available to anyone who requested it and they sought “no special favors or requests.”

A Kerry campaign aide called him within a week after the SEC session to say the senator would be in Los Angeles, according to Chung’s account. The aide asked if Chung would host a reception on short notice to raise funds.

“Johnny felt an obligation to be helpful,” attorney Sun said.

Chung only had about a week to put together what turned out to be a small reception on Sept. 9, 1996, at the Peninsula Hotel in Beverly Hills. About a dozen people attended, including four professional campaign fund-raisers. The others were employees and associates of Chung.

“It sort of seemed to me like somebody gave a party and nobody came,” recalled Paul Goldenberg, a La Habra electronics retailer who was one of Chung’s guests. Goldenberg did not make a contribution to Kerry that night.

Sources said Chung provided replacement checks before the reception to the employees who donated to Kerry. One business associate who contributed at the Peninsula Hotel was reimbursed on the spot, one source said.

Kerry spokeswoman Ravitz said the senator was unaware of any reimbursements by Chung. “Certainly no one saw them,” she said.

Asked whether the Kerry campaign fund-raisers called Chung because the Senate office had recently assisted him, Ravitz said: “They didn’t see a strong connection.”

Earlier this year, the Kerry campaign returned all $10,000 “because of the whole furor” surrounding Chung and his DNC contributions, Ravitz said. The DNC also returned $366,000 to Chung.

But the aftermath could still be troublesome for the senator.

Kerry, 53, has acknowledged that he is considering a presidential bid in 2000.

He has introduced campaign finance legislation that would eliminate “soft money” contributions and provide public funding for Senate candidates. He refused to accept political action committee contributions last year.

Although the Kerry campaign returned Chung’s money months ago, the Clinton-Gore committee has moved more slowly.

Robert Neuman, spokesman for the Clinton-Gore compliance committee, said the money would be returned only after a legal proceeding has determined that the contributions were improper.

According to Chung’s account, the businessman mistakenly thought he could write a $20,000 check to attend a September 1995 campaign dinner in Century City featuring Clinton. He had previously written large checks to attend DNC functions in Washington, New York and Hollywood.

The difference was that the Clinton-Gore function was subject to “hard money” donation limits.

“Johnny, like most Americans, didn’t know hard money from soft money,” attorney Sun said. “He was used to writing big soft-money checks to the DNC that were perfectly legal.”

Donations to individual federal candidates, called hard money, are limited to $1,000 per election, whereas soft-money donations to political parties have no such limits.

Chung arrived at the Century Plaza Hotel with the $20,000 check and more than 20 guests, including some foreign nationals who could not legally contribute.

It is unclear when Clinton-Gore campaign officials first advised Chung that they could not accept his check. But by the next day Chung’s office was informed that it would be returned. The campaign committee told Chung that it could only accept checks of $1,000 or less from individuals.

Sources said Chung, with assistance from some of his employees, rounded up about 20 straw donors, some of whom did not attend the Century City dinner.

Sun would not discuss Chung’s alleged reimbursement of those donors. However, the attorney said that if Chung made mistakes, it was out of ignorance of “the rules of campaign finance.”

White House Special Counsel Lanny J. Davis said the Chung disclosures should be kept in perspective. “If it turns out that these contributions were illegal, it should be remembered what a minuscule percentage these contributions constitute in the Clinton-Gore campaign fund-raising record,” he said.

Rempel reported from Los Angeles and Miller from Washington. Times researcher Janet Lundblad in Los Angeles contributed to this story.