Democratic Fund-Raiser to Cooperate, Plead Guilty

The Democratic campaign donor who once compared the White House to a subway requiring “coins . . . to open the gates” will plead guilty to tax evasion, bank fraud and election law violations in an agreement reached with the Justice Department, it was disclosed Thursday.

Under terms of the deal, Torrance businessman Johnny Chien Chuen Chung, who gave more than $400,000 to Democratic causes and candidates from 1994 to 1996, will agree to cooperate with federal prosecutors investigating campaign finance abuses, sources familiar with the agreement confirmed.

Chung, 43, was the fourth person charged in recent weeks in connection with the Justice Department investigation into fund-raising during the 1996 presidential campaign. But he is the first major figure to agree to cooperate with the investigation.

Specific information that Chung has agreed to share with prosecutors was not revealed, but a source familiar with the matter said Chung will, at least in part, detail his dealings with top Democratic National Committee officials.

“Johnny Chung knows firsthand how the DNC sold access to the White House,” said the source. “As part of his cooperation agreement, it is safe to say, he will provide whatever information he has about those DNC fund-raising practices.”

In a separate development Thursday, another large donor, Yogesh K. Gandhi, who is suspected of funneling foreign money to the DNC, appeared in court after being arrested near San Francisco on unrelated mail-fraud charges as he prepared to leave the country.

A federal investigator acknowledged that FBI agents acted to block Gandhi’s departure, noting that he is a key figure in the continuing campaign finance inquiry.

Gandhi, great-grandnephew of Mohandas K. Gandhi, who led India to independence, is suspected of being “an illegal conduit” for foreign donations to the DNC, according to an FBI affidavit.

The steps are the latest in a recent flurry of legal moves by the federal task force investigating alleged campaign irregularities, including illegal foreign donations.

“This investigation is moving forward, but we are not going to let up now,” said Atty. Gen. Janet Reno in a prepared statement.

The actions brought faint praise from Sen. Fred Thompson (R-Tenn.), who chaired the Senate Governmental Affairs Committee’s investigation of fund-raising abuses. While commending the Justice Department for focusing on the controversy, he said: “The trail is awfully cold. It shouldn’t have taken so long.”

Although Chung’s agreement with prosecutors appeared to cast a shadow over the DNC, a spokesman for the committee gave no hint of concern Thursday.

“As with everyone, we hope that Mr. Chung cooperates with campaign finance investigations,” said the DNC’s Steve Langdon.

Chung has emerged as a major figure in the campaign finance investigation into the alleged trading of campaign donations for White House access. White House records show he visited executive offices there on about 50 occasions.

Among donations made by the Taiwan-born entrepreneur was a $50,000 check that he delivered in the White House to an aide to First Lady Hillary Rodham Clinton. He said another $50,000 contribution was given to help gain access to the White House for a delegation of visiting Chinese business leaders.

He told The Times he came to see “the White House is like a subway--you have to put coins in to open the gates.”

Terms of the plea agreement had not yet been filed Thursday, but sources familiar with the deal said Chung would plead guilty Monday to felony tax and bank fraud charges unrelated to fund-raising and to two misdemeanor campaign finance charges.

The campaign finance charges stem from two fund-raising events at which Chung allegedly arranged for straw donors to make contributions that he, in turn, reimbursed. In September 1995, Chung improperly donated $20,000 through others to the Clinton-Gore campaign at a Century City fund-raiser. And in September 1996, he improperly donated $10,000 through conduits to the campaign of Sen. John F. Kerry (D-Mass.), according to the Justice Department.

In past months, Chung defense attorney Brian A. Sun of Santa Monica has been critical of the DNC and “professional fund-raisers” who he insisted should have helped Chung avoid violations of campaign laws because, he said, they knew or should have known how Chung was raising those funds.

On Thursday, however, Sun declined to comment, except to say that Chung is “eager to put this matter behind him.”

Gandhi attorney Peter Coleridge said Thursday that his client is innocent of the mail fraud charges. He said that Gandhi has “always been willing to cooperate” and that they “were in the midst of cooperating” when Gandhi was arrested.

Gandhi, under investigation for an allegedly improper campaign donation of $325,000 to the Democratic Party, was arraigned on mail fraud charges Thursday in San Francisco federal court. He was arrested at his home Wednesday night in the Bay Area suburb of Danville as he prepared to leave for India.

“It’s been alleged that Mr. Gandhi was going to flee the country,” Coleridge said in a brief statement after his client’s court appearance. “That’s absolutely not true. He had a round-trip ticket for a trip that had been planned long in advance.”

Gandhi, a native of India, gave the DNC one of its largest contributions in the 1996 election campaign. That spring, he donated $325,000 to pave the way for a Japanese spiritualist and business associate of Gandhi to meet with the president.

The Gandhi associate, Hogen Fukunaga, presented Clinton with a peace prize--a life-size bust of Mohandas Gandhi--during a DNC fund-raiser at a Washington hotel.

The incident remains one of the most embarrassing episodes in the party’s fund-raising frenzy: Gandhi had previously been turned down in his efforts to present Clinton with the award at the White House because aides had learned that Gandhi’s foundation was “not a reputable organization” and Gandhi was considered “a fraud,” according to documents and interviews.

When Gandhi provided the check for $325,000 to the DNC, he asked that it be held for 10 days because he did not have sufficient cash in his bank account to cover it, documents show. During this time, Gandhi received two transfers of $250,000 each from bank accounts in Japan. But he told Senate investigators that the $325,000 donation was made from his own funds.

Gandhi worked with DNC fund-raisers Yah Lin “Charlie” Trie and John Huang to arrange the peace prize event and make the large contribution. Trie has been indicted on charges of conspiracy, fraud, obstruction of justice and election law violations for his fund-raising efforts, and Huang remains under investigation.

At the time of his arrest, Gandhi was booked on a United Airlines flight scheduled to leave San Francisco for India on Thursday afternoon.

The San Francisco businessman was freed on $100,000 bail and ordered to stay in Northern California and relinquish his passport and visas. He is scheduled to appear in court again on April 9 for a preliminary hearing.

The mail fraud charges stem from allegations that Gandhi mailed a forged credit card application to illegally obtain an American Express corporate credit card.

Although unrelated to the campaign finance investigation, the charges are being prosecuted by an assistant U.S. attorney assigned to the Justice Department’s campaign task force. And an FBI agent, also assigned to the task force, declared in an affidavit Thursday that Gandhi reportedly told a business associate “that he intended to leave town as a result of impending indictments.”

Gandhi, who was subdued and soft-spoken during his brief appearance before U.S. Magistrate Maria Elena James, did not comment on the charges.

Others recently charged with campaign finance violations were Maria Hsia, an Arcadia immigration consultant, and Yuan Pei “Antonio” Pan, a Trie associate.

Rempel reported from Los Angeles, Miller from Washington and La Ganga from San Francisco. Staff writers Ronald J. Ostrow and Marc Lacey in Washington and Henry Weinstein in Los Angeles contributed to this story.