Inquiry Focuses on Hillary Clinton Campaigner

Federal authorities are investigating a former top campaign finance official for Sen. Hillary Rodham Clinton (D-N.Y.) in connection with a Hollywood gala for Clinton and her husband on the eve of the Democratic National Convention in Los Angeles in 2000, people familiar with the investigation said.

The focus on David Rosen, a Chicago-based political consultant and Democratic fundraiser, is related to a federal inquiry into the activities of celebrity fundraiser Aaron Tonken, who Tuesday pleaded guilty to federal charges that he diverted hundreds of thousands of dollars from donors and underwriters of Hollywood charities and galas that he organized.

Tonken helped organize the August 2000 event, a glittering tribute to President Clinton, which also raised $1 million for the first lady’s then-fledgling Senate campaign.

But almost from the beginning, the fundraiser has been infused with controversy -- generated mainly by Peter Paul, a onetime Clinton booster, media entrepreneur and ex-con who says he fronted nearly $1.9 million in expenses to stage the event. He has claimed the Clinton campaign never properly reported the money to federal election officials.

Paul, co-founder of a once high-flying Internet firm based on the works of the creator of Spider-Man and other comic-book characters, has said that he agreed to underwrite the event to ingratiate himself with the soon-to-be-former president in hopes that Clinton would work for his firm, Stan Lee Media, after he left office.

The deal fell apart amid revelations in the media that Paul had convictions for cocaine possession and other felonies from the 1970s, and he subsequently sued the Clintons and others, including Rosen, for fraud. The suit is pending in Los Angeles Superior Court.

Rosen, who as finance chief for the Clinton senatorial bid played a central role coordinating the event, did not return phone calls seeking comment. Currently president and chief executive officer of the Competence Group, a consulting firm, he was recently identified by Crain’s Chicago Business as one of its top “40 under 40” community and business leaders.

In recent years, Rosen has been hired to help bankroll myriad Democratic causes, including the fight against the recall of Gov. Gray Davis, and the campaign last year to unseat Florida Gov. Jeb Bush. Lately, he has also raised funds for presidential contenders, including retired Gen. Wesley K. Clark.

Lawyers for Rosen declined comment. He is being represented by Joseph Sandler, an election-law specialist in Washington and counsel to the Democratic National Committee, as well as Brad Brian, a Los Angeles-based defense lawyer and former assistant U.S. attorney.

David Kendall, a lawyer for the Clintons, also declined comment.

Those familiar with the case said Hillary Clinton was not being investigated.

The federal investigation of Rosen is part of a public corruption case focusing on his role in raising funds for the Clinton camp. The 2000 tribute has drawn the interest of federal investigators in Los Angeles and Washington.

While it wasn’t immediately clear which of Rosen’s activities investigators were zeroing in on, officials have been closely scrutinizing the allegations and the series of events described in Paul’s lawsuit, people familiar with the investigation said.

At the same time, many aspects of the suit, and the underlying flap, remain in dispute. While the costs of the event were extravagant -- from catering bills from the restaurant Spago to the costs of a private jet for the entertainer Cher -- some people close to the case have strong doubts about whether Paul spent all the $1.9 million he claims.

Paul has also had his own share of recent troubles. Stan Lee Media went into bankruptcy proceedings in February 2001, a victim of the dot-com meltdown. Paul was subsequently indicted and imprisoned while in Brazil on conspiracy and securities fraud charges in connection with the company’s collapse.

His suit against the Clintons and Rosen was initially dismissed because he was a fugitive; he refiled the action in October after being extradited. He is being represented by Judicial Watch, a Washington watchdog firm that has long been a Clinton nemesis. No defendants have filed responses with the court as of this week. A hearing is scheduled for March.

According to Paul’s lawsuit, the Clinton campaign misreported and badly under-reported his largess, including alleging that he contributed only $366,564.69 of the tribute’s costs, and attributing the costs to Stan Lee Media rather than him personally.

Federal law normally limits contributions by individuals in federal campaigns to $2,000 per candidate; Paul and the Clintons were essentially attempting to make use of a well-worn loophole in federal election law that has allowed for huge and largely unregulated “soft money” contributions to political parties and other causes. The Supreme Court banished the practice this week in upholding a new campaign finance law.

Those contributions were reported by New York Senate 2000, which was set up by the Clinton campaign and the Democratic Senatorial Campaign Committee to receive soft money contributions. According to the Clinton gala’s donor card, contributions were to be allocated to the Hillary Rodham Clinton for U.S. Senate Committee, the Democratic Senatorial Campaign Committee, and the New York State Democratic Committee.

According to his lawsuit, Paul had originally planned to spend $525,000 on the gala, but the tab kept soaring. Two weeks before the Aug. 12 fundraiser, he confronted Rosen about the rising cost, and according to the suit, Rosen threatened “to cancel the event and blame [Paul] for the substantial embarrassment” that would likely result.

The suit also alleges that Rosen brokered a contribution from Paul in the form of Stan Lee Media stock to the Working Families Party in August 2000. The party had agreed to support Hillary Clinton under the New York system of “fusion” voting, which permits a candidate to appear on the ballot for more than one party.

The Los Angeles Times previously reported that a Stan Lee Media executive said he instructed Merrill Lynch to transfer shares, although a spokeswoman for Working Families said no shares were received.

Documents obtained by The Times indicate that Rosen and Tonken collaborated on at least one charitable event, known as “A Family Celebration 2001,” which featured the cast of the “Ally McBeal” television series and appearances by former Presidents Clinton and Ford. Entertainers at the event included Paul Anka and Michael Bolton. Among the stars in attendance were John Travolta, Brad Pitt and Jennifer Anniston.

Tonken is cooperating with authorities in a wide-ranging investigation of the Los Angeles charity circuit as part of the plea deal he struck with prosecutors this week.

A grand jury in Los Angeles is known to be investigating matters connected with Tonken’s activities. Federal authorities have declined to comment. Tonken’s sentencing is scheduled for Feb. 23, and he faces up to 10 years in prison, which could be reduced depending on the level of his cooperation.

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Times staff writers Michael Cieply, James Bates and Greg Krikorian contributed to this report.