Follow the Money

Since Sen. Hillary Clinton (D-N.Y.) returned nearly a million dollars to donors recruited by fugitive Norman Hsu —a high profile fundraiser convicted in 1991 of stealing latex gloves, but who failed to show up for his sentencing hearing — the ethics of money in presidential politics has received renewed attention from major news outlets. Much of that attention, however, has gone to Democratic presidential candidates such as Clinton.

The federal indictments against Alan Fabian, the former co-chairman of former Gov. Mitt Romney’s (R-Mass.) finance committee, who prosecutors arrested in August on 23 counts of mail and bankruptcy fraud, money laundering, perjury, obstruction of justice and other crimes, caused much less of a stir. However they may well have been far more endemic of the presidential race. The multiple indictments and subsequent resignation of Fabian from Romney’s campaign staff illustrate both the increased scrutiny of campaign donations and the increased desperation for dollars this election cycle.

“You have candidates that are clearly breaking the law,” said Alex Colvin, the press secretary for former Alaskan senator and democratic presidential candidate Mike Gravel’s campaign. “Follow the money line.”

Focusing on this particular Republican scandal demonstrates the reasons why some fundraising scandals strike the public fancy and others don’t—and how the candidates react to embarrassing headlines about their bundlers and donors.

“It is really hard to know what will capture the public interest,” said Paul Marcus, the Haynes professor of Law at the College of William & Mary. “In some cases, it’s the individual himself or herself [who becomes] larger than life. If you’re a fugitive from justice, that focuses attention.”

Marcus said that the headline grabbers are not necessarily the criminals with the longest arrest records or those facing the longest jail times. Some white-collar criminals, such as Martha Stewart and Bernie Ebbers, charged with lesser offenses, “capture the public imagination,” while other white-collar criminals, such as Fabian, face longer prison sentences but “stay below the radar.”

“The person who steals the money and then uses it for a particularly lavish lifestyle…that gets the public interest,” Marcus added.

Massie Ritsch, communications director for the Center for Responsive Politics, had another observation to throw into the pot: Politicians tend to return money to donors or give money to charity when the donor’s ethical past becomes a political liability, regardless of the crimes that the donor or fundraiser allegedly committed.

“It has become fashionable for candidates to give back money that taints them in any way,” Ritsch said in a telephone interview, noting that the decision to return money arises from a “political calculation, not a legal calculation.”

Failure to report campaign donations and other types of fraud raise serious ethical questions for candidates who are also lawyers, said Law Professor James Moliterno, who oversees William and Mary’s legal ethics program. This means that Romney and former Mayor Rudy Giuliani (R-N.Y.), who also received a donation from Fabian, could potentially face professional sanctions if they turned a blind eye to wrongdoing by Fabian and other high level fundraisers.

“If you committed frauds in failing to report, [it] would offend the lawyer ethics rules if done by lawyers,” Moliterno said, offering just one example. Furthermore, “if a lawyer hired [a defendant in money-related indictments] to manage money, that person would risk liability for breach of fiduciary duty and liability for breach of an ethical violation, should something then go wrong.”

According to the American Bar Association, however, the legal ethics rules that almost all state bar associations have adopted do not apply to lawyers in their capacity as candidates.

“There are ethics standards that say lawyers should not violate the law,” said ABA spokesperson Nancy Slomin. “Most of them address the conduct of lawyers when they are performing legal services. They do not address the conduct of a lawyer as a candidate for office, unless they are a candidate for judicial office.”

And when it comes to returning ethically suspect campaign donations, the process is not automatic. Although Clinton returned all of Hsu’s money, Romney and Giuliani only returned Fabian’s personal donations to their campaigns, not the much larger sums that he raised during his stint as co-chairman of Romney’s campaign finance committee.

The Romney and Giuliani campaigns did not return repeated telephone calls for comment in regards to this issue. One reason why voters do not seem to be punishing Romney for Fabian’s alleged criminal offenses, however, may be that many voters only pay attention to attacks by the other candidates.

“I think it has to become ammunition used by your opponents before voters really get tuned in to what’s going on,” said Ritsch. “Someone has to make a big deal out of this before voters will pay attention.”

Unlike Hsu, who personally donated to only one of the current presidential candidates this cycle, Fabian personally donated money to two candidates: Romney and Giuliani. In fact, Federal Election Commission records show that Fabian hit the $2,300 individual donation ceiling in his donations to Romney and gave $1,000 to Giuliani.

Because both men received money from Fabian, neither of these leading Republican presidential candidates can feasibly attack the other candidate for accepting large sums of money from ethically challenged fundraisers. Whether Sen. John McCain (R-Ariz.), former Sen. Fred Thompson (R-Tenn.), former Governor Mike Huckabee (R-Ark.) or Rep. Ron Paul (R-Tex.) will haunt Romney or Giuliani with the ghost of Fabian before the first round of primary elections is over remains to be seen.

Fabian’s prowess as a Republican bundler stretches back to 2001, when he gave $1,500 to the Republican Congressional Campaign Committee, according to FEC records. Since 2001, Fabian has donated approximately $346,000 to various Republican candidates and committees. Past Republican candidates to have received money from Fabian include President George W. Bush, former Sen. Rick Santorum (R-Pa.), former Virginia Gov. George Allen, former Maryland Lieutenant Gov. Michael Steele, Rep. Pete Sessions (R-Tex.), and Rep. Heather Wilson (R-N.M.).

It is not clear whether campaign finance scandals will sway voters when they go to the polls next year. What is clear, though, is that voters claim they care about the ethics of money. A majority of Americans, for instance, said that they want the press to tell them more about how candidates fill their campaign coffers, a Pew Weekly News Interest Index poll found in September.

Meanwhile, 77 percent of Americans surveyed by CNN in May ranked “corruption and ethical standards in government” as either “extremely important” or “very important.” In a similar survey by the Washington Post released in June, 96 percent of Americans said that it is “absolutely essential” or “very important” for a presidential candidate to be “honest and trustworthy.”

“At some point, these issues need to begin to register with the voters,” said Colvin. “[Money in politics] really spoils the whole electoral process.”

Romney himself has received low scores in surveys that asked voters which Republican candidate they believed to be most honest and trustworthy. Only 13 percent of those surveyed in a Washington Post-ABC News poll in September chose Romney over Giuliani, McCain and Thompson, while only 8 percent selected Romney in a FOX News-Opinion Dynamics poll conducted during the same month.

Because one ethical scandal after another has roiled the Republican Party recently, including Jack Abramoff, Mark Foley and Larry Craig, voters may not pay attention to the details anymore, lessening the relative influence of each individual scandal. Consequently, Fabian may ultimately never emerge from the graveyard of Republican Party politics, allowing Romney to emerge relatively unscathed.

Until one or more of the Republican candidates decides to use Fabian in negative advertisements, the reasons why Hsu has become a well known criminal while Fabian fades into obscurity will likely remain cloaked in mystery, fodder for conspiracy theorists and law professors alike.