Senator Clinton's Lawyers Seek to Halt Fraud Suit

By Fred Lucas
CNSNews.com Staff Writer
March 27, 2007

(CNSNews.com) - Attorneys for Sen. Hillary Clinton (D-N.Y.) are trying to keep her out of a lawsuit that may ultimately force her to testify under oath about an alleged violation of campaign finance laws.

Washington lawyers David Kendall and Carolyn Utrecht and Los Angeles attorney Jan B. Norman -- all representing the apparent frontrunner for the 2008 Democratic presidential nomination -- filed legal briefs Friday in the California Court of Appeals focusing heavily on the criminal background of plaintiff Peter Paul, the Hollywood businessman who is suing both Bill and Hillary Clinton and others.

Paul alleges that fraudulent actions by the Clintons and others cost him his multi-million dollar Internet venture. Paul claims to have been the largest contributor to Sen. Clinton's U.S. Senate campaign, spending $1.9 million to hold a 2000 fundraising gala attended by Hollywood celebrities including Whoopi Goldberg, John Travolta and Brad Pitt.

In return, Paul claims, then-President Bill Clinton promised to promote the firm. However, the president allegedly reneged on the commitment after his wife was elected in November of that year and used his influence to discourage others from investing in the firm.

In an effort to stay out of the suit, Sen. Clinton used a California statute intended to protect a political candidate's First Amendment rights from frivolous lawsuits. A California Superior Court judge dismissed her from the lawsuit on those grounds last fall, but Paul appealed in January, contending the California statute does not protect Sen. Clinton from alleged illegal activity.

The Friday brief was a response to the appeal.

"Plaintiff's alleged 'donations'...were extremely unusual," the Clinton team's response said. "Unlike typical campaign contributions, these donations supposedly had strings attached; [the] plaintiffs claim that he financed the tribute in exchange for one year of former President Clinton's services after he left public office in January 2001."

Oral arguments will likely be made to the three-judge panel this summer on whether to release Sen. Clinton from the lawsuit, with a decision expected soon after. But the entire case could go on for much longer.

The motion goes on to describe how Paul's venture (Stan Lee Media, which he entered with comic book mogul Stan Lee) "imploded," and "in the midst of the company's financial collapse, [the] plaintiff fled the United States for Brazil."

"Not surprisingly," the brief said, "no working relationship between the plaintiff and the president ever materialized." It then details how Paul was indicted for and pleaded guilty to manipulating the company's stock price. He had two previous felony convictions, pleading guilty to fraud in the 1970s and to a drug charge in the 1980s.

Paul's past is irrelevant at this stage in the case, said his attorney, D. Colette Wilson of the United States Justice Foundation in Ramona, Calif.

The argument before the court in determining if Sen. Clinton is protected by the anti-lawsuit statutes is based on the seriousness of the charges, she said. Paul's credibility is a matter that is subject for discussion in the course of a civil trial.

"They're saying, 'Do not believe anything Peter said because he is a felon,'" Wilson told Cybercast News Service Monday.

She said the allegations he is making are more than viable, adding that part of his contention was already backed up by results of his 2001 complaint to the Federal Elections Commission.

After investigating the matter, the FEC ruled that Sen. Clinton's 2000 campaign committee underreported cash it received at the fundraising event Paul sponsored and slapped the campaign committee with a $35,000 fine. The Clinton campaign committee also amended financial reports to show Paul's share of the production costs were understated by $721,000. The legal limit for an individual to contribute was $2,000 at the time.

The fallout from the Paul's Hollywood fundraising event also led to the federal indictment of David Rosen, Sen. Clinton's finance director, who was acquitted on charges of lying to the FEC.

The three attorneys who filed the brief could not be reached for comment Friday or Monday.

In a written declaration for the court filed on April 7, 2006, Sen. Clinton said, "I have no recollection whatsoever of discussing any arrangement with him whereby he would support my campaign for the United States Senate in exchange for anything from me or then-President Clinton. I do not believe I would make such a statement because I believe I would remember such a discussion if it had occurred."

Wilson called it a classic "non-denial denial."

"She really doesn't want to go on the stand," Wilson said, adding the senator's delay tactics could drag the case right into the 2008 election cycle. "The timing could end up particularly disastrous for Hillary."