Quin Hillyer, The Examiner
2008-03-20 07:00:00.0
Current rank: Not ranked

WASHINGTON -

Democratic presidential candidate Hillary Clinton has received more campaign money from disgraced lawyers at the controversial Milberg Weiss law firm than any other member of Congress, but she won’t say whether she’ll keep the contributions.

Sen. Barack Obama of Illinois, Clinton’s chief rival for their party’s nomination, received much less money from the same lawyers but is likewise mum.

Clinton received $21,971 and Obama $5,300 from four senior partners of the firm or their spouses. Presumptive Republican nominee John McCain got no money from the firm’s four senior partners.

Three of the partners — William Lerach, David Bershad and Steven Schulman — have pleaded guilty to participating in an illegal kickback scheme in securities class-action lawsuits first made public by federal investigators in 2002. The firm itself and Melvyn Weiss, its senior named partner, were also indicted and face trial later this year.

Neither Democratic presidential candidate responded to multiple queries from The Examiner about whether they are keeping the money, have returned it or will donate it to charity. Federal Election Commission (FEC) records show no evidence that the donations were returned.

The New York Times also asked similar questions of both campaigns last October, without result. Then-candidate John Edwards, on the other hand, continued to use Lerach as a fundraiser even after widespread reports of the now-former Milberg Weiss partner’s involvement in the kickbacks, which federal investigators called a “criminal enterprise.”

Edwards donated Lerach’s contributions to charity after the flamboyant securities class-action lawyer pleaded guilty last year to participating in the kickback scheme.

The Examiner analyzed donations made by the four lawyers after January 2002, which was when the federal investigation became public knowledge. Federal officials say the firm paid $11.7 million in kickbacks relating to lawsuits from which it realized more than $200 million in tainted fees.

Obama’s apparent decision to keep the money stands in contrast to his decision to donate to charity $160,000 from controversial Chicago businessman Tony Rezko and his associates. Rezko, a longtime financial backer of Obama, is now on trial for alleged extortion relating to the administration of Illinois Gov. Rod Blagojevich.

Clinton has been associated with Lerach since the mid-1990s, when Lerach was a guest in the Lincoln Bedroom during her husband’s presidency. Just days after Lerach spoke with Bill Clinton at a White House dinner in 1995, the president vetoed legislation, fiercely opposed by Lerach, that was aimed at reining in abusive lawsuits. (It was the only Clinton veto Congress overturned during his two terms in office.)

Donations to Hillary Clinton from all Milberg Weiss lawyers (not just the charged individuals) since her first Senate race in 2000 total $49,794 (compared with $20,100 for Obama since 2004); her husband’s 1996 campaign received $31,500 from the firm’s lawyers. Lerach also donated more than $100,000 to the Clinton presidential library.

Both Clintons have been associated with controversial campaign donations for more than a decade — including the so-called White House “coffee Klasches” in the 1990s, a Hollywood fundraising event that resulted in the imposition of massive fines on Hillary Clinton’s first Senate campaign, and the arrest of fundraiser Norman Hsu on fraud charges in connection with hundreds of thousands of dollars donated to Hillary Clinton’s presidential campaign.

“There is no ethical requirement [to return the contributions],” said Lester Brickman, a professor of legal ethics at the Cardozo School of Law who has been one of the biggest public critics of Milberg Weiss’ practices. “When office holders return these contributions, they are concerned about public reaction.”

Michael Barone, founder and author of the Almanac of American Politics, went one step further: “I think there is a good case for donating the money to third parties ... because these guys were accused of pretty nefarious conduct and the charges against them are serious.”

qhillyer@dcexaminer.com