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

WASHINGTON -

Hillary Clinton and Barack Obama are among eight congressional recipients of campaign contributions from the disgraced law firm of Milberg Weiss who decline to say whether they will return the tainted money, a Washington Examiner inquiry found.

A ninth lawmaker — Rep. Carolyn McCarthy, D-N.Y. — says she plans to keep the Milberg Weiss donations.

Of the remaining 13 lawmakers who received the most money from the firm, five told The Examiner they had already returned the donations, while seven said they had given equivalent amounts to charities and another pledged to do so.

Clinton, Obama and six others did not respond to repeated telephone and e-mail inquiries from The Examiner, and Federal Election Commission records do not indicate that they returned the money. Twenty-one of the 22 lawmakers who received the most contributions from Milberg Weiss are Democrats.

In addition, the three major national Democratic campaign committees are keeping nearly a million dollars in donations they received from the law firm.

The donations were made by the Milberg Weiss partners after a federal probe of the New York class-action lawsuit firm became public in 2002. Many of the donations came after the firm and the top four partners were indicted in 2006.

The probe led to guilty pleas by William Lerach, Steven Schulman and David Bershad for participating in a criminal racketeering scheme, and indictment of lead partner Melvyn Weiss.

Federal investigators say Milberg Weiss paid $11.7 million in illegal kickbacks to favored plaintiffs in at least 150 of the securities class-action lawsuits filed by the firm as far back as 1979, generating more than $200 million in tainted fees.

At Lerach’s sentencing last month, U.S. District Judge John Walter described the kickbacks as a “breathtaking” scheme that “goes to the core” of the legal system, and “corrupted the law firm... in the most evil way.” Lerach has said he believed he had to pay kickbacks because “everybody was paying plaintiffs.”

The Examiner compiled all federally reported contributions by the four partners and their spouses since January 2002, then asked the top 22 incumbent recipients what they did with the money once they knew the firm was under federal investigation.

As for McCarthy’s decision to keep the firm’s donations, her chief of staff, Rob Recklaus, said his boss kept Bershad’s total of $2,500 in contributions in 2002, 2003 and 2004 because her committee assignments have “no jurisdiction” on issues linked to the now-former Milberg Weiss partner and because she has “never done anything to help him out on other issues.” McCarthy has been on the Committee on Financial Services since 2003, which does have at least some jurisdiction on securities law.

Likewise, but involving far more money, spokeswoman Stacie Paxton of the Democratic National Committee said that $447,795 to DNC accounts from the lawyers in question, from 2002 to 2004, was already “spent and gone,” and thus cannot be returned.

“If an issue arises during the term of the [DNC] chairman when the contribution was accepted, we would look into the contribution, case by case,” Paxton said. “It would depend on what the issue is.”

She said that because most of those contributions arrived before former Vermont Gov. Howard Dean became DNC chairman, the money (or its equivalent) would not be given back or donated to charity.

The DNC in 2006 did return $5,000 of the $10,000 that the lawyers donated in 2005.

Spokesmen for the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee did not respond to queries about why they apparently kept $465,040 in contributions by the Milberg Weiss lawyers between 2002 and now.

National Republican Party committees received far less, just a total of $5,000, but they, too, did not return the money.

“So much of this depends upon context,” agreed longtime Congress-watcher and American Enterprise Institute Fellow Norman Ornstein, who founded a campaign finance reform group in the mid-1990s. “If the money was given years before a conviction, that’s a different matter.”

Ornstein added: “But as a general matter, I think it is counterproductive for any candidate or officeholder who gets money from somebody convicted of a felony to keep the money. In many cases it is just plain wrong, if you are dealing with a nefarious character.”

Meredith McGehee, policy director for the nonpartisan watchdog Campaign Legal Center, said that “perception” plays a big role in the question. “The most appropriate thing obviously with that money would be to give it to a charity. ... It is very hard to make a public case, once you have money from someone who is indicted or convicted of a felony, to keep it in your campaign coffers.”

qhillyer@dcexaminer.com