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Democratic Fund-Raiser to Cooperate, Plead Guilty

Inquiry: Johnny Chung of Torrance will admit to tax evasion, bank fraud and election law violations. Sources say he'll aid federal investigation into '96 campaign finance abuses.

March 06, 1998|WILLIAM C. REMPEL and ALAN C. MILLER and MARIA L. La GANGA | TIMES STAFF WRITERS

The Democratic campaign donor who once compared the White House to a subway requiring "coins . . . to open the gates" will plead guilty to tax evasion, bank fraud and election law violations in an agreement reached with the Justice Department, it was disclosed Thursday.

Under terms of the deal, Torrance businessman Johnny Chien Chuen Chung, who gave more than $400,000 to Democratic causes and candidates from 1994 to 1996, will agree to cooperate with federal prosecutors investigating campaign finance abuses, sources familiar with the agreement confirmed.

Chung, 43, was the fourth person charged in recent weeks in connection with the Justice Department investigation into fund-raising during the 1996 presidential campaign. But he is the first major figure to agree to cooperate with the investigation.

Specific information that Chung has agreed to share with prosecutors was not revealed, but a source familiar with the matter said Chung will, at least in part, detail his dealings with top Democratic National Committee officials.

"Johnny Chung knows firsthand how the DNC sold access to the White House," said the source. "As part of his cooperation agreement, it is safe to say, he will provide whatever information he has about those DNC fund-raising practices."

In a separate development Thursday, another large donor, Yogesh K. Gandhi, who is suspected of funneling foreign money to the DNC, appeared in court after being arrested near San Francisco on unrelated mail-fraud charges as he prepared to leave the country.

A federal investigator acknowledged that FBI agents acted to block Gandhi's departure, noting that he is a key figure in the continuing campaign finance inquiry.

Gandhi, great-grandnephew of Mohandas K. Gandhi, who led India to independence, is suspected of being "an illegal conduit" for foreign donations to the DNC, according to an FBI affidavit.

The steps are the latest in a recent flurry of legal moves by the federal task force investigating alleged campaign irregularities, including illegal foreign donations.

"This investigation is moving forward, but we are not going to let up now," said Atty. Gen. Janet Reno in a prepared statement.

The actions brought faint praise from Sen. Fred Thompson (R-Tenn.), who chaired the Senate Governmental Affairs Committee's investigation of fund-raising abuses. While commending the Justice Department for focusing on the controversy, he said: "The trail is awfully cold. It shouldn't have taken so long."

Although Chung's agreement with prosecutors appeared to cast a shadow over the DNC, a spokesman for the committee gave no hint of concern Thursday.

"As with everyone, we hope that Mr. Chung cooperates with campaign finance investigations," said the DNC's Steve Langdon.

He offered a similar response to questions regarding Gandhi. The DNC returned Gandhi's contribution in 1996 and Chung's money last year.

Chung has emerged as a major figure in the campaign finance investigation into the alleged trading of campaign donations for White House access. White House records show he visited executive offices there on about 50 occasions.

Among donations made by the Taiwan-born entrepreneur was a $50,000 check that he delivered in the White House to an aide to First Lady Hillary Rodham Clinton. He said another $50,000 contribution was given to help gain access to the White House for a delegation of visiting Chinese business leaders.

He told The Times he came to see "the White House is like a subway--you have to put coins in to open the gates."

Among those who received political contributions from Chung was Rep. Loretta Sanchez (D-Garden Grove). A spokesman said Thursday that the freshman congresswoman will return the $1,000 she received in September 1996.

"All along, we have said that until a clear violation of the law was evident, we had no reason to suspect that this donation was in any way illegal," spokesman Lee Godown said. "Now that it appears that Mr. Chung is admitting violations of campaign laws . . . the congresswoman feels it is appropriate to return the minimal contribution we received."

Sanchez met Chung at an event in Chicago during the August 1996 Democratic National Convention, he said. Sanchez received a $1,000 check from Chung on Sept. 6 that year, according to her campaign reports.

Terms of the plea agreement had not yet been filed Thursday, but sources familiar with the deal said Chung would plead guilty Monday to felony tax and bank fraud charges unrelated to fund-raising and to two misdemeanor campaign finance charges.

The campaign finance charges stem from two fund-raising events at which Chung allegedly arranged for straw donors to make contributions that he, in turn, reimbursed. In September 1995, Chung improperly donated $20,000 through others to the Clinton-Gore campaign at a Century City fund-raiser. And in September 1996, he improperly donated $10,000 through conduits to the campaign of Sen. John F. Kerry (D-Mass.), according to the Justice Department.

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