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Clash Over Clinton Gala Told

Man testifies in ethics probe that finance director knew costs of Senate race fundraiser were out of control.

May 20, 2005|David Rosenzweig | Times Staff Writer

Sen. Edward M. Kennedy's brother-in-law testified Thursday that he wore a concealed device to record a conversation with Sen. Hillary Rodham Clinton's former finance director, David Rosen, in advance of Rosen's indictment on campaign finance charges.

Rosen is on trial in Los Angeles on charges of underreporting several hundred thousand dollars in costs for a lavish Hollywood fundraiser in 2000.

At the outset of his testimony, Raymond Reggie, a member of a politically prominent Louisiana family, acknowledged having pleaded guilty last month to federal check kiting and conspiracy charges.

Reggie, whose sister is married to Kennedy, said he hoped to win a lighter prison sentence by cooperating in the Rosen investigation.

Describing himself as longtime friend of Bill Clinton, Reggie said he met Rosen during a fundraiser for Hillary Clinton after she entered the 2000 Senate race in New York.

In August 2000, he said, he flew to Los Angeles to help Rosen with preparations for a star-studded fundraiser to be held on the eve of the Democratic National Convention.

Reggie recalled being present during a heated exchange between Rosen and Kelly Craighead, a top aide to Hillary Clinton, over the gala's escalating budget.

"I'm the fundraiser, and I have it under control," he quoted Rosen as having told her.

But a few days before the Aug. 12 gala, Reggie said, Rosen confided that he was being "crushed" by cost overruns.

Rosen is charged with causing the Clinton campaign to file false expense reports with the Federal Election Commission. Lawyers with the Justice Department's public integrity division say the event cost more than $1.1 million to produce, while the campaign reported spending a little more than $400,000.

Because of nuances in the federal election law, the higher the costs, the less "hard money" the Clinton campaign could theoretically spend on advocacy ads and the like.

Rosen's defense lawyers say he was kept in the dark about the actual price tag by businessman Peter Paul, who underwrote the costs in a bid to curry favor with the Clintons; and by Paul's protege, Aaron Tonken, who specialized in recruiting Hollywood celebrities for charity events.

Since the Clinton fundraiser, Paul has been convicted of defrauding investors in a now-bankrupt Internet company he co-founded with Spider-Man creator Stan Lee. It was his third felony conviction. Tonken is serving a five-year prison term for defrauding some of the charities he represented. The prosecution has opted not to call either man to testify.

Reggie was the second Bill Clinton associate to testify in the trial after having pleaded guilty to criminal charges. Last week, the prosecution called James Levin, a Chicago businessman and Democratic Party fundraiser, who agreed to plead guilty to charges of bribery, conspiracy and fraud.

Like Reggie, he testified that Rosen was acutely aware that the gala's costs were spiraling out of control.

Also testifying Thursday was Whitney Burns, an independent Washington-based consultant who handles financial reporting duties for various political campaigns. One of her clients in 2000 was the Hillary Clinton Senate campaign.

She testified that Rosen had expressed concern about mounting costs. "He knew he needed to keep the costs down, and he was working to do that," she said.

Burns said most of the financial information she received about the event came from Tonken's assistant, Bretta Nock. "She was the one who seemed to have the detailed information."

On Wednesday, Nock testified that Rosen had instructed her to understate event costs, an assertion denied by the defense.

Under questioning by defense lawyer Paul Sandler on Thursday, Burns acknowledged that the alleged underreporting did not benefit the Clinton campaign. That was because she conservatively designated about $58,000 of the proceeds as "hard money," an amount smaller than she could have claimed under the fabricated figures.

The prosecution is expected to conclude its case today.

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