Crooked Claims About Clinton

Summary

In a video that has logged millions of views on the Internet since early October, Peter Paul, a felon who helped produce a gala fundraiser for the Democratic Party and Hillary Clinton’s 2000 Senate campaign, makes a number of false or misleading charges against the presidential contender and former First Lady. Among them:

• The video gives the false impression that the Clintons somehow caused Paul to be investigated for securities fraud as retaliation for a lawsuit he filed against them. But the investigation – and Paul’s indictment – came first.
• A lawyer appearing on the video claims that a telephone conversation between Paul, Hillary Clinton and others shows that she had knowledge of and perpetrated illegal campaign activities, when the conversation illustrates no such thing. It only shows Hillary thanking organizers of a fundraiser.
• The same lawyer alleges that the actions of Clinton and those working for her amounted to "the largest fraud in election funding history," a claim that is absurd. The campaign was fined for a reporting violation, not "fraud." And the fine was relatively modest compared with other FEC fines.
• The video makes deceptive use of an ABC "20/20" clip in an effort to prove that the Clintons pretended not to know who Paul was after his criminal past came to light.

Update Feb. 8: We have received a response from Douglas Cogan, co-producer of the video. We’ve reviewed Cogan’s comments carefully and see no reason to change anything we said. We have posted his unedited comments and our response as a supporting document.

Analysis

Last fall, a video attacking Hillary Clinton began attracting attention on the Internet. A lot of attention, in fact – it garnered more than 1.4 million views in its first month, and is up to more than 3.4 million at this writing.

Clocking in at about 13 minutes, the piece is a preview of a longer movie that makes various charges against the Clintons stemming from a Hollywood fundraiser in 2000, when Hillary Clinton was running for the Senate. That DVD is for sale. We analyzed only the preview, because it is readily available on the Internet and has drawn such a large audience; we viewed the longer film to make sure we weren't misunderstanding Paul's charges.

The video reminds us of various "documentaries" that proliferated in the early years of Bill Clinton's presidency. "The Mena Coverup," "The Clinton Chronicles" and others accused Clinton of a range of illegal and unethical acts. Like many – we daresay most – of those, this video contains a lot of false, unproven and misleading material. And what it leaves out is often more important than what it tells us.

The video begins with shots of a glitzy Hollywood fundraiser, billed as a tribute to President Clinton, on Aug. 12, 2000. Cher, Diana Ross and Sugar Ray performed. The glitterati glittered madly. If you were in L.A. for the Democratic National Convention, opening two days later, this party was the A-list place to be. The Clintons appear to be thoroughly enjoying themselves. Sitting with them is the narrator of the video, Peter Paul, a cohost and executive producer of the event.

Paul was a thrice-convicted felon at the time, a fact that wasn't known to the Clintons or aides who were working to set up the gala, according to a lawyer for the Clintons. ("It was missed" by vetters for the campaign, he told us.) In the late 1970s, Paul was convicted of conspiring to defraud the Cuban government of $8.75 million by selling it a nonexistent shipload of coffee beans, and of possession of cocaine with intent to distribute. He served about 40 months in prison. (Paul claims that he was part of a covert government operation when he was arrested for these crimes.) In the 1980s, he again served time when he violated parole by lying to a Customs officer (again, he claims to have been secretly working with the government.) He chalked up his fourth conviction with a 2005 guilty plea in a securities fraud case … but we'll get to that shortly.

Paul begins his story with the startling declaration that he decided to help Hillary Clinton and the Democratic Party as a way to cozy up to Bill Clinton, whom he hoped to persuade to be a rainmaker for the company he cofounded, Stan Lee Media, after Clinton left the White House. Rarely does a contributor so directly and so publicly state that he opened up his wallet in order to try to get something of value from a politician.

Paul: I decided, well, maybe I should reach out to Bill Clinton to work with us and be a rainmaker for the company when he left the White House. I could accomplish my objective by becoming a major contributor to the party. … My interest in supporting Hillary Clinton was specifically to hire Bill Clinton.

The video cuts to shots of various fundraising events – for the Democratic Party, for Hillary Clinton, for Al Gore – as well as a photo of Hillary Clinton with her arms around Paul and his wife. Then Hillary is on stage at the big gala, thanking Paul and his business partner, Stan Lee, co-creator of such characters as Spider-Man and the Hulk when he was at Marvel Comics.

The uber-event – $1,000 a ticket, $25,000 per couple if you wanted dinner – was to benefit New York Senate 2000, a joint committee consisting of Hillary Clinton's campaign committee, the Democratic Senatorial Campaign Committee and the New York Democratic Party. Paul claims on camera that by producing it, which he later says cost him nearly $2 million, he sealed the deal he wanted: Bill Clinton promised to work with him after he left office. (Paul has said in other venues that Clinton was to be paid $15 million in stock and cash for representing the company.) But Paul offers no evidence in the video to support this claim. He said in an interview with FactCheck.org that nobody witnessed his conversations with Clinton about this and that he had nothing in writing.

Three days after the fundraiser, we learn in the video, The Washington Post ran a short item revealing Paul's felony record; Hillary Clinton's spokesperson, Howard Wolfson, first said her campaign would accept no contributions from him, then two days later corrected himself to say it would return the single $2,000 check it had received from Paul. As for Paul's production of the gala, Wolfson said it was an in-kind contribution.

"The Clintons now had to pretend that they did not even know who Peter Paul was," says an unidentified man on the video. Paul told us the man is Doug Cogan, who coproduced the film with him. Cogan is a conservative Republican and a San Bernardino County, Calif., commercial real estate broker who is a believer in Paul's cause.

It's false, though, that the Clintons feigned no knowledge of Paul. True, they hardly came rushing forward to volunteer the various contacts they'd had with him. But they didn't pretend not to know him. Paul's video makes deceptive use of a clip from an ABC "20/20" segment in which reporter Brian Ross asks Clinton if she recalls Peter Paul, and she turns and walks away. First, Paul's video doesn't tell us that the clip dates from July 2001, which is almost a year after The Washington Post item. Among many developments in the interim: Stan Lee Media had collapsed and Paul was living in Brazil, a fugitive from securities fraud charges. He had also filed a lawsuit against the Clintons. In addition, in the fuller version of the "20/20" story, we see that Hillary Clinton, confronted by Ross, simply says she won't discuss Paul. She never says she didn't know who he was.

Paul says on the video that privately, even after The Washington Post disclosures, the Clintons were still in touch, and he received from them signed photos from the gala and thank you notes for putting on the event. That much is true, if the photos on the Web site dedicated to Paul's allegations can be believed. As for his claim that, around that time, Hillary Clinton's "finance director faxed me a request for $100,000," that's mostly true, but a bit misleading. The money had been promised by Paul months earlier, was to be paid in stock, not cash, and was to go to a group called Working Families, which was supporting Hillary Clinton, not to Clinton's own campaign committee.

The video then takes us into allegations of business fraud by Bill Clinton. Cogan and Paul claim on camera that the president, through an associate, stole away a Japanese investor who had promised to put $5 million into Stan Lee Media. The Clinton associate, according to the video, cut a different deal with the investor that didn't involve Paul's company. Paul offers no evidence on the video to support that, and since it is currently the subject of a lawsuit, we'll let the court decide that one. We can say, however, that it's quite a stretch to claim that Stan Lee Media was forced out of business as a result:

Paul: So that began to trigger a meltdown of the stock. The company collapsed as a result.

Not exactly. It's pretty clear that it would have taken a lot more than $5 million from any investor to save Stan Lee Media.

The price of the company's stock had soared in early 2000, and according to federal prosecutors and a later guilty plea by Paul, there was a reason for that: Paul was manipulating the stock, trading it through accounts that hid his ownership and paying stock promoters to execute trades that made it appear there was a constant demand for shares in Stan Lee Media. He also used the pumped-up stock to borrow millions of dollars on margin from the brokerage firm Merrill Lynch. Things started to fall apart when Paul and his colleague started shifting money around in order to repay the brokerage loans, prosecutors said, and when the two stopped making payments to the stock analysts, the share price plummeted. On Dec. 16, 2000, virtually all of Stan Lee Media's 100-plus staff members were laid off. Nasdaq halted trading of the stock when the price fell to 13 cents.

By the end of the month, Paul was on a plane to Brazil, saying he had a business there that needed attention.

Busted in Brazil

In June 2001, while Paul was in Brazil, two things happened: One, the grand jury in the Eastern District of New York handed up its charges against him. And two, he filed a lawsuit against the Clintons and several other parties. In the video, Paul implies that the lawsuit came first and that the Clintons pulled the strings of government to shut him up because of it:

Paul: We had filed a civil suit against the Clintons. … And then I discovered that I was being investigated in connection with the misuse of my brokerage accounts.

Paul actually filed suit on June 19, 2001, according to legal documents, days after his June 8 indictment, and well after he knew of the investigation that led to it. Besides, Bill Clinton was no longer president at this point, and the U.S. attorney that indicted Paul reported to a Republican Department of Justice, which was part of the Republican administration.

According to a Justice Department press release that later summed up the case, Paul "refused to return after the United States Attorney's Office informed him that he was the target of a criminal investigation" :

DOJ press release, March 8, 2005: Subsequent to the filing of first (sic) indictment, Paul again refused the United States Attorney's Office demand that he return to this country. Accordingly, the government sought the assistance of law enforcement authorities in Brazil. On August 3, 2001, Paul was arrested in Brazil and jailed pending the outcome of extradition proceedings, which Paul contested for the next two years.

Campaign Cash Charge

Paul wasn't extradited to the U.S. until September 2003. Meanwhile, though, his  attorneys at Judicial Watch, a conservative legal group that dogged the Clintons through the 1990s with a stream of document demands and related lawsuits, had met with the Justice Department officials and given them some of Paul's documents having to do with the gala fundraiser. Prosecuters flew to Brazil to meet with him. They began an investigation.

But they didn't turn up much. The prosecutors secured an indictment against David Rosen, the Clinton campaign's finance director, alleging he caused false reports to be filed with the Federal Election Commission putting the cost of the gala at about $519,000, when Paul claimed to have spent $1.9 million to produce it. But the jury acquitted Rosen. His lawyers argued, among other things, that he had no motive to underreport the expenses, because the amount cleared by the Clinton campaign was unaffected by how much Paul spent. There were no other indictments.

Meanwhile, the FEC, mounting its own enforcement action in connection with the gala triggered by a complaint by Paul, couldn't find much to go after, either. It reached a conciliation agreement with New York Senate 2000 and its treasurer, Andrew Grossman, in December 2005. The settlement involved a payment to the FEC of $35,000 and required New York Senate 2000 to amend its disclosure report to reflect an additional $721,895 in in-kind contributions, bringing the total to $1.24 million. As to Hillary Clinton specifically, the agency voted 5-0 on a motion to "[f]ind no reason to believe that Hillary Rodham Clinton violated any provision of the [Federal Election Campaign] Act or regulations in connection with this matter and close the file as to her." Two of the votes were from Republicans and three from Democrats.

That's not part of Paul's video, either.

The Crimes That Weren't

In the video, John Armor, who is identified as a "constitutional law specialist," makes several false claims against Hillary Clinton. They're based on a five-minute videotape of a phone conversation between Paul, Hillary Clinton, Stan Lee and others in Paul's office, which he says provides smoking-gun evidence of Clinton's involvement in "a number of violations of the law" in connection with the fundraising event. Armor's is not a familiar name to campaign finance experts. He says on his Web site that he has represented the campaigns of Eugene McCarthy, John Anderson and Ross Perot, mainly on ballot-access matters, and that he has argued cases before the Supreme Court. He is a sometime-counsel to the American Civil Rights Union, a group set up at least in part to counter the American Civil Liberties Union and whose policy board includes former Attorney General Edwin Meese, former Judge Robert Bork and the former independent counsel who spent years looking into various allegations against Bill Clinton, Kenneth Starr.

Armor: First of all, it shows that she had personal involvement and personal knowledge of the details of this gala, whereas she has had her representatives, in the criminal court, in the civil case and before the FEC, represent that she had no knowledge of this. So that is suborning perjury. That is obstructing justice.

You hear her describing how she solicited a contribution by Cher, who was to be one of the main performers at this gala. Now, what she did there would be legal only if the services of Cher to come and sing at a concert are worth less than $2,000. Therefore she was soliciting an illegal contribution. So that, too, is a violation of the law. …

She says on this tape that Kelly [Craighead, a Clinton staffer] … had fully briefed her, quote unquote, up to the point of the phone call, and furthermore that she would keep her informed after that. So there’s the connection of the candidate to this allegedly independent program. And the FEC law is quite clear, it is a felony, punishable by up to five years in jail, for a candidate to be directly involved in this sort of fundraising activity if it exceeds $25,000. And the FEC found that it exceeded $1.2 million. It’s crime on tape, very simple.