For the first time since she declared her intention to run for President, Senator Hillary Clinton actually may not be the clear frontrunner for the Democratic nomination. After overtaking Johnny Reid Edwards in Iowa back in August, she has narrowly relinquished that lead to Senator Barack Obama. Her New Hampshire lead over Senator Obama, once well over twenty points, has collapsed to the low single digits. While her leads in later states are still secure, back-to-back losses in Iowa and New Hampshire will damage her standing, and Senator Obama has enough money to capitalize on the momentum he would gain from back-to-back wins.
What is truly amazing is not just the speed with which Senator Clinton’s leads have collapsed — everyone expected the race to narrow — it is the self-inflicted nature of the wounds. To be blunt: Clinton’s feared political machine has turned out to be a paper tiger. Her inability to answer a straightforward question about giving driver’s licenses to illegal aliens was inexcusable for a two-term Senator who wishes to run the country. Her “I’m just a girl defense” was even worse. And I actually had to go to her website (first time, to be sure) and read her press release attacking Senator Obama for something he wrote in elementary school firsthand, because I was certain that the friend who sent me the news article had actually cut-and-pasted it from the Onion and was trying to pull one over on me.
The worst is likely yet to come for Clinton. While her opponents didn’t expect the windfalls that her ham-handed campaign has given them, they knew she was vulnerable on ethics. And at the worst possible moment for her, one of her leading former fundraisers has come under indictment.
As I’ve written before Norman Hsu is something of a fundraising equivalent of Arizona Cardinals quarterback Kurt Warner. He appeared almost out of nowhere, and immediately became a star in his profession. Within three years Hsu went from having never made a political contribution to being one of the largest fundraisers for the Democratic party.
But unlike Kurt Warner, Hsu’s advances weren’t the result of hard work. It turned out that Hsu had been a fugitive from justice for fifteen years, after skipping bail on a Ponzi scheme he ran in the 1980s. He had ties to the Triad Society, a Chinese mafia, and claimed to have been abducted by them at one point. More importantly, his campaign donations brought about a federal investigation, after it came to light that a family headed by a mail carrier had donated over $200,000 to Democrats since 2005. The family lived in a house previously owned by Mr. Hsu, and their donations lined up nicely with those made by Mr. Hsu.
The fact that the Clinton campaign had been warned about Mr. Hsu and first defended him and initially refused to return all of the money he’d raised was problematic. Matters got worse this week when a New York grand jury issued a fifteen-count indictment on a variety of counts, covering Mr. Hsu’s latest Ponzi scheme and his illegal donations to political campaigns. All told Hsu faces charges of six counts of mail fraud, six counts of wire fraud, and three counts of violating the Federal Election Campaign Act.
The details are grim. According to the indictment, Hsu used his investment schemes to pressure co-investors to donate to political candidates. Reuters reports that Hsu is also accused of avoiding the federal campaign limits by reimbursing straw donors for their contributions to Democratic candidates, including $850,000 to Senator Clinton (which she eventually returned).
The renewed attention this has received has been bad for Senator Clinton, especially as her campaign is in the midst of defending against the most serious challenge to date (in the Iowa caucus race). Fortunately for her, the news media is more interested in touting new allegations of gay sex against Senator Craig than in exploring Hsu’s past (you had to go to CNN’s blog “The Ticker” to find the story.
Some publications are — surprisingly — putting aside their partisan leanings and investigating the possibility that Norman Hsu may not be an isolated actor. The details of a recent LA Times story on Clinton money raised from Chinatowns in New York and California sound like something plucked from a Progressive Era tract on political corruption. The LA Times investigation details $1,000 and $2,000 donations coming into Clinton from areas where the median income is around $25,000 a year. The Times alleges that Clinton has engaged “neighborhood associations” — at least one of which is tied to organized crime — to help with its fundraising. Unsurprisingly, donors are reporting feeling pressured to give. Of 150 donors whom the Times chose to investigate, one out of three could not be located.
For now, while the case against Norman Hsu is strong, the case against Senator Clinton is largely circumstantial. But the indictment of Norman Hsu reminds Democratic voters of the worst scandals of the last Clinton Presidency, and those scandals did not involve a porcine intern. The possibility that Norman Hsu is actually part of something larger and potentially more sinister is not to be discounted, and it is unlikely that Senator Clinton has heard the last of him.