Campaign fund-raiser admits guilt Democratic backer laundered $46,000 from Indian Embassy

Gadhia faces 5-year term

Four Md. lawmakers unwittingly took illegal donations

May 09, 1996|By Jim Haner and Mark Matthews | Jim Haner and Mark Matthews,SUN STAFF Sun staff writers Paul West, John B. O'Donnell and C. Fraser Smith contributed to this article.

A prominent fund-raiser for Maryland Democrats pleaded guilty yesterday to election fraud in a scheme to launder at least $46,000 in illegal campaign contributions he received from an official at the embassy of India in 1994.

Lalit H. Gadhia -- a 57-year-old immigration lawyer and former campaign treasurer to Gov. Parris N. Glendening -- confessed in U.S. District Court in Baltimore to his role in the scheme to influence congressional lawmakers involved in foreign-policy decisions affecting India.

An immigrant from Bombay, India, who was active in Baltimore's early civil rights movement, Gadhia now faces up to five years in prison and $250,000 in fines. Sentencing is scheduled for this summer.

Prosecutors say the case against Gadhia is one of only a handful of cases in which foreign citizens or governments have been linked to illegal campaign contributions in a U.S. political race, and may be the first time an official of a foreign embassy has been implicated. "The fact that the money came from the Indian Embassy and that so many people were manipulated into participating in the scheme takes this case to a higher level than we normally see in these kind of investigations," said U.S. Attorney Lynne A. Battaglia. "Obviously, we have not seen a case like this in Baltimore before."

Among those who received the illegal funds were four members of the Maryland delegation and congressmen in Pennsylvania, New York and Ohio. According to documents filed in the case, federal authorities could find no evidence that any of the recipients was aware of the true source of the contributions.

"The campaign assumed that these were appropriate contributions," said Jesse Jacobs, press secretary for Sen. Paul S. Sarbanes, the Marylander who is the third-ranking Democrat on the Foreign Relations Committee. Mr. Sarbanes received $4,500 of the questionable contributions.

Other Maryland Democrats who received $3,000 contributions each were Reps. Benjamin L. Cardin and Steny H. Hoyer and former Rep. Kweisi Mfume.

In all, 19 Democratic candidates nationwide got the money shortly before the 1994 elections through a network of prominent Indian-American businessmen in Maryland, their families and employees of their companies. The donors then were reimbursed by Gadhia, who admitted yesterday that he used money from a minister at the Embassy of India in Washington.

Under Federal Election Commission rules, it is illegal for noncitizens to make political contributions or for anyone to make donations in another person's name. But Gadhia never informed donors that the money was coming from India -- or told them that it was a crime to accept reimbursement for a donation.

"The vast majority of people in the Indian-American community nationally are going to be appalled by this," said Subodh Chandra, 28, a Los Angeles lawyer who heads a political action committee that unwittingly received at least $31,400 of the illegal contributions from Gadhia.

"We can only hope at this point that these were the acts of a lone bumbler or group of bumblers and not some sort of international intrigue involving the Indian government. Whatever the case may be, it has harmed an immigrant community in this country that has worked hard for political recognition," Chandra said.

The scheme first came to light last year after a two-month investigation by The Sun into Chandra's PAC, the Indian-American Leadership Investment Fund. Federal campaign finance records showed that almost all of the group's money came from Baltimore donors with ties to Gadhia, who then was Glendening's campaign treasurer.

Donating mostly in $1,000 and $500 increments, contributors ranged from prominent Indian-American engineers and doctors to cooks, busboys, students and secretaries who never before had made a political donation.

A half-dozen contributors interviewed said they were paid by Gadhia or his nephew to write the checks, but had no idea the practice was illegal.

Satish Bahl, a part owner of the Akbar Restaurant on Charles Street -- where kitchen employees made $13,500 in bogus contributions -- echoed other Baltimore donors in saying he now feels badly used by his former friend.

"I had no idea -- absolutely no idea," he said yesterday. "We were not aware of the consequences. We were only involved thirdhand. We never thought about how far this could go."

Gadhia denied the allegations at the time of The Sun's investigation. But the case against him continued to build last summer as FBI agents issued subpoenas to those who gave to the PAC or who attended fund-raisers held by Gadhia for Maryland congressional candidates, Baltimore Mayor Kurt L. Schmoke and presidential aspirants Bill Clinton and Michael S. Dukakis.

Former Md. official

Gadhia was at the height of his political influence, having been rewarded by Glendening with an $80,000-a-year post as his deputy secretary of international economic development. Within days, the governor demanded his resignation.

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