DNC sent funds to 12 state parties to skirt spending limit National Democratic Party specified how $32 million was spent, evidence shows


WASHINGTON -- The Democratic National Committee quietly transferred at least $32 million to state Democratic parties in the last election as part of an elaborate plan to spend more money than federal election law appeared to allow on a massive advertising campaign that indirectly helped re-elect President Clinton.

The plan was conceived and coordinated by the Clinton-Gore campaign staff and Democratic Party officials as an end run around legal spending limits, according to documents and interviews with Democratic officials. The Clinton campaign had agreed to the limits in return for accepting millions of dollars in public financing.

The state parties played almost no role in deciding on the details of this arrangement and were simply used as a vehicle for the Democratic National Committee to funnel more money than they could have spent directly on an advertising campaign that benefited the president's re-election effort.

The Republican Party, too, used similar strategies, including transfers of money to state parties for ads that echoed the campaign message of its presidential nominee, Bob Dole.

But the Republicans transferred less money to the state parties, and later in the election cycle, according to election records. A Justice Department task force also is reviewing Republican expenditures.

Justice Department and Senate investigators, who until now have primarily focused on how the Democrats raised money, have widened their investigation to look at whether the Democratic Party may have violated the law in the way they used money they had gathered from coffees, sleep overs, dinners and phone solicitations.

The money transferred by the DNC to the states was used to pay for "issue ads," which are supposed to support the party's agenda, rather than a candidate, such as Clinton.

The investigators are re-examining the ads, which might be thinly veiled candidate ads for the Clinton-Gore effort.

Parties can buy issue ads but not ads for a candidate. However, the issue ads must be paid for with a blend of legally restricted donations and unrestricted contributions. The DNC sent money to the states because they are permitted to spend more unrestricted money on the ads.

The money the DNC transferred to state parties also came with specific instructions on how to spend it, state party officials said. Within days of receiving the transfers, the state parties dutifully sent checks to the consulting team hired by the Clinton-Gore campaign and the DNC. The $32 million went to the 12 battleground states.

About $1.4 million was sent to Colorado by the national party and was used to pay for issues ads within a matter of days. "Basically, we'd receive instructions from the DNC and an amount would be transferred to us," recalled Dan Morris, the former state party treasurer, "and we would then transfer the money for the media buy. Folks out of the DNC sent us the money and they would give us instructions about where to send it from there."

Money transfers from the national party to the state parties can be legal, but Justice Department and Senate investigators are looking into whether the transfers were purposefully used to evade campaign spending limits.

Even Dick Morris, the former presidential campaign adviser who orchestrated the president's media campaign acknowledged that the television effort was directed by the DNC and not the states. "It was a charade to say those were ads of the state parties," said Morris in an interview. "I never spoke to anyone from any state."

Among the legal issues under examination is whether this arrangement allowed "soft money," contributions made to the national party in unlimited amounts by corporations, unions and individuals, to be used in ways that would otherwise violate federal election law. Such donations cannot be used to support the re-election of individual candidates.

Another question is whether this arrangement allowed the Clinton re-election effort to evade the $62 million spending limit it agreed to in 1996, when it accepted the same amount in public funds.

"There has always been an attempt by both parties to push back the edges of these laws," said Trevor Potter, a former Federal Election Commissioner and election law expert. "But, in the past, it was in the margins of political activities. Here we are talking about a wholesale blowing of the legal spending limits."

Moreover, investigators are reviewing the conversion of candidate advertising into issue ads through a few deft changes wording and message, allowing them to be paid for with DNC money. That permitted the Clinton-Gore campaign to conserve its financial resources. The consulting team that created the issue ads also worked for the Clinton-Gore campaign.

"This was a coordinated effort to evade the limits of how much a campaign can spend," said a senior Republican lawyer involved in the Senate Governmental Affairs Committee's inquiry.

"It was a strategy formed inside the White House. They knew they were in a legal gray area," the lawyer said.

Lanny J. Davis, a spokesman for the White House, said he was confident that no laws had been broken.

Pub Date: 10/02/97

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