Is a Possible New Fundraising Scandal Looming for the Clintons?

This is a rush transcript from "Hannity & Colmes," August 29, 2007. This copy may not be in its final form and may be updated

ALAN COLMES, CO-HOST: A campaign fundraiser with close ties to the Clinton campaign has come under fire.Norman Hsu, one of the nation's leading political fundraisers, promised to raise at least $100,000 for the New York senator's presidential campaign.

The Los Angeles Times also reported today that the state of California has an outstanding warrant for Hsu's arrest on charges of grand theft.

Earlier today, people were claiming that Hsu is a decent man who has convinced friends and colleagues to join in his fundraising efforts. But late this evening, the Clinton campaign announced that they would donate all of Hsu's contributions to charity because of the controversy surrounding the warrant for his arrest.

Al Franken's Senate campaign in Minnesota and Congressman Mike Honda of California have also returned donations. And that might only be the tip of the iceberg.

Joining us now, Wall Street Journal columnist John Fund.

John, welcome.

JOHN FUND, COLUMNIST, WALL STREET JOURNAL: Thanks.

COLMES: Is there any evidence that Hillary Clinton knew anything of what Hsu was doing, if indeed he did anything illegal, that she had any knowledge that this was going on?

FUND: At this point, no. But I think we need to learn more. And I think we need to have Mr. Hsu found. After all, there's a warrant out for his arrest on grand theft. And he should be brought in and should be asked a lot of questions about a lot of things.

COLMES: What, she should be brought in?

FUND: No, Hsu should be brought in.

COLMES: Mr. Hsu. All right. But you want to pin this on Hillary Clinton because of his behavior?

FUND: No. No, no. The only concern with the Clinton campaign is we have seen strange campaign contribution scandals before. The 1996 campaign saw 120 people connected to the Clinton fundraising efforts either flee the country to avoid questioning or plead the Fifth Amendment.

COLMES: Right, but you want to then use...

FUND: I'm simply saying the Clintonites should have learned from that 1996 thing.

COLMES: First of all, you don't know that they didn't. You don't know they didn't. You want to go back to John Lund. You want to go back to what happened in 1996 with Bill Clinton — let me just get out my question.

And then you want to use that to overlay that on Hillary Clinton, and presume that there's some malfeasance here because of what might have happened 10 years ago.

FUND: The same finance people who worked in the Clinton campaign in 1996 are running Hillary's campaign. The same people, Alan.Terry McAuliffe.

COLMES: But you sound like you're chomping at the bit with the hope that there's a problem with the campaign.

FUND: I want questions answered.

COLMES: There's no evidence of it. In fact, there's no public record or indication that Hsu reimbursed, for example, the Paw family, the family in California that gave like-minded contributions.

FUND: We also have these gentlemen who have just fled to Pakistan because they gave illegal campaign contributions, fled the country. I'm saying there are ominous parallels with exactly what went wrong in the 1996 Clinton campaign, and we never got the answers to what...

COLMES: Generally, you know the candidates are not aware, day-to-day, of what's happening with people who may contribute, who are going to contribute.

FUND: And in 1996, we do know Bill Clinton was aware. He was aware of the Lincoln bedroom. He was...

COLMES: John...

(CROSSTALK)

COLMES: What does it have to do with this?

FUND: Clinton has a modus operandi. This is a pattern.

COLMES: You want to go back to '96?

FUND: It's a pattern.

COLMES: And it has nothing to do with it.

SEAN HANNITY, CO-HOST: You guys are arguing. I want to go through this step-by-step and explain exactly, especially as it relates to the Paw family, where you have a gentleman that only makes $45,000 per year.

FUND: And his wife is a homemaker.

HANNITY: And his wife is a homemaker. Why don't you explain in detail what's happening here and why this is significant? He's a fugitive, by the way.

FUND: Absolutely. We can't find him. Although he's sponsoring a Clinton fundraiser September 30, Mr. Hsu is.

The Paw family is very interesting. They live in a house that Mr. Hsu used to own in Daly City, California.

HANNITY: Right.

FUND: The family there has contributed over $250,000 to Democratic candidates in the last three years. They never contributed before 2004 to anyone.

HANNITY: Right.

FUND: He makes $49,000 a year. There's very little other income in the family.

HANNITY: Right.

FUND: They apparently have all of this money.

The suspicion is that, like with a lot of campaign finance scandals, Mr. Hsu may have been reimbursing them in order to make those contributions to evade the campaign contribution limits. That would be the suspicion.

HANNITY: In other words, that they would be funneling the money from Mr. Hsu, basically, through the Paw family...

FUND: Right.

HANNITY: ... to get it into the Clinton coffers there.

FUND: Exactly.

HANNITY: Now how — where would the culpability of the Clinton campaign be here? In other words, should they be doing background checks? Should they have knowledge of this? Is this something that can happen instantly?

FUND: I would say if the Clinton campaign hadn't had the 1996 experience, when 120 people fled the country or pled the Fifth Amendment, I would say a campaign should try to do due diligence, try to look out for suspicious behavior.

But because of the 1996 thing, they should have had all of their radar out. They should have a heightened level of scrutiny, and they should have protected themselves from this. Because we also have this guy who's fled to Pakistan over campaign contribution-limit problems.

HANNITY: Now, she's saying, I think, she's going to give some of this money, I guess, to charity.

FUND: Sure.

HANNITY: Does that get her off the hook?

FUND: I think we need to scrutinize the Clinton campaign very carefully. We didn't do it in 1996. And we had a situation in which we may have compromised American national security regarding the Chinese, who were clearly trying to influence our election. So we need more scrutiny here.

HANNITY: We have this George Soros-funded group. It's called Americans Coming Together, headed up by a Clinton friend, Harold Ickes. Now today, the Federal Election...

FUND: He's working in the Clinton campaign now.

HANNITY: He's working in the Clinton campaign now, and they fined this organization $775,000 for using...

FUND: The third largest fine...

HANNITY: Absolutely, in history. For using soft money to boost Kerry and other Democratic candidates during the 2004 election.

Here's my question. We talk about John Wong and Charlie Tre in the '96 scandal. And the Paw family, Mr. Hsu, does it get too confusing? Is this something that the American people really can relate to? Or is it a basic knowledge that you can sort of thwart these laws and there's no punishment or there's no consequence?

FUND: I've often thought that a lot of these campaign finance laws really can't be enforced. What you should have is full disclosure. And people came up. And have real punishment if you don't disclose.

The real problem here, though, is these laws are an invitation for people who don't have good ethics to evade them. Remember, that fine was levied because over $100 million was improperly spent on that Kerry campaign.

HANNITY: A hundred and thirty-seven million, to be exact.

FUND: A hundred million dollars is more than we used to spend on the entire presidential campaigns.

HANNITY: Exactly.

(CROSSTALK)

COLMES: Will he be in jail because of this?

FUND: In jail? The investigation goes on. The Federal Election Commission says they're continuing to...

COLMES: Do you have any public record or indication that Hsu reimbursed the Paw family?

FUND: No, but I have strong suspicions of it.

COLMES: All right.

FUND: The Paw family should come forward.

HANNITY: Where did they get the money? They only make $49,000 a year. Where did they get the money?

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