N.Y. Senate Money Scrutinized
Special party accounts - or "victory funds" - created for New York Senate candidates Hillary Rodham Clinton and Rudy Giuliani are illegal, two good government groups told the Federal Election Commission on Tuesday.
"We're filing a complaint against the campaigns of Hillary Clinton and Rudolph Giuliani ... because they're raising and spending illegal money through these so-called 'victory funds,'" Common Cause spokesman Jeff Cronin told CBSNews.com.
The complaint by Common Cause and Democracy 21 centers on accounts set up by the Democratic Senatorial Campaign Committee for the first lady and the National Republican Senatorial Committee for the New York City mayor. These accounts are able to accept unlimited "soft money" contributions, which can be received from unions, corporations and large donors - groups that don't have permission to give directly to the campaigns.
Both watchdog groups have also asked the Justice Department to investigate. And both parties say they're just following the law, reports CBS News Correpondent Howard Arenstein. The FEC had no comment Tuesday. The Justice Department did not immediately return a phone call seeking comment.
Common Cause executive director Scott Harshbarger told CBS Radio News what the Clinton and Giuliani campaigns are doing is illegal.
"The New York Senate race on both sides involves an elaborate new schemes in which the candidates and the parties are raising and spending soft money in increasingly blatant ways to influence federal elections."
Common Cause's Cronin explained that when a big donor gives big money to a candidate, the legal limit for an individual contribution - $1,000 - goes into the candidate's coffers, while the rest is automatically funneled into the "victory fund." Cronin said because all the money goes toward promoting the candidate, the line between hard money and soft money is blurred or erased.
"Everyone knows precisely what is going on here," Democracy 21 president Fred Wertheimer told CBS Radio News.
Clinton and Giuliani "are thumbing their noses at the Federal campaign finance laws and treating the voters of New York as if they were fools," he continued.
"We have a factual record here and it makes clear to any real person whose willing to look at the facts, that this is a fraud, it's a farce. They're just playing around and laundering money through the parties to spend on their own races." Wertheimer added.
Party officials defended the fund-raising agreements, which they say have been used in U.S. Senate elections for years now.
"The DSCC's joint fund-raising with the Clinton campaign is entirely legal and absolutely appropriate," DSCC political director Jim Jordan said.
Jordan pointed out that in New York's most recent U.S. Senate contest, in which Democrat Charles Schumer efeated Republican Alfonse D'Amato, both candidates made use of similar accounts.
Jordan added Common Cause's decision to focus on the high-profile New York race "smells of a publicity stunt."
The DSCC sought to discredit Harshbarger, a fellow Democrat, by distributing press releases on Tuesday detailing how he had received soft money himself when as Massachusetts attorney general he ran for governor in 1998.
Harshbarger said the soft money used in his race was "a completely different kind."
And Cronin countered the DSCC by pointing out that, though these "victory funds" have existed for some time, at no time in the past have candidates had a "formal relationship" with them, as Giuliani and Clinton do now.
"They've actively become involved in raising money from prohibited sources," Cronin said.
The complaint came as Giuliani stumped in New York with Arizona Sen. John McCain, the most visible booster of campaign finance reform whose plan would ban soft money. The NRSC did not return a telephone call seeking comment. Neither did the Clinton and Giuliani campaigns.
With seven months to go before the election, Giuliani and Clinton are easily on track to mount the most expensive contest in New York history. Giuliani has raised $19 million and Clinton $12 million. Recent polls show the two in a dead heat.
With so much at stake, both parties are expected to pour soft money into New York for television advertisements as Election Day draws nearer. But the law says that so-called soft money cannot be spent on advertisements that specifically advocate voting for a candidate. Soft money can only legally be used for "issue ads," which do not directly endorse candidates, or get-out-the-vote and other party-building activities.
Cronin said Tuesday that while ads for the first lady and the mayor don't explicitly state that viewers should vote for the candidate, "they do not pass the giggle test," in that they are clearly candidate ads rather than issue ads.
Clinton's New York Senate 2000 account had raised more than $700,000 in soft money by the end of last year. The Giuliani Victory Committee was set up just weeks ago and has not reported yet.
While the parties are legally barred from earmarking money for specific races, they keep tallies to keep track of how much candidates raise.