At the presidential gala fundraiser that capped last summer’s Democratic National Convention in Chicago, some of the party’s top fundraisers were listed in the red, white and blue program book.
But only one set of names appeared twice.
Nora and Gene Lum, a couple little-known outside of their native Hawaii, were cited as both hosts and sponsors of the event that raised $2.5 million for the party.
What the program didn’t mention is that federal authorities for more than a year have been investigating whether the Lums used campaign fundraising to gain access to the Commerce Department and to advance their domestic and international business interests.
And although there is no evidence that the Lums funneled foreign money to the Democrats in this election cycle, in the past they have been implicated in a scheme to fund Democratic campaigns with foreign donations in violation of federal campaign laws.
Amid debate over foreign donations solicited by former Democratic fundraiser John Huang, the Lums show how, in an increasingly international economy, the Clinton administration’s Commerce Department became an arena in which fundraising, international dealmaking and government operations seemed to converge.
The scandal over improper and foreign-linked contributions changed the tenor of the presidential campaign in its final weeks, and the White House has been on the defensive ever since. In response, the Democratic Party has, in a piecemeal fashion, returned more than $1.2 million raised by Huang, saying they didn’t realize the money came from questionable sources.
But if bonafide mystery existed about the identities and backgrounds of some of those contributors, the Lums’ legal and ethical problems–including the ongoing criminal investigation–were well-known within the Clinton administration.
When then-Commerce Secretary Ron Brown was killed in a plane crash while on a trade mission to Croatia in April, an independent counsel was focusing on the Lums as part of a broad investigation into Brown’s personal finances, federal records show.
The Lums had cultivated a strong relationship with Brown and brought his son into their multimillion dollar business ventures.
The independent counsel’s investigation was turned over to the Justice Department, and since April, FBI and IRS agents have traced the Lums’ money as it hopscotched through a series of improbable landscapes–from the lush valleys of Hawaii to the dusty oil fields of northeastern Oklahoma, the Los Angeles warehouse district and then Washington D.C., where the Lums and their business partners won unusual access to government.
When aspects of the probe first surfaced publicly last year, some of the Lums’ efforts to gain Commerce Department assistance were aborted. But they continued to play a prominent role in Democratic campaign financing, and to enjoy the perquisites of top donors. The most recent of Nora Lum’s at least four, possibly several more, visits to the White House was in July, records show.
White House officials said they are reviewing internal records and could not immediately explain why she visited the White House, exactly how many times she was there nor with whom she met.
“I am shocked that they are still involved in political contributions,” said Hiroshi Kobayashi, an executive with a Japanese-financed company that during the 1980s hired Gene Lum to help it build a golf course in Hawaii–with scandalous results.
Between 1986 and 1988, Gene Lum convinced the Japanese developers to give $60,390 to the campaigns of Hawaiian politicians who could ease the permit process, according to Kobayashi and federal election records.
But in 1994, after a five-year investigation, the Federal Election Commission ruled that those donations broke laws that bar foreigners from contributing to U.S. campaigns. The money had to be returned, and the developers were forced to pay $23,000 in fines.
When asked in a civil lawsuit if he had arranged the contributions, Lum asserted his right not to give testimony that might lead to criminal charges against him.
“I’m going to take the 5th (Amendment) at this time,” he said in a December 1994 deposition.
In the ongoing investigation into their dealings with Brown, the Lums have not been charged with breaking criminal or campaign finance laws, and they refused to comment for this article.
As Nora Lum sipped coffee in the kitchen of their Honolulu home on a recent morning, Gene Lum shooed away a reporter.
“You can speculate all you want,” he said.
“I feel that they’re honest and hardworking people,” said their friend and attorney, John R. Tisdale, of the Little Rock firm of Wright, Lindsey & Jennings.
The Lums were part of a circle of Asian-American executives, including Huang, who raised money for Clinton’s campaigns to increase their ethnic group’s clout in the administration. But Tisdale said the Lums have been stung that reporters and congressional investigators probing foreign campaign donations seem to be focused exclusively on Asian contributors, and not those from Europe, Canada or the Middle East.
“They’re proud of their Asian heritage and their standing in their community,” Tisdale said.
But an unflattering portrait emerges from court records and interviews in Hawaii, Oklahoma and California, where former business partners have accused the Lums of fraud.
The couple became prominent in Hawaiian political circles during the late 1980s, when Nora, now 54, ran a Waikiki shop that sold clothes to tourists. Gene, 57, was an attorney who worked part-time as an aide to the chairman of the county planning department. On the side, he guided real estate developers through the thicket of Hawaiian planning regulations.
Hiroshi Kobayashi and his firm were trying to build a golf course on 1,084 acres of farmland nestled in the lush Maunawili Valley on the island of Oahu. The project drew opposition from local civic groups and environmentalists, as well as from farmers who had for decades leased plots on the land.
In May 1987, Gene Lum led about a dozen horsemen, several of them armed, who rounded up the cattle of a remaining farm family, slaughtered their breeding bull and divvied up its meat, according to court papers and published reports.
The scandal stalled the golf course development, Kobayashi said, and the Japanese investors later learned that Lum sold the cattle for his own profit, and fired him.
“I just said, sayonara,” Kobayashi said.
In August 1990, the Lums joined as partners with another Japanese-financed company that was seeking to build a $50 million golf course on 324 acres of pristine, lava-covered shoreline in a remote area of the Big Island of Hawaii.
During a six-week period in 1991, while county planners were considering whether to grant a special permit to the developers, the Lums and their relatives contributed $15,000 to the campaign of the island’s mayor, who appoints the members of the Planning Commission and can veto their decisions.
The special permit was awarded, but the blatant timing of the Lums’ donations intensified local resistance to the course.
It was in the midst of these controversies that then-Democratic Party Chairman Ron Brown met the Lums, at a December 1991 fundraiser to which they contributed $10,000.
Within months, in the summer of 1992, Brown installed Nora Lum as executive director of a newly created Democratic Party office, called Asia Pacific Advisory Council-VOTE, which was charged with raising money and mobilizing support among Asian-Americans for the Clinton/Gore ticket.
Brown cut the ribbon to open APAC’s Torrance, Calif., office, and Nora gathered the donations harvested by fundraisers like Huang, the director of U.S. operations for the Indonesian based Lippo banking and real estate conglomerate.
In recent interviews, three Asian-American fundraisers who worked at the office at the time estimated APAC took in at least $250,000, and perhaps as much as $1 million.
But that money does not appear on reports filed with the Federal Election Commission. Spokeswoman Amy Weiss Tobe said party officials could not locate records pertaining to the office, and couldn’t account for how it raised and spent funds.
APAC’s main fundraising event, for example, was an October 1992 reception at the Radisson Hotel in Manhattan Beach, Calif., which honored Huang and eight other Asian-American Clinton supporters. Two campaign aides who helped organize the event said guests donated at least $125 per person, and estimated the event raised $50,000.
That money does not appear on the Democratic National Committee’s election disclosure forms for October 1992, as required by federal campaign laws.
Nor do APAC’s rent, utilities and phone bank costs appear, although such expense must be reported on campaign filings even if they are donated, election rules say.
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Nora Lum told workers in the office that the council’s purpose was to demonstrate the clout of the politically silent Asian-American community.
“All she said was, `We’re going to try to get an Asian-American Cabinet official,’ ” said John Chiang, chief of staff to California’s Board of Equalization Chairman, who worked in the office for several months in 1992.
“She knew a lot of the people who were considered for (White House) jobs. She had worked with them in the campaign and was acting as an advocate for Asian-Americans who had been active,” said David Martin, former White House and Commerce Department aide.
Among those active workers was the Lums’ daughter, Trisha Lum, who became a $24,000-a-year confidential assistant at Commerce in August 1993.
A former Commerce official who spoke on condition of anonymity said department lawyers advised Brown that hiring the daughter of a prominent fundraiser might raise the appearance of impropriety, but Brown overruled them, arguing that it was a low-level post.
For Brown’s son, Michael, the Lums had a senior-level job.
In 1994 they gave him 5 percent of the stock of an Oklahoma gas company they’d recently purchased, and installed him on the board of directors.
That company gave the 30-year-old, who was struggling to pass the bar exam and to make a name for himself as a Washington, D.C., lobbyist, at least $150,000 in stock dividends and other payments, as well as a $60,000 membership to the exclusive Robert Trent Jones Golf Club in Virginia, court records show.
The Lums bought the Oklahoma gas company, formerly known as Gage Co., in the fall of 1993. The financially strapped, six-person operation consisted of 100 miles of low-volume pipeline and a small processing plant near Tulsa.
Their partner, W. Stuart Price, had been Oklahoma state finance chairman for Clinton’s 1992 campaign.
Price testified in a July 1995 Tulsa County court hearing that he was invited into the deal by “a friend, actually at the Democratic National Committee,” but Price did not name the friend and will not comment today.
The Lums’ lawyer for the sale was Tisdale of Little Rock, who had been attorney for Clinton’s Arkansas campaigns and was custodian of his gubernatorial papers.
Tisdale said in an interview that he was introduced to the Lums by a law partner who specialized in minority affairs, and that politics had nothing to do with his role.
In their meetings with Gage employees and officials, the Lums underscored their closeness to Commerce Secretary Brown, going so far as to tell then-Gage Vice President Michael McAdams that Brown was their partner in the gas company purchase.
Even before the Lums and Price bought Gage, Price offered contracts to companies that agreed to buy its gas, then used that money to purchase Gage, records show.
The result “was just a great win,” Price testified. Their new company, called Dynamic Energy Resources Inc., paid $9.4 million for Gage while selling its gas contracts for $18 million.
Oklahoma Corporate Commissioner Robert H. Anthony, one of three commissioners on the state panel that regulates utilities, has since February been investigating Dynamic’s windfall profit.
According to people who have been interviewed by agents, investigators have focused on two curious aspects of the deal.
First, some of the money the Lum’s company used to buy Dynamic was funneled into a trust in the United Kingdom that in turn bought and sold European bank notes, then distributed its earnings to a second trust headquartered on Cook Island, an obscure sovereign country near Australia known for its bank secrecy laws, company records and interviews show.
Lawyers for Gage’s former employees have suggested in court testimony that the purpose of the arrangement was to conceal proceeds that went to Gage.
And second, a Hawaiian golf course that a Lum-controlled company owned with Japanese investors, was mortgaged to Gage’s president during the sale negotiations, Hawaiian land records show.
After the sale was completed, in the spring of 1994, the Lums and Price decided to split some of the proceeds, based on their relative shares in Dynamic. The Lums took $5.2 million in cash, later designating these as consulting fees, and the Prices took $2.5 million.
In June 1994, Price decided to run for Congress, and Dynamic spent more than $160,000 of company funds on his campaign, including $13,000 to fly in two ministers who helped mobilize Tulsa’s black vote, court records show.
Price lost by a convincing margin to Republican Steve Largent, the former pro-football star. Price testified that he did not authorize Dynamic’s campaign spending.
After Price lost his election, he sued the Lums for fraud in their handling of Dynamic’s funds, while they accused him of improprieties.
Michael Brown was given a seat on Dynamic’s board so the Lums could “gain influence with the department of Commerce,” Price testified. “Their discussions with me is that he’s there because they want influence, and that’s why he is getting paid.”
Brown declined to comment for this article.
Court records suggest the Lums launched an ambitious scheme to curry favor with the Commerce Department.
Gilbert Colon, who had been the $107,300-a-year head of the Commerce Department’s Minority Business Development Agency, was hired by Dynamic in August 1994.
“The Lums thought they were going to qualify for minority (federal) contracts,” Price testified.
Company records show Brown and Colon were given Dynamic checks marked “reimbursement” within days of making personal political donations totalling several thousand dollars.
The Lums also gave Dynamic stock to Helen Yee, who is the mother of Melinda C. Yee, a then-Commerce special assistant who had worked with Nora Lum in the APAC office in 1992.
Melinda Yee quit her $83,284-a-year Commerce post this year after disclosures that she failed to list on ethics forms that Dynamic had paid for two plane flights so she could campaign for Democratic candidates in 1995.
At the time, the Lums were exploring several international businesses, including propositions to farm shrimp in Mexico and build housing in South Africa. Nora Lum also invested $1 million in a start-up company that would market Japanese-made CD ROM players for cars. Along with Michael Brown, her partner was Unchong Choi, also known as Richard Bertsch, a 38-year-old Korean citizen and U.S. resident who had worked for Lum as a fundraiser in the APAC office.
Those deals later fizzled, and Choi and the Lums are now suing each other in Oklahoma and California federal courts.
Several current and former Commerce officials said they were disturbed by the Lums’ blatant name-dropping, as well as by the macadamia nuts, Kona coffee and printed Hawaiian shirts Nora Lum sent to the bureaucrats whose assistance she sought.
But her ties to Ron Brown opened doors.
In August 1994, just before Secretary Brown’s trip to China, Nora Lum was one of 30 Asian-American business people invited to meet with Brown and other Cabinet secretaries to discuss the administration’s commercial policy toward Asia.
The government-sponsored meeting lasted only three hours, but Nora Lum rubbed shoulders with executives from some of America’s largest companies, including American Airlines, General Electric, IBM, Westinghouse and Federal Express, as well as U.S. trade officials.
That month, Nora gave $10,000 to the Democratic Party, and in September she gave $10,000 more.
At the time, Nora Lum was lobbying for a place on Brown’s delegation of U.S. business executives traveling to China. She was exploring the possibility of investing in a shopping center in China, and asked that Brown promote her deal on the trip, according to one senior Commerce official who spoke on condition of anonymity.
She was ultimately rejected by Commerce Department lawyers.
In November 1994, Nora Lum attended the Asia Pacific Economic Cooperation summit in Jakarta, Indonesia. The government-sponsored summit is a key meeting place for government officials and the international businessmen seeking assistance for their projects.
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In July 1995 she attended the state dinner for South Korean President Kim Young Sam as the guest of Veterans Affairs Secretary Jesse Brown, a Chicagoan who said he met her at a Democratic fundraiser the year before. “I was very impressed with her,” Brown said.
Two months later, in September 1995, Dynamic filed for bankruptcy, listing debts of $1.6 million.
As part of an August 1996 settlement of the bankruptcy case, Dynamic sold its gas pipelines but retained a $105,000 Honolulu condo and the membership in the Robert Trent Jones Golf Club, court papers show.
The same month the bankruptcy was settled, the Lums traveled to Chicago for the Democratic Convention, where Nora Lum gave $10,000 to the party. Besides the additional $10,000 she gave in September, her status as host and sponsor of the Presidential gala shows that she and her husband raised more than that from others.
Democratic spokespeople said they did not have records indicating how much the Lums gathered for the event.