N.Y. Senator Wins in Court Against Campaign Donor

PALO ALTO, Calif. — Senator Clinton has won a court battle with a disgruntled campaign donor who claimed that his business dealings were unfairly disrupted by President Clinton, the former first lady, and their associates.

A California appeals court ruled yesterday that a lower court judge acted properly when he dismissed Mrs. Clinton and her 2000 Senate campaign from a lawsuit by the donor and former Internet entrepreneur, Peter Paul.

"The record as presented to us strongly suggests Senator Clinton's and Clinton for Senate's conduct was perfectly legal," Judge Dennis Perluss wrote for a unanimous three-judge panel.

Mrs. Clinton could still be forced to give a deposition or testify at trial in the civil case because a portion of it remains pending against Mr. Clinton. In 2004, the California Supreme Court turned aside Mr. Clinton's appeal seeking to be dropped from the case.

Paul served as a host and major financial backer for a star-studded August 2000 gala, which served as a fund-raiser for Mrs. Clinton and drew performers such as Cher, Diana Ross, and Paul Anka.

Paul's suit claims that he ponied up $1.9 million for the event based on promises that, after Mr. Clinton left office, he would come to work for the online entertainment company Paul ran at the time, Stan Lee Media. Mr. Clinton never joined the company, which went bankrupt in the Internet downturn. Paul also asserts that some of his existing business deals abroad were usurped by Mr. Clinton's associates.

Paul, 59, is a four-time convicted felon who is awaiting sentencing on a federal stock-fraud charge stemming from the demise of Stan Lee Media. Advisers to Mrs. Clinton told federal prosecutors Paul should not have been permitted to organize a fund-raiser because of his criminal record but that he "missed the vet," meaning that he slipped through campaign's background check system. His criminal record was disclosed in the Washington Post a few days after the gala. He was later declared a fugitive after traveling to Brazil.

Mrs. Clinton's campaign and associated committees reported only about half a million dollars in in-kind gifts from Paul. The understatement led to the criminal indictment of Mrs. Clinton's national finance director, David Rosen, on charges that he caused the submission of false financial reports about the August 2000 gala. After a trial in 2005, a jury acquitted Mr. Rosen of all charges. A political committee that sponsored the gala, New York Senate 2000, later agreed to pay a $35,000 civil fine and to amend its financial reports to show an additional $721,000 in in-kind expenses borne by Paul.

While yesterday's decision has no direct impact on Paul's pending claim against Mr. Clinton, Judge Perluss said the former president's decision to back away from any business deal may have been a wise one. "Whether Senator Clinton responded to media reports after the event about Paul's convictions in a manner calculated to protect her image in a hotly contested political campaign does not bear on President Clinton's intent at the time the promise was made," the judge wrote. "President Clinton may have intended to work with Paul after the election when the heightened scrutiny would have passed but was ultimately dissuaded by the collapse of Stan Lee Media and Paul's fugitive status."

Paul told the Associated Press that he is considering an appeal to the California Supreme Court.

"The court relied upon earlier findings by the Federal Election Commission, which found no evidence of misconduct by Senator Clinton," an attorney for the Clintons, David Kendall, said.

Three other men involved with the Hollywood gala have since been convicted of federal felonies. A Paul associate who helped plan the gala, Aaron Tonken, is serving a 63-month sentence for fraud connected with charity fund raising.

A political consultant from New Orleans who attended the gala and took out a tribute ad in the program, Raymond Reggie, was released from prison in November after serving time for bank fraud. Reggie is a brother-in-law of Senator Kennedy of Massachusetts.
A Chicago businessman and former strip club owner who said he was asked to monitor the Hollywood gala for Mr. Clinton, James Levin, pleaded guilty last year in connection with a minority contracting fraud scheme involving the Chicago Public Schools. He was sentenced in May to three years probation.