Published on Saturday, June 17, 2000 in the Washington Post
Torricelli Sells Out Democratic Heritage In Quest For Corporate Checks
by Susan Schmidt
Soon after Internet entrepreneur Larry Kasanoff's company was the subject of an admiring newspaper profile last December, he received an unexpected phone call from Washington. It was New Jersey Sen. Robert G. Torricelli, chief fundraiser for the Senate Democrats, saying he'd like to pay Kasanoff a visit.
Before Torricelli's cold call to his office, Kasanoff had never given a dime to political causes. That didn't deter Torricelli. He flew to Hollywood to learn how Kasanoff's company creates such World Wide Web sites as "Bikini Masterpiece Theatre" and "Pete the P.O.'d Postal Worker." Soon Kasanoff found himself at a Washington dinner with President Clinton, chatting about the future of entertainment on the Internet.
Bottom-line benefit to Senate Democratic coffers: a $10,000 check from Kasanoff. "I don't go to political events, but I am incredibly impressed with these guys," said Kasanoff.
Torricelli's relentless fundraising style as head of the Democratic Senatorial Campaign Committee is paying off for his fellow Democrats in their uphill quest to regain the Senate majority. The DSCC already has taken in nearly as much money as its Republican counterpart, and actually has more money in the bank than Senate Republicans.
To bring in the money, Torricelli is aggressively courting corporate America by pushing business-backed bills, from rewriting the bankruptcy laws to limiting compensation to asbestos victims. He also is unapologetically exploiting the loophole that allows his committee to raise large "soft money" contributions from businesses, unions and wealthy individuals--even though such contributions are not supposed to be used to elect federal candidates.
"My job is to win by the rules as they're written," Torricelli, 48, said in an interview. "It's now or never."
But Torricelli's pro-business tilt has at times dismayed some of his colleagues. Sen. Russell Feingold (D-Wis.) said Torricelli's backing of the bankruptcy measure--which has helped bring in large sums to the DSCC from the credit card industry--reflects a betrayal of the party's heritage. "It is particularly disheartening when my own party puts itself in a position of partial financial dependence on an industry whose interests in this legislation are contrary to those of citizens that we take pride in protecting," he said.
There is also unease among some of his colleagues over Torricelli's finances, both in his campaign and personally. New disclosure forms show he is actively trading in highflying technology stocks, including a telecommunications company that would benefit from legislative language he has promoted. And the Justice Department has indicted a string of donors to Torricelli's 1996 campaign for making illegal contributions; two of them pleaded guilty just two weeks ago.
Nonetheless Torricelli has demonstrated gusto for a fundraising chore that none of his fellow Senate Democrats relish, and his success has been a balm to their jitters. Senate Democrats have raised $40 million so far this election, compared with $42 million raised by Republicans. The DSCC now has nearly $10 million on hand, $3 million more than Senate Republicans.
Torricelli says he does not revel in his role as money man. "I don't particularly enjoy it," he said. "It's shallow, tedious, simplistic." But those who have worked closely with him say that Torricelli, unlike many politicians, is not squeamish about asking for money. "He's very aggressive. He goes after it. He's not ashamed of it," said one Democratic consultant. "He'll say, 'Would you consider doing $100,000?' "
Torricelli's fundraising follows the model set by Tony Coelho when he chaired the House Democrats' campaign committee during the 1980s: going after business money. For example, Torricelli is championing a bill that would limit the liability of asbestos manufacturers, drawing the ire of trial lawyers--a traditional Democratic constituency--but bringing in more than $200,000 to the DSCC from GAF, the New Jersey company pushing the legislation.
At the same time Torricelli is sponsoring the asbestos bill, trial lawyers are helping to finance television commercials that assail its Republican backers. For Torricelli, that is the best of both worlds. He has happily predicted it will stir up enough voter ire at his Republican co-sponsors to be a Democratic "majority maker" in the Senate.
Recently Senate leaders said they do not plan to take up the controversial bill this year. "Torricelli's getting both sides to contribute to the DSCC--and the bill doesn't go anywhere," said a senior Republican congressional staffer admiringly. "That's pretty darn effective."
As the Clinton administration has litigated against Microsoft Corp., Torricelli has wooed it. Torricelli wrote to Attorney General Janet Reno in February urging a compromise in the antitrust case. "It is critically important for both sides to avoid extreme positions, such as proposals to break up the company," he wrote.
Two weeks later Microsoft contributed $50,000 to the DSCC. Recently Microsoft contributed another $40,000, bringing its total to $145,000. The company also will co-host a $50,000 event at the Democratic convention this summer honoring women running for Senate.
Torricelli bristles at the suggestion of any linkage between his advocacy on Microsoft's behalf and the company's contributions. "I don't approach legislation that way," he said.
Nonetheless, Torricelli's leading role in pushing the bankruptcy bill now before Congress has made deep inroads with business interests. In December, not long after Torricelli became ranking Democrat on the subcommittee handling the bill, credit card giant MBNA gave the DSCC $150,000. It was MBNA's first-ever contribution to a Democratic Party committee, according to Common Cause.
The DSCC also has benefited from a dispute--into which Torricelli inserted himself--over valuable licenses for wireless communications and high-speed Internet connections. Torricelli proposed adding language to the bankruptcy bill that would have allowed NextWave Communications, a wireless company in bankruptcy, to hang on to Federal Communications Commission licenses it won the right to buy in 1996 for $4.7 billion.
The company has been refinanced--thanks in part to backing from Global Crossing, a company Torricelli owns stock in--and that now can actually pay the FCC for the licenses. But the FCC and other wireless companies want a new auction, saying the licenses are now worth billions more. Some of the biggest telecommunications companies in the country have showered money on both parties. Last month a powerful trade group opposed to NextWave's position, the Cellular Telecommunications Industry Association, gave $50,000 to the DSCC.
Beyond the flap over the licenses, some Democrats are upset at the extent to which provisions of the bankruptcy bill imperil poor and middle-class debtors while allowing wealthy people to shield assets. During a Democratic Caucus meeting last week, Sen. Edward Kennedy (Mass.) angrily challenged Torricelli's assertion that the bill was ready for passage. Kennedy told Torricelli the bill abandons the party's basic principles.
Even as Torricelli works to bring in money for the 2000 race, he is dealing with the fallout from his own election campaign four years ago. Six donors to his $9 million 1996 Senate war chest have pleaded guilty to illegally funneling contributions from others into the campaign.
"It's embarrassing, but in a campaign of that scale it's inevitable," Torricelli said. "It's just something I have to endure." While the investigation is continuing, the campaign itself has not been implicated in wrongdoing.
Torricelli acknowledged he tried to help one of the accused donors, commodities broker David Chang, in an $85 million contract dispute with the North Korean government. Chang, one of the country's largest donors to political campaigns in 1996, unsuccessfully sought access to frozen North Korean assets in this country as partial repayment of his North Korean contract.
"I called the Justice Department to check on the status and see if his claim was legitimate. A number of members of Congress wrote letters for him. I did not," Torricelli said.
Torricelli's personal financial investments have attracted criticism as well. He has been cut in on initial public offerings (IPOs) that have brought large returns on nominal investments.
In 1994, after the revelation that Torricelli had made $69,000 in one day on an IPO offered by a New Jersey bank headed by a friend, he established a blind trust and vowed not to invest in IPOs, which are often offered only to large investors. "My integrity is more important to me than any profits," he said at the time.
But Torricelli's blind trust invested in IPO deals too, including one for a New Jersey company, IBS Interactive Inc. Torricelli has said he did not know his blind trust was investing in the company, although his former girlfriend, Patricia Duff, and his ex-wife were on the board.
In another stock deal in which Torricelli's blind trust made a profit, New Jersey stockbroker Lawrence Penna, whom Torricelli describes as a close friend, was convicted of defrauding investors of $33 million. Penna also pleaded guilty to illegally reimbursing his employees for making $20,000 in donations to the Torricelli campaign. Torricelli said he had no knowledge of Penna's financial manipulations or illegal contributions.
But as a result he dissolved the blind trust in 1998, and last year invested in more lucrative private placements. He made nearly $100,000 in paper profits on a $5,000 investment in a privately held Internet company, e.Volve Technology Group, run by his former financial adviser. With the help of the same adviser, Torricelli bought shares in another company, eDiets, which sells diet plans on the Internet. The company went public this month but has not begun active trading. His new disclosure forms show several new IPO investments and very active--sometimes daily--trading in 20 high-tech stocks.
Spokesman Richard McGrath said Torricelli's investment strategy was to be expected. "The senator," he said, "is aggressive in most things he does." Indeed Torricelli's nickname--"the Torch"--is no accident. His fellow Democrat and senator from New Jersey, Frank R. Lautenberg, with whom Torricelli has feuded bitterly over the naming of a new U.S. attorney, describes him as "constantly confrontational and vindictive."
Despite his reputation for combativeness, Torricelli's style can be surprisingly subtle when it comes to fundraising. One of the committee's biggest donors, investment banking heir Peter Buttenweiser, described the Torricelli soft pitch as "better than the stalk."
"Torricelli's very good at describing what's going on, where opportunities are emerging and he asks you to put money into them," Buttenweiser said. "Part of the reason I'm willing to invest more time is because he's willing to invest time."
When the DSCC invited more than 100 high-tech executives to a workshop at a Capitol Hill hotel last month in an effort to harvest this booming sector of the economy, Torricelli's financial pitch stressed civic duty, not the party's bottom line.
"We're fighting for things that largely do not involve self-interest to you," he told the group. But three Senate Democrats and former treasury secretary Robert Rubin were on hand to hear their concerns about such matters as Internet privacy legislation. The session ended up bringing in $600,000.
Torricelli proved adept at a quick change of message that day, rushing down the hall from the high-tech meeting to a stroking session with politically active Native Americans flush with casino profits. For them he handicapped the Senate races around the country, explaining where money is most needed.
Torricelli's longtime chief fundraiser is his former wife, Susan Holloway Torricelli, now a $120,000-a-year DSCC consultant and the person Torricelli describes as "probably the most effective Democratic fundraiser in the United States."
The Torricelli duo were phenomenally successful in New Jersey, where they raised $9 million for his 1996 campaign. It was enough to catapult the six-term House member into a Senate seat--and even install him as vice chairman of the DSCC, a de facto leadership position unusual for a freshman senator. Moving up to the top fundraising post has made Torricelli a power player in the Senate.
"I never ask people to give more than they seem inclined to want to donate," said Torricelli. "Susan thinks I am not aggressive enough."
DEMOCRATS CATCHING UP
Contributions to the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee in the first 15 months of three election cycles from January to the following March:
Contributions, in millions of dollars
Democratic Senatorial Campaign Committee
Hard money: 12.9
Soft money: 1.5
Hard money: 15.5
Soft money: 7.6
Hard money: 18.6
Soft money: 16.5
National Republican Senatorial Committee
Hard money: 31.4
Soft money: 8.8
Hard money: 31.4
Soft money: 14.5
Hard money: 22.7
Soft money: 17.6
MAJOR DEMOCRATIC GIVERS
Top donors to the Democratic Senatorial Campaign Committee, 1999-2000.
American Federation of State, County and Municipal Employees: $800,000
Peter L. Buttenweiser (philanthropist): $600,000
1199 New York State Political Action Fund (labor union): $500,000
DASH PAC (Senate Minority Leader Thomas A. Daschle's political action committee): $450,000
Williams Bailey (law firm): $379,000
Bernard L. Schwartz (Loral Corp.): $260,000
Fred Eychaner (Newsweb): $180,000
International Brotherhood of Electrical Workers: $175,000
Ness Motley (law firm): $150,000
Ian M. Cumming (Leucadia National Corp.): $125,000
SOURCE: Federal Election Commission