By James Warren, Washington Bureau.

August 24, 1998

Almost like the nefarious Freddy Krueger in the "Nightmare on Elm Street" movies, Atty. Gen. Janet Reno is back considering whether to recommend an independent counsel to investigate campaign-finance abuses in the 1996 presidential campaign--a horrifying prospect for the White House.

Reno has spurned such a move before, but now, prodded by congressional Republicans and with at least one tantalizing new piece of evidence, she is again focusing on the matter, with her decision said to be imminent.

At the heart of her deliberations are often nebulous and unenforced campaign-finance laws, not to mention a century-old statute concerning the raising of funds on federal property.

She will seek to determine if there are "specific" and "credible" allegations of violations and thus set into motion a process that could bring, as it has with Whitewater and Kenneth Starr, yet another prosecutor with far-reaching authority and virtually unlimited resources.

There would appear to be precious little before Reno that is not widely known, with the exception of a just-surfaced memo suggesting that Vice President Al Gore may have known more than he has let on about his fundraising efforts inside the White House.

The large amount of evidence before her was revealed to a generally inattentive American public last summer during Senate hearings. In the case of Gore, there were wide reports of phone calls he made from the White House and how the monies he solicited were used.

Back then, Reno was thrust into a highly partisan dispute over whether federal law allows solicitation of funds on federal property and, if it does, whether it allows only certain types of funds to be raised. The relevant Pendleton law dates to 1883.

As it turns out, at least $100,000 raised by Gore's 45 White House phone calls were used as so-called hard money, meaning for specific campaigns, notably the Clinton-Gore re-election.

Reno took the legal position that Gore could solicit funds from the White House only for "soft" money meant for generic, party-building activities.

Did Gore know where the money was going? He said he did not, but last week notes written by his deputy chief of staff were revealed that raised the possibility that Gore had told staff to "count me in" and perhaps knew about hard-money solicitations.

"In my view, the calls made by the vice president were entirely legal and appropriate," Joseph Sandler, the Democratic National Committee's general counsel, told last year's fundraising investigation led by Sen. Fred Thompson (R-Tenn.).

"That is unbelievable that you would think that," Sen. Don Nickles (R-Okla.) responded, underscoring how very different was his reading of relevant statutes on raising money on federal grounds.

More than a year later, Reno's return to the issue is rife with political ramifications.

FBI Director Louis Freeh and Charles LaBella, the former head of Reno's campaign-finance task force, recommended an independent counsel to her. House and Senate Republicans have used disclosure of the internal Justice Department rift to pressure Reno into changing her mind.

In theory, she could name an independent counsel for a very specific matter, such as Gore's disputed calls or former senior White House aide Harold Ickes' disputed testimony on fundraising to Thompson's committee. Given the political damage brought by the Whitewater investigation, such a decision would seem to spell trouble for the White House.

Reno could choose an independent counsel to look generally into the 1996 presidential fundraising, both Democratic and Republican, virtually ensuring a sprawling, costly investigation. Or, once again, she could hold her ground and refuse to recommend one.

As she finishes her deliberations and plans for a promised briefing to congressional leaders, Reno does so knowing that even election-law experts concede she confronts a statutory muddle and a campaign-finance system that has unraveled.

"The campaign-finance law is nebulous and unclear as to whether Reno's original interpretation was correct--namely that soft money calls were within the confines of the law, not hard money," said Kenneth Gross, an attorney who represents Democrats and Republicans on campaign-finance matters.

Even if Gore knew he was raising hard money, Gross said, problems persist, especially involving the law governing solicitation of funds on federal property.

That part of the criminal code has been the subject of only four cases, with the most relatively germane one dating to 1908 and involving the shakedown of federal workers.

"It doesn't really apply to these sorts of fundraising calls," Gross said. "Finally, even if he knew, there's the matter of whether you go ahead with a case like this; whether that was willful intent to break the law, especially since it's a provision almost never prosecuted."

"The first thing I'd say is that there's no question that the (Clinton-Gore) campaign was playing shell games with hard and soft money and violated the law," said E. Joshua Rosenkranz, executive director of the Brennan Center for Justice at New York University Law School. The center does much work in the campaign-finance area.

"Clearly, its conversion of soft money and hard money was illegal," he said. "And it seems most unlikely that the leaders of the ticket or fundraising drive were unaware of how the money was used. I believed that a year ago, so the latest news (the Gore memo) doesn't strike me as news at all.

"Reno has been hacking away at the wrong limb for a year. Basically, she has been finding reasons to conclude that the activity that was in front of everyone's face was not illegal by raising technicality after technicality. Each time one assumption is shown to be wrong, she finds another reason."

Yet, Rosenkranz is not urging appointment of an independent counsel.

He thinks "it's silly that this has become an issue; the metaphysical issue of whether Gore solicited hard money on that White House phone.

It's silly to appoint an independent counsel for that when a bigger issue goes unanswered, namely the non-enforcement of the law generally as to how soft money is used."

Attorney Stanley Brand, another election-law expert, said, "It seems like overkill to go through this type of analysis over a few words on a memo. Even if Gore knew, I doubt it's a crime. At the end of the day, you're not looking at a substantial criminal case."

Copyright 1998, The Tribune Company.