By Lynne Duke
Washington Post Staff Writer
Saturday , November 20, 1999

NEW YORK, Nov. 19-A former Teamsters official charged with illegally raising money for former union president Ron Carey was found guilty by a federal jury today in a sprawling case that involved President Clinton's top fund-raiser and the Democratic National Committee.

William W. Hamilton Jr., former political director of the International Brotherhood of Teamsters, was accused of arranging to have the union make large contributions to the Democratic Party and various liberal groups in exchange for their support for Carey's 1996 reelection campaign.

He was charged with illegally diverting $885,000 in union funds to help Carey, who won but was later ousted as a result of fund-raising improprieties.

Hamilton, the highest-ranking official to be charged in connection with the illegal contributions, was found guilty in U.S. District Court of all six counts with which he was charged, including conspiracy, embezzlement, fraud and perjury. He could face up to 30 years in prison and a fine of $250,000. Sentencing is set for Feb. 29.

Five others have previously pleaded guilty in the complex contribution-swapping scheme, including Carey's campaign manager, Jere Nash, who cooperated with prosecutors and testified at Hamilton's trial.

Mary Jo White, U.S. attorney for the southern district of New York, said the verdict "sends a clear and unmistakable message that rank-and-file union dues cannot be misappropriated to promote one union candidate over another."

Carey's bitter rival and successor, Teamsters President James P. Hoffa, praised the verdict as "an important step towards closing a dark chapter in Teamster history" and said he would take steps to recover the money that was "looted" from the Teamsters treasury.

But Robert Gage, Hamilton's attorney, said he would "pursue a vigorous appeal on Mr. Hamilton's behalf."

Hamilton's defense insisted that the Teamsters contributions to political organizations were legitimate and that Hamilton was duped by other Carey aides involved in the swap schemes.

The five-week-long trial featured testimony about the role of Terence R. McAuliffe, the chief fund-raiser for President Clinton's 1996 reelection campaign and now a leading fund raiser for Hillary Rodham Clinton's Senate race. McAuliffe also pledged $1.3 million of his own money to guarantee the mortgage on the Clintons' new home in Chappaqua, N.Y., but that arrangement drew criticism and the Clintons secured more conventional financing.

Richard Sullivan, former finance director of the Democratic National Committee, testified that McAuliffe repeatedly encouraged him to find a Democratic donor to contribute to Carey in exchange for large Teamsters contributions to the Democratic Party.

Neither McAuliffe nor any other figures from Democratic fund raising circles have been charged with wrongdoing. A spokesman for White said the investigation is continuing.

Richard Ben-Veniste, McAuliffe's attorney, said his client did nothing wrong and has been cooperative in the case. "He was never a target of the investigation, he cooperated fully and completely and without condition," Ben-Veniste said Thursday. "He did not raise any money for Mr. Carey, nor did he urge anyone to raise money for Mr. Carey."

But Sullivan testified that he spoke with McAuliffe five or six times in 1996 about the contribution-swapping scheme, which was initially proposed by a Teamsters consultant. McAuliffe said "that if we could get a $50,000 contribution for the Carey campaign, he knew we could get $500,000 for Unity [a Democratic fund-raising effort] from the Teamsters," Sullivan testified.

In the end, the Teamsters donated $236,500 to various Democratic state committees, but the party had trouble finding a donor to fulfill its part of the deal to find contributors for the Carey campaign. The DNC did find a Philippine national, not a U.S. citizen, who wanted to make such a donation. But the Teamsters ruled her out because she was an employer, whose contributions are not permitted under union rules.

In a second scheme that was cited in the Hamilton prosecution, Teamsters officials arranged to give union money to three liberal groups that in turn steered money to the Carey campaign.

"The scheme can best be described as a swap scheme, a quid pro quo, a 'you'll scratch my back and I'll scratch yours,' " prosecutor Robert Rice said at the start of the trial.

For example, prosecutors said, Hamilton helped funnel $150,000 in Teamsters funds through the AFL-CIO to the liberal group Citizen Action in exchange for that group's donation to pay for a Carey direct-mail campaign.

Carey won reelection by a narrow margin. But because of the finance irregularities, the election was thrown out by federal officials assigned to supervise the balloting under a 1989 consent decree. Carey was disqualified from seeking reelection and thrown out of the union, as was Hamilton. In a subsequent special union election, Hoffa won the Teamsters presidency in 1998.