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The kingmaker

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Terry McAuliffe has reinvented the rules of fund raising and shattered all records, and he has become rich along the way. Is he the poster boy for reform?

May 30, 2000
Web posted at: 2:59 p.m. EDT (1859 GMT)

If anyone can upstage Bill Clinton, it is the man who pays the President's way. So when Terry McAuliffe got everyone hooting and hollering at a Democratic National Committee barbecue last week, Clinton was clapping the loudest. McAuliffe chaired what was supposed to be a tribute to the only Democrat twice elected President in 50 years. But many guests who paid $25,000 a table at Washington's MCI Center also came to salute that other guy on the dais: the fund raiser in chief.

Last month Republicans seemed on their way to overshadowing the king of campaign cash when they raised $21.3 million in one night for their presidential nominee, George W. Bush. It was the most ever netted in a campaign event, but that record lasted only as long as it took McAuliffe to announce his numbers to a standing ovation Wednesday night. He topped the G.O.P. by 25% and in one evening brought in a total that almost matched all the soft money raised by the party in the 1992 presidential contest. "I want to thank the greatest fund raiser in the history of the universe," said Vice President Al Gore, who hopes to boost his presidential race with TV ads paid for by the proceeds.

Some guests were less sure of Gore's success than they were of McAuliffe's importance in getting him on his way. In jeans and cowboy boots meant to mock the G.O.P.'s black-tie formality, they applauded the man they have come to regard as the party's Lee Iacocca: the marketer who figured out how to diversify the product line to attract new buyers. McAuliffe has succeeded in broadening the Democrats' financial base, which consisted mostly of organized labor, by selling the "New Democrat" gospel of Clintonomics to entrepreneurs who have benefited from low interest rates, investors whose fortunes have grown with the stock market and trial lawyers who want to protect the right of plaintiffs to unlimited damages from corporations. What better evidence of the "Mack Magic," as he himself calls it, than the balance of heavy hitters lined up for last week's gala: of the 26 donors of $500,000, just over a third represented labor unions.

But the triumph of McAuliffe this week seems on a collision course with Americans' growing dissatisfaction about the ways in which campaigns are financed. Voters know instinctively now that Presidents and politicians may come and go, but the men who collect the checks and rack up the favors amass the real power. And so far, none of the proposed reforms from either party would change that. While Clinton and his kingmaker have reinvented the rules of Democratic fund raising, that achievement has also brought scandal to the presidency and left McAuliffe with hefty legal bills. "When it comes to political money, this is a period when Rome is burning and McAuliffe is the fiddler," says Fred Wertheimer of Democracy 21, a nonprofit group dedicated to tracking the influence of money on politics. Wertheimer is especially critical of McAuliffe for "connecting six-figure donors with elected officials in a position to do favors for them." But McAuliffe argues that what he does is simply grease the great wheels of democracy. "You need money to get out your message," he says. But what can donors expect out of their President in return for their largesse? At most, a social outing with him, McAuliffe contends.

McAuliffe breaks the mold of Washington fund raisers--and not just because of the fund-raising records he has shattered. For one thing, he is not as reserved and staid as presidential moneymen tend to be. He once wrestled an alligator for a $15,000 contribution. He invites reporters, including this one, to watch him do his thing. And he brags about his fund-raising prowess. Deposed by G.O.P. investigators during the Senate's 1997 campaign-finance probe, he called himself "the guy who jumps out of planes and falls through burning buildings" for political cash.

McAuliffe is the rare moneyman who has linked his personal life with his President. Not since Hollywood mogul Arthur Krim roamed the Lyndon Baines Johnson White House has one fund raiser done so much for one political family. He has raised more than $300 million for Clinton causes, including the presidential library ($75 million), Clinton's legal bills ($8 million), Hillary's Senate campaign ($5 million) and the President's millennium celebration ($17 million). When no one else came through to help the First Family buy a house in New York's Westchester County, McAuliffe interrupted a golf game with Clinton to arrange the $1.35 million guarantee. The Clintons dropped the idea and pursued a conventional mortgage after being criticized for accepting such a large gift.

Aclose friendship has grown between McAuliffe and Clinton, two men who share a passion for food, storytelling, golf, three-dimensional Scrabble and ironic humor. When the 1994 G.O.P. takeover of Congress seemed to doom Clinton's hope for a second term, McAuliffe came to the rescue as finance chair of the Clinton-Gore re-election campaign, raising cash early to stave off challenges by Democratic rivals. Since then, the President has turned increasingly to McAuliffe as a trusted adviser as well as playmate, spending more time with McAuliffe than with anyone other than his wife and top aides. He was one of three people Clinton called after falsely testifying in the Paula Jones deposition in January 1998. McAuliffe kept up the President's spirits and immediately forgave Clinton after his public confession scattered other friends.

The friendship has turned McAuliffe into the man to see in Washington, which explains the procession of lobbyists and diplomat-wannabes who stop by his reserved tables at two favorite luncheon haunts, the Palm and the Oval Room. Like every other presidential fund raiser, he has a say in political appointments. For ambassadorial jobs, Clinton has been known to give aides a list of candidates and ask, "What does Terry think?" McAuliffe is a centrist who claims he never takes up "issues" with the President. But Democratic sources say he can take credit for about 25 diplomatic postings from Madrid to Malta to the Dominican Republic.

McAuliffe's success lies partly in the fact that he can tap the treasuries of both labor and industry, the far ends of the Democratic empire. While one of his mentors, former House whip Tony Coehlo, got Washington lobbies to spread their largesse to probusiness Democrats in the 1980s, young McAuliffe hit the road to find new donors in law firms, mid-size businesses and real estate brokerages. His recruits were people who were reliable voters but were sometimes excluded from the established social register--Jews, Irishmen and Asians. By 1993, McAuliffe had boosted ninefold the D.N.C.'s club of business leaders who paid dues of $10,000 a year. They became the roots of McAuliffe's money tree, which keeps flourishing thanks to his continuous stream of small kindnesses. No event passes without personal thank-you notes to "my guys," as McAuliffe calls them. He attends out-of-town funerals of their relatives, lines up White House tours for their friends and arranges presidential notes for special occasions. He puts together golfing foursomes with the President. The joke among donors is that McAuliffe runs Clinton's pro shop. He makes sure that Jews are invited to state dinners for Israeli visitors and that Irish Americans are invited to Clinton's St. Patrick's Day fete. He used to send out penny Valentines every February until the number reached several thousand.

It was as a favor for a powerful labor boss that McAuliffe agreed to chair last Wednesday's gala. AFL-CIO president John Sweeney had become so unhappy with D.N.C. leaders that he threatened to stop affiliated unions from donating to the party unless McAuliffe took over its reins. Only he could raise a lot of money quickly to get Gore on the air during the lead-up to his nomination, Sweeney argued. McAuliffe was unwilling to take the full-time job, but he did promise to lead the drive for dollars. At 9 a.m. on March 27, he and associate Peter O'Keefe sat around a small table in D.N.C. chairman Ed Rendell's office. With an alphabetical list of 150 names culled from McAuliffe's Rolodex, they focused on Clinton's biggest helpers of 1996. The first call went to Dan Abraham, chairman of Slim-Fast Foods Co. McAuliffe told him about the tribute and asked, "If the world blew up tomorrow, Danny, what can I put you down for?" Abraham promised to send a check for $500,000 the next day.

McAuliffe racked up more pledges: $250,000 from Elaine Schuster, wife of a Boston real estate executive who was honored by the appearance of Hillary Clinton at a hospital tribute to her; $500,000 from Chris Korge, a Miami lawyer who had a golf outing with the President set up by McAuliffe. On Day Two, he visited Sweeney. "John, as you can see, I'm here," he said. "You can trust it." The labor boss signed on, clearing the way for about $3 million in contributions for the gala and sending McAuliffe back to the phones. For the next eight weeks, he led a team that made about 200 calls a day. The scene could have passed for a bookie operation, with lines jangling and commitment sheets flying across the table. When he exhausted his own list, McAuliffe was supplied with the names of past contributors.

Two weeks out, they had promises of $25 million but far less in hand. It was collection time, a chance for McAuliffe to demonstrate his trademark blend of cajoling and ribbing and his use of fund-raising argot--an old hand never needs to say the last three digits of the big dollar amounts. "You all pumped up for the event?" he asked Niranjan Shah, an engineering-firm executive in Chicago. "You got your 100 done?" Pause. "No, you're right. You don't have a choice." O'Keefe found sport in the next call as he dialed Cincinnati lawyer Stan Chesley. "Ten bucks you can't close this guy," he dared McAuliffe. McAuliffe liked the bet, nodded and picked up the line. "Stan, have you got 50 out there for me? That's all I'm asking." McAuliffe's face lit up. "I love you. You'll get it in before May 24. I thank you for your $50,000 check. You'll be in all the action. You'll go arm to arm with me in every event." The understudy threw several dollar bills across the table. "I love spanking you young guys," McAuliffe said. "Twenty-one years I've been doing this, and they try to smoke the Mack."

McAuliffe learned the art of banter across the dining-room table of the modest home he grew up in in southwest Syracuse, N.Y. Terence Richard McAuliffe, the baby of the family, took an early interest in politics. Father Jack, treasurer of the Onondaga County Democratic Party, took the boy to fund raisers at age five and gave him tickets to sell a few years later. One of his dad's mottoes sank in. "You gotta show up" to gain the trust of people, he would tell young Terry. Jack, who earned a living in real estate, was the original networker, using his patronage and wide contacts to find jobs for people. Mother Millie pressed the work ethic with Terry, who by 14 had started his first company, sealing driveways with tar. He made his first $1 million 11 years later by investing those profits. Along the way, he graduated from Catholic University in Washington and in 1979 got his first job in politics working to re-elect President Carter. When the campaign's Florida finance chair, Richard Swann, asked Washington for help on a fund raiser, he got a 22-year-old kid named McAuliffe. Breaking a record for the event, McAuliffe was sent to California, where he worked closely with a pair of fund-raising legends: Hollywood's Lew Wasserman and San Francisco real estate magnate Walter Shorenstein. By the general election, McAuliffe was the top fund-raising member of the staff at the D.N.C., wearing fake horn-rimmed glasses to look older. Something else came out of McAuliffe's Florida initiation: a marriage to Swann's daughter Dorothy, with whom he has four children.

McAuliffe earned a law degree from Georgetown University, but except for a brief stint in a lobbying shop, he spent most of his early years not making money but raising it. And that is perhaps McAuliffe's most distinguishing feature as a moneyman--what separates him from those who've gone before him. People like Wasserman were multimillionaires before they got into politics. McAuliffe has done it the other way, using his political contacts to become a multimillionaire. In 1995 he acquired a bankrupt home-building business in Orlando, Fla., with the help of American Financial Corp. after soliciting its owner, Carl Lindner, for the D.N.C. "People like to do politics with me, and they like to do business," he says. Now that he's worth tens of millions, he says he's in a position to meet the donors as peers, exchange stock tips with them and serve on their boards. His wealth, he says, is the best argument for why he can't possibly extract much personally from his closeness with Clinton. "There's nothing he can do for me except be my friend," said McAuliffe.

McAuliffe's sprawling network of friends is one reason he has managed to escape the legal trouble that has sometimes befallen other moneymen. His relationships extend to top Republicans who came to his rescue during the Senate probe of White House coffees in 1996. When G.O.P. investigators found alleged discrepancies in McAuliffe's deposition, sources say, allies of Republican Party chairman Haley Barbour persuaded Senate Republican leaders to take him at his word. It worked. McAuliffe wasn't even called as a witness at the showcase hearings held in 1997.

But in weaving his business success out of his political one, he has had other questions to answer. The Labor Department has examined his role in getting an old campaign pal in control of a union pension fund to join McAuliffe in a Florida land deal. The fund, which provided nearly all the capital in an equal partnership with McAuliffe, bought back his shares for more than $2 million--a move the department called imprudent but did not blame McAuliffe for. Likewise, when Prudential Insurance Co.--a generous donor to both parties--paid McAuliffe $375,000 to help secure a government lease, U.S. prosecutors in Washington fined the firm but found no problem with McAuliffe.

His business-political nexus came up again in the federal investigation of Teamster efforts to swap contributions with the D.N.C. in the 1996 campaigns to re-elect both Clinton and union boss Ron Carey. McAuliffe had worked on a high-paying corporate issue with a political consultant who later hatched the swap plan on behalf of the Teamsters. But McAuliffe told prosecutors he had never agreed to a trade and says he has not heard from them since.

So McAuliffe keeps on his wild money ride. Last week he was back on the job meeting with Boston financier Howard Kessler, with whom he has investments. Of course, the two men had something else in common: a $100,000 check Kessler had recently sent to the D.N.C.


Cover Date: June 5, 2000



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