The Democrats' Charity Shuffle

THE PITCH WAS HARD TO RESIST. LAST FALL a Democratic National Committee official called Michael St. Martin, a Louisiana trial lawyer and big party donor, with a swell idea: there was a way St. Martin could help the Clinton campaign and get a nice tax break at the same time. How? By giving money to Vote Now '96, a Miami-based nonprofit. So, two weeks before the election, St. Martin wrote a tax-deductible check for $5,000. ""I wish I could have given all my money to that group,'' St. Martin told NEWSWEEK. A generous thought, but Vote Now was doing just fine: it took in more than $3 million to turn out voters in largely Democratic neighborhoods. It is illegal for any charity to raise money for a partisan purpose--or to work in tandem with a political party. The Justice Department wants to know if Vote Now was doing just that.

Last July, Bill and Hillary Clinton hosted a dinner for Gary Barron and Hugh Westbrook, Vote Now's two top officers and former party fund raisers. One of the guests was Alexis Herman, now Clinton's nominee for labor secretary, who has admitted that her staff may have talked to the two men about cooperating on voter-registration drives. Later, NEWSWEEK has learned, DNC Chair Don Fowler ordered his staff to raise $500,000 for Vote Now. When the funds didn't come in immediately, Barron ""would call up 10 times a day,'' one fund raiser says, demanding to know where his money was. At least one White House official also tried the hard sell: Harold Ickes directed a supporter to wire $250,000 into Vote Now's bank account. The DNC told donors that their gifts would be tax-deductible --and promised that Vote Now would not have to disclose the names of its contributors.

It still hasn't. But sources say the list includes a Canadian energy company that would have been barred from donating to any U.S. campaign. Where did the money go? Sources say a sizable chunk went to an offshoot of Jesse Jackson's Rainbow Coalition. A Vote Now lawyer insists the Miami group knows nothing about any ""inappropriate'' fund raising. But FBI agents want to question Vote Now officials, and Justice is expected to issue subpoenas.

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