The Portrait Of A Hustler

JOHNNY CHUNG LIKED TO TELL FRIENDS HOW HE WON HILLARY CLINTON'S HEART. It was March 1993, and the nearly penniless fax-software salesman was convinced an Oval Office picture of himself with the new president would impress investors. Bunking at a friend's house, NEWSWEEK has learned, he spent days calling the White House, hoping for a sympathetic voice. To brush him off, Mrs. Clinton's chief of staff, Maggie Williams, told Chung the First Lady was visiting her ailing father in Little Rock. Chung saw his chance. He hopped a plane and surprised Hillary by leaving her a note at the hospital. He bragged to friends that she was deeply touched by the gesture.

The First Lady says she has ""no recollection'' of the encounter. But even if Chung, a Taiwan-born California entrepreneur, is just spinning tales, he obviously did something right: over the next three years he made 49 trips to the White House. He's now a key figure in the Clinton cash scandal; the Democrats have returned his $366,000 in murky contributions--and the Feds want to know how an unknown hustler won such easy access at the top.

In 1992, after watching the presidential debates, Chung wrote Clinton and George Bush to promote his ""blast fax'' system. Bush never replied, but Hillary sent Chung a letter saying his business was ""on the right track.'' California Gov. Pete Wilson had already agreed to a free trial. With one political client, Chung signed up state offices in Florida, too.

Chung knew just what to do with the money. In August '94 he gave the Democratic National Committee $10,000 to attend his first Clinton fund-raiser. He gave an additional $40,000 to bring business associates to a Los Angeles luncheon with the First Lady. He then arranged for two executives from the Chinese Haomen beer company to have their picture taken with the Clintons at the White House Christmas party. Haomen used the photo as an ad back in China. In February '95 Chung got a call from a Beijing official who'd seen the picture. He asked Chung to cohost a U.S. visit by six senior Chinese officials and entrepreneurs. Chung said he'd try to get them face time with Clinton. ""He realized these were VIPs who could bring big-time credibility,'' Chung's lawyer, Brian Sun, told NEWSWEEK. He brought his guests to Clinton's radio address; they also met the First Lady and ate in the White House Mess. That same week Chung handed Maggie Williams a $50,000 check to the DNC. In all, he used his Clinton reputation to help start at least seven businesses and attracted more than $3 million in capital and ""consulting fees.'' Sun says Chung took no money from the China delegation.

Most curious is Chung's relationship with Chao-ying Liu, daughter of China's most senior general, Liu Huaqing. NEWSWEEK has learned she is also an executive with China Aerospace Corp., Beijing's state-run rocket manufacturer. Chung met her in Hong Kong, and helped her get a U.S. visa. In July 1996, he took her to a $10,000-a-plate fund-raiser in L.A., where she shook hands with Clinton. Two weeks later, Chung helped Liu open a company called Marswell Investment. Chao-ying Liu also invested $300,000 in Chung's fax company. NEWSWEEK has learned federal officials are investigating whether these transactions may have helped funnel Chinese money into U.S. campaigns. (Chung's lawyer flatly denies it.) Chung used to be offended when people called him a small-time ""hustler.'' Now it may be his strongest defense.