Newsreal: Show us the money!

Paula Jones' patron accuses her legal fund of defrauding the public.

By Jonathan Broder - Murray Waas

Published March 12, 1998 8:00PM (EST)

WASHINGTON -- The Rutherford Institute, the conservative legal foundation paying Paula Jones' legal bills in her sexual misconduct suit against President Clinton, has sent letters to a federal judge accusing the Paula Jones Legal Fund of misleading and possibly defrauding the public in its fund-raising practices, Salon has learned.

The Rutherford Institute has also threatened to report alleged fraud by Jones' legal fund to the Internal Revenue Service and other authorities.

Rutherford's letters to the federal judge are under court seal and have not been previously disclosed.

The Rutherford Institute contacted representatives of the Paula Jones Legal Fund late last year after it learned that money raised by the fund to pay Jones' legal expenses was not going to the lawyers representing her in her lawsuit against Clinton. Instead, the funds were going directly to Jones and to the direct-mail firm that is helping her legal fund attract contributions.

It has previously been reported that Jones signed a contract last November with Bruce W. Eberle and Associates Inc. of MacLean, Va., a conservative fund-raising business, which guarantees her a minimum net income of $300,000.

Sources familiar with the agreement say Jones already has been paid a $100,000 advance, as called for under the contract, which also guarantees her another $200,000 from the donated funds. The contract calls for the remainder of the donated funds to go to Eberle to pay for the fund-raising effort.

The direct-mail appeal for donations to Jones' legal fund recounts her alleged 1991 encounter with Clinton in a Little Rock, Ark., hotel room, where she claims then-Gov. Clinton dropped his pants, exposed himself and asked for oral sex. Clinton has denied the charge, and a trial is set for May 27.

In her direct-mail letter, Jones says any contributions to her legal fund are not for her personal use. "It's all going to help my legal case," she writes. Her legal fund also has a solicitation Web site, which promises donations will be used for "litigation expenses ... depositions, investigations and court appearances."

But according to a source familiar with the institute's concerns, Rutherford has not seen a penny of the money raised by the Paula Jones Legal Fund. "As far as I know, the fund is still going strong, they're still mailing these letters and Rutherford hasn't seen any money," said the source.

After not receiving any money for Jones' legal bills and after learning about Jones' contract with Eberle, the Charlottesville, Va.-based Rutherford Institute became concerned that her legal fund's appeals for contributions were misleading -- and possibly fraudulent -- and sent letters late last year to Eberle and lawyers for the fund, expressing its concern.

"The Rutherford Institute is on record with you, as counsel for the Paula Jones Legal Fund, that the direct mail solicitations of the fund create a false impression and mislead the public that others besides the Rutherford Institute are paying court costs and legal expenses," said one of the letters, which was obtained by Salon.

One person familiar with the correspondence put it more bluntly: "We're talking mail fraud here, and that's just unacceptable," the source told Salon.

Rutherford's letters also threatened to report the alleged fraud by Eberle and the Paula Jones Legal Fund to the Internal Revenue Service, the Better Business Bureau and attorneys general in all 50 states. "Whatever it took to make them stop lying," this source said.

One of those who received Rutherford's letters was Braden Sparks of Dallas, the legal fund's attorney. On Dec. 15, after only three months on the job and several heated telephone conversations with Rutherford lawyers, Sparks resigned his post. Sparks told Salon he stepped down because he had completed his work and because, "there was a possibility that I might be asked to testify" in the Paula Jones trial. Under the circumstances, he said, "I felt the ethical thing to do was to withdraw." He declined to say why he might be asked to testify.

The Rutherford Institute wrote more letters to Sparks' successor, Dallas attorney Brent Perry, urging a review of the legal fund's direct-mail solicitations. According to one knowledgeable source, the letters essentially said, "Your fund-raising letters aren't true. You're misleading and defrauding the public. Please stop it."

Perry tried to contact Rutherford's lawyers by telephone, but they would not take his calls, preferring to communicate in writing, sources said. Perry declined to write back, apparently concerned his letter might be handed over to Clinton's lawyer, Robert Bennett, as part of the discovery phase of Jones' trial. Under an order from Susan Webber Wright, the U.S. District judge presiding over the sexual misconduct case, Jones' attorneys already have turned over some of the Paula Jones Legal Fund records to Bennett. In a further effort to show that Jones is suing the president to enrich herself, Bennett also has filed a discovery motion in federal court in Charlottesville to obtain other records from the Rutherford Institute.

Unable to get Jones' fund-raisers to alter their pitch, the Rutherford Institute sent one last letter to the legal fund. "Since it appears we cannot achieve a resolution of these concerns with you, we are obliged to turn the matter over to other appropriate organizations who are charged with responsibility for such matters," the letter said. At that point, the Rutherford Institute, concerned its reputation could be tarnished by the legal fund's activities, handed over copies of its letters to U.S. District Judge James Henry Michael in Charlottesville. If Michael approves Bennett's discovery request, the letters will be handed over to Clinton's lawyers.

Direct-mail fund-raiser Eberle did not return a telephone call, but Perry, the fund's attorney, defended the group's fund-raising practices. "The Paula Jones Legal Fund is raising funds for expenses that are relevant to the lawsuit," he told Salon. "Frankly, a lawsuit of this magnitude puts a lot of strain on the Joneses. There are expenses associated with that: high long-distance bills, cell phone bills, investigative expenses, travel expenses. The fund also has its own overhead expenses that have to be covered. This is not going to enrich Paula Jones' lifestyle. There is no proof of it."

Asked how these expenses squared with the fund's appeal for contributions to pay for Jones' legal expenses, Perry said: "The money doesn't necessarily go to expenses incurred by lawyers, but it goes to expenses that are related to the lawsuit."

Responding to the Rutherford Institute's charges that the fund was misrepresenting how it spent its money, Perry declined to discuss the matter further. "I would rather talk to the Rutherford Institute directly about that rather than through you," he said, abruptly ending the conversation.

In a separate interview, Sparks, the fund's former attorney, also insisted the group was not misrepresenting itself in its public solicitations. He said Jones' legal expenses went far beyond the costs being picked up by the Rutherford Institute. He said she faced additional attorneys' fees in connection with an IRS audit and any possible appeals. He also said some of the expenditures for which Jones has been criticized in the media -- for new clothes, a new hairdo and boarding her dog in a kennel -- were also "reasonable and legitimate" costs connected to her case.

Sparks also said Jones needs money to pay travel expenses and the services of Susan Carpenter MacMillan, her spokeswoman -- a claim that makes critics of Jones' fund-raising operation bristle.

"The answer to that is $300,000 for incidental travel is a lot of money," one source said. "But more importantly, that's not what the fund-raising letter says. The letters of the Paula Jones Legal Fund say it's going to the lawyers. That's not true. This case can be fought without Susan Carpenter MacMillan, and some would say, better."

Jonathan Broder

Jonathan Broder is Salon's Washington correspondent.

MORE FROM Jonathan Broder

Murray Waas

Murray Waas is a frequent contributor to Salon.

MORE FROM Murray Waas

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Robert F. Bennett