Peter Paul and Chelsea

The Stan Lee fraud case gets weirder: Litigation-happy Larry Klayman now wants to depose ... Chelsea?

By Anthony York

Published June 22, 2001 6:34PM (EDT)

Big buzz

With Washington's growing obsession with the Chandra Levy-Gary Condit noir thriller, the folks at Judicial Watch are trying to stoke the fires of a good ol'-fashioned Clinton scandal.

The story features two of the last decade's most experienced scandal figures: Judicial Watch's Larry Klayman and Sen. Hillary Rodham Clinton, D-N.Y. The subplots involve comic books, $25 million in stock fraud, fugitives hiding out in Brazil battling extradition, Brad Pitt, Barbra Streisand, and for good measure, a few allegations of political cash in exchange for a presidential pardon. All of which could result in the deposing of Chelsea Clinton.

The story begins with a Hollywood promoter named Peter Paul, who has been indicted in a New York court for his role in a $25 million stock manipulation scam involving Stan Lee Media, the company of Spider Man creator Stan Lee. Paul, co-founder of the Stan Lee Media Group, is currently hiding out in Brazil, battling extradition and desperate to cut a deal with prosecutors to avoid spending time in the slammer.

Enter Larry Klayman, chairman of Judicial Watch, the conservative group that made a name for itself waging war on the Clinton White House. Klayman says that Paul made over $2 million in direct and in-kind campaign contributions to stage a star-studded "Hollywood Tribute to Bill Clinton" last year, which was a soft money fundraiser for Hillary Clinton's Senate campaign. The money was reported as coming from the Stan Lee Media Group.

Paul, who has a past record including convictions for cocaine possession and a multimillion-dollar fraud scheme involving the Cuban government, says those donations were personal contributions, but that Clinton wanted to hide Paul's involvement because of his felony record. In August, Washington Post columnist Lloyd Grove reported "convicted felon Peter Paul -- who served three years in prison two decades ago after pleading guilty to cocaine possession and trying to swindle $ 8.7 million out of the Cuban government -- helped organize Saturday's star-glutted $ 1 million fundraising gala for Clinton's Senate race at businessman Ken Roberts's Brentwood estate. Paul, co-founder of Stan Lee Media, told us in a statement ... that he only produced the gala and hasn't given or raised money for the first lady's New York campaign."

Now, Paul has changed his story. He claims the contribution was part of an effort to lure Bill Clinton to join the board of the Stan Lee Media Company. In addition to the $2 million worth of cash and services, which Paul now says came from him personally, Bill Clinton was reportedly promised an additional $15 million in Stan Lee stock to join the board.

"So eventually Peter Paul said, 'In order to get Bill Clinton I'm willing to help get Hillary Rodham Clinton elected U.S. senator. And I'll put up money to help elect her,'" Judicial Watch southwest regional director Russ Verney told WABC radio.

When asked about the case, Hillary Clinton's spokeswoman Karen Dunn said, "we tend not to comment on the activities of Judicial Watch."

But the folks at Judicial Watch are undoubtedly thrilled with the prospect of another media blockbuster. The headline on their press release boasts "Major Hollywood Stars Such As Brad Pitt and Barbra Streisand As Witnesses."

And if that weren't enough enticement for the media pack, Verney, the former Ross Perot henchman, added the prospect of deposing the former president and Chelsea Clinton in the case.

"According to a note Chelsea wrote," Verney told WABC radio, "she and Bill Clinton stayed up all night one night playing Scrabble and they were talking about him joining Peter Paul's company after he left the presidency and the fact that Peter Paul was putting on this big gala out in California."

"I can't see how they can avoid the depositions," Verney said.

Records at the Center for Responsive Politics show Lee donated personally to Clinton's campaign, and to the Democratic Party. They also show the Stan Lee Media Group had contributed $100,000 in soft money as of Sept. 9, 2000.

Paul also says then-DNC Chairman Ed Rendell said it would be "nice" if Paul gave $150,000 to the DNC after Paul sought a presidential pardon for his two prior convictions. "He is willing to return to the U.S. to testify in exchange for a deal with prosecutors," Klayman told the New York Daily News.

Calls to Judicial Watch were not immediately returned.

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Anthony York

Anthony York is Salon's Washington correspondent.

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Chelsea Clinton Hillary Rodham Clinton