Clinton announces $850,000 refund to donors

An estimated 260 donors will receive refunds totaling approximately $850,000 from Sen. Hillary Rodham Clinton's presidential campaign.

Monday night Clinton spokesman Howard Wolfson said in a statement, "In light of recent events and allegations that Mr. Norman Hsu engaged in an illegal investment scheme, we have decided out of an abundance of caution to return the money he raised for our campaign."

Since 2004, Hsu has donated $260,000 to Democratic Party groups and federal candidates, and raised hundreds of thousands of additional dollars. He was regarded as a top party fundraiser until recent reports surfaced that he was wanted on a warrant in California in connection with a 1991 grand theft charge.

Republicans who have been tarnished by recent political scandals have jumped on this story and it's ongoing drama ever since the Wall Street Journal first broke the story. But this appears to be bigger than any one party.

What strikes me about this twist in the story is that normally politicians who have accepted donations from people they later wish not to be connected make a show of donating the money to charity. It happened to many people tied to Jack Abramoff.

In this case, the money Clinton is refunding was not donated by Hsu himself, it was linked to his bundling efforts - a process of collecting checks from others. It is suspected of being fruit from the poisonous tree.

I guess the public accepts the practice of bundling as a response to campaign finance laws, either because we think we are powerless to stop it or because we imagine the process is similiar to selling your nephew's candybars at the office - only on a larger scale.

But as we begin to peel back the layers of the Norman Hsu story we are beginning to hear ugly details of paper companies making wire transfers to a secretive network of eventual political donors it reveals a dark shady fundraising practice that's about to get a lot more attention.