Campaign fund-raiser admits guilt Democratic backer laundered $46,000 from Indian Embassy; Gadhia faces 5-year term; Four Md. lawmakers unwittingly took illegal donations


A prominent fund-raiser for Maryland Democrats pleaded guilty yesterday to election fraud in a scheme to launder at least $46,000 in illegal campaign contributions he received from an official at the embassy of India in 1994.

Lalit H. Gadhia -- a 57-year-old immigration lawyer and former campaign treasurer to Gov. Parris N. Glendening -- confessed in U.S. District Court in Baltimore to his role in the scheme to influence congressional lawmakers involved in foreign-policy decisions affecting India.

An immigrant from Bombay, India, who was active in Baltimore's early civil rights movement, Gadhia now faces up to five years in prison and $250,000 in fines. Sentencing is scheduled for this summer.

Prosecutors say the case against Gadhia is one of only a handful of cases in which foreign citizens or governments have been linked to illegal campaign contributions in a U.S. political race, and may be the first time an official of a foreign embassy has been implicated. "The fact that the money came from the Indian Embassy and that so many people were manipulated into participating in the scheme takes this case to a higher level than we normally see in these kind of investigations," said U.S. Attorney Lynne A. Battaglia. "Obviously, we have not seen a case like this in Baltimore before."

Among those who received the illegal funds were four members of the Maryland delegation and congressmen in Pennsylvania, New York and Ohio. According to documents filed in the case, federal authorities could find no evidence that any of the recipients was aware of the true source of the contributions.

"The campaign assumed that these were appropriate contributions," said Jesse Jacobs, press secretary for Sen. Paul S. Sarbanes, the Marylander who is the third-ranking Democrat on the Foreign Relations Committee. Mr. Sarbanes received $4,500 of the questionable contributions.

Other Maryland Democrats who received $3,000 contributions each were Reps. Benjamin L. Cardin and Steny H. Hoyer and former Rep. Kweisi Mfume.

In all, 19 Democratic candidates nationwide got the money shortly before the 1994 elections through a network of prominent Indian-American businessmen in Maryland, their families and employees of their companies. The donors then were reimbursed by Gadhia, who admitted yesterday that he used money from a minister at the Embassy of India in Washington.

Under Federal Election Commission rules, it is illegal for noncitizens to make political contributions or for anyone to make donations in another person's name. But Gadhia never informed donors that the money was coming from India -- or told them that it was a crime to accept reimbursement for a donation.

"The vast majority of people in the Indian-American community nationally are going to be appalled by this," said Subodh Chandra, 28, a Los Angeles lawyer who heads a political action committee that unwittingly received at least $31,400 of the illegal contributions from Gadhia.

"We can only hope at this point that these were the acts of a lone bumbler or group of bumblers and not some sort of international intrigue involving the Indian government. Whatever the case may be, it has harmed an immigrant community in this country that has worked hard for political recognition," Chandra said.

The scheme first came to light last year after a two-month investigation by The Sun into Chandra's PAC, the Indian-American Leadership Investment Fund. Federal campaign finance records showed that almost all of the group's money came from Baltimore donors with ties to Gadhia, who then was Glendening's campaign treasurer.

Donating mostly in $1,000 and $500 increments, contributors ranged from prominent Indian-American engineers and doctors to cooks, busboys, students and secretaries who never before had made a political donation.

A half-dozen contributors interviewed said they were paid by Gadhia or his nephew to write the checks, but had no idea the practice was illegal.

Satish Bahl, a part owner of the Akbar Restaurant on Charles Street -- where kitchen employees made $13,500 in bogus contributions -- echoed other Baltimore donors in saying he now feels badly used by his former friend.

"I had no idea -- absolutely no idea," he said yesterday. "We were not aware of the consequences. We were only involved thirdhand. We never thought about how far this could go."

Gadhia denied the allegations at the time of The Sun's investigation. But the case against him continued to build last summer as FBI agents issued subpoenas to those who gave to the PAC or who attended fund-raisers held by Gadhia for Maryland congressional candidates, Baltimore Mayor Kurt L. Schmoke and presidential aspirants Bill Clinton and Michael S. Dukakis.

Former Md. official

Gadhia was at the height of his political influence, having been rewarded by Glendening with an $80,000-a-year post as his deputy secretary of international economic development. Within days, the governor demanded his resignation.

The allegations of wrongdoing stunned Baltimore's close-knit Indian-American community because Gadhia was its de facto political leader -- the man with the golden Rolodex who could produce thousands of dollars in contributions with a round of telephone calls.

Then, on May 8, 1995, FBI agents seized documents from Gadhia's Charles Street office that quickly expanded the investigation beyond the PAC contributions: copies of 66 personal checks attached to an Airborne Express bill of lading.

According to records released yesterday by the U.S. attorney's office in Baltimore, the courier bill was addressed to a minister named Devendra Singh at the "Embassy of India" and it contained checks not only to the PAC but to 12 Democratic lawmakers.

The records enabled the FBI to trace some $46,000 in illegal contributions back to Singh at the embassy, Battaglia said.

Singh, who now is a high-ranking police official in Rajasthan state in India, was minister for personnel and community affairs at the embassy at the time. Among his duties was to reach out to prominent Americans who had immigrated from India and seek their support for the government.

No 'such contribution'

The current minister for community affairs, Wajahat Habibullah, denied that the embassy is involved in trying to influence U.S. foreign policy through campaign contributions.

"I have not made any such contribution," he said, adding that diplomats at the embassy have a budget for entertaining dignitaries but not for political donations. "Certainly it is not part of our work."

But it is not the first time the issue has come up.

India's current ambassador has been in Washington only since April. But his predecessor, Siddhartha Ray, who is now running for Parliament in India, drew harsh criticism from Indiana Republican Rep. Dan Burton for his statements backing certain members of Congress who were known to be strong supporters of India.

"We are very concerned about political activities at the Indian Embassy," Burton's chief of staff, Kevin Binger, said of the Gadhia guilty plea. "We feel very strongly that it should stay out of political races. Any allegation that this is going on should be investigated and made an issue with the Indian government."

Said embassy spokesman Shiv Mukherjee: "The Indian Embassy operates fully within the bounds of diplomatic propriety."

Officially, the State Department had no comment. Privately, however, officials chalked up the illegal contributions that were funneled through Gadhia's Maryland political network to a lack of sophistication in how to influence the American political system.

One official said the Indians had made a fumbling start in their attempt to copy the formidable clout wielded on Capitol Hill by such countries as Greece and Israel, which are aligned with powerful and well-financed Washington lobbies.

India and its supporters in Washington have been extremely vocal in trying to limit U.S. military assistance to India's longtime adversary, Pakistan -- most recently, the sale of 38 F-16 fighters.

As the Clinton administration has tried to improve trade and political ties with India while not damaging relations with Pakistan, much of this debate has played itself out before the Senate Foreign Relations Committee and House International Relations Committee.

Federal Election Commission records show that the committee members have become magnets for campaign contributions from Pakistani and Indian immigrants living in the United States -- and for Gadhia's laundered contributions.

In addition to Sarbanes, other Democratic committee members targeted were Sen. Charles S. Robb of Virginia, $2,000; Rep. Gary L. Ackerman of New York, $3,000; Rep. Sherrod Brown of Ohio, $3,000; Rep. Lee H. Hamilton of Indiana, $3,000; Rep. Eliot L. Engel of New York, $3,000; Robert E. Andrews of New Jersey, $3,000; and Rep. Howard L. Berman of California, $2,800.

State Department officials said yesterday's revelations were unlikely to do serious damage to U.S.-Indian relations. Nor does the Gadhia case appear to rise to the level of other campaign financing scandals involving foreign nationals.

The Justice Department is investigating the campaign finances of Rep. Jay Kim, a California Republican and the first Korean-American member of Congress.

Since December, four Korean companies -- Hyundai Motor America, Korean Air Lines, Daewoo International (America) Corp. and Samsung America -- have paid a total of $1.2 million in fines in connection with illegal campaign contributions to Kim that were laundered through company employees.

In 1994, a number of Japanese citizens and corporations paid a $162,225 civil penalty to the FEC for making more than $300,000 in illegal contributions in Hawaii during the 1980s.

Perhaps the most famous episode of foreign intervention in recent history was the Korean scandal of the 1970s, in which a wealthy South Korean businessman funneled hundreds of thousands of dollars in bribes and contributions to U.S. politicians.

Among those caught in the scandal, which implicated more than 30 members of Congress, was Hancho C. Kim, a Maryland businessman. He was sentenced to six years in prison in 1978 for accepting $600,000 in funds from the Korean government to influence members of Congress.

Pub Date: 5/09/96

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