Chuck Schumer fund-raiser John Paulson is key figure in Goldman Sachs fraud case, records reveal
WASHINGTON – One of New York Sen. Chuck Schumer’s top recent fund-raisers is a key figure in the Goldman Sachs fraud case, a review of federal campaign records reveals.
John Paulson, leader of the $33 billion hedge-fund firm Paulson & Co., helped Democrat Schumer collect nearly $100,000 in the first three months of this year. Schumer is running for a third term in November.
The Securities and Exchange Commission says Paulson’s company helped assemble a bunch of bad mortgage securities for Goldman Sachs and bet they would tank, while Goldman found buyers who got soaked for $1 billion.
The SEC has not accused Paulson of wrongdoing, but alleges Goldman knew the securities were risky and misrepresented them to investors.
Paulson’s role in the alleged shenanigans has not prompted Schumer to refund the cash from his stockpile of nearly $22 million. But it has rung alarm bells.
“Through the years, our general practice has been to return funds when there is a determination of wrongdoing,” said Schumer spokesman Brian Fallon. “That hasn’t occurred here, but we will continue to monitor this case.”
Paulson has said, “We didn’t do anything wrong here.” Goldman is fighting the charges.
Schumer, the third-most-powerful Democrat in the Senate and a member of the Finance and Banking committees, is a key player in financial reforms under debate in Congress.
Schumer’s camp made it clear that it had no qualms about passing the hat among big-bucks donors who are likely to feel the impact of reforms.
The money – a total of $95,300 from 21 Paulson workers and seven of their spouses – was given in advance for an April 5 fund-raiser at the Friars Club in Manhattan.
A spokesman for the firm would only say that John Paulson held the event because he “supports candidates based on keeping the United States the financial and economic capital of the world.”
Paulson was more explicit in an invitation to the cash clutch that was first reported by Politico.com.
Schumer “has been one of the few members of Congress that has consistently supported the hedge fund industry, on important issues such as financial regulation, carried interest \[a lower tax rate for hedge-fund manager profit-sharing\], and investor rights,” Paulson wrote.
The senator is hardly the only politician to feel Paulson’s love. Andrew Cuomo, the state attorney general and presumed candidate for governor, also has raked in nearly $100,000 from him since 2008, and also does not plan to return it unless Paulson is found to have done wrong, said campaign spokesman Josh Vlasto.
Government watchdogs say relationships like Schumer’s with Paulson are all too common – and perfectly legal – in a system in which the rich can buy access to policymakers.
Paulson’s donations over the years have tilted Republican, which shows he’s focused on money, not on political ideals, said Dave Levinthal, a spokesman for the Center for Responsive Politics.
“This is not about any ideology he has but the bottom line of his financial interests,” said Levinthal.
Schumer’s top donors have long been Wall Street financiers, but many of them have complained lately that he is turning his back on them after the 2008 economic meltdown.
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