McCain's mystery donors

Andrew Zajac

Today's Chicago Tribune features a story about a virtually unknown network of large donors to mostly Republican causes, including the McCain presidential bid.

The main donor, Shi Sheng Hao, lists an address in suburban Chicago and is the largest political donor in Illinois this election cycle who is not a self-funding candidate for office.

Hao, 64, is an intriguing character. He has the same name as a Taiwanese businessman who is embroiled in a legal dispute with Las Vegas billionaire Sheldon Adelson over a casino license in Macau. The Taiwanese Hao also has links to members of the Lum family, who were entangled in a high-profile Democratic fundraising scandal in the late 1990s.

While it's not known for certain if the two Haos are one and the same, a series of coincidences strongly suggests they are.

Judge for yourself by reading the story posted below.

Following the story is a brief explainer on how McCain and Sen. Barack Obama exploit an election law loophole to enable individual donors like Hao to legally give more than the $4,600-per-election-cycle limit to benefit their campaigns.

Campaign donor's giving raises questions
Little known about man who has sent thousands to GOP
By Andrew Zajac, Ray Gibson and Bob Secter

Tribune reporters

October 29, 2008

Big campaign donors typically come with deep pockets and influence. But in Illinois this election cycle, no one not running for office himself has given more to the nation's federal campaigns than Shi Sheng Hao of Roselle, a virtual unknown in business and political circles.

Before September 2007, Hao's name had never appeared in the 15-year-old federal database of campaign contributors. Since then, however, his donations have topped $120,000 -- including $70,100 on a single June day to Republican presidential candidate John McCain.

Over the same time frame, a network of Hao relatives has kicked in more. The take from this group over the last 13 months exceeds $269,000, a small amount to Democrats but most of it to McCain and the Republican National Committee, records show.

Hao didn't register to vote at the northwest suburban address attached to his donations until October 2007, a month after he wrote his first political check, $25,000 to the RNC.

The circumstances surrounding Hao's sudden and prolific political activism are curious and his whereabouts unclear. His name isn't listed on property records or the mailbox at the unassuming tract home listed on his donations. Hao lives "overseas," insisted a man who answered the door at the Roselle home recently. The man declined to identify himself.

The story of Hao--whose varied roster of business associates appears to include a Taiwanese government investment arm as well as the mastermind of a decade-old Democratic fundraising scandal -- is an eyebrow-raiser in the current election climate.

Ethnic Chinese donors became an issue in the battle for the Democratic nomination last year because some didn't seem to live where they claimed on contribution records. Now, Republicans are raising questions about the authenticity of many small donations Democrat Barack Obama has received from abroad.

Sheila Krumholz, executive director of the Washington-based Center for Responsive Politics, said the timing of the Hao-related contributions appeared troubling, though there could be a plausible explanation. "Large contributions from people who have never given previously do generally provoke questions about who they are and what they're up to, and most importantly, what they're looking for," said Krumholz, whose non-partisan group closely tracks political donations. "The public needs to be concerned because there are fraudulent donations, and persons use them to gain influence and access in Washington."

McCain spokesman Brian Rogers said Hao was not a "major donor" and "not a part of this campaign in terms of fundraising," but declined to discuss him further or address the campaign's procedures for vetting donors. RNC spokesman Danny Diaz said he would not respond to questions from the Tribune, contending that the newspaper was biased against McCain.

So who is Shi Sheng Hao, and what are his means and motives for becoming a mega-donor? No one answers a telephone listed in his name in the 630 area code, and there's no answering machine. Messages left for him by phone and e-mail with several relatives went unanswered.

But this much can be gleaned from public records:

Donation disclosures list his occupation as a businessman with entities identified only by slightly different acronyms: ADECC, AAEC, A.A.E.C.C. On some he is also listed as president of American Chinese Entertainment Ltd.

Hao and his wife, Hsin-Ning, declared bankruptcy in 1995, at the time using the Roselle home as an address and listing as a business a firm called Asian American Environmental Control.

Hao holds an Illinois driver's license that lists his address as the Roselle home, but property records show the four-bedroom house has been owned since 1992 by Robert and Jen Chi, and their last name is on the mailbox. Contacted at the Des Plaines marketing firm where she works, Jen Chi said she didn't want to discuss Hao, though she said she knew how to get in touch with him and would have him call the Tribune. He never did.

"I don't know anything about his business," said Chi, who herself gave $15,000 to the RNC the week after Hao's first donation. "I don't want to be stuck in the middle." Hao's wife, Hsin-Ning, also used the Roselle address when she made a $25,000 contribution to the RNC last year. In September, however, she listed a Taipei address on a $2,300 contribution to the campaign fund of former Democratic presidential candidate Hillary Clinton.

There is no record in business databases of American Chinese Entertainment Ltd., the firm listed in some Hao donation records. However, an Asian American Entertainment Corp. was incorporated early this year in California with a Shi Sheng Hao as president. Government records show that firm and at least two other Hao companies have connections to the family of Gene and Nora Lum, onetime prominent Democratic fundraisers in the Asian-American community who were convicted in 1997 of making political donations through illegal straw donors.

A Taiwanese firm with a nearly identical name as Hao's new California company, Asian American Entertainment Ltd., is also headed by a Shi Sheng Hao. That firm has been embroiled in a lengthy legal battle in Las Vegas over a soured partnership in an application for a casino license in Macau, the former Portuguese colony now part of China.

A court filing in that case described Hao's firm as a business affiliate of the China Industrial Development Bank, a finance arm of the Taiwanese government. Hao is listed as a resident of Taiwan in corporate papers filed in the case.

It is not clear whether the Shi Sheng Hao in the lawsuit and the California ventures is the same Shi Sheng Hao using the Roselle address. But public records point to numerous coincidences, including corporations with similar names and an overlap of investors. Some political donations from the Roselle address also refer to Hao by a nickname, Marshall, the same nickname given for Hao in the Las Vegas court action.

Federal records indicate a pattern of large and coordinated donations from Hao, relatives and associates. Collectively, eight of them gave a total of $130,000 to the RNC in late September to early October of last year.

azajac@tribune.com

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Copyright © 2008, Chicago Tribune

EXPLOITING JOINT FUNDRAISING COMMITTEES

Given federal contribution limits, how can Shi Sheng Hao give $70,100 to John McCain?
In general, individuals are barred from giving more than $2,300 to the main fundraising committee of presidential candidates in a primary race and another $2,300 in a general election.
But the law has a loophole exploited by Democrats and Republicans alike. Barack Obama and John McCain each control what are called "joint fundraising committees" that are allowed to put the arm on individual donors for tens of thousands of dollars. Between them, Obama and McCain have raised $300 million that way.
The joint committees act as funnels, distributing money they raise to other political committees which, by law, aren't allowed to coordinate with each other on how it is spent. That's a feeble restriction since experienced political operatives know how to promote a candidate without comparing notes with colleagues, said Massie Ritsch, of the non-partisan Center for Responsive Politics.