Clinton Blasts Defrauding Seniors Despite Supporter's Questionable Practices

Aug. 15, 2007 — -- In a Des Moines, Iowa, speech Wednesday morning, Sen. Hillary Clinton, D-N.Y., expressed concern about older Americans being "scammed," even though her campaign has benefited from the largesse of a Democratic donor whose company is being investigated by the Iowa attorney general for its role in the very same issue -- defrauding seniors.

"Fraudsters prey on seniors," Clinton told more than 300 Iowans at Waukee High School. "They offer prizes and sweepstakes and lotteries that lure people into a web of deception."

Clinton warned the crowd, "We've got to send out the alarm: Seniors should be extremely careful in buying anything that someone tries to sell you over the telephone."

One of Clinton's biggest financial supporters, however, is the multimillionaire owner of a data-mining company currently under investigation for its role in selling data lists of vulnerable seniors in Iowa to criminals specifically preying on lottery-seekers.

Iowa Attorney General Tom Miller launched the investigation against telemarketers defrauding the elderly in 2005, including an exploration as to what role infoUSA and its subsidiary Walter Karl Inc. played in selling their telemarketing lists to the very same kinds of "fraudsters" Clinton lambasted Wednesday.

Clinton Supporter Investigated

Vinod Gupta, founder, chairman and chief executive officer of infoUSA, has contributed more than $14,000 to Clinton and her various campaign committees, federal election records show.

For her presidential race, Gupta has given the maximum allowable contribution, $2,300, and by serving as vice chair of a June Manhattan fundraiser for Clinton featuring Christina Aguilera, Gupta committed to raising $50,000 for her campaign.

infoUSA has also paid former President Bill Clinton hundreds of thousands of dollars for speeches, and more than $3 million for consulting.

A spokesman for Clinton would not address whether there was an inconsistency between Clinton's concern about vulnerable seniors and the contributions she takes from Gupta, but insisted that the senator's record, when it comes to privacy issues and protecting seniors, speaks for itself.

"Hillary Clinton believes we have a sacred obligation to keep our seniors safe and protect them from unconscionable acts of fraud and privacy theft," said Clinton campaign spokesman Phil Singer. "This is something she cares deeply about, and has been working for years to combat."

Last year, for example, Clinton introduced legislation to offer consumers a Privacy Bill of Rights to keep personal data safe and secure, Singer said, while in 2004, she introduced an amendment to a tax bill to require businesses that collect personal data from consumers using a foreign data processor to inform consumers of that fact and obtain their permission.

Investigation in Iowa

The investigation into Gupta's company and its subsidiary has been going on since 2005, and it has not stopped.

"This matter remains open for us," Bob Brammer, spokesman for the Iowa Attorney General's office, told ABC News Wednesday afternoon.

In March 2005, Miller's office asked the Polk County District Court to order Walter Karl Inc. to provide his office with information in response to its investigation into telemarketing schemes, since the company was refusing to share information investigators sought.

"Our investigation seeks to determine whether Walter Karl's services are used by fraudulent operators, and whether the list-broker should have known of such activities. Our overall objective is to deny deceptive telemarketers access to the crucial tools they need," Miller said. "After a period of cooperation -- albeit slow and fitful cooperation -- Walter Karl refused to provide certain key information."

The Iowa Attorney General sought to find out what the firm knew about how its lists were created, how its lists were used, and who used them.

"It is important to know whether, given the potential abuses to which certain customer lists are subject and given the manner in which some of these lists are openly promoted, Walter Karl has any procedures in place to guard against fraudulent uses of its lists," Miller's filing with the court stated.

Walter Karl Inc. advertised telemarketing lists of "impulsive buyers … primarily mature," and sweepstakes contestants "over the age of 40, with household incomes of approximately $25,000."

Other lists included "elderly opportunity seekers, defined as 3.3 million seniors "looking for ways to make money," and "oldies but goodies," which were 500,000 gamblers 55 years old or older.

"These people are gullible," advertised one list, as first reported in The New York Times. "They want to believe that their luck can change."

The company ultimately complied with the Iowa attorney general's request.

Ethics Questions Surround Corporate Jets, All-Female Yacht

A spokesman for infoUSA would not comment but steered a reporter to a section on the infoUSA Web site that stated that the problems seemed to stem from Walter Karl's acquisition of JAMI Marketing, a small list brokerage company that provided customers with lists of seniors interested in sweepstakes and lotteries.

"In response to the Iowa investigation, Walter Karl exited this business and the one sales representative involved in this area left the company," the infoUSA statement reads. "While infoUSA can not manage what a client does with the publicly available information infoUSA provides, the company has a strict policy about not selling data to companies who act illegally."

The relationship between Gupta and the Clintons has come under scrutiny for other reasons as well.

In May, various media outlets reported about a shareholder lawsuit filed against Gupta's company by two Connecticut hedge funds that had invested in InfoUSA and were assailing Gupta for spending lavish sums "to ingratiate himself" with Bill and Hillary Clinton.

Gupta, for instance, provided his corporate jet to the Clintons in January 2002 to fly to Acapulco, Mexico, at a cost of $146,866, a ticket Sen. Clinton paid for by upholding Senate ethics rules

The lawsuit also charged that "during the next four years, infoUSA paid Mr. Clinton more than $2 million for consulting services, and spent almost $900,00 to fly him around for his presidential foundation work and to fly Mrs.Clinton to campaign events."

The hedge funds, Dolphin Limited Partnership and Cardinal Capital Management faulted Gupta for improper spending on items such as jets, luxury cars and a yacht "that is notable for being one of the few to have an all-female crew."

Gupta told the Indian Web site Rediff.com that the stories were "part of a smear campaign" and "sleazy journalism" only written "because The New York Times is supporting Obama and they are trying to hurt Hillary Clinton any way they can."

David Chalian contributed to this report.