y JONATHAN D. SALANT
.c The Associated Press
WASHINGTON (Dec. 30) - Stung by the fund-raising controversy and declining contributions, President Clinton's legal defense fund announced it is shutting down on Wednesday and leaving the first family to find other ways to defray $3 million in unpaid legal bills.
The president immediately asked White House lawyers for other options to raise the money to pay the mounting bills from the Whitewater and fund-raising investigations.
Trustees of the 3-year-old legal defense fund said Tuesday that potential contributors shied away in the wake of the ongoing criminal and congressional investigations into political fund-raising.
''The trustees have noted with concern and regret the steady decline in contributions to the trust,'' said Michael H. Cardozo, the Washington lawyer who served as the fund's executive director.
''They believe this is due in large measure to the political climate which prevails today, with numerous highly publicized campaign finance related investigations.''
The fund itself became ensnared in the fund-raising controversy after revelations last year it returned $640,000 in contributions from controversial fund-raiser Yah Lin ''Charlie'' Trie. The money, delivered in manila envelopes, was returned because of concerns about its origins.
''The notoriety associated with that incident had a chilling effect on contributions to the trust fund,'' said Cardozo, who testified before Congress about the incident. ''There is no question that the notoriety hurt us.''
The fund was also hamstrung by a restriction prohibiting its trustees from soliciting donations.
After taking in $1.2 million during its first two years, the fund's financial support slowed to a trickle. It took in only $79,702 between Jan.1 and Nov. 30, 1997, while spending $92,372.
Among those to give the maximum $1,000 in the past 11 months:
-Judith A. McHale, chief executive of Discovery Communications, which operates the Discovery cable channel.
-Jean M. Auel, an author in Oregon whose work include ''The Clan of the Cave Bear.''
-Walter Kaye, a New York insurance executive and major Democratic donor.
-Washington lawyer Philip L. Verveer, whose wife Melanne is chief of staff to Hillary Rodham Clinton.
So far, the fund has paid $766,134 of President and Mrs. Clinton's legal bills but the first couple still owe $3 million. Another $890,000 worth of legal bills in the Paula Jones sexual harassment suit have been paid by the president's insurance companies.
Most of the unpaid bills, $2.7 million, is owed to the firm of Clinton's Whitewater attorney, David Kendall.
Cardozo said the fund will not accept any checks dated after Dec. 31, 1997, and would go out of business as soon as possible next year.
The president asked the White House counsel's office for advice on how to continue raising money.
''In light of the trustees' decision to dissolve the trust, we have asked the counsel's office to advise us concerning the ethical and legal requirements that would govern any future efforts to address both the substantial legal fees already accumulated and those that will be generated by the need for ongoing representation,'' Clinton said in a statement.
He did not elaborate.
Cardozo suggested that the president's supporters could choose to solicit contributions, which the legal defense fund could not do under a ruling by the Office of Government Ethics.
''The ethical and legal challenges can be overcome,'' Cardozo said. ''I would hope the president's friends and supporters will do so.''
But others questioned whether potential donors will be scared away by the attention that contributions to the president receive.
''There is probably no shortage of people who would like to ingratiate themselves with the president, but not in such a public way,'' said Gary Ruskin, director of the Congressional Accountability Project, a watchdog group affiliated with consumer advocate Ralph Nader.
AP-NY-12-30-97 1705EST
Copyright 1997 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press.
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