The Senator From MBNA

...In 1996, du Pont contributions to Biden were dwarfed by those from MBNA...

...So did senior executive vice-president Peter Dimsey...

...And a third agent said only, "In my opinion, [Cochran] overpaid...

...Kenneth Boehl, another top executive, also sent in $1,000 on the 16th...

...There's a stress on putting your best foot forward," another observer says...

...After that, virtually the entire top management of the company gets together in a coordinated campaign to donate money to the senator, getting around campaign contribution limits...

...If you talk to people involved in real estate in the Wilmington area, you'll quickly find that few want to approach the question...

...They are the affinity business," says Franklin Morton, a Chicago-based analyst who tracks MBNA's fortunes...

...Clatworthy's press secretary told the News-Journal that the home sale was "not an issue we're going to deal with in this campaign...

...MBNA president Charles Cawley created his company's extraordinary success by focusing on something called the "affinity card" business...

...Biden called the accusation "immoral and unethical," and in short order the whole thing blew up in Clatworthy's face...

...MBNA's chairman, Alfred Lerner, is less active in the company's affairs than Cawley...

...John Cochran, the company's vice-chairman and chief marketing officer, did pay top dollar for Biden's house, and MBNA gave Cochran a lot of money—$33o,000—to help with "expenses" related to the move...

...The contributions fit an established MBNA pattern...

...The law allows individuals to give $1,000 to a candidate during the primary phase of a campaign and another $1,0oo during the general election phase...

...Still no luck...

...They created the concept, they figured out how to market the hell out of it, and before anybody else figured out how to do it, they owned it...

...Fans of the Green Bay Packers can get a green-and-gold team card...

...Even though he has an income that is impressive by outside-the-Beltway standards—a senator's salary is $133,600 a year —Biden has struggled financially over the years...

...Beyond that, the company is not eager to talk...

...Then, when asked what young Biden is doing for the bank, the spokesman paused and said, "That's not something we get into details on...

...The Delaware state Republican chairman called Clatworthy's campaign "crazy" to suggest that Biden had sold his house in a sweetheart deal...

...And David Spartin, the vice-chairman and company spokesman...

...He even brought in Hollywood GOP icon Charlton Heston to campaign for him in all three of Delaware's counties...

...Another declined to say anything...

...We're very fortunate to have him here at MBNA...

...On April 18, MBNA general counsel John Scheflen sent in $1,000...

...And certainly lots of children of influential parents end up in very good jobs...

...Many of the people in management and skill positions work very long hours," says one observer...

...I knew the right answer for $40,000...

...On the 29th, David Spartin sent in his $1,000, as did Vernon Wright and Kenneth Boehl (Boehl's wife Kathleen also sent in another $1,000 on the 29th...

...On the 28th, Ronald Davies sent $1,000, along with Bruce Hammonds and David Nelms...

...Cochran's mortgage company," the spokesman says...

...However it happened, in February 1996 Cochran bought Biden's house for $1.2 million...

...as well as its snazzy sportfishing boat, So Far So Good and its power launch, Deliverance...

...A top executive of a rich and spendthrift company buys the home of a financially strapped senator, paying a generous price...

...Although disclosure rules do not force senators to list the value of their personal residences, Biden chose to include a letter noting his "good faith estimate" that he had between $500,001 and $1,000,000 in equity in his home...

...Agents say the presence of less expensive homes tends to bring down the value of the big house...

...But he needed some quick cash for campaign ads...

...Looking for support, he visited a group of rich businessmen...

...22 January 1998 • The American Spectator According to documents on file with the Securities and Exchange Commission, in 1996 Cawley received a compensation package worth about $6.6 million, a figure significantly higher than that of chief executives at other credit card firms...

...But the Biden case is troubling because all those ingredients come together in one man—along with a touch of hypocrisy...

...Joe's Money Crunch It has become a minor ritual each year in Washington: political observers scan the latest financial disclosure reports from Capitol Hill and marvel at how many members of the Senate are millionaires...

...If you do not plan to make any suggested contributions," Scheflen wrote, "I would appreciate it if you would so note...

...Sold...

...According to MBNA officials, the company asked Cochran to move to Delaware...

...Scheflen reportedly sent a follow-up memo asking to be informed in writing if an employee decided not to give...

...Senate credit union and another $1,000415,000 in the Delaware state pension plan (disclosure forms do not require senators to reveal exact figures...

...Then, less than two weeks before election day, one of Clatworthy's campaign consultants ran a so-called "push poll" in which campaign workers call voters ostensibly to learn their opinions but in truth to spread damaging information about the candidate's opponent...

...But Biden said he learned an important lesson about "the manner in which money corrupts...

...On the liabilities side, Biden had a loan of between $15,000 and $50,000 from the Senate credit union, plus another loan of between $15,000 and $50,000 against the cash value ofthose Connecticut Mutual policies...

...Moored in Camden's picturesque harbor," Barron's reports, "you can see MBNA's classic yacht, Affinity...

...plastic emperors...

...I knew the right answer for $20,000," Biden said...

...Reform...

...According to the pundits and pollsters, the episode 21 left many in Delaware with a strong distaste for negative politicking...

...On the positive side, he had between $1,000 and $15,000 in an account at the U.S...

...MBNA officials say there was no such coordination or coercion in the 1996 Biden contributions...

...Was the home sale a sweet deal for Biden...

...Biden said they asked him, "Joe, what's your position on capital gains...

...Mystery Job A few weeks after Biden was re-elected in November 1996, there came yet another tie between the senator and MBNA when the company hired Biden's son Hunter (the younger Biden is a Yale Law School graduate who was admitted to the bar this year...

...On the 3oth, John Scheflen sent his $1,000...

...I wouldn't touch that with a ten-foot pole," said one agent...

...When asked why many top executives contributed the same amount at the same time, spokesman David Spartin responded, "We all know each other very well...

...Of course, to get that money he would have to sell the house, a lovely old mansion on three and a half acres of what used to be a du Pont family estate outside Wilmington...

...He was openly critical of other bills that would have imposed less severe restrictions...

...Two other top executives topped the $3 million mark...

...And the practice raises another question: Are the contributions truly voluntary...

...In all, at least 39 of the 100 members of the Senate qualify for membership in the millionaires' club...

...An MBNA official declined to comment on the payment...

...Then Biden told the committee about an experience he had in 1972, during his first run for the senate...

...The price, they said, was twice the home's value, suggesting that MBNA had bought off Biden as well as his house...

...Bundles of Joy A few months after the sale, during the 1996 senatorial race, MBNA cemented its ties to Biden when company employees began showering him with campaign contributions...

...It sold in August 1995 for $800,000 (it should be noted that the house did not have a pool, which Biden's does...

...He had to...

...It didn't work...

...Biden would have had a negative net worth were it not for the value of his home...

...John Cochran received compensation of nearly $4.3 million...

...The list is headed by names like Kennedy and Rockefeller, but it also includes lawmakers like McCain, Helms, and Murkowski...

...In 1995, the Wilmington News-Journal reported that Scheflen wrote a memo to top staffers advising them to make specific contributions during the 1994 campaign...

...It was a tough call, one that could have cost him the election...

...And John Hewes, senior executive vice-president of 'Another factor might also lower the house's value: the Biden estate doesn't really blend in with the rest of the neighborhood...

...A spokesman for Cochran provided TAS with a copy of that appraisal...

...That appraisal was equal to the sales price...

...The statement says $210,000 of that was to make up for a loss Cochran suffered on the sale of his Maryland home...

...That didn't work, either...

...The next day, April 17, vice-chairman and chief financial officer Scot Kaufman sent $1,000, as did Bruce Hammonds, MBNA's vice-chairman and chief operating officer...

...It appears that was not a workable long-term arrangement...

...And Clatworthy was forced to fire the consultant who came up with the idea...

...he almost sold it in 1988...

...Certainly they pay themselves royal salaries...

...It appears that MBNA indirectly helped Cochran buy the Biden house...

...According to the paper, the memo "advised MBNA executives which candidates to give to, how much to give and when to give it—and to send photocopies of their checks to the bank's general counsel...

...Biden said he knew what to say to get the donations he desperately needed...

...Today, it is the second-largest issuer of Visa and Mastercards in the country, and some analysts believe it will eventually overtake Citicorp to become the nation's biggest credit-card bank...

...He tried to portray Biden as a soft-on-crime liberal...

...In March of that year, Biden appeared before the Senate Rules Committee to testify on behalf of his proposed reforms...

...MBNA has invented hundreds of different affinity cards and is always coming up with more...

...For example, according to Federal Election Commission records, on April 16 MBNA executive vice-president and chief technology officer Ronald Davies sent in $1,000...

...According to a statement in the company's filing with the Securities and Exchange Commission—in which it is required to detail the compensation of top officers—in 1996 MBNA reimbursed Cochran $330,115 for expenses arising from the move...

...MBNA BY BYRON YORK / n the 1996 campaign, a Republican businessman named Raymond J. Clatworthy challenged Joseph Biden's run for a fifth term as senator from Delaware...

...The practice is known as "bundling," and it is something that troubles campaign finance watchdogs...

...In the case of Biden's house, the appraiser compared the home to another large old house about a quarter of a mile away...

...And finally, on April 26, Charles Cawley sent in his $1,000...

...04 24 January 1998 • The American Spectator...

...on the other hand the house had central air conditioning, which Biden's did not, and it was on a larger lot...

...That house —which was in similar condition—was judged to be worth $1,013,000...

...On the 25th, Gregg Bacchieri gave another $1,000...

...Joe Biden isn't one of them...

...Members of the National Education Association, for example, can get an NEA credit card— issued by MBNA...

...The appraiser also looked at two other newer houses in the area...

...Others note that top officers all live close to each other, and MBNA encourages them to display the outward signs of success, like houses, clothes, and cars...

...The other was The American Spectator • January 1998 appraised at $1,163,000 and sold for an even $i million...

...Hunter Biden himself declined to discuss his salary or his job...

...23 MBNA's credit division...

...Biden disputed the claim and provided the local paper, the Wilmington News-Journal, with an appraisal of the house fixing its value at $1.2 million—exactly the price that the MBNA executive, a man named John Cochran, had paid...

...When pressed, the spokesman said, "He's a talented young guy that we are grooming for a management position...

...They seem very committed, very dedicated to Cawley...

...An MBNA spokesman says the same thing...

...The price was not twice the home's value, as Raymond Clatworthy's pollsters claimed, but there is evidence to suggest it was a pretty darned good deal for Biden...

...And they spend as much on their toys as they do on their salaries...

...But the deal didn't happen until MBNA came along...

...the popular Biden maintained a strong lead in the polls going into election day...

...Judging by the timing of the contributions, it appears that there was a concerted effort among top MBNA executives to support Biden...

...The appraisal that Biden gave the News-Journal during last year's campaign—showing that the house was worth $1.2 million—was done several years earlier, at the time Biden took out loans for his sons' education...

...Of course, lots of members of Congress have intimate ties to corporations in their states or districts...

...First, a spokesman declined to discuss Biden's salary...

...It is customary for appraisers to evaluate homes in relation to similar properties in the area, or "comparables...

...By many accounts, Clatworthy ran a hapless, hopeless race...

...In all three cases, the homes sold for a good deal less than their appraised value...

...One was appraised at $1,230,000 and sold for $1,007,500...

...Company employees gave him $62,850 in the 1996 cycle, while the second-biggest contributor gave just $21,000...

...Hunter Biden is an outstanding young man," a bank spokesman says...

...How the two got together is not clear...

...MBNA's success has bred an extraordinary corporate culture, almost a cult of Cawley...

...At the same time, Biden was looking for a buyer for his house...

...And he co-signed two loans totaling between $100,000 and $250,000 for his sons' college educations...

...On April 22, John Cochran sent in $1,000...

...When asked, an MBNA spokesman declined to offer any details, saying only, "That's a very personal question...

...early in the race, he had vowed to stay away from personal attacks...

...In Januaryi.996, as the purchase deal was under way, another appraisal was made, also putting the house's value at $1.2 million...

...And William Daiger, another executive vice-president...

...When asked about Biden'sacceptance of MBNA contributions, a spokesman for the senator would say only that Biden "is proud of the support he has received from the business community in Delaware...

...And vice-chairman and chief administrative officer Lance Weaver...

...But as Biden tells the story, he wouldn't say what the fat cats wanted to hear, and went away with nothing...

...But MBNA is perhaps best known for another corporate personality trait: its extravagant spending...

...The spokesman said Hunter Biden has been "moving around the bank" as part of his introduction into the business...

...he received $6.4 million...

...its state-of-the-art cruiser, Impatience...

...He was just 29, with a chance to become the second-youngest senator in American history...

...It might be interesting to hear the young Joe Biden's reaction to a case that would arise twenty-five years later...

...There's also a warm-weather hideaway in Boca Raton and MBNA's "summer headquarters" in Camden, Maine, where Cawley has bought a $2.75 million home on the waterfront...

...In his 1995 disclosure report, for example, Biden's liabilities appeared to outweigh his assets...

...And then, after the senator is re-elected, the company hires the senator's son...

...Biden bought the house in 1975 but had been thinking on-and-off about selling it for years...

...And, according to people familiar with the situation, the house needed quite a bit of work, contractors and their trucks descended on the house for months after the purchase.' A spokesman for Biden says there was nothing out of the ordinary in the purchase...

...Other houses are of much more recent vintage, and on much smaller lots, According to local real estate agents, they sell in the $35o,000 to $5oo,000 range...

...That's a matter of public record...

...The practice makes a politician beholden to rich companies, Biden said during a debate on finance reform in 1993...

...According to Federal Election Commission records, MBNA became by far Biden's biggest single source of contributions...

...Such moderate measures, Biden said, were "like moderate chastity...

...When you bundle the individual contributions," says Ellen Miller of the public interest group Public Campaign, "you can give more than with a political action committee...

...Biden's largest asset, valued at between $15,000 and $50,000, was six life insurance policies with the Connecticut Mutual Life Insurance company...

...MBNA was originally based in Maryland, but in the 198os moved to Delaware to take advantage of that state's more liberal interest laws...

...None wanted to be identified by name...

...Clatworthy's callers said that earlier in the year Biden had sold his house to a top executive of the DelawareBYRON YORK is an investigative reporter with TAS...

...Despite his frustration, Clatworthy stuck to the issues...

...And lots of companies encourage their employees to make big campaign contributions (MBNA has given more to some Republicans than it gave to Biden...

...You are much less indebted to the 200 electricians who gave you two bucks apiece," Biden said, "than you are to the 5o du Pont family members who gave $2,000 apiece...

...Such help is particularly valuable for Biden, a longtime advocate of campaign finance reform, because Biden does not accept money from political action committees...

...What's the right answer for that...

...Once the primary contributions had been made, MBNA's second wave of donations appeared in late August...

...On August 27, John Cochran sent in his $1,000, as did William Daiger and another top official, Robert Desantis...

...When you do it in the workplace, many people feel there are unwritten rules, and certain pressures that can be applied with a wink and a nod," says Kent Cooper of another public interest group, the Center for Responsive Politics...

...We all talk among each other, and made our contributions...

...The idea is simple: MBNA markets cards to people who identify with groups or organizations to which they belong...

...dollar" But the deal didn't happen until MBNA came along...

...He tried to portray Biden as a big-government tax-and-spend liberal...

...Senator Biden sold his house in Delaware at the appraised value," the spokesman said...

...It is perhaps not necessary to add that Clatworthy lost big when election day came around...

...Almost all of Cawley's team of top executives moved to the Wilmington area, but John Cochran stayed behind at his home in northern Maryland, commuting to the company's new headquarters...

...by many accounts, Cawley wants his top aides close to him and to the office...

...MBNA officials seem delighted with their new executive...

...In 1993 Joe Biden, along with fellow senators John Kerry and Bill Bradley, sponsored a campaign finance bill that would have, among other things, sharply limited the influence of political action committees and the practice of bundling...

...There was an independent appraisal done by Mr...

...Even luxury auto enthusiasts can get an MBNA-issued Jaguar owners card...

...Appearances matter...

...The American Spectator • January r998 based credit card company MBNA...

...In comparison, it appears Cochran simply paid Biden's full asking price...

...I knew the right answer for $30,000...

...After all, this is a senator who for years has sermonized against what he says is the corrupting influence of money in politics...

...According to Barron's, the company maintains an extensive collection of antique automobiles, plus four Lear jets, plus two Gulfstream jets, plus a private golf course...

...There ain't no such thing...

...He has also been a vocal critic of bundling...

...He also owed between $15,000 and $50,000 on a line of credit from the Beneficial National Bank in Wilmington (he had just that year paid off a loan of between $1,000 and $15,000 with the Delaware Trust Company...

...The home deal, it appeared, was on the up-and-up...

...Biden captured 6o percent of the vote, and Clatworthy returned to his businesses in Dover...

...he almost sold it before his disastrous run for the presidency in 1988...

...Big Spenders Not too many years ago, MBNA was a relatively minor player in the credit card business...

...But as much as he bungled the issue, it turns out Clatworthy was on to something: Biden and MBNA have indeed developed a pretty cozy relationship...

...On April zo, group president David Nelms sent in $1,000, as did vice-chairman Vernon Wright...

...at the very least, it seems unlikely that anything like the Biden house caper will be repeated anytime soon...

...One recent profile in Barron's magazine called Cawley & Co...

...And then, a short time after the election, MBNA hired Biden's son for a lucrative job in which, according to bank officials, he is being groomed for a senior management position...

...And senior vice-president Gregg Bacchieri...

...He did Biden bought the house in 1975 but had been thinking ay to about selling it for years...

...You might feel coerced into giving...

...A few months after the sale, as Biden's re-election effort got under way, MBNA's top executives contributed generously to his campaign in a series of coordinated donations that sidestepped the limits on contributions by the company's political action committee...