Clinton Backer Pleads Guilty in a Straw Donor Scheme

As Senator Hillary Rodham Clinton ran for president in 2008, one of her most enthusiastic financial supporters was Sant Singh Chatwal, an Indian-American hotel and restaurant owner, whose relationship with the Clintons dated back years.

Mr. Chatwal was a regular at Clinton campaign events in New York, a genial and gregarious presence in his red turban. He had directed more than $200,000 through his businesses to her 2000 Senate campaign, when unregulated “soft-money” donations were still permissible.

Both Bill and Hillary Clinton, along with Senator Charles E. Schumer and Representative Richard A. Gephardt, were guests at the wedding of one of Mr. Chatwal’s sons, Vivek, at Tavern on the Green in New York City in 2002.

For Mrs. Clinton’s presidential run in 2008, Mr. Chatwal went on to raise at least $100,000. It now turns out, however, that much of what Mr. Chatwal raised was tainted, a product of an elaborate straw donor scheme in which Mr. Chatwal illegally reimbursed donors for their contributions.

Mr. Chatwal dancing in 2005 in a marriage procession. Credit Amit Bhargava/Corbis for The New York Times

Mr. Chatwal pleaded guilty in Federal District Court in Brooklyn on Thursday to skirting federal campaign contribution laws and witness tampering, admitting that he had funneled more than $180,000 in illegal contributions between 2007 and 2011 to three federal candidates — identified by a person with knowledge of the investigation as Mrs. Clinton, Senator Christopher J. Dodd of Connecticut and Representative Kendrick B. Meek of Florida.

Mr. Chatwal owns the Chatwal and the Dream hotels and the Bombay Palace restaurant chain. He has long been shadowed by financial and legal problems in both the United States and India, filing for bankruptcy twice, facing allegations of bank fraud and owing millions in back taxes.

Now, Mr. Chatwal, 70, faces up to 25 years in prison. It is not hard to discern Mr. Chatwal’s motivation for his scheme, according to information filed by federal prosecutors. He described the importance of the donations to a government informant in a recorded conversation:

“Without that nobody will even talk to you. When they are in need of money,” he said, “the money you give, then they are always for you. That’s the only way to buy them.”

The Chatwal family has had a colorful history. Mr. Chatwal’s other son, Vikram, is a night-life fixture whose corporate website describes him as a “man-about-town” who has “friendships with some of Hollywood’s most influential stars,” has dated the models Gisele Bündchen and Esther Cañadas, and is a friend of the rapper Sean Combs and the actress Lindsay Lohan. He was arrested last April after trying to board a flight while carrying cocaine, marijuana and prescription pills, and has had several stints in rehabilitation.

The elder Chatwal’s realm was politics: He had a private dinner with Ms. Clinton when she was visiting India and was a regular at state dinners at the White House under three different presidents — Mr. Clinton, George W. Bush and Barack Obama.

He and his family have given more than $350,000 to candidates for federal office since the 1990s and have raised hundreds of thousands more.

His business problems raised some alarms, but never enough to lock him out of the process. One former fund-raiser for Mrs. Clinton recalled Mr. Chatwal as always nice but desperate to be seen as close to power.

Another Clinton fund-raiser described Mr. Chatwal as a regular at Clinton Global Initiative and campaign events, often proffering invitations to his Lambs Club restaurant or his hotels.

He filed for bankruptcy protection in 1995 and in 1997 was sued by the Federal Deposit Insurance Corporation for his role in a failed New York bank. A naturalized United States citizen, he was charged in 2000 with bank fraud in India, but was eventually dropped from the case.

In April 2007, Mr. Chatwal formed “Indian Americans for Hillary 2008” and pledged to raise $5 million for her presidential campaign.

One of the straw donor schemes that prosecutors sketched out in court records started that year. Mr. Chatwal asked an associate, who owed him $2.5 million, to help him raise money for a candidate, prosecutors said. The court records say that the associate distributed $90,000 and kept a “minimal sum” as a “commission,” and that Mr. Chatwal reduced the total the associate owed him by $100,000. The resulting contributions by straw donors appeared to support at least three fund-raising events for that candidate, according to the court records.

Mr. Chatwal could be frank about the power of money in politics. In the fall of 2010, according to court documents, Mr. Chatwal and a business owner who is now cooperating with prosecutors decided that they should raise money, using straw donors, for another candidate so the candidate might intervene with a federal regulatory agency that had issued an “adverse ruling” regarding the other person’s business. “That’s the only way to buy them, get into the system,” Mr. Chatwal was recorded as saying to the person, who by then was cooperating with prosecutors.

To reimburse straw donors for contributions made to a third candidate, Mr. Chatwal instructed a contractor involved in the scheme to pad an invoice for work done for one of his businesses by $69,000 to cover some of the contributions, according to prosecutors.

In September 2010, around the time of actions described by prosecutors, Mr. Clinton was then helping Mr. Meek in a three-way race — against Charlie Crist, an independent, and Marco Rubio, the Republican who ultimately won — for a Senate seat from Florida that was seen as very important to the Democratic Party and the Obama White House.

That month, Mr. Chatwal hosted a fund-raiser for Mr. Meek at his Lambs Club restaurant in Manhattan, which had just opened in the Chatwal Hotel on West 44th St. Mr. Clinton stopped by to say a few words on Mr. Meek’s behalf, according to news reports at the time.

By 2012, both the Internal Revenue Service and the Federal Bureau of Investigation were looking into Mr. Chatwal’s activities. He was recorded multiple times telling an associate to lie about the donations, according to court records.

He appeared in court on Thursday wearing his usual red turban, a pink shirt and a red tie. He said little more than “Yes, sir” as Judge I. Leo Glasser accepted his guilty pleas. He was released on $750,000 bail, forfeited his passport and agreed to forfeit $1 million to the government. His sentencing is scheduled for July 31.

He remains chairman of Hampshire Hotels and Resorts, his hotel and management group, but this month stepped down as chief executive.

“Mr. Chatwal deeply regrets his actions and accepts full responsibility for the consequences,” a spokeswoman for Mr. Chatwal, Lesley Bogdanow, said. “He looks forward to resolving this personal matter.”

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