NEW YORK, June 13, 2004 – LAWFUEL – New York Attorney General Elio…

NEW YORK, June 13, 2004 – LAWFUEL – New York Attorney General Eliot Spitzer’s office called the office of prominent hedge-fund manager Stanley Druckenmiller last fall and said, with a chuckle, that the purpose of the call wasn’t a “regulatory matter,” but that Spitzer wanted to chat, according to people who’ve heard the story from Druckenmiller. Later, Spitzer asked for a contribution, about $25,000 each from Druckenmiller and his wife, to the “Spitzer 2006” committee for his likely campaign as a Democrat for New York governor, reports Newsweek Senior Writer Charles Gasparino in the current issue.

Campaign-finance records show that Druckenmiller, who typically supports Republicans, and his wife, Fiona, each contributed $25,000. He declined to comment, but didn’t deny the story, Gasparino reports. Spitzer’s office confirms the call, but noted that he rarely asks for specific dollar amounts. In the June 21 issue of Newsweek (on newsstands Monday, June 14), Gasparino reports details about Spitzer’s fund-raising efforts, which raise new questions about conflicts of interest for him. To be clear: Spitzer has done nothing illegal; at issue is whether his own actions meet the standards he’s championed. Spitzer, through a spokesman, says he sees no conflicts in accepting the money if those who donate have no “pending business matters before the office.”

Gasparino cites another example: attorney Gary Naftalis, who represented Canary Investment Management, the first target in Spitzer’s hedge-fund inquiry, cut a deal with Spitzer for Canary to pay $40 million last year without accepting criminal liability. Two months later Naftalis’s law firm contributed $10,000 to Spitzer. Naftalis now has new business with Spitzer, representing Kenneth Langone, who was recently named in a civil suit from Spitzer over the $139.5 million paid to former New York Stock Exchange chairman Dick Grasso. (Langone had led the NYSE compensation committee). Naftalis declined comment.

Gasparino also reports: Friess Associates, a mutual-fund firm, contributed $2,000 to Spitzer last June, despite its founder’s support of conservative causes. Chris Long, a spokesman for Friess, says the donation was from a fund manager who was networking. “From my point of view, it is a conflict getting contributions from executives at industries you’re investigating,” he adds.

And records show that Spitzer also received $5,000 from the drug firm Eli Lilly in March 2003, Gasparino reports. Spitzer just filed suit against GlaxoSmithKline for not fully disclosing the side effects of Paxil.

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