A prominent Democratic fundraiser has called off a $10,000 a head conference she was planning to coincide with the party's Denver convention amid controversy over party fundraising.

Nancy Jacobson is married to Mark Penn, the former chief strategist to Hillary Clinton's failed presidential bid. Her conference, a four-day event that was to be held at the Ritz-Carlton, had been touted as an opportunity for Democrats to hobnob with the party's elite: candidates, policymakers and even Hollywood stars.

But questions emerged about who would profit from the event, which Ms Jacobson told the news website the Huffington Post was an "entrepreneurial thing". Some Democratic fundraisers and party activists expressed indignation, sayingthe conference would steer potential donations away from the Democratic party.

Feeding exasperation was Ms Jacobson's relationship with Mr Penn, a political and corporate strategist and pollster widely blamed for Mrs Clinton's campaign missteps. Complicating matters for Democrats who are helping the New York senator pay off roughly $25m in campaign debt isthat the firm Mr Penn runs is owed about $5.3m by the campaign.

"I think the reaction was, 'Why don't you contribute it to candidates or to the party or the convention?' ", said one party fundraiser who was annoyed at Ms Jacobson's plan. "The fact that Hillary Clinton and Barack Obama have to raise money for Mark [to pay off his debt] while she [Nancy Jacobson] is taking money to throw a seminar was an added irony," the person said.

Mr Obama, the presumptive Democratic nominee, has shattered fundraising records since he began his bid for the White House, but the rest of the Democratic party is not faring as well. The Democratic National Committee, headed by How-ard Dean, the former Vermont governor, has raised $82m this election cycle, compared with $168m raised by the Republican National Committee. Democrats are also grappling with a $10m shortfall to the convention.

One person familiar with the conference said Ms Jacobson was not moving ahead with the event because of time constraints. Neither Ms Jacobson nor Mr Penn responded to questions on the event.

Ms Jacobson, an early supporter of Indiana senator Evan Bayh, joined Mrs Clinton's campaign in late 2006. She was paid $164,000 as a professional fundraiser, according to public records.

When The New York Times first reported that the event was being planned, it said actor Kevin Spacey, who starred in HBO's Recount , about the 2000 election, would appear on the seminar's draft agenda. The newspaper later reported neither the Hollywood star nor advisers to Mr Obama had promised to attend.

By Stephanie Kirchgaessner, The Financial Times, July 23 2008