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http://www.newsmax.com/insidecover/democratic_fundraiser/2007/09/20/34428.html
Democratic Fundraiser Charged With Fraud
Thursday, September 20, 2007
NEW YORK -- Norman Hsu, one of the top fundraisers for big-name Democrats,
was charged Thursday with swindling at least $60 million from investors and
using some of his profits to make illegal donations to political campaigns.
Hsu, who was already facing a 15-year-old fraud case in California, was
charged in New York with what prosecutors called a "massive" Ponzi scheme
that ensnared investors across the country.
At a news conference, U.S. Attorney Michael Garcia said the main purpose of
the fraud was to support a "lavish lifestyle," but he said it also may have
been fueled by Hsu's desire "to purchase a place on the celebrity campaign
circuit."
The criminal complaint, unsealed in U.S. District Court for the Southern
District of New York, said the 56-year-old clothing-industry entrepreneur
pressured his business partners to make hefty donations to congressional and
presidential candidates, most notably Hillary Rodham Clinton. None of the
partners was identified.
Garcia said there was no evidence that the campaigns were aware of the
scheme or acted criminally. The Clinton campaign has been cooperating with
the investigation, he said, and Clinton has already announced that she would
give back $850,000 raised by Hsu.
Hsu also is accused of donating money in other people's names, which is a
federal crime.
Robert Emmers, a spokesman for Hsu, declined to comment. Hsu's lawyer in San
Francisco, Jim Brosnahan, did not immediately return phone messages
Thursday.
The charges are the latest in a string of legal problems for Hsu, who is
already in custody. On Thursday, the Mesa County, Colo., sheriff released
him to officials from California.
His troubles began this summer when news reports revealed that he was a
fugitive from justice; in 1992 he had pleaded no contest to theft charges in
California related to a fraudulent clothing import business, then skipped
town before he could be sentenced. Investigators believe he fled to Hong
Kong.
Hsu turned himself in last month, but then fled again after he was released
on $2 million bail. He was arrested in Grand Junction, Colo., on Sept. 6
after becoming sick on a train.
When he was arrested, Hsu was carrying a briefcase containing thousands of
dollars in cash, bank receipts reflecting millions of dollars worth of
transactions and handwritten ledgers of campaign contributions, prosecutors
said.
Within days, according to the criminal complaint, he contacted the FBI and
voluntarily confessed to making "phony" business deals.
In the criminal complaint, FBI investigators describe the Ponzi scheme. They
say Hsu had no actual business, but created the appearance that he was
turning a profit by using funds from his newest victims to pay off debts due
to his older partners.
The complaint did not identify any of the alleged victims of the scheme but
a lawsuit was filed last week in state Supreme Court in Manhattan by a
company that claims to have been cheated by Hsu.
Source Financing Investors, a fund run by one of the creators of the 1969
Woodstock rock festival, said it sank $40 million into a Hsu venture that
purportedly made its money by making short-term, high-interest loans to
clothing companies in China.
In the lawsuit, Source Financing Investors said its checks from Hsu _ some
for as much as $1.5 million _ recently began to bounce.
The investors said they contacted clothing retailers Hsu claimed to have
done business with, including L.L. Bean, Macy's, Nordstrom and DKNY, and
none had heard of him.
The FBI said it had identified several investors who lost amounts ranging
from a few thousand dollars to several million. It did not name them in the
complaint.
Prosecutors said one account Hsu had used to write millions of dollars worth
of checks had only $83,000.
Democratic Fundraiser Charged With Fraud
Thursday, September 20, 2007
NEW YORK -- Norman Hsu, one of the top fundraisers for big-name Democrats,
was charged Thursday with swindling at least $60 million from investors and
using some of his profits to make illegal donations to political campaigns.
Hsu, who was already facing a 15-year-old fraud case in California, was
charged in New York with what prosecutors called a "massive" Ponzi scheme
that ensnared investors across the country.
At a news conference, U.S. Attorney Michael Garcia said the main purpose of
the fraud was to support a "lavish lifestyle," but he said it also may have
been fueled by Hsu's desire "to purchase a place on the celebrity campaign
circuit."
The criminal complaint, unsealed in U.S. District Court for the Southern
District of New York, said the 56-year-old clothing-industry entrepreneur
pressured his business partners to make hefty donations to congressional and
presidential candidates, most notably Hillary Rodham Clinton. None of the
partners was identified.
Garcia said there was no evidence that the campaigns were aware of the
scheme or acted criminally. The Clinton campaign has been cooperating with
the investigation, he said, and Clinton has already announced that she would
give back $850,000 raised by Hsu.
Hsu also is accused of donating money in other people's names, which is a
federal crime.
Robert Emmers, a spokesman for Hsu, declined to comment. Hsu's lawyer in San
Francisco, Jim Brosnahan, did not immediately return phone messages
Thursday.
The charges are the latest in a string of legal problems for Hsu, who is
already in custody. On Thursday, the Mesa County, Colo., sheriff released
him to officials from California.
His troubles began this summer when news reports revealed that he was a
fugitive from justice; in 1992 he had pleaded no contest to theft charges in
California related to a fraudulent clothing import business, then skipped
town before he could be sentenced. Investigators believe he fled to Hong
Kong.
Hsu turned himself in last month, but then fled again after he was released
on $2 million bail. He was arrested in Grand Junction, Colo., on Sept. 6
after becoming sick on a train.
When he was arrested, Hsu was carrying a briefcase containing thousands of
dollars in cash, bank receipts reflecting millions of dollars worth of
transactions and handwritten ledgers of campaign contributions, prosecutors
said.
Within days, according to the criminal complaint, he contacted the FBI and
voluntarily confessed to making "phony" business deals.
In the criminal complaint, FBI investigators describe the Ponzi scheme. They
say Hsu had no actual business, but created the appearance that he was
turning a profit by using funds from his newest victims to pay off debts due
to his older partners.
The complaint did not identify any of the alleged victims of the scheme but
a lawsuit was filed last week in state Supreme Court in Manhattan by a
company that claims to have been cheated by Hsu.
Source Financing Investors, a fund run by one of the creators of the 1969
Woodstock rock festival, said it sank $40 million into a Hsu venture that
purportedly made its money by making short-term, high-interest loans to
clothing companies in China.
In the lawsuit, Source Financing Investors said its checks from Hsu _ some
for as much as $1.5 million _ recently began to bounce.
The investors said they contacted clothing retailers Hsu claimed to have
done business with, including L.L. Bean, Macy's, Nordstrom and DKNY, and
none had heard of him.
The FBI said it had identified several investors who lost amounts ranging
from a few thousand dollars to several million. It did not name them in the
complaint.
Prosecutors said one account Hsu had used to write millions of dollars worth
of checks had only $83,000.