Democratic Donor Hsu Is Indicted On Fraud Charges
By: Wall Street Journal
By IANTHE JEANNE DUGAN
NEW YORK — Norman Hsu, a purported clothing magnate who became a top Democratic donor, was indicted by a federal grand jury on charges of running a fraudulent investment scheme and using some of the proceeds to make political contributions.
The 15-count indictment formalized a case brought by the U.S. Attorney for the Southern District of New York. The government alleges that Mr. Hsu conducted “a massive scheme that defrauded investors across the United States” of tens of millions of dollars. He also was charged with violating federal campaign-finance laws by making contributions to various political candidates in the names of others.
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See a sortable table of campaign donations from Norman Hsu and other donors whose pattern of donations correlates with his.
Read a Sept. 20, 2007, U.S. statement and unsealed complaint in U.S. v. Norman Hsu
A spokesman for Mr. Hsu declined to comment, and a lawyer couldn’t be reached for comment.
Mr. Hsu, 56 years old, is being held in jail in California in a separate case in which he was convicted of raising about $1 million in the 1980s to invest in a latex-glove business that didn’t exist. He was arrested in September in Colorado, after skipping a court appearance in California and attempting suicide aboard an Amtrak train.
James Brosnahan, a lawyer for Mr. Hsu, recently filed a motion to withdraw Mr. Hsu’s no-contest plea in the California case. The motion is slated for a hearing in early January.
The federal government said it expected Mr. Hsu to be transferred to New York in coming weeks. Ronald Smetana, an assistant California district attorney, said an imminent move was news to him. “I hope he is here for our hearing,” he said.
Mr. Hsu became a symbol of campaign-finance problems, after rocketing from obscurity to become one of the nation’s biggest political fund-raisers. Revelations of his past problems and fund-raising tactics embarrassed many candidates, including Hillary Clinton, who was among politicians who returned his donations.
The federal case alleges that from 2000 to 2007, Mr. Hsu raised more than $60 million, claiming he was making lucrative short-term loans to clothing manufacturers and other businesses. He paid newer investors with money from older investors, and ultimately “swindled his victims of at least $20 million,” the federal government alleges.
In an effort to raise his profile and attract more investors, Mr. Hsu “pressured many of his victims to contribute thousands of dollars to various candidates” for U.S. president, Senate and congressional races, the government claims.
Campaign-finance records show Mr. Hsu helped raise more than $1 million for politicians. Mr. Hsu allegedly pressured investors with the threat of losing out on deals if they failed to make the donations. He also is charged with making donations in other people’s names. In 2005, 2006 and 2007, Mr. Hsu allegedly asked other individuals to make contributions, totaling more than $25,000 for each calendar year, to designated federal candidates. He then directly reimbursed the individuals for the political contributions they had made on his behalf.
Mr. Hsu has said in the past that he asked friends to donate money but didn’t require anybody to do so. He has denied wrongdoing.
He faces six counts of mail fraud, six counts of wire fraud and three counts of violating the Federal Election Campaign Act. If convicted, Mr. Hsu faces maximum penalties of 20 years in prison on each of the mail- and wire-fraud charges, and five years on each of the federal campaign-finance charges. He faces a maximum fine of twice the gross gain or loss resulting from his financial-fraud crimes, and an additional maximum fine of $250,000 for the campaign-finance crimes.
Write to Ianthe Jeanne Dugan at email@example.com
* Content From the Wall Street Journal supplied by Elva Ramirez:
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