Democratic fundraiser Hsu indicted on fraud scheme

By Jonathan Stempel

NEW YORK - Democratic fundraiser Norman Hsu was indicted by a federal grand jury for swindling investors in a $60 million fraud scheme and making illegal donations to U.S. political campaigns.

The 15-count indictment, unsealed on Tuesday in Manhattan federal court, follows similar charges filed in September, in a case that prompted Democratic presidential hopeful Hillary Clinton to return $850,000 in campaign contributions.

A lawyer representing Hsu, James Brosnahan, did not immediately return requests for comment.

The indictment charges Hsu, 56, with six counts of mail fraud, six counts of wire fraud and three counts of violating the Federal Election Campaign Act, which limits individual campaign contributions.

If convicted, Hsu could face 20 years in prison on each fraud charge and five years on each campaign finance charge, as well as fines, U.S. Attorney Michael Garcia said.

Prosecutors accused Hsu of cheating investors out of at least $20 million in a Ponzi scheme.

They said Hsu recruited victims from 2000 through August 2007 by promising them high returns on short-term investments, and using payments from newer investors to pay off older investors.

Prosecutors also said Hsu, in an attempt to raise his public profile and attract more investors, pressured victims to contribute to politicians he supported, and threatened that failure would jeopardize their investment relationships.

Hsu also violated federal campaign finance laws by reimbursing people for contributions they made to various candidates on his behalf, prosecutors said.

In September, Hsu had been charged with one count of mail fraud, one count of wire fraud, and one count of violating campaign finance laws.

He was arrested at a Grand Junction, Colorado hospital on September 6, after failing to appear at a California court hearing.

Hsu had been wanted since 1992 after fleeing in the wake of another fraud scheme in which he was accused of bilking about $1 million from 20 investors.

He had spent time in Asia before emerging as a donor to Democrats including Clinton, a New York senator, and Barack Obama, an Illinois senator also running for president.

On September 10, the Clinton campaign said it would return about $850,000 in contributions from Hsu. Garcia had in September said the campaign had cooperated with his investigation.