September 21, 2007
Posted: September 21st, 2007 09:06 AM ET

Hsu appeared in court with his lawyer on Wednesday.

NEW YORK (CNN) - Federal prosecutors have charged Democratic fund-raiser Norman Hsu with breaking campaign finance laws and cheating investors out of millions of dollars in a $60 million Ponzi scheme.

The criminal complaint was announced Thursday at a press conference in Manhattan.

Hsu has raised money for several Democratic candidates, but most substantially for Sen. Hillary Clinton's, D-New York, presidential bid. Clinton's campaign has said it will return the $850,000 Hsu raised to the individual contributors.

Hsu is charged with one count of violating the Federal Election Campaign Act after using investors in his companies as straw donors, making various political contributions greater than $25,000, which Hsu then paid back to the straw donors. Other charges include one count each of wire fraud and mail fraud.

"In committing acts of campaign finance fraud" said U.S. Attorney Michael Garcia, "Hsu corrupted a system in which transparency is paramount in order to purchase a place on the celebrity campaign circuit."

Hsu contributed to political campaigns to raise his profile and draw more investors to his Ponzi scheme, prosecutors allege. "It doesn't appear the Ponzi scheme was devised in order to generate money for the political contributions," Garcia said.

Hsu persuaded his investors to contribute tens of thousands of dollars to various campaigns in order to build his public profile and lure more investors to his scheme, prosecutors say. Investors were made to fear that if they failed to contribute they would jeopardize their relationship with the company and risk losing their money.

However, the companies, Components Ltd. and Next Components Ltd., never conducted any legitimate business and were nothing more than an instrument to conduct the Ponzi scheme, prosecutors say. Hsu, whose phony companies guaranteed high return rates on short term investments, was actually paying older investors with money coming in from new investors, the allege. When the scheme fell apart investors were left holding millions of dollars worth of bad checks.

Hsu is being held in Denver on charges of fleeing San Mateo, Calif., to avoid prosecution. When he was arrested, authorities seized a laptop, a blackberry, and a suitcase filled with thousands of dollars. Also seized were checks from Hsu's victims as well as bank receipts for millions of dollars in transactions made by Hsu and a lists of specific campaign contributions made by investors on Hsu's behalf.

He would face 45 years in prison, as well substantial fines, if convicted on all charges.

– CNN's David Miller

Filed under: Hillary Clinton • Norman Hsu


Gary Lumsden, New York, New York   September 22nd, 2007 10:50 pm ET

There is an old saying, "The masses are asses".

The Clintons understand that saying better than any others since Huey Long or Franklin Rosevelt.

It is shocking to think that there are so many in voters in the United States who buy into their 'PROGRAM'. The good news is that a large percentage of that population are too stupid to show up at the polls!

Calvin Preddie, Mississauga, ON, Canada   September 22nd, 2007 7:32 am ET

Why is it that every story about Mr. Hsu has to link him to Senator Clinton?

Your story correctly states that he raised money "for several Democratic candidates, but most substantially for Senator Clinton ($850,000.00 which she states she will return to individual contributors).

If your story wants to accuse Senator Clinton of corruption and collaboration with Mr. Hsu, then be brave enough to say so and cease trying to project her as guilty by association while leaving out the others who have benefitted from contributions from Mr. Hsu.

C. Mass, Washington D.C.   September 21st, 2007 8:29 pm ET

How ironic that a prodigous supporter of the Democratic party wears a "yellow" jumpsuit to their arraignment

CP, Columbia, SC   September 21st, 2007 5:47 pm ET

To the Hillary Clinton supporters who are upset over her name in the title to this article – doesn't feel too good when CNN does it to your candidate, does it? It happens to them all, and as an Obama supporter, I feel like it happens to him a whole lot, especially on CNN, but hey, we all have our biases. And to be fair, when I saw the headline, I did think, hmmm... Clinton wasn't the only candidate who received donations from Hsu. She did received the most it seems though...

Matt Kachaluba, Phoenix, AZ   September 21st, 2007 4:49 pm ET

It's funny how when all the stories about Ken Lay broke, the media never reffered to him as "George W Bush backer, Ken Lay".

Get over yourselves, the few missteps the Clintons have had don't hold a candle to the high crimes, political favors, and bribes surrounding the GOP and the Bush administration.

Ron, TX   September 21st, 2007 4:23 pm ET

If Clinton gets elected, I wouldn't be surprised if he's secretly pardoned like Bill did for all his 300 law-breaking friends.

David, Los Angeles, CA   September 21st, 2007 1:57 pm ET

"But your political allegiance shouldn't prevent you from being able to construct a sound argument."

You would be better off getting a sound argument out of a houseplant than getting one out of a Bush- or Giuliani-loving conservative. "We're fighting them over THERE so we don't have to fight them OVER HERE!!!"

Chip Celina OH   September 21st, 2007 1:47 pm ET

dawn,

I admire your support, devotion and dedication to your candidate.

Saying she had no clue who Hsu was when you can look back at some earmarks and see she knew EXACTLY who he was. She had even requested campaign workers to be overly diligent in vetting donors so the appearance of impropriety from the 96 fiasco didn't take place (which they failed to do). Then her campaign said it would be willing to accept the money from the 850,000 tainted bucks if the individual donors wished to give it back. Sorry, poisoned fruit of a poisoned tree. Lawyers make that case in court daily, but this group of WashDC/Yale lawyers fail to make that distinction when it comes to personal political gain.

You use the fact that Kerik pled guilty to a charge as justification that his actions were illegal, but call cynicism of the fundraising tactics used by the 1996 Clinton campaign as false and thoroughly debunked (although that scandal resulted in 22 guilty pleas by actionable parties).

Which is it?

Have a good weekend,

Margo Trent, Kansas City, MI   September 21st, 2007 1:02 pm ET

DONG! Where is my au-to-mo-bile ?!

dawn -- Gaithersburg, MD.   September 21st, 2007 12:59 pm ET

So far, I know about crooked contributors to the Clinton, Obama, and Edwards campaigns. I have NO doubt that I'll hear about campaign finance violations in ALL of the campaigns before we elect a President.

And Chris:

If you think Giuliani won't be among them, you are either medicated or an insane prankster. Have you heard of Bernie Kerik? He was Giuliani's POLICE COMMISSIONER. He was Giuliani's BUSINESS PARTNER. Giuliani recommended him to be SECRETARY OF HOMELAND SECURITY. In other words, he was ONE MAN Giuliani knew VERY WELL. But apparently he didn't know that he had, inter alia: comandeered an apartment, donated to assist in Ground Zero efforts, as an illicit love nest, sold his stock in Taser International under circumstances that suggested insider trading, allegedly misused police property for personal benefit, and failed to comply with ethics rules regarding accepting gifts. (He pled guilty to the last one.) GIULIANI, however, is qualified to run the country.
But Sen. Clinton, to be similarly eligible, is expected to know all the intimate, even hidden, details of the lives of tens of thousands of contributors. I see that you prefer Giuliani and are probably a Republican: well and good. But your political allegiance shouldn't prevent you from being able to construct a sound argument.

Tom - Dedham, Mass   September 21st, 2007 12:51 pm ET

The color yellow is perfect for him?

Posted By Anonymous : September 21, 2007 10:30 am

Since you are anonymous from nowhere and yet CNN lets you post, here goes, yellow is perfect because he cowardly tried to run away from his problems. Get it.

bob, seattle, wa   September 21st, 2007 12:39 pm ET

Queen Hillary is not very 'selective' when it comes to those who contribute to her 'feather bed'. She is merely a mouthpiece seeking power for power's sake and most probably to be able to tell her fake husband 'See, I told you I know a thing or two and you aren't the only one who wears the pants in the family."

Paul, Phoenix, Arizona   September 21st, 2007 12:27 pm ET

Why is it relevant to make the point that Hsu is a Clinton supporter? His alleged crimes have nothing to do with his candidate choices.

Do a follow up: who does the former head of Enron endorse?

Daniel Newton, Charlottesville, VA   September 21st, 2007 12:18 pm ET

I don't understand those that say a 45 year prison term is too harsh. To me, undermining our country's campaign system isn't too far from treason.

Joe Dylon, New York, NY   September 21st, 2007 12:10 pm ET

-When Jack Abramoff cooked up hundreds of shady deals with Tom Delay and met Bush innumerable times in White House, was it given a headline?
-When Laden family were flown immediately after 9/11 at the time no other commercial or private air traffic was allowed because of the Bush connections, was it given a headline?
-When NY firefighters protested against Rudy Guliani for not giving sophisticated communication equipment resulting in the death of several of those, was it given a headline?
-When Cheney-Rumsfield-Bush insisted of having their private army for security run by Blackwater who charge $1000/day/soldier, whereas the US soldiers get nothing and die on the frontlines, is it newsworthy story?

It seems to me that anything connected with Hillary gets a bad publicity.

Chris, Middletown, CT   September 21st, 2007 12:04 pm ET

As one of of the handfull of "HILLRAISERS" – theres no way Hillary could know that he was a bad egg...no way....and rumor has it there are those who are saying Hillary wants to run the country too....I mean...she can't monitor the small group of 100,000 plus fund raisers...and she wants to run the country?? MODERATE PRESIDENT NEEDED...only one running – Rudy!

Gary Gienger   September 21st, 2007 12:03 pm ET

A Chinese Clinton contributor with legal problems?

What a surprise.

Josh   September 21st, 2007 11:27 am ET

Steven in KS
Yeah, everybody swindles $60, it's no big deal. Seems like every few years the Clintons and their backers are getting in trouble with the law again. This latest comes as no surprise, and is beginning to be expected.

Mike, Washington, DC   September 21st, 2007 11:12 am ET

Here we go again. Sleazy politics goes a long way, huh. Congrats Hillary on a job well undone.

Lindsay Benjamin, Oakton, VA   September 21st, 2007 10:48 am ET

DONG! Where is my au-to-mo-bile ?!

Steven S. Mellnick Pittsburg, KS   September 21st, 2007 10:48 am ET

Give the man a break.

The term "When in Rome....."

Everyone does it, those that say they
do not, just haven't been caught yet.

He's facing the music. Taking him to task further is showing the real reason this is news....Politics.

Denise, Austin TX   September 21st, 2007 10:38 am ET

Funny how the Clintons always seem to find these kind of people...

Anonymous   September 21st, 2007 10:30 am ET

The color yellow is perfect for him?

Carrie Lusebrink, Indigo, ND   September 21st, 2007 10:30 am ET

DONG! Where is my au-to-mo-bile ?!

Jay Marysville, OH   September 21st, 2007 10:27 am ET

What's sad is he could get up to 45 years...sure he needs to do some time, but there are people who are convicted murderers who get off with 10-15 years for murdering someone, yet someone who basically is a thief can get 4x that. And people wonder what's wrong with this country...

The American Public, USA   September 21st, 2007 10:26 am ET

Comments are moderated (screened), in accordance with our Liberal CNN Comment Policy, and may not appear on this blog untill they have been reviewed and approved for Democratic support. Also, due to the volume of consevatives who comment on our 'Ticker', we will most likely throw out your post. Thank You.

Mark, Shreveport, LA   September 21st, 2007 10:21 am ET

So the Clintons are doing what they did in '96: taking donations from anyone.

Remember all the Clinton fundraisers who fled the country or pled the 5th after all the illegal fundraising charges arose after the '96 election?

Everything old is new again!

trekks, kansas   September 21st, 2007 10:19 am ET

Very few comments on this one, becuase its no suprise the Clintons campaign team is full of crooks like Hsu.

Psbro   September 21st, 2007 10:17 am ET

HE GAVE TO OBAMA TO! Something you and CNN seem to have a problem accepting.

Also Obama was going to KEEP the money until they learned Hillary was giving it back.

Obama will NEVER be President, get over it. He won't make it this time and his fame won't last past this election cycle. So you, CNN & Chris Matthews need to find a new flavor of the week.

Bea, Hoboken, NJ   September 21st, 2007 10:10 am ET

Why would Obama be looking better for the Democrats? He along with a couple of dozen other Democrats, such as Cuomo and Spitzer, also received money from Hsu. Most of the campaigns have already returned or promised to return any donation they received from this man. The lesson here is that everybody better start vetting this bundlers closely.

Lee, Ann Arbor, Michigan   September 21st, 2007 10:08 am ET

It's nice to see CNN reporting something negative on Hillary (they were know as the "Clinton News Network" during Bill's Presidency) and couldn't see anything wrong during those eight years.

She and Bill are two of the most selfish, self-centered, self-serving individuals in the US.

They have sponged off the government (Arkansas and the US Gov't) their whole lives.

She and Bill have had their day in the spotlight....now can they just fade away (and live on speaking fees and book royalties)? We don't want them in government anymore.

dawn -- Gaithersburg, MD.   September 21st, 2007 10:04 am ET

Except that Sen. Obama also received contributions from Hsu. And except that at least one prominent Obama backer is (I believe) currently on trial for fraud. (Look for more. Illinois is not famous for its clean political scene.) I don't mind at all that you prefer Sen. Obama to Sen. Clinton, but can you justify your preference on the facts?

pl. at the UN for a while.   September 21st, 2007 9:57 am ET

I am not American. I try to stay neutral.

The swindler will face charges, as he should.
Ms Rodham Clinton has refused his contributions to her campaign; as she should have.
No political damage has been done to the candidate. That is obvious. Everything remains the same.

Tom - Dedham, Mass   September 21st, 2007 9:54 am ET

The color yellow is perfect for him.

Speak oh great Hsu, we will make a deal with you.

Please be careful "inside", they have convicted friends that can get to you.

Obama is looking better everyday for the Democrats.

The American Public, USA   September 21st, 2007 9:43 am ET

Hsu is not the only crook on Hiliary Clintons campaign bandwagon. Many of her capaign contributers have been in volved in 'questionable practices' when it comes to raising money to fund her run for office. Coincidentally, the same contributers involed in electing her husband in 02.

Pat, Huntington, NY   September 21st, 2007 9:43 am ET

Why is this guy being referred to as a Clinton Backer, when in fact, he's backed many other candidates, and in reality, he merely collected numerous contributions from individual donors, and presented them all in one package? This is dangerous media manipulation of the facts.

Rodney Dallas TX   September 21st, 2007 9:37 am ET

According to a news article I read from the U.S. attorney who is prosecuting this case, he said that the candidates had no knowledge of Mr. Hsu's past. So before all the Clinton haters get started, do your homework and maybe believe for once that she might actually not have known what he was doing.

Rose Hillrose, Chicago, IL   September 21st, 2007 9:34 am ET

CNN, kindly change the title of this article. Didn't this crook back Obama, too? I think your titles are just meant to sell the story because you know that Clinton's name in the title would draw more readers than a mention of Obama. Stop exploiting Clinton's name and use the other canditate's name equally as beneficiaries of Hsu' Ponzi scheme.

JB Boston MA   September 21st, 2007 9:22 am ET

Where is the investigation into Clinton's campaign? Where is the media attention? I heard (could be bad info) that this guy took Clinton's entire campaign staff on a trip, paid for hotel rooms etc. . . You would think people would be interested in this. Come on Wolf ask the hard questions of people that aren't Republicans If Clinton wins, I heard she is going to rename the Lincoln bedroom the Hsu bedroom! Why not he paid for it : )

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