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
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 : )
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.
Very few comments on this one, becuase its no suprise the Clintons campaign team is full of crooks like Hsu.
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!
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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...
DONG! Where is my au-to-mo-bile ?!
The color yellow is perfect for him?
Funny how the Clintons always seem to find these kind of people...
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.
DONG! Where is my au-to-mo-bile ?!
Here we go again. Sleazy politics goes a long way, huh. Congrats Hillary on a job well undone.
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.
A Chinese Clinton contributor with legal problems?
What a surprise.
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!
-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.