Democratic fundraiser Hsu charged with fraud
NEW YORK (Reuters) - Democratic fund-raiser Norman Hsu was charged on Thursday with fraud and campaign finance violations in a case that has prompted presidential candidate Sen. Hillary Clinton to return $850,000 in contributions.
U.S. Attorney Michael Garcia unsealed a criminal complaint in New York charging Hsu, 56, with perpetrating a $60 million "pyramid" fraud scheme between 2003 and 2006 and committing related federal campaign finance crimes in 2006.
Hsu used a small portion of the $60 million to reimburse investors who made contributions on his behalf to presidential campaigns, including Clinton's, Garcia told reporters at a news conference.
"This case is about self-promotion and greed," Garcia said, adding that Hsu carried out the scheme to "support his lavish lifestyle" and "in order to purchase a place on the celebrity campaign circuit."
He was charged on one count of mail fraud and wire fraud and one count of violating the Federal Election Campaign Act, which limits individual campaign contributions. If convicted he could face 20 years in prison for each of the fraud charges, and five years on the campaign finance charge.
A spokesman for Hsu's attorney James Brosnahan said he had no comment on the charges.
Hsu, who was arrested in Colorado this month, had been a donor to several candidates including Clinton. On September 10, the Clinton campaign said it would return about $850,000 in campaign contributions from Hsu.
Hsu was convicted of fraud in 1992. He had evaded authorities for years, spending time in Asia before emerging in the United States as a generous donor to Democrats, including Clinton of New York and Sen. Barack Obama of Illinois, who is also seeking to be the party's nominee in the 2008 presidential election.
CLINTON COOPERATED
Hsu admitted to FBI agents in Colorado earlier this month that he carried out the scheme and also pressured investors to fund political candidates, according to the complaint.
Garcia said Clinton's campaign had cooperated with the investigation. He did not specify the amount of money from the pyramid scheme that was donated.
A pyramid scheme refers to a fraudulent fast money-making business operation in which investors are offered large short-term returns in order to attract new investors, a model also referred to as a "Ponzi scheme."
The complaint said Hsu was managing director of two companies that he said extended short-term finance to businesses, attracting investors with promises of high returns. As new investors came in, their money was used to pay the original investors.
In an effort to raise his public profile, Hsu pressured investors to contribute tens of thousands of dollars to various presidential and congressional candidates, the complaint said.
Pyramid schemes usually eventually collapse when the scheme's originator absconds with the investment money or begins to have problems paying out.
FBI agents arrested Hsu on federal charges of unlawful flight at a Grand Junction, Colorado, hospital this month, after he failed to appear at a court hearing in California concerning his 1992 conviction.
Hsu is expected to face sentencing for his conviction arising from a business scheme that bilked about 20 investors of approximately $1 million.
He is due to return to San Mateo County in California later on Thursday or on Friday, prosecutors said.
(Additional reporting by James Vicini in Washington)
