Vol. 22, No. 5,514 - The American Reporter - September 7, 2016



by Joe Shea
American Reporter Correspondent
Bradenton, Fla.
August 30, 2007
Follow The Money
HSU TOOK $40 MILLION FROM WALL ST. INVESTMENT FUND BEFORE DISAPPEARING

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BRADENTON, Fla., Sept. 12, 2007, 6 a.m. EST -- In yet another astounding turn of events in the fantastic tale of Chinese-American millionaire and top Democratic donor Norman Hsu, it was learned Friday morning that a Wall Street investment fund run by Woodstock music festival backer Joel Rosenman and his Chinese-American partner, Yau Cheng, gave Hsu some $40 million to cover the cost of producing apparel in China for U.S. private labels such as Gucci and Prada, and now says the money is missing, the Wall Street Journal reported Wednesday.

Cheng had introduced Rosenman to Hsu in 2001, after an initial investment went well. Rosenman invested and also recouped a profit. The relationship based on those deals led to the $40 million investment this year. News reports say others may have invested another $30 million that may now be lost.

In another development, the Journal reported that Hsu sent a suicide note to several of his backers before he skipped a court appearance in Redwood City, Calif., and disappeared.

Hsu, 56, the mysterious Chinese-American fugitive who raised at least $850,000 for Sen. Hillary Clinton and tens of thousands more for other Democrats, was still hospitalized Monday when Clinton revealed she will return $850,000 to 260 donors from whom Hsu raised money for her, the Wall Street Journal - whose reporters broke the story - said in Tuesday's editions.

Hsu was arrested the night of Sept. 7 in Grand Junction, Colo., after he">http://blogs.wsj.com/washwire/2007/09/10/traveling-man/">he became delirious on an eastbound Amtrak train. He is in good condition as he remains in Grand Junction at St. Mary's Hospital, awaiting recovery from an apparent suicide attempt and extradition proceedings. He is expected to be returned to California within a week.

According to the New York Times, Hsu had a ring of at least nine people who either were paid by or made payments to a paper entity controlled by Hsu called Components Ltd., the New York Times reported in its Sunday, Sept. 9 editions.

"The records make clear that the group was more than just a loose collection of friends, family and co-workers that bundlers typically rely on when raising money for a candidate. Rather, each person had a direct financial relationship with Mr. Hsu, either receiving money from his company or paying into it, even though many of them appear to have other jobs or businesses independent of him. The purpose of the payments, and whether they related to business costs, fees or expenses, is unclear. ...

"The records show that during that one-month period, Components Ltd. took in close to $600,000, about a third of it wired to the company's account by two people in California and New York who also were part of Mr. Hsu's circle of campaign contributors. At the same time, the company issued checks and wire transfers totaling $660,000, much of it to the same group of people, including two checks for more than $100,000 apiece that bounced because of insufficient funds," the New York Times report said.

The Times said it was unable to make contact with anyone listed in Hsu's campaign disclosures and financial records.

Hsu forfeited $2 million bail after he failed to make a San Francisco Bay Area court apperance seeking reduced bail and then disappeared. The new developments reinforced fears that Hsu is in fact a Chinese agent who has now been summarily dismissed by his alleged sponsors.

Hsu, who bundled $260,000 in contributions for presidential hopeful Sen. Hillary Clinton and other Democratic candidates and causes, apparently did not have the various businesses nor live at the various addresses he claimed in campaign filings, several newspapers reported on Aug. 31. Clinton has returned a $23,000 contribution from Hsu.

Ironically, prosecutors in Redwood City, Calif., were prepared to endorse the defense attorney's request for a reduced bail of $1 million because it would have gone to reimburse some of those swindled by Hsu in a 1992 Ponzi scheme that led a 3-year jail sentence. Hsu skipped town after his conviction, while out on bail, and apparently went to Hong Kong instead of serving time' he returned to the United States in 2003, according to some news reports. Other reports place his return years earlier.

Until his arrest and re-arrest, though, Hsu was just a fugitive from the 3-year California prison term stemming from the 1992 conviction. Jim Brosnahan of San Francisco, Hsu's California attorney said he turned himself two weeks ago as the Justice Dept. announced it would begin a probe of possible campaign-finance violations, and was quickly released on $2 million bail.

Norman Hsu, right, one of Sen. Hillary Clinton's biggest donors turned himself in to face a 3-year jail term for a Ponzi scheme as the Justice Dept began a probe of possible campaign-finance violations. He forfeited $2 million bail when he failed to appear in court, and was arrested by the FBI on Sept. 6 after he "fell ill" on an Amtrak train in Colorado.

Photo: San Mateo County Sheriff's Office

But further investigation of the formerly ubiquitous and now elusive financier by the New York Times has raised profound new questions about Hsu's real identity. The Times reported in last Friday's editions that most of the corporations and addresses provided by Hsu were bogus, and that he had spent most of the time following his disappearance from California in Hong Kong, from which he returned only in 2003.

Earlier contributions to Sen. Clinton's husband, former President Bill Clinton, during his 1996 re-election campaign, in some cases originated with Chinese military officials anxious to influence Defense Dept. export policy on advanced missile and satellite technology. The policy ultimately was changed by the Clinton Administration in the way the Chinese wanted, and they obtained the highly sensitive technology over Defense Dept. protests.

In that scandal, in which the FBI traced $300,000 in contributions back to the Chinese Embassy in Washington, D.C., part of the reason the Chinese plot came undone was that it relied on just one or two intermediaries to serve as the donor.

In the Hsu case, in contrast, multiple groups of mostly Chinese-American immigrants were the source of large sums of cash for which their ostensible incomes cannot account. No evidence yet, however, has tied any of the contributions to the Chinese government, which is under constant pressure from Democrats and unions to alter its trade policy concerning underaged and forced labor, low wages, unsafe working conditions and defective or dangerous manufacturing practices.

Hsu might have been an ideal double agent precisely because of his checjkered background. In defense of espionage charges, Chinese authorities could dismiss his testimony as that of a con man already convicted for swingling others. By the standards of intelligence agences, that might make him the ideal fall guy for an extensive effort to influence American elections. Such a role for Hsu may have been leveraged by Chinese control over any family members who may remain in Hong Kong or mainland China.

A change from the friendly policies of the Bush Administration towards Chinese trade could undone by candidates like Sen. John MCCain, Sen. John Edwards or Sen. Barack Obama, who would likely be more attentive to pleas that China is taking millions of jobs and much of this nation's manufacturing base. The Clinton Administration favored extensive ties with China and fostered the current trade imbalance, many observers say. Support for Clinton and her network may have been intended to renew that controversial prior relationship.

Did Hsu represent the tip of the iceberg of a Chinese effort to influence American politics? No one is answering that question yet.

The New York Times said its reporters, checking addresses where according to campaign filings Hsu's various garment businesses were located, found no trace of the companies. Only one among about a half-dozen addresses associated with the filings, an expensive condominium in New York City, had any record of Hsu. In that case, an employee said Hsu had moved out two years earlier.

"Visits to companies at addresses listed by Mr. Hsu on campaign finance records provided little information. There were no offices in buildings in New York's garment district whose addresses were given for businesses with names like Components Ltd., Cool Planets, Next Components, Coopgors Ltd., NBT and Because Men's clothing - all listed by Mr. Hsu in federal filings at different times," the New York Times reported Friday.

"At a new loft-style residential condominium in SoHo that was also listed as an address for one of his companies, an employee there said that he had never seen or heard of Mr. Hsu. Another company was listed at a condo that Mr. Hsu had sublet in an elegant residential tower in Midtown Manhattan just off Fifth Avenue, but an employee there said Mr. Hsu moved out two years ago, after having lived there for five years," the Times report said.

The i>Los Angeles Times had better luck, but at one address Hsu listed, employees said he was rarely seen. The Times said he returned to the United States from Hong Kong in 1996. Everyone seems to agree he didn't start making Federal campaign contributions until 2003.

Yet the revelation by the Wall Street Journal on Sept. 11 that some 260 donors were involved, and Mr. Hu's past conviction for operating a Ponzi scheme, suggests he may have used political contributions to build a new kind of political Ponzi operationn that involved attracting donors who were promised their money back. That is yet to be proven, however.

The controversy over the Hsu donations now threatens to cloud Sen. Clinton's presidential campaign, which has been as extraordinarily supportive of Hsu as he has been, financially, of the Clinton campaign and a host of other Democratic causes and candidates.
41 Shelbourne Avenue, Daly City, Calif.

Big contributions from this modest home in Daly City may spell disaster for the Hillary Clinton campaign.

Wall Street Journal Photo: Brody Mullins

Howard Wolfson, Clinton's communications director, was quoted in both papers as saying, "Norman Hsu is a longtime and generous supporter of the Democratic Party and its candidates, including Sen. Clinton. During Mr. Hsu's many years of active participation in the political process, there has been no question about his integrity or his commitment to playing by the rules, and we have absolutely no reason to call his contributions into question or to return them."

By late Thursday, however, Sen. Clinton disavowed Hsu's contributions, saying that the enormity of the task of vetting each contributor prevented the campaign from fully checking on the origins of the Hsu donations.

A former California official, Ronald Smetana, who prosecuted Hsu on fraud charges 15 years ago for the California state attorney general, had a different take. "He is a fugitive," said Smetana in an interview with the Times published Aug. 28. "Do you know where he is?"

Hsu's attorney, E. Lawrence Barcella of Washington, D.C., said Hsu had yet a different view of the matter. Hsu believes the enforcement action against him was a civil matter and did not recall signing an agreement to serve time in prison, he said. Hsu is no longer making contributions, Barcella said.

Meanwhile, a Tampa, Fla., Clear Channel station, WFLA AM 970, mistakenly reported during its drive time show Thursday morning that William Paw had been arrested as a "swindler." The talk show host had apparently conflated the two stories, producer Jeff Fisher said told The American Reporter.

"Beyond his $23,000 in personal contributions to Mrs. Clinton, Mr. Hsu had raised well over $1 million for the New York senator's presidential campaign, making him one of her top 20 'bundlers.' His reach extended well beyond the presidential race, as he has also raised hundreds of thousands of dollars for House and Senate Democrats and governors across the country," the Wall Street Journal, which broke the story on Monday, Aug. 27, said on Aug. 30.

In Thursday's editions, the Journal said the Clinton campaign was "scrambling" to return $23,000 in donations from Hsu, who continued to be "surprised" at the California warrant, his lawyer said. Hsu said he will no longer give or raise money for Democratic candidates and causes, and Barcella told the Los Angeles Times that he would turn himself in to California authorities.

The Wall Street Journal reported Monday morning that U.S. Sen. Hillary Clinton's campaign took at least $45,000 from a San Francisco Bay Area postal carrier's family that was apparently laundered on behalf of Norman Hsu, a well-known Chinese-American political donor who has criticized demands for tougher U.S. trade policies against China.

The Journal story is available only to Wall Street Journal subscribers, who pay $9.99 per month. Both the New York Times and Los Angeles Times require free site registration.

Journal staff writer Brody Mullins said Norman Hsu's donations to Clinton during the current campaign were paced by similar amounts from the Bay Area Chinese-American family of U.S. Postal Service mail carrier William Paw, that would not seem to have the resources to make contributions that total aboiut 91 percent of the mail carrier's $49,000 salary.

The Journal said six members of the family were granted Social Security cards in 1982 in California, and all but one are registered as "nonpartisan." San Mateo County voter records indicate they "voted sporadically," the Journal investigation showed. None gave contributions before 2004, the paper said.

Six members of the Bay Area family have contributed, according to Clinton's financial reports, but only one has said he used his own money. Winkle Paw, a son of William Paw, said he had been asked by Norman Hsu to give to Democrats but had used his own money. He is understood to be an executive of a software firm.

Hsu has used the family's address on other giving occasions, the Journal said. The Paw family lives in a one-story, 1,280-sq.ft. home with a "dilapidated" garden in Daly City, the Journal reported.

"It isn't obvious how the Paw family is able to afford such political largess," the paper said. "Records show they own a gift shop and live in a 1,280-square-foot house that they recently refinanced for $270,000. William Paw, the 64-year-old head of the household, is a mail carrier with the U.S. Postal Service who earns about $49,000 a year, according to a union representative. Alice Paw, also 64, is a homemaker. The couple's grown children have jobs ranging from account manager at a software company to "attendance liaison" at a local public high school. One is listed on campaign records as an executive at a mutual fund. ...

"The Paws' political donations closely track donations made by Norman Hsu, a wealthy New York businessman in the apparel industry who once listed the Paw home as his address, according to public records," the story continues. "Mr. Hsu is one of the top fund-raisers for Mrs. Clinton's presidential campaign. He has hosted or co-hosted some of her most prominent money-raising events," the Journal said.

Hsu, who raised $1 million at a party he co-hosted at supermarket mogul Ron Burkle's home in Los Angeles this year, is a major Democratic Party donor.

The most damning evidence that the funds given to Clinton are laundered, however, may be that several other Chinese-American business associates of Hsu gave similar amounts on the same days he did.

"On four separate dates this year, the Paw family, Mr. Hsu and five of his associates gave Mrs. Clinton a total of $47,500. In all, the family, Mr. Hsu and his associates have given Mrs. Clinton $133,000 since 2005 and a total of nearly $720,000 to all Democratic candidates," the Journal story said.

There is no public record that indicates Hsu reimbursed the Paws or his associates, however. The list iof "associates" may be growing, though.

Hsu told the Journal he had no reason to "cheat" on political contributions. In an email Monday night to the Journal, Hsu said, "I have NEVER asked a single favor from any politician or any charity group. If I am NOT asking favors, why do I have to cheat...I've asked friends and colleagues of mine to give money out of their own pockets and sometimes they have agreed."

Barcella was quoted on Monday by the Journal as saying "You are barking up the wrong tree," and he suggested that if Hsu had an Anglo-Saxon name there would have been no story about his contributions. That charge seemed even more baseless by Friday.

Kent Cooper, a former FEC disclosure official, was quoted by the Journal as saying "There are red lights all over this one."

Copyright 2016 Joe Shea The American Reporter. All Rights Reserved.

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