Democratic fundraiser Norman Hsu was charged Thursday with defrauding investors of more than $60 million in a Ponzi scheme and using some of the proceeds to make illegal donations to political campaigns.
According to a criminal complaint unsealed in U.S. District Court for the Southern District of New York, Hsu is accused of taking millions from unsuspecting partners for a pair of companies that had no legitimate business operations.
U.S. Attorney Michael Garcia said Hsu supported a lavish lifestyle and gave money to political candidates — including Sen. Hillary Rodham Clinton (D-NY) — in an apparent attempt "to purchase a place on the celebrity campaign circuit."
Garcia said there was no evidence that the political candidates were aware of the scheme or acted criminally. He said the Clinton campaign has cooperated with the investigation, and Clinton has already announced that she would give back $850,000 raised by Hsu.
According to the complaint, some of the campaign donations came from investors whom Hsu pressured into making contributions. Hsu also is accused of donating money in other people's names, which is a federal crime.
Robert Emmers, a spokesman for Hsu, declined to comment. Hsu's lawyer in San Francisco, Jim Brosnahan, did not immediately return phone messages Thursday.
In the criminal complaint, an FBI agent said Hsu had confessed to making "phony" deals. Investigators said they also had seized a suitcase from Hsu containing thousands of dollars in cash, financial records and handwritten ledgers of campaign contributions.
The charges are the latest in a string of legal problems for Hsu.
He was arrested in Grand Junction, Colo., on Sept. 6 after he failed to show up for a court appearance in California in an unrelated theft case. On Thursday, the Mesa County sheriff released him to officials from California, where he faces a 15-year-old felony theft conviction.
In that case, state prosecutors accused him of fraudulently persuading investors to pump money into a clothing import business that didn't actually exist. He pleaded no contest, and left town before he could be sentenced. Investigators believed he fled to Hong Kong.
The fraud case was largely forgotten when he returned to the United States and years later began aggressively raising money for Democrats, including Clinton.
His more recent troubles began this summer when news reports revealed his criminal history and a warrant was issued for his arrest.
Investors in Hsu's business ventures also began claiming that they had been duped.
Source Financing Investors, a fund run by one of the creators of the 1969 Woodstock rock festival, complained to Manhattan prosecutors that it put $40 million into Hsu business ventures that it now suspects were fraudulent.
From NPR reports and The Associated Press