Hsu's case based on confession

NY Times:

Norman Hsu, the Democratic fund-raiser with a habit of fleeing the law, confessed to F.B.I. agents last week that he had swindled investors in what the government describes as a multimillion-dollar Ponzi scheme, and acknowledged pressuring at least some of them to contribute to political campaigns, prosecutors said in a criminal complaint unsealed yesterday.

The complaint, filed in the Federal District Court in Manhattan, charges Mr. Hsu with bilking hundreds of investors around the country out of at least $60 million over the last four years. It says he used some of that money to reimburse, in violation of election law, at least two people who, the government says, made a total of $60,000 in campaign donations at his request.

The complaint does not contend that Mr. Hsu confessed either to so vast a swindle or to reimbursing the donors. Nor does it specify which candidates received the illegal or coerced contributions, or who made them.

But the authorities confirmed that one of the candidates was Senator Hillary Rodham Clinton, Democrat of New York, whose presidential campaign has already said that it intends to return $850,000 to more than 200 people whose donations were bundled by Mr. Hsu. At a news conference yesterday, Michael J. Garcia, the United States attorney in Manhattan, said the Clinton campaign was cooperating in the investigation that led to the new complaint.

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The new complaint said that while in Colorado, Mr. Hsu reached out to federal agents on three occasions and asked to speak to them without his lawyers present. He is said to have told the agents that his business deals involved no real investments but were in fact fraudulent, and “admitted that he made implied threats to his investors to pressure them to contribute to political candidates he supported.” The threats, the authorities said, were that Mr. Hsu would cut the investors out of deals that he described as lucrative.

Working through two shell companies, Components Ltd. and Next Components Ltd., Mr. Hsu persuaded numerous investors from across the country to give him money, ostensibly to help secure short-term loans for various companies doing business in the apparel industry, the government said.

Though several investors were bullied into making donations, the Ponzi scheme had not been created to generate political contributions, David A. Cardona, the special agent in charge of the F.B.I.’s New York office, said at yesterday’s news conference. Rather, Mr. Cardona said, it was the cachet derived from Mr. Hsu’s political activities that gave his investment schemes a certain allure.

Those schemes, the complaint said, focused on several aspects of the apparel trade, among them helping obtain letters of credit for wholly imaginary manufacturers and financing the importing of “high-end” Chinese clothing that did not exist. As in all Ponzi schemes, the government said, Mr. Hsu paid interest to the first wave of investors with principal invested by secondary waves, and used this purported success to lure in more investors.

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There is more specifics on how the scam worked, but it appears my original speculation about the politicians being props in the scam appears to be dead on. This should be a real problem for Sen. Clinton and others who he played. They will attempt to play themselves as victims, but it can't be ignored that Hsu played them as fools and used them to steal money from others.

This comes on the heels of many Democrats claiming to have been fooled by President Bush about Iraq. While they were not, that has been the story they have been telling their kook base. At some point that lie along with their actually being fooled by Hsu should lead many of these Democrats to conclude that candidates like Hillary Clinton aren't smart enough to be President and that they are likely to get sucked on deals the way the first Clinton administration was by the North Koreans. It will be hard for them to evade this framing of the character issue.