Jailed Fundraiser Set to Return to California
Thursday, September 20, 2007
Democratic fundraiser Norman Hsu could return to California as early as today to face the 15-year-old criminal charges that reemerged after he gained prominence as one of the most prolific "bundlers" for Sen. Hillary Rodham Clinton's presidential bid.
But his legal problems will not end in California. Last night, a group of New York investors who entrusted Hsu with more than $40 million, believing they were financing a clothing venture, filed a lawsuit alleging that he cheated them out of their money.
The investment group, Source Financing Investors, "was duped by Hsu into providing tens of millions of dollars in 'financing,' " the suit alleges. "While SFI thought it was investing in a legitimate clothing manufacturing enterprise, it was really providing Hsu with millions of dollars in cash to fund Hsu's pet political fundraising projects, and an extravagant international lifestyle."
Robert H. Emmers, a publicist hired by Hsu's criminal attorney, said Hsu had no comment in response to the lawsuit.
"Mr. Hsu and his attorneys have previously made clear that he was anxious to get back to California and deal with the issues here," Emmers said.
Hsu appeared briefly in a Colorado court yesterday, handcuffed and with his ankles shackled as he waived his rights and answered Mesa County District Judge Brian Flynn's questions about declining to fight extradition, according to the Associated Press.
The odyssey that brought Hsu to the Colorado courtroom began in California 15 years ago, when Hsu was prosecuted by state officials for running a Ponzi scheme in which he persuaded investors to give him money for a nonexistent clothing import enterprise. Hsu pleaded guilty to the felony theft charges, but fled to Hong Kong before sentencing.
Years later, he returned to New York and attempted to reestablish himself. The new lawsuit lays out in detail how Hsu allegedly engaged SFI's partners in a series of successful short-term investment deals beginning in 2003. Over time, he hatched 147 deals with the group aimed at importing pants, jackets and shirts for well-known fashion brands, according to the suit. Since then, the group paid $40 million to Hsu on the promise he would return to them with $44.5 million.
It was only when Hsu's past brush with the law became public last month that the investors began to panic, the suit says. A series of payments of more than $1 million were coming due, but when investors went to cash the checks, the suit says, they bounced.
Now the group is seeking to freeze Hsu's assets. "I don't want him paying money to people in different parts of the country without him knowing there's this restraining order out there," said Ron Minkoff, SFI's attorney.