Criminal complaint against Hsu, including alleged confession, now available; Update: New details on new shady bundler!

posted at 4:45 pm on September 20, 2007 by Allahpundit

16 pages in PDF, courtesy of FindLaw. If the complaint is accurate, he confessed not only to running a Ponzi scheme — in one case, per paragraph 57(b), he was handed a check from an investor and immediately handed them back a postdated check in the sum of their investment plus a profit — but to threatening his investors into donating to a certain candidate for electoral office whose name the complaint dare not speaketh. See paragraphs 12, 19, 26, 38, 55, and 57(h) for details. The game here appears to have been “pay to play”: Hsu was making fabulous profits for people on their investments, but if you wanted in or if you were already in and wanted to stay in you had to donate to that certain unnamed candidate. Interestingly, the Journal story this morning about another Hillary bundler, William Danielczyk, suggested (without proving) a similar scenario:

One person at the [Hillary fundraising] event was a Washington-area investor who was considering putting some money in one of Mr. Danielczyk’s ventures. The investor, a registered Republican, said he was invited by Mr. Danielczyk and a colleague who were wooing him to invest at least $125,000 in one of their companies.

The investor, who spoke on condition of anonymity, says he didn’t donate any money to Mrs. Clinton. Campaign-finance records show that the investor contributed $4,600 on March 30 to Mrs. Clinton. The reason for the discrepancy isn’t clear.

I wonder if the alleged “wooing” here wasn’t more a case of the investor wooing Danielczyk to let him in on the venture and Danielczyk demanding a little coin for Hillary as the price of admission. That would also explain why the investor conveniently forgot his donation when pressed on it by the Journal.

Also interestingly, there’s only one example in the complaint that I noticed of Hsu allegedly illegally reimbursing someone for their contribution. Paragraph 55:

55. In addition, in or about 2005 and 2006, on approximately four occasions, NORMAN HSU, the defendant, asked Victim-5 to make multiple political contributions for which HSU agreed to reimburse Victim-5. HSU told Victim-5 that in order to invest the amount of money he/she was investing with him, Victim-5 had to make the political contributions that HSU requested. On each of these occasions, HSU provided Victim-5 with a list of names of political organizations and candidates, including candidates for Federal Office, to which Victim-5 should write out checks. Victim-5 complied — writing separate checks for each political contribution as directed by HSU. HSU reimbursed Victim-5 by adding the amounts from the political contributions to checks paying Victim-5 profits and principal on his/her investments with HSU.

It’s worth noting that he didn’t cop to any reimbursement in his confession as described in paragraph 63.

Finally, according to an LA Times article dated September 6, Hsu assured his own lawyers right before he disappeared that he’d left his passport in his apartment in New York. As recently as yesterday, his spokesman claimed that he may, in his disoriented state, have accidentally boarded an Amtrak cross-country train instead of Bay Area transit to take him to the courthouse on the day he disappeared. Got all that? Okay. Now, per paragraph 62, check out what they found in the briefcase they confiscated from him after his arrest on the train:

During the search of the Evidence, I recovered the following items from the locked suitcase in the possession of NORMAN HSU, the defendant, at the time of his arrest: (1) HSU’s passport; (2) approximately $7,000 in cash; (3) checkbooks for bank accounts used by HSU to carry out his fraudulent scheme; (4) hundreds of thousands of dollars worth of checks from HSU’s victims; (5) bank receipts reflecting millions of dollars worth of financial transactions conducted by HSU; (6) hand-written ledgers reflecting specific amounts of campaign contributions to be made by specific victims on behalf of various candidates for Federal Office; (7) Federal Express shipping labels for materials sent by HSU via overnight mail from Components Ltd. in New York, New York; a Cartier watch and Tiffany jewelry; and (8) receipts reflecting HSU’s travel throughout the United States via a corporate jet service.

Update: Take a breath. We may have another round of this crap yet to come.

The WSJ report mentions that Danielczyk is the investor who took over the now-defunct Nashville aviation company FractionAir in 2004. That firm sold fractional ownership in private charter jets. It drew an A-list of owners who bought the shares, including former Vice President Al Gore, Tennessee Titans coach Jeff Fisher, former Titans star Eddie George, the late music industry veteran Buddy Killen and the late John Lindahl, co-founder of State Industries.

Trouble seems to follow Danielczyk. In addition to the FractionAir troubles, he has taken two companies into bankruptcy in the past and faced a class-action lawsuit filed by angry investors who felt like he had defrauded them. FractionAir staved off bankruptcy but was grounded by the Federal Aviation Administration…

FractionAir was the subject of a NashvillePost.com investigative report last year after the company nearly went into bankruptcy. Clement was involved with FractionAir until late 2005. An aide at the time said he left because he didn’t agree with the company’s direction. Former employees say Clement had turned a blind eye to the company’s mounting troubles under Danielczyk.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

He sounds like a more thorough packer when “disoriented” than I am sober.

omnipotent on September 20, 2007 at 4:48 PM

Man I’d love to see hsu paper trail. I think some dems are sweating tonight

William Amos on September 20, 2007 at 4:54 PM

I’m guessing this is going to get even bigger…and soon.

Bob's Kid on September 20, 2007 at 5:03 PM

I think it is pretty clear that this administration will do nothing to these people who flaunt laws with no care in the word. Hsu will get maybe a slap on the wrist or if he does time he will do it at the behest if Billy and the Beast,Hmmm, did I jusy have a flash of deja vu…..?

bbz123 on September 20, 2007 at 5:04 PM

Skimming through…”INVESTOR 1″ is clearly Rosenman, and “PARTNER” is Yau Cheng.

see-dubya on September 20, 2007 at 5:10 PM

The ripples in the pond are geting larger and will start spreading ……….

Mallard T. Drake on September 20, 2007 at 5:11 PM

NY Times has more

NY TImes

Mr. Garcia said that in 2005 and 2006, Mr. Hsu persuaded two of his investors to make contributions of about $70,000 to a handful of candidates and political groups as “straw donors,” reimbursing them illegally from his own pocket. Mr. Garcia declined to say which candidates or groups received that money.

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

William Amos on September 20, 2007 at 5:13 PM

There is global warming – the Glacier is dripping, dripping…and this has just begun. Timing is everything.

Entelechy on September 20, 2007 at 5:14 PM

I wonder if the alleged “wooing” here wasn’t more a case of the investor wooing Danielczyk to let him in on the venture and Danielczyk demanding a little coin for Hillary as the price of admission. That would also explain why the investor conveniently forgot his donation when pressed on it by the Journal.

Interesting point, but surely the investor knows that the records of campaign donations are public and he’d be found out? Maybe he needed more time to come up with another story?

What I want to know more than anything is who was directing Hsu in this:

On each of these occasions, HSU provided Victim-5 with a list of names of political organizations and candidates, including candidates for Federal Office, to which Victim-5 should write out checks.

Is Hsu that intimately familiar with the intricacies of American elections, or golly, could someone in the Democrat Party have been giving direction to Hsu, who in turn passed that on to the “victims”.

Maybe someone who works on behalf of the person whose name the complaint dare not speaketh.?

Ha Ha. Loved that.

Buy Danish on September 20, 2007 at 5:17 PM

That doesn’t seem like the luggage of a man who wants to leave life behind. All that stuff is his life insurance, meaning he wouldn’t be getting a mandatory preventive care visit from Hill’s Angels as long as she didn’t have that paperwork conveniently tucked away.

pedestrian on September 20, 2007 at 5:22 PM

William Amos on September 20, 2007 at 5:13 PM

Do you buy Mr. Garcia’s “cachet” theory?

Buy Danish on September 20, 2007 at 5:24 PM

I question the timing, heh.

Califemme on September 20, 2007 at 5:29 PM

Howard Wolfson was unavailable for comment.

JammieWearingFool on September 20, 2007 at 5:31 PM

That complaint was a nice snack–it was very well drafted–but I’m still wanting more:

Moreover, none of the bank records used by HSU that I have analyzed indicate that HSU made any bridge loans or extended any letters of credit to banks or other entities, such as apparel manufacturers in China.

I think this explains the “factor” business. There was zero contact with China and zero apparel manufacturers. The “factor” was an excuse for why Norman Hsu controlled all the money and signed all the checks–the “factor” handled all the non-existent paper from China.

I think my laundering theory is pretty well sunk, BTW, unless some new bombshell comes out.

see-dubya on September 20, 2007 at 5:32 PM

I think Hsu used Hillary and vice versa. There Hsu gave them money and Hillary gave him credibility.

Still doesnt explain why investors when told they HAD to donate they didnt run to authorities. I know if I was being threatened I would

But then I was also a union member at one time and my dues were taken to be given to the democratic party without my consent so is typical of them to think like this.

William Amos on September 20, 2007 at 5:32 PM

Everybody needs to keep on digging, I bet there is even more dirty money to be found. So when does the Congressional investigation start ?

Maxx on September 20, 2007 at 5:37 PM

In addition, in or about 2005 and 2006, on approximately four occasions, NORMAN HSU, the defendant, asked Victim-5 to make multiple political contributions for which HSU agreed to reimburse Victim-5. HSU told Victim-5 that in order to invest the amount of money he/she was investing with him, Victim-5 had to make the political contributions that HSU requested.

I’m not buying this “victim” crap. What kind of an idiot would help somebody launder political contributions in exchange for the “privilege” of being allowed to invest money?

These people had to know what was up. Didn’t Rosenman announce the $40 million loan disappeared about an hour after the campaign contribution laundering story broke? Do you think he had time to fly somebody out to Malaysia and find out the shoe factory wasn’t there? Hell no; he didn’t have to check anything; he knew instantly that the Chinese would pull the plug on the “magical money machine.”

So he’s scrambled to cover his ass for defrauding his investors. He’ll pay his lawyers $150,000 to go out and get all of Hsu’s assets: a bad toupe and a couple of suits tailored to fit somebody four feet tall.

logis on September 20, 2007 at 6:03 PM

No campaign money for nuke secrets yet huh? I’m so disappointed in Hillary. Next up, Hsu gets bond and wakes up dead under a cherry tree?

Buzzy on September 20, 2007 at 6:05 PM

Hillary’s laundry is piling up.

Connie on September 20, 2007 at 6:10 PM

Hillary’s laundry is piling up.

Connie on September 20, 2007 at 6:10 PM

Yes indeed, Hillary gots some splaining to do…

http://forum.usjf.net/modules.php?op=modload&name=News&file=article&sid=360&mode=thread&order=0&thold=0

doriangrey on September 20, 2007 at 6:14 PM

Just watch, Cankles will spin this as a vast right wing conspiracy and actually make hay with it.

TheSitRep on September 20, 2007 at 6:22 PM

Logis

I’m not buying this “victim” crap. What kind of an idiot would help somebody launder political contributions in exchange for the “privilege” of being allowed to invest money?

Get out of my head – when I read the sort of dunderhead little innocent game Source Financial is trying to pull – it’s insane. They are just a liable- caused people to invest 40 mil in a con man, they didn’t bother to vet and went along with strong arming people into donating to political campaigns?

Something is up – this is just too weird.

Topsecretk9 on September 20, 2007 at 6:34 PM

Also Logis

Didn’t Rosenman announce the $40 million loan disappeared about an hour after the campaign contribution laundering story broke? Do you think he had time to fly somebody out to Malaysia and find out the shoe factory wasn’t there?

Yes he did and he made sure his lawyer repeated:

it appears we are victims just like Hillary

to everyone they could.

Topsecretk9 on September 20, 2007 at 6:37 PM

Topsecretk9 on September 20, 2007 at 6:37 PM

None of them are victims and all of them deserve to be residing right next to Randy “Duke” Cunningham especially Hillary and Bill Clinton.

doriangrey on September 20, 2007 at 6:43 PM

Hillary’s laundry is piling up.

Connie on September 20, 2007 at 6:10 PM

I got my campaign contributions from Norman Hsu
He gave me money that I sure could use
People love it when I lose,
They love my dirty laundry

Well, I coulda been suing a McDonalds, but I married up
I just have to look good compared to the rest, I dont have to be clear
Come and whisper dirty tricks in my ear
See my dirty laundry

See me when Im up
See me when Im down
See me when Im up
See me when Im down
See me when Im up
See me go round and round

We got the silky-pony who
Comes on all poor like
He can tell you bout channeling the dead with a gleam
In his eye
Its interesting when people die-
See his dirty laundry

Can we trash Obama yet?
You know, the boys in my campaign got a
Running bet
Got the dirt on him all set!
I love others dirty laundry

You dont really need to know whats going on
You dont really want to know just how far Ive gone
Just leave me well enough alone
Eat my dirty laundry

See me when Im up
See me when Im down
See me when Im up
See me when Im down

See me when Im up
See me when Im down
See me when Im stiff
See me when Im talkin southern black all around

My dirty little secrets
My dirty little lies
Ive got my dirty little fingers in everybodys pie
I love to cut em down to size
I love dirty laundry

I can do the innuendo
I can pounce and I can sing
When its all said and done I havent told you a thing
You all know that my crap is king
Give me dirty laundry!
- Hillary Rodham Henley

MB4 on September 20, 2007 at 6:51 PM

doriangrey on September 20, 2007 at 6:43 PM

I am sure many are complicit, but I don’t think all — check Suitably Flips emailer.

Topsecretk9 on September 20, 2007 at 6:51 PM

[Source Financial] are just a liable- caused people to invest 40 mil in a con man, they didn’t bother to vet and went along with strong arming people into donating to political campaigns?
Topsecretk9 on September 20, 2007 at 6:34 PM

The lower-level investors MUST have known too, but at least they have plausible deniability. They can just say Source showed them some pretty paper and they took their word for it. That’s the way these incestuous investment schemes work – lots of whispering.

But Source can’t just claim ignorance. Forty million dollars is too much to straddle. They have to avoid a breach of fiduciary obligation suit, and they started covering their asses IMMEDIATELY.

Personally, I think that’s why the Clintons couldn’t contain this. Rosenman might be as liberal as the day is long, but he’s a big fish; there’s no way in Hell he’s going down to protect Hillary.

That’s why the media damage control didn’t have time to kick in. Remember in 1996, when Bill got caught soliciting and accepting campaign contributions from the Chinese Communist government? The lead story on ABC, NBC, and CBS the whole week after that was about how the Republican Party got 2% more contributions from the evil tobacco lobbyists than the Democrats got.

That’s because that story got distributed through the proper channels. But the Hsu story didn’t; it blew up before the liberal media could get together on how to bury it.

logis on September 20, 2007 at 6:58 PM

this was in the complaint

Hsu contacted FBI agents last Thursday and said he “wanted to speak with them about his current criminal activity without his lawyers present.” During a September 14 meeting with Hsu, who was imprisoned in Colorado on an outstanding warrant from California, the swindler waived his Miranda rights and admitted his operation of a multimillion dollar investment scheme.He **also** acknowledged that he “made implied threats to his investors to pressure them to contribute to political candidates he supported.” But the complaint, which was unsealed today in U.S. District Court in Manhattan, does not identify the federal candidates to whom Hsu steered money.

I think that is more than slightly odd – why? I’m sure even he knew there was enough on him without admitting anything and he wanted to speak without his attorney present – whiskey tango foxtrot?

Topsecretk9 on September 20, 2007 at 7:27 PM

I think that is more than slightly odd – why? I’m sure even he knew there was enough on him without admitting anything and he wanted to speak without his attorney present – whiskey tango foxtrot?

Topsecretk9 on September 20, 2007 at 7:27 PM

Dropping a dime on Hillary and not wanting others to know it ?

William Amos on September 20, 2007 at 7:35 PM

Dropping a dime on Hillary and not wanting others to know it ?
William Amos on September 20, 2007 at 7:35 PM

The Clintons have Hsu afraid to talk in front of his own lawyers? No wonder the guy’s turning into a basket case; even the Mafia doesn’t generate that kind of fear.

logis on September 20, 2007 at 7:45 PM

Dropping a dime on Hillary and not wanting others to know it ?

That’s about as good a guess as I had. But like Allah noted

— but to threatening his investors into donating to a certain candidate for electoral office whose name the complaint dare not speaketh.

but since…Spitzer, Cuomo and…

Even Manhattan District Attorney Robert Morgenthau, who is leading one investigation of Hsu, received $2,000 from Hsu during his last re-election campaign. His spokeswoman says the district attorney has put the money into an escrow account pending the outcome of the investigation.

I am not surprised.

Topsecretk9 on September 20, 2007 at 8:07 PM

In that pic, he looks like an Asian Bill Maher.

DaveS on September 20, 2007 at 8:17 PM

DaveS on September 20, 2007 at 8:17 PM

He doesn’t have Maher’s arrogant look, though. Everytime I look at Hsu’s photo and then read that he threatened his victims, it makes me laugh. If that little wimp actually threatened anyone, he had somebody big behind him.

Connie on September 20, 2007 at 8:51 PM

Dropping a dime on Hillary and not wanting others to know it ?

William Amos on September 20, 2007 at 7:35 PM

Does anyone know anything about his lawyer?

Connie on September 20, 2007 at 8:54 PM

Another Hillary donor indicted
link

Hs partner a HUGE Hillary and Dem donor pled guilty yesterday – William S. Lerach

Topsecretk9 on September 20, 2007 at 9:08 PM

Does anyone know anything about his lawyer?

Connie on September 20, 2007 at 8:54 PM

I believe he defended John Walker Linn

William Amos on September 20, 2007 at 9:45 PM

but since…Spitzer, Cuomo and…
Even Manhattan District Attorney Robert Morgenthau, who is leading one investigation of Hsu, received $2,000 from Hsu during his last re-election campaign. His spokeswoman says the district attorney has put the money into an escrow account pending the outcome of the investigation.
I am not surprised.
Topsecretk9 on September 20, 2007 at 8:07 PM

Great point. As William Amos quote earlier from the Times, FBI agent Cardona claims:

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

I just do not buy this explanation.

Spitzer and Morgenthau may be putting words in Cardona’s mouth.

Time for a special prosecutor, ha ha.

Buy Danish on September 20, 2007 at 11:05 PM

My current list of problematic Clinton donors

San Singh Chatwal (Hampshire hotels and Bombay Palace)
Abdul Rehman Jinnah (on FBI most wanted list)
Tendo Oto
Peter Paul (partner of Stan Lee of Spiderman fame)
Raul Martinez (ex mayor of Miami)
Oscar Wyatt (oil for food)
William Danielczyk
William Lerach (Milberg-Weiss)

CommentGuy on September 21, 2007 at 12:34 AM

Sorry to interrupt, but I do.

Each big name he could develop an association with gave him street cred to bolster his image to make it that much easier to work his Ponzi schemes and move them up the ladder to bigger dollar marks to fleece.

CommentGuy on September 21, 2007 at 12:44 AM

Oops that was in relation to the comment I forgot to paste into mine

Do you buy Mr. Garcia’s “cachet” theory?

Buy Danish on September 20, 2007 at 5:24 PM

CommentGuy on September 21, 2007 at 12:45 AM

I think that is more than slightly odd – why? I’m sure even he knew there was enough on him without admitting anything and he wanted to speak without his attorney present – whiskey tango foxtrot?

Topsecretk9 on September 20, 2007 at 7:27 PM

Whats the odds that his attorneys who are already putting together the diminished mental capacity defense for his CA return will try to pose that the whole confession was a mind meltdown.

CommentGuy on September 21, 2007 at 1:07 AM

He doesn’t have Maher’s arrogant look, though. Everytime I look at Hsu’s photo and then read that he threatened his victims, it makes me laugh. If that little wimp actually threatened anyone, he had somebody big behind him.

Connie on September 20, 2007 at 8:51 PM

Shrimp Boy?

CommentGuy on September 21, 2007 at 1:10 AM