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.