This is the one part of the Hsu saga that hasn’t gotten much press yet. Amid all the sexy details of great train escapes and gangland kidnappings and punching out old girlfriends (“He’s mentally unstable”) and where the money came from and how much of it Hillary’s planning to give back, the fact that Hsu was allowed to buy publicity by hobnobbing with prominent Democrats despite being a known fugitive with a history of bad business deals helped him cut a much more convincing figure when running his scams. We’ve been wondering why a savvy businessman like Joel Rosenman would toss $40 million this guy’s way — but why wouldn’t he? He was one of the top 20 Democratic bundlers in the country, according to the WSJ. Rosenman must have assumed that he’d passed the Democrats’ various political background checks and thus that it was okay to take a chance on him. The Dems have been allowed to skate thus far on the way they let their brand be used by him that way. As the lawsuits pile up, that’ll get much harder.

An Orange County investment company filed a lawsuit against disgraced fundraiser Norman Hsu on Friday, saying that he defrauded investors out of at least $23 million and dictated that they make contributions to Democratic candidates as a condition of doing business with him.

According to the suit, Hsu persuaded the company’s operator that he was legitimate partly by taking him to Democratic Party events, where, the suit alleges, Hsu was thanked and praised by New York Sen. Hillary Rodham Clinton and California Atty. Gen. Jerry Brown, among others…

The suit lays out how Hsu attempted to leverage his growing profile as a fundraiser to draw in investors and to tap his network of investors for political contributions.

It says Waters invested with Hsu in part because “prominent persons, including Sen. Hillary Clinton, New Mexico Gov. Bill Richardson, California Atty. Gen. Jerry Brown, national Democratic political advisor James Carville, film director Steven Spielberg, actor [Tobey] Maguire, grocery store magnate/billionaire Ron Burkle and others introduced and/or endorsed Hsu as a friend, colleague and trusted associate.”…

At one event for which no date is given, the suit says, Hillary Clinton spoke via videoconference, singling out Hsu for thanks. At another event, a 2006 fundraiser in San Francisco, Waters sat at a table with Brown, who “praised and endorsed Hsu.”

Hsu also told Waters he had hosted a dinner party for Bill and Hillary Clinton at his New York apartment, and had a private dinner with Sen. Edward M. Kennedy (D-Mass.) in Beverly Hills, the lawsuit says.

I wonder if there’s some sort of contributory negligence action afoot here if the investors can show that the Democrats knew or had to reason to know that he was (a) a fugitive, (b) with a history of bad practices, and (c) allegedly guilty of illegal fundraising. Ohhhh, the schadenfreude if there is. In the meantime, here’s the Glacier being quizzed about Hsu this morning on Meet the Press. She says they took action right away to refund the dirty donations — which is true only with respect to the money donated by Hsu, not the many hundreds of thousands of dollars more that he bundled for her. She also conveniently neglects to mention that she’s going to ask them to re-donate the money after she gives it back. Total questions about the warnings her campaign allegedly got from Jack Cassidy this summer: zero.