> SEC sues Democrat fundraiser for alleged $60M scam!
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SEC sues Democrat fundraiser for alleged $60M scam
SAN FRANCISCO (AP) — Federal regulators on Monday sued political
fundraiser Norman Hsu for allegedly operating a $60 million investment
scam and using some proceeds to contribute to Sen. Hillary Rodham
Clinton and other prominent Democrats.
The Securities and Exchange Commission filed a lawsuit in U.S.
District Court in Los Angeles that accuses Hsu of using a company
called Next Components to solicit investments that promised high rates
of return by providing short-term loans to other companies.
Instead, Hsu used the investments to pay off early investors in a
classic Ponzi scheme while using the rest to make political
contributions and support a lavish lifestyle, the lawsuit states.
The SEC is seeking to recoup the investors' money and financial
penalties.
Public records show Hsu donated millions to numerous Democratic
campaigns since 2003. He also attended many well-publicized
fundraisers.
Hsu was indicted last year in New York on federal charges of fraud and
violating campaign finance laws — a case that came on the heels of a
1992 conviction in California for bilking investors of $1 million. He
was declared a fugitive for a while in that case, but finally was
sentenced in January to three years in state prison. He has been moved
to a jail in New York to await the federal trial.
Federal prosecutors said a year ago that Hsu hoped the profligate
campaign spending would raise his public profile enough to draw money
to his scheme.
"He allegedly then used the veneer of respectability created by his
political connections to persuade his investors that the investments
he offered were legitimate," said Linda Chatman Thomsen, director of
the SEC's division of enforcement.
The federal indictment alleges that Hsu lost at least $20 million of
the investor money, and says the rest of Hsu's assets are frozen. The
federal criminal case is scheduled for January.
"He plans to contest the charges," said Martin Cohen, his defense
attorney in the case.
Hsu raised more than $1.2 million for Clinton and other Democratic
candidates in recent years.
The Clinton campaign returned more than $800,000 to donors whose
contributions were linked to Hsu after it was revealed in 2007 that he
was wanted in California since 1992, the year he fled the state after
pleading no contest to bilking investors of $1 million.
He voluntarily returned to California and posted $2 million bail in
August 2007, claiming that the 1992 conviction was a misunderstanding.
The next month, Hsu skipped a court hearing in Redwood City,
California, and was once again declared a fugitive. He was arrested
days later in a Colorado hospital after trying to commit suicide by
drug overdose on a train.
He was ultimately sentenced to three years in a California state
prison for the 1992 conviction and now faces a maximum sentence of 20
years in federal prison if convicted of the latest charges.
In May, a federal judge in Los Angeles ordered Hsu to pay $28.8
million to aggrieved investors who sued him. Hsu wasn't represented by
a lawyer in that case and never responded to the lawsuit.