Hsu Is Accused of Ponzi Scheme

Wall Street Journal (no subscription) ^ | September 21, 2007 | Ianthe Jeanne Dugan

[CutePuppy]

U.S. Alleges Fund-Raiser Used Political Role to Lift His Profile, Lure Investors

Federal prosecutors said in a criminal complaint that Democratic fund-raiser Norman Hsu pressured investors to make campaign contributions through him in order to raise his public profile -- then used his prominence to find more investors for illegal Ponzi schemes.

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Mr. Hsu is charged with mail fraud, wire fraud and violating the Federal Election Campaign Act. If convicted, he faces a maximum of 45 years in prison -- 20 years for each fraud charge, and five years on the campaign-finance charge.

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The complaint alleges that on several occasions, Mr. Hsu donated money to politicians under other people's names -- or reimbursed them for their donations. Such activity is illegal, but has grown in recent years amid stricter limits on individual contributions.

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The complaint includes detailed allegations of how Mr. Hsu mixed his business and political activities. Prosecutors say Mr. Hsu's self-confessed "phony" business served as an engine to raise massive amounts of money for candidates. He pressured investors to give to candidates of his choice -- and asked them, in turn, to push their friends and family, they allege.

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Mr. Rosenman gave investors a contribution form listing Mr. Hsu as a contact, according to investors. When one investor asked who Mr. Hsu was, Mr. Rosenman told him Mr. Hsu was the designer who had made the fund so successful, promising to deliver nearly $10 million more in profits this year -- a return of about 25%. The investor then donated $2,300.

"Hsu made implied threats to the victims leading them to believe that their failure to make the required political contributions would adversely affect the victims' ongoing investment relationship with Hsu," the complaint alleges.

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[CutePuppy]

So where are the money laundering charges, and why does money laundering stop with Hsu? People or entities who laundered money through "investments" or "loans" to Hsu, are the "victims"... that's the setup they want us to believe, but the "massive Ponzi scheme" by one guy who was so busy with politics and fund raisers doesn't pass the smell test.

[CutePuppy]

The guy who went to Wharton knows darn well that the only way the pyramid or Ponzi scheme can end is in crash, and you don’t want to be well known or visible when that happens. Yet he seems to have been trying to achieve exactly that while ratcheting up the amounts in the scheme and at the same time decided to get involved in illegal campaign contributions, and “threatened” his investors to contribute - all by his lonesome...?

[Just Lori]

But it only LOOKS like a duck!

[biff]

Boy, glad to see the feds were really on top of this and caught him after only 15 years!!! Of course, if it would have been me they would have nabbed me in a few hours. LOL

[vetvetdoug]

Thousands of veterinarians and pharmacists got caught up in an advertising Ponzi Scheme back in 1993...the perps ran their business out of Florida because of the liberal bankruptcy laws there and were very organized. After years of litigation, the Female Black Judge that was one of the SC of Florida members that screwed the pooch on the 2000 election, let the perps off and the ones that bought the advertising were left to pay the bills. A total scam from start to finish with the knowledge that the legal system would let the ones that scammed the money get off the hook.

[CutePuppy]

Here's how to money laundering works for drug dealers - doesn't seem that much different from political campaigns (particular attention to "smurfing")

WASH CYCLE
ATMs Become Handy Tool For Laundering Dirty Cash
With Small Deposits, Couriers Outwit Banks

[justa-hairyape]

People or entities who laundered money through "investments" or "loans" to Hsu, are the "victims"... that's the setup they want us to believe, but the "massive Ponzi scheme" by one guy who was so busy with politics and fund raisers doesn't pass the smell test.

One obvious money laundering mechanism was when Hsu coerced investors to contribute to his desired political campaigns if they wanted to continue to get good returns on their investments. Technically, these political contributions can be viewed as coming from the profits of their investment. So in effect, Hsu was laundering other peoples ponzi scammed money into political campaigns via ponzied fake returns he gave to investors. Is that not fitting. Hillary is running a political campaign partly financed with laundered ponzi scammed investment funds. Since close to $60 million is missing it looks as if a whole lot more ponzi money got coerced into these campaigns. Perhaps the campaigns were spending a lot of time finding other ways to launder in the contributions from Hsu. Where else could have all that investment money have gone ? If Hsu had it why not wire it to Hong Kong and fly a corporate jet back to Hong Kong or take bags of cash with you ? The political campaigns probably where putting lots of pressure on Hsu due to their monetary requirements and they eventually busted the ponzi scheme ?

[justa-hairyape]

Smurfing. What do you know. Speaking of Columbian Drug Lords, when I used to play a lot of craps in Vegas, I once saw a Columbian possibly laundering money into a couple of Vegas Casinos. Then again he could have been just very bad at craps. Lots of people are. This person certainly looked like a gangster from South America and he possibly had a body guard or gangster buddy with him. He was throwing in $100 bills all night long at a couple of casino’s craps tables. Finally caught up with him at about 4 am in downtown Vegas and he was throwing in $20 bills at a downtown casino. Thought it was real odd to see someone just throw money away like that for over 8 hours straight. But hey, Its Vegas baby.

[CutePuppy]

I doubt Hsu’s money (or at the very least, “massive” amounts of it) came from some “massive” Ponzi scheme - that simply defies business sense and common sense and implies that a lot of very rich people were either gullible idiots to “invest” in Hsu’s “on-paper-only” enterprise (with a laughable “post-dated” checks as guarantees of future payments) or that he could keep raising money at frenetic pace to satisfy payments of “invested capital” + “profits” (which is what Ponzi / pyramid scheme requires). Money were simply laundered through Hsu’s “business[es]”, they didn’t come from Ponzi scheme, they came from somewhere else, that’s why I’d like to see the sources and destinations of wire transfers, “front and back” of the checks. Hsu is simply the conduit, the intermediary and got a bit of taste of money himself, but the rest was funneled to campaigns through distributions and reimbursements.

There seems to be a real rush to start and stop the chain of money with Hsu, and declare everybody else a “victim” - nice and clean, and done, and gone. The only way to explain away the source of Hsu’s excess money that went to campaign in that scenario would be a “massive Ponzi scheme” by one guy in a period of time of about 2 years, but that sounds not much more believable than turning $1,000 into $100,000 in one year in cattle futures. It also doesn’t explain at all or has any real connection with Hsu’s seeming obsession with political contributions and the need to ask through Rosenman (Hsu was in no position to “threaten” or “coerce”, explicitly or implicitly) his “investors” for small donations.

The more obvious explanations go beyond Hsu, but he seems to be at the moment a Grand Central Terminal, where all the trains stop and go no further.

Nothing beyond a political “embarrassment” of being “affiliated” with the Dem campaigns, not money laundering from outside sources through “smurfing” via Hsu’s ATM, not even anything close to Chinese Connection and “money bags” of Charlie Trie and John Huang.

From what I see in the complaint so far, that’s where it stops. I hope I am wrong, but the story is being rushed and simplified, and pieces of the puzzle the way they are presented now simply do not fit together, though they are being stretched to make the impression that they do.

[justa-hairyape]

It also doesn’t explain at all or has any real connection with Hsu’s seeming obsession with political contributions and the need to ask through Rosenman (Hsu was in no position to “threaten” or “coerce”, explicitly or implicitly) his “investors” for small donations.

Yeah. They have that part backward. But this is the FBI and they are dealing with big fish. Just on the legal grounds it threatens one of the major political parties and that threatens the Rino/Dino Globalist Elitist. Getting some mud on the Hildabeast may be all we can hope for. Rosenman was the person who produced Woodstock. He was not rolling around in the mud. He is like the Clintons. They corral and control the moonbats for the Globalist Elites Controlling the Democratic Party. Dinos. There heart is not really with that 'movement'. The only way they go down is if the moonbats stop playing in the mud and start taking life seriously. Not gonna happen.

[ovrtaxt]

Ponzi scheme, huh?

Maybe Hillary was planning on appointing him to the Social Security Administration.

[restornu]

How do they consider this a ponsi scheme?

I always thought the first level got paid and maybe the second level it like rob Peter to pay Paul..

In this case I am missing something here where does Ponsi scheme come in on or how is Ponsi applied here in a fund-raising?

[ReleaseTheHounds]

Ah, it’s a Ponzi Scheme! That’s why this guy was attracted to Hillary and the Demos! They are all advocates for and masters of the Ponzi Scheme!

[Iconoclast2]

Great analysis. This is yet another example of the Bush Justice Department rushing to cover up the crimes of the Clintons (or more precisely, their mutual puppetmasters), because they are . . . [tagline]

[Presbyterian Reporter]

I have the same problem as you do believing that this FBI Complaint is the truth and NOTHING BUT THE TRUTH.

These were all short term investments. Where did Hsu get the capital to be able to constantly payoff short term investors? A Ponzi scheme can only work when somebody lends money with the expectation that they will get the money back several years in the future. In Hsu’s case he was paying off his investors every three months.

Hsu would also have had the expenses of his lavish lifestyle and the political contributions.

Something does not add up.

From a portion of the complaint: “Over the course of the next two years, Victim-1 continued to invest in deals with NORMAN HSU, the defendant, investing in increasingly larger amounts and generally reinvesting his/her proceeds from each deal. For each deal, Victim-1 gave his/her investment money to HSU and, in return, HSU provided Victim-1 with an agreement and a post-dated check. For each deal, the post-dated check represented the investment money plus interest. Each time the post-dated check came due, Victim-1 cashed the check and realized a profit on his/her initial investment.”

[iopscusa]

If ever an independent investigation were neccessary, this is the time.....starting with the 1996 election!

[Lonesome in Massachussets]

I dunno, like I’ve said before, if I were a conman looking for deep pocketed marks lacking circumspection, a high stakes Democratic fund raiser would be the happy hunting ground. Lots of folks like Hollywood types, dot-com millionaires, trust fund legatees and such with lots more money than business acumen.

$200,000 is the ante to take (so far as we know) at least one $40,000,000 and one $33,000,0000 pot. The whole Hong Kong businessman/alchemist legend just adds to the allure.

It’s like Jimmy Rockford working one of his patented “Oklahoma oilman” scams with Angel Martin.

Think about it: you can find out in 10 minutes on the internet whether a potential boyfriend has ever been arrested, in a mental hospital or declared bankruptcy. Here’s this guy, using his own name, who’s been declared bankrupt, is a fugitive from a 15 year old felony conviction and “investment counselors” hand him $40,000,000? He’s gotta have the cool confidence of a Christian with four aces.

[Suzy Quzy]

None of these indictments gets anywhere NEAR the Clintons!! Crap, it looks like they skate again!!

[Suzy Quzy]

Color me REALLY stupid, but HOW do the money launderers GET the money to Deposit in an American bank that’s withdrawn in Colombia into Pesos??

[MinuteGal]

Hsu is the bearer of lots of political baggage and inside info on the Klinton Crime Family.

In an ideal world, the feds would flip Hsu and extract valuable information in return for a lesser sentence.

In the real world, the Justice Department and the FBI under this administration will play dead and Bonnie and Clyde will walk.

Not only will the Administration not allow anything untoward to happen to the Odd Couple, but, in addition, the FBI as well as our top legal department formerly under Gonzales and now Mukasey are still rife with Clinton holdovers.

So, who else remains that will flip the diminutive Mr. Hsu?

The blindfolded Lady Justice's scales are not balanced evenly any more.

Leni