Hsu Is Accused of Ponzi Scheme

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

[tiger640]

Have you checked out the latest from Flip:

http://suitablyflip.blogs.com/suitably_flip/2007/09/hsocking-hsu-se.html

hoo boy!

[eureka!]

Wow, is right. That is some serious sleuthing...

[Presbyterian Reporter]

Flip is amazing. If the FBI and mainstream media did one tenth of the investigation into this Hsu scandal, the American public would then know how corrupt certain politicians are.

Let me post the link again so that others make Flip’s blog one of their favorite places.

http://suitablyflip.blogs.com/suitably_flip/2007/09/hsocking-hsu-se.html

[Miss Didi]

On a positive note, Pat Caddell was on Fox this morning with the Friends saying that it is not inevitable that Mrs. Clinton will be the nominee and that this recent scandal is serious indeed.

[VirginiaConstitutionalist]

I must have missed something. When was he named Social Security Administration head?

[Enchante]

"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"

Exactly - and yet he went out of his way to make himself very well know and prominent, and certainly behaved as though he did not imagine the whole scheme could crash. So is that an indication of major outside support ala Chinagate? Why would anyone think they could scam so many wealthy people AND be close to a lot of the most prominent pols in the country and yet somehow end up OK? I know crazy things have happened before, but this seems to have no explanation unless he had huge financial backing such that he did not expect to be brought down by the crash of a Ponzi scheme....

[CutePuppy]

You got it. “Ponzi scheme” is just an excuse, the only convenient explanation (that can be swallowed by populace who would not ask further questions) of how Hsu could be paying “interest” to the likes of “investors” like Rosenman. Of course, the more plausible and likely, but very inconvenient explanation is that all the while he was getting money from outside to “wash” through supposedly legitimate business enterprise (with Rosenman, Source Financing providing the nice cover for millions going through Components Ltd, Next Components etc.)

That’s why this nice, clean, simple “wrap-up” - Hsu is a swindler who set up a “massive Ponzi scheme” to pay out Rosenman the invested capital plus interest, then somehow got involved with politics and illegal donations, and everyone else is a “victim”, including innocent politicians who received donations through his illegal activities, which include fraudulent, reimbursed or “coerced” donations - simply doesn’t “wash”.

More likely, it was designed from the beginning as laundering operation to funnel money to campaigns in small donations, which needed Hsu’s company as a conduit (ATM) for large number of legitimate transactions involving millions of dollars to cover the tracks (see my post #6 on how Colombians laundered drug money) and make everyone richer and happy.

Hsu is not an idiot, he graduated from Wharton. There is never a good ending to every Ponzi scheme - it always falls apart under its own weight with perpetrator winding up in jail or “on a slow boat to China” - and Hsu couldn’t possibly not know that, so what was the end game and why the need to put it in even more jeopardy by making himself highly visible with elite politicians and getting seriously involved in and very time-consuming process of soliciting and/or reimbursing campaign contributions on a level of about $2,000 per donation and other “small potatoes” illegal schemes?

[Nachoman]

Stupid bastard. He should know only the Federal government is allowed to run a ponzi scheme.

[CutePuppy]

So is that an indication of major outside support ala Chinagate?

Would be my best bet at this point, and was executed pretty well, except Hsu was the wrong horse due to having a "prior" history and record. That would make all the pieces fit perfectly. It would explain the beginning (Hsu), the middle (setting up "on-paper-only" companies and "joint ventures" with Rosenman / SFI to move large amounts of money with large number of transactions) and the end (some of the money passing through the business winds up in campaigns, laundered first through Hsu's business and then small donors).

The way Feds are painting the picture now they have to really stretch the pieces to fit the story (or at least two different stories - Ponzi scheme on one end, illegal small campaign contributions scheme on the other end - with nothing joining them except Hsu himself)...

Needless to say, so far I am not happy about the turn the criminal complaint has taken - i.e., Hsu is bad, bad guy, everybody else is the victim, end of story... That story doesn't fit the Hsu.

[CutePuppy]

I know crazy things have happened before, but this seems to have no explanation unless he had huge financial backing such that he did not expect to be brought down by the crash of a Ponzi scheme....

Right, there was no Ponzi scheme and no need for it, since "they" were on the other side of Rosenman in Hsu's venture - which :

1. established Hsu as legitimate and "successful" businessman
2. "washed" the money through his "businesses"
3. allowed Hsu to become active politically and a member of exclusive "clubs" like New School and HillRaisers etc.

The laundromat was working, he just got caught on small campaign things (like Paws) and then previous record came up, so now they have to scramble to cover the tracks of laundering. Ponzi scheme is the only other thing they can come up with, that can somehow explain "excess money" Hsu had to have for all this to work, but it's not at all plausible here.

[CutePuppy]

I like Pat, he is an honest liberal, and he was disgusted by Clintons, but he often lets his heart talk more than his reason. “Scandal” is being “managed” and no matter the scandal, there is simply nobody else who is going to be the Democrats’ nominee... It’s a race for VP at best, and IMO, Obama blew it when he thought he could challenge Hillary for nomination and made several stupid statements and moves like his speeches on foreign policy. As of now, he has shown he’s not ready for prime time, and a little too “independent” for Hillary to tolerate as VP. But that’s my opinion.

I don’t see anybody else even running on Dems’ side.

[Master of Orion]

Democratic fund-raiser Norman Hsu

Clinton fund-raiser Norman Hsu

There, I fixed it.

[justa-hairyape]

At first I did not quite grasp what you were getting at, but I now think I might understand your point. In simple terms - Since Hsu was not operating actual successful and profitable business transactions, where did the numerous profits come from that he paid the investors ? He had to have another money source. The feds are insinuating there was no other source and it was a vast pyramid scheme that was Robbing Peter to Pay Paul and was working fine since his Pauls were investing large and larger sums (ie - the ponzi or pyramid). The only way we could prove that his pyramid business was not generating enough increasing ‘investment’ to have paid all those investor profits, would be if we had his accounting books. Now if his investment income cannot account for all his paid returns on investment, there must have been another source of undisclosed money coming into the pyramid. Money that was only destined to be washed into the laundry and end up as return on investment profits from which the investors could then donate ‘free and clean’ money into political campaigns. We suspect the dirty money was coming from possibly China. Maybe that was his 'factor'. Okay. That makes sense, but he did end up short 10’s of millions. Perhaps the Chinese pulled the plug and that is what really brought the Ponzi Laundry to Bankruptcy. Perhaps the campaigns were sucking so much money that they eventually ended up sucking out some of the still dirty laundry. Perhaps that is when the Chinese got spooked. Or perhaps Hsu was just losing too much in Vegas.

[restornu]

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]

When I am reading things like this than somehow I think Hegelian dialectic is afoot!

They seem to play off of each other to bring about their version of the NWO

[justa-hairyape]

Oops. Replace

..since his Pauls were investing large and larger sums..

with

..since his Peters were investing large and larger sums..

[CutePuppy]

Yes, that was, for lack of a better name, his “factor” and “guarantor” that made laundromat work. Somebody had to “guarantee” the profit and, obviously, Hsu was in no position to guarantee it, and he otherwise wouldn’t need the “investment”.

The “post-dated” checks as a “guarantee” of payment is one of the most laughable details that I have ever heard of in schemes like this.

“Investors” would have to be idiots to make “investments” on that scale (really a short term loan with a “shark” interest rate) with the guy without checking his bankruptcy or criminal history, especially in an industry (apparel) not known for high gross margins (20% - 30% GM at the most on top high end brands, like Gucci and Prada,) let alone net profit.

Money stopped coming into account, “post-dated” check “bounced” when WSJ ran the article and Hsu was starting getting into trouble fast and became a “wanted” man for his “prior” run-in with the law. That broke the money train and caused all kinds of trouble from “investors” with post-dated checks who had been “guaranteed” their money with interest.

[CutePuppy]

Chain goes like this:

Colombia —> cocaine —> boats / planes /trucks —> USA —> powder or crack, retail —> small denominations US$ currency deposited through ATMs of international banks to certain accounts —> withdrawal of Pesos from these accounts anywhere in the world, including Colombia.

Ain’t international banking and commerce convenient?

[Suzy Quzy]

Hillary’s VP will be Weasley Clark...imho.

[justa-hairyape]

Hillary’s VP will be Weasley Clark...imho.

The man that almost caused a war between the US and Russia over Kosovo. Great. Cold War II guaranteed.

[Grampa Dave]

SoCal investors sue Democratic fundraiser Norman Hsu
The Associated Press ^ | 09/22/2007

http://www.freerepublic.com/focus/news/1900588/posts

09/22/2007 6:36:56 AM PDT by george76

A Laguna Beach investment firm filed a lawsuit against Democratic fundraiser Norman Hsu on Friday, claiming he defrauded investors out of at least $23 million and required them to donate to Democratic candidates.

According to the lawsuit filed by Briar Wood Investments, Hsu persuaded the company’s operator to do business with him by taking him to star-studded Democratic Party events. There, the 56-year-old Hong Kong native was praised by New York Sen. Hillary Rodham Clinton, California Atty. Gen. Jerry Brown and others, the lawsuit said.

As a condition of doing business with the fundraiser, Hsu directed investors to make contributions to certain Democratic candidates, the lawsuit said. The investors turned over tens of thousands of dollars, including $30,000 worth of checks to Clinton’s campaign on a single day.

The lawsuit is the latest in a series of legal troubles that continue to mount for Hsu.

Last week, New York investors filed a similar suit against Hsu. On Thursday, federal prosecutors unsealed a criminal complaint accusing Hsu of operating a national Ponzi scheme and reimbursing investors for donations made in their names. And on Friday, a San Mateo County judge ordered Hsu held without bail in a 1991 theft case.

According to the lawsuit, 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 adviser 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.”