After a bizarre and mysterious saga that started in Daly City in the late 1980s before going national, Norman Hsu returned once again to the Bay Area on Thursday, this time facing charges by federal prosecutors that he scammed investors nationwide out of more than $60 million and broke campaign laws as he did it.
Hsu arrived at the Maguire Correctional Facility in Redwood City at approximately 4:45 p.m. Thursday after being brought from Colorado by deputies from the San Mateo County Sheriff's Office and state law enforcement officials. He is scheduled to appear in San Mateo County Superior Court today at 9 a.m.
Hsu, who became a major Democratic Party fundraiser despite having fled legal troubles in San Mateo County in the early 1990s, is charged with one count each of mail and wire fraud, and one count of reimbursing individuals for political donations they made on his behalf, which is against federal campaign law.
“This case is about self-promotion and greed,” United States Attorney Michael Garcia said in a prepared statement. “Hsu perpetrated a massive Ponzi scheme to support his lavish lifestyle, and in the process stole tens of millions of dollars from unsuspecting investors.”
If convicted, Hsu could face up to 45 years in federal prison and a $250,000 fine, according to the U.S. Attorney's Office.
Garcia charged Thursday that the 56-year-old Hsu created two companies, Components Ltd. and Next Components Ltd., to defraud investors of their money by promising them high returns on short-term investments.
Hsu would allegedly use money from new investors to pay returns to old investors as more and more money came in, according to the U.S. Attorney's Office.
Robert Emmers, a spokesman for Hsu's attorney Jim Brosnahan, had no comment on the new charges.
In 1992, Hsu pleaded no contest in San Mateo County to charges that he ran a Ponzi scheme in the late 1980s and early 1990s, scamming Bay Area investors out of $1 million. He disappeared — prosecutors think to Hong Kong — before his sentencing.
He ultimately resurfaced during the 2004 presidential election cycle as a major Democratic fundraiser and donor and has been a source of hundreds of thousands of dollars for candidates such as John Kerry, Hillary Clinton and Barack Obama.
Newspaper reports in August raised questions about the nature of Hsu's donations and donation “bundling” for candidates, and it was ultimately discovered that he had an outstanding warrant for his arrest in San Mateo County because of the 1992 failure to appear.
Hsu was arrested in Grand Junction, Colo., on Sept. 6 after fleeing on the day he was again to be sentenced in San Mateo County.
The federal case against Hsu
» Between 2003 and Sept. 6, 2007, Hsu allegedly pressured victims to donate money to various federal candidates in an effort to “raise his public profile and thereby convince more victims to invest in his fraudulent scheme.”
» On Sept. 3, 2007, just two days before he was due in San Mateo County court for sentencing, Hsu allegedly tried to recruit a victim into another deal.
» When Hsu was arrested Sept. 6 in Grand Junction, Colo., FBI agents recovered two cell phones, a BlackBerry, a laptop computer, a flash drive, an iPod and a locked suitcase. In that suitcase were Hsu’s passport, $7,000 in cash, checkbooks, hundreds of thousands of dollars in checks from Hsu’s alleged victims, bank receipts,handwritten notes reflecting campaign donations made by alleged victims, FedEx shipping labels, a Cartier watch and Tiffany jewelry, and receipts showing his use of a corporate jet service.
» On Sept. 14, Hsu allegedly met with two FBI agents — without his lawyers present per his request — and admitted to using his companies for “phony” deals. He also allegedly admitted he pressured investors to donate to candidates he backed.
– Source: U.S. Attorney’s Office