Former Top Clinton Fundraiser Says ‘I Was Greedy’ By Ianthe Jeanne Dugan
http://www.wsj.com/articles/former-top-clinton-fundraiser-says-i-was-greedy-1439329859
Convicted in Ponzi scheme, Norman Hsu speaks in first prison interview about politics; denies he broke campaign-finance laws
Norman Hsu was in the middle of the action in national politics eight years ago, as a top fundraiser for Hillary Clinton and other Democrats.These days, he is holed up in a federal penitentiary here on charges of operating a Ponzi scheme and breaking campaign finance laws, and the action is anything but heated.
Recently, an inmate asked him how to make $1 million “legitimately, in a year.” Mr. Hsu advised him: “Win the lottery.” When a guard approached him to ask a question, Mr. Hsu stopped him: “I said, ‘I know what you’re going to ask: Who’s going to be the next president?’”
The government said Mr. Hsu stole between $50 million and $100 million from individuals by claiming he was making short-term loans to retail companies—and then pressured the investors to make political contributions.
“I was greedy,” said Mr. Hsu, sitting in a small meeting room at the low-security correction institution on a recent day, wearing a beige prison-issued jumpsuit and the same round-framed glasses in the photos with Mrs. Clinton that remain indelibly online. “I made a huge mistake.”
Mr. Hsu raised more than $850,000 for Mrs. Clinton, “arm twisting” a network of about 300 investors, acquaintances and friends, he said. The Clinton campaign said it subsequently gave the money to the U.S. Treasury.
The 64-year-old Mr. Hsu, who admits he ran a fraudulent investment scheme, is a reminder of the risks that campaigns take in relying on big donors who round up money from others. Such “bundlers” need influence or money to tap vast networks of donors and acquaintances, and most do so within the law. But on occasion, such fundraising techniques come back to embarrass campaigns—though usually to a smaller degree.
Conservative author and filmmaker Dinesh D’Souza in September received five years of probation after pleading guilty to a charge that he made $20,000 in donations in the names of others—“straw donors”—to Republican Senate candidate Wendy Long in 2012. Ms. Long didn’t return calls for comment.
Earlier this year, hotel developer Sant Singh Chatwal, a Hillary Clinton fundraiser, was sentenced to three years of probation after admitting he used straw donors to raise $180,000.
It is illegal for supporters to give more than $2,700 to a candidate for a primary or general election. But it is legal to bundle money from friends, family and colleagues and channel it to candidates, which can reap rewards ranging from hard-to-get restaurant reservations to ambassadorships.
“Hsu’s investment and campaign schemes overlapped,” said a 2012 decision by the U.S. Court of Appeals for the Second Circuit, rejecting an appeal by Mr. Hsu. “He used political connections created by his campaign fundraising to create an appearance of legitimacy useful in recruiting victims to his investment scam, and used the illusions of successful investments to recruit his investors as campaign ‘donors.’”
Among them was Joel Rosenman, a founder of the Woodstock music festival, who lost upward of $13 million that he and others had in a fund invested in Mr. Hsu’s operation. Believing that Mr. Hsu had turned the money into $40 million, Mr. Rosenman donated to candidates, including Mrs. Clinton.
Mr. Rosenman said he is still hoping for some restitution and that the topic is painful. “He hurt a lot of people,” said Mr. Rosenman.
“I doubled down a few times and it got bigger and bigger,” Mr. Hsu said of his Ponzi scheme during a two-hour interview, his first since his arrest in 2007. “I feel bad.”
Most other friends and bundlers have lost touch. John Catsimatidis, chief executive of food and oil conglomerate Red Apple Group, sounded surprised to hear Mr. Hsu’s name when contacted by a reporter. “Oh. My. God,” he said, recalling an elaborate fundraiser Mr. Hsu threw at Per Se restaurant in New York.
Mr. Catsimatidis added that “I always smelled something. But he seemed like a nice guy.”
Mr. Hsu said he became passionate about politics as a child in Hong Kong. When Bobby Kennedy was shot in 1968, he said, “I went to my room and cried and cried and cried.” Four years later, he said, he canvassed door-to-door in California for George McGovern’s presidential campaign.
He got involved in importing and exporting, he said, but when business got tough, he faked it. “I was lazy,” he said.
In California in 1992, he pleaded no contest to grand theft charges for failing to repay investors for money he raised to import latex gloves from China. He then went on the lam, failing to show up for a sentencing hearing. “Why didn’t anyone vet me?” he asks.
His criminal record didn’t come up as he traveled abroad. Nor did it arise when he courted investors between 2000 and 2007 to two entities ostensibly involved in short-term financing for high-end retail ers. His record wasn’t raised in 2004 when he met Mrs. Clinton at a Los Angeles event. He donated and began hosting fundraisers, joining an elite group of “Hillraisers”—the title given to the biggest bundlers behind her 2008 bid for the Democratic presidential nomination.
Other recipients of his efforts included then-U.S. Sen. John Kerry, then-Rep. Kirsten Gillibrand, then Gov. Eliot Spitzer, then New York Attorney General Andrew Cuomo and the Tennessee Democratic Party.
Most of the recipients said they subsequently donated the money to charity. All the recipients declined to speak on the record.
“The finance managers would call and tell me who still had room to donate” and remain within legal limits, Mr. Hsu said. “I would call and email and do everything to get more out of them.”
In 2007, The Wall Street Journal highlighted suspicious donations linked to a modest home in California. It was owned by acquaintances of Mr. Hsu who later testified that he reimbursed them for donations.
Mr. Hsu pleaded guilty in 2009 to 10 counts connected to the pyramid scheme. He denied four campaign finance counts but was found guilty of them after a jury trial. The campaign finance violations represent 52 months of his 292-month sentence.
Mr. Hsu denies reimbursing for donations. “Until the day I die, I will not admit I broke campaign finance laws,” said Mr. Hsu.
The federal indictment said Mr. Hsu “threatened” to toss out investors if they didn’t donate campaign money.
“I never threatened,” he said. “But I would say, ‘You made $50,000 from me. You can’t donate $4,000?’”
Mr. Hsu, who holds degrees from the University of California, Berkeley and the University of Pennsylvania’s Wharton School, said he now earns a salary of $40 a month tutoring prisoners studying for the high-school general equivalency diploma. He spends it on incidentals such as toiletries, postage and laundry. He said he helped a cellmate in accounting studies—that person is now on the outside and working—and talks like a proud parent about the five students who found out this month they passed their exams.
He passes time reading about politics in newspapers, magazines and books—he has no Internet access—and teaching inmates about it. In 2012, he said he walked his students through the national elections and predicted winners. He claims he was correct 96% of the time.
In one of his classes he screened the documentary “Recount,” about Al Gore’s loss in Florida in 2000 to George Bush. “Gore didn’t raise enough money,” Mr. Hsu laments. He said he would continue supporting candidates—if only he could. “In here,” he said, “there are no favors you can do.”
Write to Ianthe Jeanne Dugan at ianthe.dugan@wsj.com
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