The New York Times has its reporters wearing out some old-fashioned shoe leather in attempting to trace down the source of Norman Hsu's prodigious amounts of money, used to float $1.6 million in personal and bundled contributions to Democratic candidates and organizations. The result? The Times discovered that the companies Hsu listed appear to have only one produce -- salaries for Democratic contributors:
At the center of the ever-deepening mystery of Norman Hsu, the fugitive fund-raiser who was captured after a brief flight from the law last week, is the question of how he evolved from a bankrupt swindler in 1992 to a wealthy donor to many Democratic candidates, and a bundler of campaign contributions to Senator Hillary Rodham Clinton in 2007.
A review of financial records for one of Mr. Hsu’s companies begins to shed light on some of his recent activities, including his dealings with a circle of campaign contributors that has fallen under suspicion since news of Mr. Hsu’s criminal past, murky business interests and unexplained riches rocked the Democratic Party.
The records show that Components Ltd., a company controlled by Mr. Hsu that has no obvious business purpose and appears to exist only on paper, has paid a total of more than $100,000 to at least nine people who made campaign contributions to Mrs. Clinton and others through Mr. Hsu. The payments occurred in the spring of 2003, several months before Mr. Hsu emerged as a contributor to Democrats and more than a year before he started bundling checks from those same people for various campaigns. In all, he has raised more than $1 million for Democrats.
The records make clear that the group was more than just a loose collection of friends, family and co-workers that bundlers typically rely on when raising money for a candidate. Rather, each person had a direct financial relationship with Mr. Hsu, either receiving money from his company or paying into it, even though many of them appear to have other jobs or businesses independent of him. The purpose of the payments, and whether they related to business costs, fees or expenses, is unclear.
The system described by Mike McIntyre is one that resembles a pyramid scheme, except the only payoff participant were Democratic candidates and organizations. The companies existed to take money from various people and push it through others to get the money to Hsu's political clients. It allowed the money to come through cleanly and to keep it from raising the attention of the FEC.
For instance, Components Ltd took $600,000 in receipts one month. These did not come from sales of product, but rather cash transfer from people associated with Hsu's bundled contributions, especially from two specific associates. Components Ltd them sent out $660,000 in the same month to other people connected to Hsu's bundling, although almost $100,000 of those checks bounced.
McIntyre closed the gap a little on Hsu's missing years abroad while fleeing the US and a three-year stretch for fraud. He did return to Hong Kong and opened new businesses, but by 1998 he had to declare bankruptcy there as well. The Hong Kong court system does not release the name of the creditor, but they did report that Hsu only emerged from bankruptcy there in 2006 -- two years after he reappeared as a major Democratic fundraiser.
Clearly, the feds will find interesting material in this information. The family whose massive contributions led the Wall Street Journal to report on Hsu has been up to their eyeballs in Hsu's shell game. The Paws have wired five-figure funds transfers, despite their modest income. Hsu also wired the Paws significant amounts of money. All of this occurred in May 2003, which predates most of the attention-getting contributions Hsu engineered.
Can you say "wire fraud"? I know the FBI can. That carries about a six-year sentence, and once they start interrogating the Paws, the Lees, and the other channels for Hsu's bundling, this case will start to assemble in a hurry.
And at that point, perhaps we will get the answer to the big question: where did all of this money really originate? And how did all of these Democrats, including three current or former state Attorneys General, manage to miss all of this illegal activity from one of their biggest rainmakers?
Note: Danny Glover has a great post about Hsu punning. It's forcing me to put on my running shoes to keep ahead.