September 22, 2007

Celebrity Endorsements, Political Contributions, And Hsu

The fallout continues from the exposure of Norman Hsu as a world-class con man. A Laguna Beach investment firm filed a lawsuit against the Democratic Party fundraiser for defrauding investors of $23 million, which apparently makes them Victim #3 in the FBI's complaint against Hsu. Given the description of the suit in the Mercury News, Briar Wood Investments may add some celebrities and politicians as codefendants:

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 requirement that investors donate to political campaigns may create even more grief for Hsu. If the FBI can prove coercion, it could be possible to prosecute Hsu under a RICO predicate. At the least, that requirement can be shown as a manner in which Hsu laundered his own contributions to Democrats without tripping any legal alarms at the FEC -- and every individual contribution would then become a separate charge against Hsu. He could face thousands of counts in federal court of election fraud, wire and mail fraud, and money laundering, apart from the Ponzi cons he perpetrated.

However, the "requirement" may take a little explaining. Investors with any sophistication should have questioned that requirement, as well as the spectacular short-term returns that Hsu promised and initially provided. Why would it be necessary to make political donations in order to remain in an investment group? It changes the mission of the group from profit to political action, which should have been a big clue as to Hsu's primary focus.

The investors could be forgiven for not exercising enough skepticism, however, given the high-wattage celebrity endorsements they saw first-hand. After all, when the Attorney General of one's state (Jerry Brown) says how highly he regards an investment manager, one doesn't usually worry that the AG might endorse a con man convicted in his own state with an outstanding warrant for his arrest. When Hillary Clinton endorsed Hsu, the investors had to believe that she knew his character -- because after all, would Hillary lie just to get a few political donations?

Those aren't the only people who inadvertently helped Hsu defraud California investors of millions. Tobey Maguire got caught up in the spider web as well. Stephen Spielberg's close encounters with Hsu convinced investors that Hsu was on the level. James Carville apparently used his Mouth of the South to make Hsu look legitimate. Their mention in the lawsuit means that all of these celebrities may need to lawyer up -- and perhaps pony up for some of the lost monies as well.

Did someone think that the Hsu case would go away? Hell ... it just went Hollywood.


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Comments (20)

Posted by GarandFan | September 22, 2007 10:13 AM

As Deepthroat said "follow the money". And all of this from the party that promised integrity during the last election cycle.

Posted by John Wilson | September 22, 2007 10:17 AM

It might be that the shear magnitude of the dollars involved in this scandal will be enough to derail Hillary. And you also have to suspend disbelief that Hillary was asked and denied that she is a lesbian by a gay activist publication.

Posted by Fight4TheRight | September 22, 2007 10:18 AM

Capt. Ed, I couldn't help notice that the link to this story came from "mercurynews" , whoever that might be. I am just shocked, SHOCKED I tell you, that this isn't front page or second page stuff at the NYTimes, Washington Post, Reuters! And I've looked at the list of guests on the Sunday Morning News Shows and don't see a single Tim Russert or George Stephanopoulas scheduled to showcase the Hsu debaucle!
Surely, CBS news will lead with this tonight on the Weekend Nightly News, yes?


Posted by Hugh Beaumont | September 22, 2007 10:35 AM

Keep a close eye on where charges are brought.

New York are where charges against Clinton cronies
go to disappear.

Posted by alexander White | September 22, 2007 10:47 AM

The "requirements" to donate sounds like promises soft graft to me. Hsu whispers to investors that if they grease the right palms they will have friends in high places down the road. Culture of corruption indeed.

Posted by RBMN | September 22, 2007 10:48 AM

I assume any Hsu trial will happen after November of next year. That's if Hsu doesn't succeed in killing himself first.

Posted by meep | September 22, 2007 11:01 AM

Even if Hsu were out of the picture, as it were, for a trial next year, there are already enough other odd bundlers in the story that they're not all going to just disappear.

Posted by Anna Puna | September 22, 2007 11:28 AM

I had commented on another blog this had the potential to be greater than Teapot Dome. I might have misunderestimated the scope.

Hsu may hope he only gets hsu'd by Spielberg et al versus a couple thousand counts under RICO.

Dear Norman Hsu, may you live in interesting times.

Posted by RKV | September 22, 2007 11:42 AM

I'd love to see current California AG Jerry "Governor Moonbeam" Brown do the perp walk on a Federal campaign finance rap.

Posted by theblacksheepwasright | September 22, 2007 11:45 AM

mercurynews is the webpage for the San Jose Mercury..

What I see as bigger problem for Hillary, Carville et al if anyone dare. That would be to sue them along with Hsu for what could be construed as an implied endorsement.

Lawyers have included people in suits for far less.

This is..will anyone have enough guts to do it?

Posted by richard mcenroe | September 22, 2007 11:59 AM

The SJMN is a kickass little newspaper. They've broken several stories the LAT and SF Chronicle ignored or tried to bury...

Posted by coldwarrior415 | September 22, 2007 12:16 PM

This observation has nothing to do with the huge amounts of money racked up by celebrities adding their cachet to candidates. My observation is that anyone who votes for or backs a candidate because they have a celebrity endorsement deserves the kind of government they get. Voting for Hillary becasue Barbra Streisand endorses her, for example, is as inane reason for voting as one can find.

Posted by dhunter | September 22, 2007 3:06 PM

"the investors had to believe that she knew his character -- because after all, would Hillary lie just to get a few political donations"

You have got to be kidding me I almost spit my water all over my keyboard.

Would a Clintoon Lie? Does a cat have an ass? Come on some tougher questions please.

Maybe the government could use that line in her indictment.

Interesting little project: just insert Hillarys' name in every instance where Hsus' is listed above. That is what she is capable of and far more to become POTUS.

The real question is will we allow her?

Posted by jt | September 22, 2007 4:32 PM

What's Hsu's legal exposure? Ten minutes after Hillary takes the oath of office, Norman will be a free man.

Posted by Mike B the Cajun | September 22, 2007 4:35 PM

Somebody please post SCOM* alerts on some of these posts... Now I gotta clean up the mess...

SCOM = Spit Coffee on Monitor

Posted by davod | September 23, 2007 7:58 AM

Maybe those coming out of the woodwork claiming the guy defrauded them are just really pissed off Democrat donors who do not want to be exposed for giving lots of money to distribute illegally.

If tru, do not excpect the Democrat salted Justice department to pursue the leads.

Posted by MagicalPat | September 23, 2007 11:41 AM

Right about now is when Hillary is missing Janet Reno the most.

Posted by kelleyjak | September 23, 2007 4:19 PM

Has anybody considered that maybe the Hsu "investors" were using Norman to get around the campaign contribution limits. They were not looking to get their money back...until the whole scheme was exposed. It was an approved by Hillary and DNC scheme to funnel money to Dems. Now they are crying foul to CYA. Naah...I'm probably just paranoid... Terry MacCullauf and crew would never stoop that low.

Posted by Dan S | September 24, 2007 8:50 AM


No way! You aren't suggesting that these folks aren't the epidome of integrity, are you?

I'm shocked!

Posted by KGP | September 24, 2007 8:07 PM

Firstly, I find your post extremely thought provoking. Although you say that you believe Clinton must have known about Hsu's past, I believe that her knowledge of Hsu's illegal scam is practically irrelevant. Even if she did not know, it shows she did not care enough to deeply investigate Hsu, who was one of her biggest fundraising contributors. Her motivation was to get the money for her campaign; the work and time to look deeper into Hsu's background was clouded by the necessity to get campaign funding. I think it is really important to see that getting the people's votes in America has become a business, teeming with unethical interactions. Pretend for a moment that Hsu did not fraud $23 million from investors and did not have a shady past, Hsu was in charge of getting money for Clinton from investor groups for her campaign. For decades and possibly centuries, candidates have been garnering money from politically charged factions that later require some sort of favor. The accepted American system of electing members of government is not conducive to a just and fair way of governing.
As you stated, Hsu had celebrity endorsements: "Tobey Maguire got caught up in the spider web as well. Stephen Spielberg's close encounters with Hsu convinced investors that Hsu was on the level." These celebrities, who have general public support and are respected figures helped Hsu raise money. They too did not really have an idea who they were helping. However, when it comes to politics, it is obvious that getting elected has become a business. The candidate hires a "professional" like Hsu, they "find" money in order to make their product sell, even if the product could be our next just and honorable president.

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