NEW YORK – Democratic campaign contributor Norman Hsu, already cooling his heels in a California jail cell, was indicted in Manhattan on Tuesday on charges he stole millions of dollars from investors and made illegal campaign contributions to various candidates, including Sen. Hillary Clinton.

A fifteen count indictment unsealed Tuesday and released by Manhattan U.S. Attorney Michael Garcia accused Hsu of swindling $20 million from people who bought into various short term investments that allegedly were nothing more than a Ponzi scheme in which old investors were paid off by money from newer clients and not from any gains in value or interest.

As part of its case, the federal government is seeking to seize millions of dollars in assets from Hsu, including a saxophone autographed by a “former President of the United States,” apparently referring to an instrument Bill Clinton once used which Hsu reportedly purchased at a charity benefit for $26,000.

The indictment, which closely tracked an earlier federal criminal felony complaint lodged against Hsu in September, accused the Manhattan businessman of election fraud and forcing his investors to contribute thousands of dollars to various candidates.

As in the September criminal charges, none of the political campaigns which allegedly received illegal contributions were identified in Tuesday’s indictment except to say they involved candidates for the offices of the U.S. President, Senate and House of Representatives.


However, in September, Garcia, when pressed by reporters, said that the Clinton campaign was one involved. He said the Clinton group had cooperated in the investigation. In September, the campaign said $850,000 in contributions from Hsu had been returned.

Asked if the approaching Iowa presidential caucus affected the timing of the indictment, a spokeswoman for Garcia said “no comment” but noted Garcia has in the past said political considerations play no role in investigations.


Over $60 million was put by victims from 2000 to 2007 into Hsu’s various investments, largely through two companies he operated that ostensibly provided short term financing to businesses, said prosecutors. But as happens in many Ponzi schemes, the money didn’t earn the promised high rates of return, said the indictment. Instead, Hsu for a time paid promised interest and principal to some investors but then simply paid money owed to the earlier investors with money received from newer ones, the indictment charged.

To buttress his stature and public profile so that he could entice more investors, Hsu allegedly pressured some victims to make individual contributions to various candidates who he supported, said Garcia in a prepared statement. Hsu was also accused of making campaign contributions of over $25,000 a year in the names of other donors from 2005 to 2007, according to Garcia, who added that Hsu reimbursed the alleged straw donors.

Tuesday’s indictment caps what has been a terrible year for the embattled Hsu. Beset by lawsuits from investors, Hsu disappeared for a time until he was arrested on an Amtrak train in Colorado on Sept. 6. After his arrest, Hsu gave a confession to the FBI in which he admitted using two companies for “phony deals,” according to court papers. He remains in custody in California where he faces a sentence of three years on unrelated state grand theft charges.

No arraignment information was available yesterday. James Brosnahan, Hsu’s lawyer in San Francisco, didn’t return a telephone call for comment.

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