The Strange Case of Norman Hsu

The going suspicion in Washington has always been that politicians are not prone to ask too many questions of contributors as long as the checks keep coming. But never has a contributor’s hidden past blown up in a campaign’s face quite like it has for the Clinton campaign in the case of Norman Hsu.

The story began just two weeks ago when The Wall Street Journal noticed that one of Hillary Clinton’s biggest donors was a family that lived in a single story home near the San Francisco airport. The father, William Paw, was a mail carrier; his wife was a homemaker. And yet the couple and their children had given $45,000 to Clinton since 2005. The contributions closely, and suspiciously, matched the timing of those by a New York businessman named Norman Hsu. It’s illegal to reimburse individuals for making campaign contributions.

The next day, The Los Angeles Times made the story a scandal when it reported that Hsu had been convicted in California state court of stealing $1 million from investors in the early 90s. He’d failed to show at a sentencing hearing and been on the lam ever since.

After that story, he made his way back to California, but then promptly disappeared again after posting $2 million for bail. After sending out a “To Whom It May Concern” suicide note via FedEx to acquaintances and charitable organizations to whom he’d donated (like, ironically enough, The Innocence Project), he hopped on an Amtrak train to Chicago. On the train, he locked locked himself in a compartment. A passenger discovered him the following morning shirtless, wedged against the door in the fetal position. Pills were scattered over the floor. He was arrested after being transferred to a hospital in Colorado.

Despite all the scrutiny of Hsu, a number of mysteries remain, the main one being what Hsu was after, another being where all this money came from. Hsu managed to raise the staggering sum of $850,000 in just the last eight months for Clinton from some 260 contributors, and that’s not counting the money he’s delivered for a long list of other Democrats since 2004.

For his part, when first contacted by the Journal, he responded via email:

“I have NEVER asked a single favor from any politician or any charity group. If I am NOT asking favors, why do I have to cheat…I’ve asked friends and colleagues of mine to give money out of their own pockets and sometimes they have agreed.”

Hsu was “shocked, sad and angry that you have chosen to pick on me for NO reason,” he wrote.

It’s proven difficult to stop picking on Hsu. Yesterday the Journal reported that he owes investors some $40 million for a deal to manufacture apparel in China for Gucci, Prada and other private labels. Hsu, in fact, a graduate of Berkeley and the University of Pennsylvania’s Wharton School, seems adept at getting people (even sophisticated investors) to trust him with large sums of money. In this case, the chief victim was Joel Rosenman, one of the creators of Woodstock and the owner of a Madison Avenue investment firm. It appears to be a repeat of Hsu’s crime in the early 90’s: he lured investors in with promises of big bucks from China (in that case, the product was latex gloves), even delivering on early, smaller deals before failing to come through once investors were in waist deep.

Now the FBI has opened preliminary inquiries into possible fraud and whether Hsu broke the law by reimbursing contributors. Clinton has returned the $850,000, starting a chain reaction for other Dems to give back their Hsu money.

So why didn’t the Clinton campaign realize that their biggest contributor was a crook? They say that they did check him out, but the information about his prior arrest didn’t come up on their search of public databases. The reason? Their search didn’t “include the two middle names Hsu used in the California case.” When a California businessman told them that Hsu was engaged “in a risky investment scheme and was using Hillary Clinton’s name ‘in vain’ to solicit people for his business proposition,” the campaign ran another check — and came up with nothing again.

As a result, the Clinton campaign says that they’ll now do criminal background checks on major donors. This time around, there might be a special emphasis on middle names.

Note: Clinton has returned contributions given through Hsu, but left the door open for contributors to give it right back.