Hsu, 56, burst from nowhere three years ago to become a fundraising heavyweight, bringing in more than $1.2 million for Clinton and other Democrats. But his public fall from grace led numerous campaigns to return his direct donations. Until now, most had not returned money from his network of donors.
Hsu's case has become a spectacle in the last two weeks. At first he explained his fugitive status as a misunderstanding; he then failed to show up at a San Mateo County hearing. He was rearrested last week in Grand Junction, Colo., where he was hospitalized after acting erratically on an eastbound train.
In recent days, the FBI has been talking to participants in a current Hsu business venture, questioning whether it was a legitimate bridge-loan investment pool, as those involved were told, or a Ponzi scheme similar to the one Hsu ran in the past.
The Clinton campaign decided not to wait for details about the venture to emerge.
"We have decided out of an abundance of caution to return the money he raised for our campaign," campaign spokesman Howard Wolfson said. Wolfson refused to provide a list of the 260 donors who would get their money back.
Monday's announcement marks the latest in a series of quick reversals by the Clinton campaign, which first refused to return any Hsu-related contributions after a Wall Street Journal article suggested some were questionable. Then, learning that Hsu was considered a fugitive, the Clinton campaign announced it would return $23,000 contributed personally by Hsu.
Beyond his own contributions, Hsu was valuable as a so-called bundler, a person who collects checks from others and provides a stack of them to candidates. Bundlers have become especially important since recent campaign finance reform laws limited the amount a single individual can contribute to political causes.
Nearly all major presidential campaigns rely on bundlers, and most do the same minimal background checks that the Clinton campaign had employed.
Generally, campaign officials said, those background checks involve a campaign worker running the name of a major donor or bundler through a public database such as LexisNexis, which provides access to newspaper, magazine and journal articles, as well as congressional transcripts and television broadcasts.
Questions about Hsu were first raised in June by an Irvine businessman, Jack Cassidy, who contacted the Clinton campaign and party officials about his suspicions, which he had heard about through a friend.
