NEW YORK — The U.S. attorney here on Thursday charged enigmatic Democratic fundraiser Norman Hsu with masterminding a massive Ponzi scheme that defrauded investors from New York to California out of more than $60 million, while pressing many to make campaign contributions to Sen. Hillary Rodham Clinton and other politicians.
The case, which came together with surprising speed, includes Hsu's confession to the FBI that his investment deals were "phony," officials said in unsealing the charges.
As Hsu's apparent scam has unraveled, it has left perhaps hundreds of investors across the country in a panic. A group in the New York area said it lost at least $40 million. Hsu reportedly took in millions more from about 60 investors in Orange County.
One Orange County investor said that he gave Hsu $90,000 from personal savings and his pension program, although he received almost no information about where his money was going.
"That's how foolish I was," he said, declining to speak on the record because of the continuing investigation.
The federal charges were announced on the same day that Hsu was extradited from Grand Junction, Colo., to California on a fraud charge from which he fled 15 years ago. The once-dapper 56-year-old Hong Kong native wore a black long-sleeved T-shirt and jeans as sheriff's deputies turned him over to California authorities. He was put on a plane in shackles
Now the 1991 case -- in which Hsu fleeced investors in a similar scheme -- seems minor in comparison to the federal allegations.
U.S. Atty. Michael J. Garcia of the Southern District of New York unsealed a 16-page complaint Thursday charging Hsu with mail fraud, wire fraud and violating the Federal Election Campaign Act by reimbursing some associates for their political donations. If convicted, he could face up to 45 years in prison.
"This case is about greed," the New York prosecutor said in a news conference. Hsu sought financial gain, he said, and contrived "to purchase a place on the celebrity campaign circuit."
Although prosecutors declined to specify the exact locations or provide names of Hsu's victims, the Los Angeles Times has traced his alleged pyramid-style scheme to clusters of friends and acquaintances around New York and the Bay Area, as well as Orange County.
In each area, investors say Hsu lured them with promises of a high rate of return on deals to provide short-term financing to apparel manufacturers and other businesses.
