Posted on 09/26/2007 4:44:04 PM PDT by NormsRevenge
Even as he sits in the suburban Bay Area jail that once housed condemned killer Scott Peterson, Norman Hsu is still a wanted man.
Jilted investors who sunk $63 million into Hsu's alleged Ponzi schemes are competing for whatever financial crumbs they can shake from the disgraced Democratic fundraiser. At the same time, state and federal prosecutors are wrangling over where he should be jailed.
"We have the body," California Deputy Attorney General Ronald Smetana argued last week outside San Mateo Superior Court after a shackled Hsu was ordered held without bail.
Hsu's fall from top-tier fundraiser has been swift: He turned himself in on a California fraud case last month after 15 years as a fugitive, then skipped the next court hearing, fled on an Amtrak train and was arrested at a Colorado hospital after attempting suicide on the train.
Now the man who once fashioned himself as a wealthy businessman capable of raising large amounts of campaign cash isn't wanted by politicians, but in the courts. Candidates are scurrying to return Hsu's money and distance themselves from him.
On Wednesday, a state judge in Manhattan refused to freeze the contributions Hsu made to several New York politicians, including Sen. Hillary Rodham Clinton, Gov. Eliot Spitzer and Attorney General Andrew Cuomo because their lawyers were not in court. But the judge did freeze Hsu's bank accounts and sealed his Manhattan apartment at the request of investors.
Earlier this week, state prosecutors said they intended to keep Hsu in the Redwood City jail on the fraud charges until he is sentenced in the 1991 case that alleged he stole $1 million from family, friends and others who thought they were investing in a clothing deal. Hsu pleaded no contest to grand theft in 1992 and agreed to a maximum prison term of three years. He fled California before he was formally sentenced. Investigators believe he went to Hong Kong.
But getting Hsu sentenced to state prison may take some time.
Hsu's defense attorney, James Brosnahan, has said he intends to exploit a California law that requires the same judge who takes a defendant's plea to mete out the sentence. The judge who took Hsu's plea has since retired.
Brosnahan also has said he will seek to undo the plea and force prosecutors back to square one.
Smetana said there's scant legal precedent to help guide a judge in deciding whether to let Hsu out of his more than decade old plea.
Smetana said he will argue it's simply not fair to let Hsu benefit from absconding from justice for 15 years.
Hsu is due back in court in Redwood City on Friday.
Federal prosecutors in New York, where Hsu is also charged with fraud, have said they will seek Hsu's transfer to federal custody. But state officials insisted he will remain in California for a while.
"The normal rule is if you have the body, you have primary custody," said Rory Little, a former federal prosecutor who is now a law professor at the University of California, San Francisco. "The state has primary custody."
Little said typically prosecutors try to informally negotiate who will first prosecute a person facing charges in both jurisdictions. Failing a negotiated resolution, Little said it appears California has the advantage.
Smetana said he has been talking to federal prosecutors, but declined to elaborate on those conversations. A spokeswoman for the U.S. attorney's office in Manhattan declined to comment.
The two sides are also dueling over the $2 million Hsu used to post bond when he turned himself in to California authorities on Aug. 31. A judge ordered the money forfeited when Hsu skipped a Sept. 5 court appearance.
Now that he's been found and jailed, Hsu wants his bail money back. But state prosecutors are fighting to keep the money with the government so it can be used to compensate victims of Hsu's early 1990s Ponzi scam.
Hsu's investors who are suing to recover their alleged losses are actually rooting for Hsu to win that battle for the bail money. They say it will be far easier to compel Hsu to fork over the money than the government.
"Once the state has its hands on the money, it's not really interested really in letting go of it," said Ronald Minkoff, a New York lawyer representing the East Coast investors who claim $40 million in losses.
Minkoff is also going after the hefty retainer Hsu presumably paid Brosnahan, his high-priced Silicon Valley criminal defense attorney.
Many of the investors on both coasts who claim they were duped by Hsu are pursuing the same assets. The problem is, there may not be much left to divvy out.
According the FBI, there's about $83,000 left in one of Hsu's bank accounts. He rented his luxury Manhattan apartment, and when he was arrested he was carrying about $8,000 in cash, the FBI says.
"To a degree, we are competitors," said William Bollard, the Irvine attorney representing a group of Orange County investors. "There is a little bit of a race to the finish line."
Rosenman is as dirty as Hsu....maybe DIRTIER!
The “$63 million” figure continues to puzzle me. Nothing in the case has yet suggested where funds of that magnitude could have gone. The reported levels of Hsu’s political donations + “lavish lifestyle” do not begin to hint at how he could have gone through $63 million. How much did he repay to various smaller investors to keep them on the hook for future schemes? I would love to see a plausible analysis of the inflow and outflow of his funds..... so far nothing adds up.
The $8k is cash Hsu had on him when arrested. Evidently the judge agreed to freeze a US based account with $83K in it, but there are numerous other accounts that were inexplicably not frozen, including one on a Phillipine bank.
One explanation for that would be that the other accounts were already emptied/closed. Reports of a $6M balance in one account are, I believe, based on balance statements Hsu had on him when captured, and not necessarily on current confirmation from the bank.
Pure supposition, but I don't think the payoffs to the two investment funds bounced because the supposed Ponzi scheme just then collapsed under its own weight. I'm thinking that his handlers yanked the big money when the first WSJ article came out.
He evidently had enough to pay the $2M bail, but that was peanuts compared to the $68M+ he'd collected from the investors and not yet paid off on. He could have been maintaining his own "fersure" account apart from the ones dedicated to the main operation with his handlers.
It strains all logic to imagine that the WSJ's article about the Paws coincidentally came out at the precise time that the Ponzi scheme collapsed. It makes much more sense that the WSJ article was the precipitating event. The handlers got spooked and pulled the money, leaving Hsu to hang out to dry.
Correction: not post 19. Post 23.
hmmmmmmm.....this ONION has soooo damn many layers, I’ll bet NO one will be able to figure it out.....and Hillary will escape as the VICTIM once again!
Flip Pidot at suitablyflip.com is reporting that Winkle Paw was an authorized signatory on Hsu’s accounts. And no one has seen him for 3 weeks.
He posits an interesting what-if: What if Paw was on the train with Hsu?
Hsu HAD to have someone with him...how else did he get aroung that day??
It appears that those political donation funds were not donations at all. They were actually payments for future services rendered. Too bad some of the 'investors' may not have known that.
Up through 2005, Paw also listed the (legitimate) investment management firm Franklin Templeton as his employer on more than two dozen filings, where he was also variably a "project analyst" or a "business analyst" (never making it to CEO though).
Don't know if Paw was a legitimate employee of Franklin Templeton, but check out the recent performance of the Franklin Templeton China Investment fund.
'To the Moon' Alice.
Stupid Hsu. Should have invested the money in China. Looks like a 100 % return in just over 1 year.
Holy smoke!! I just checked the net and exactly TWO (including Flip) blogs have picked this up. I can’t find ANY news stories on it yet!! This guy has total access to ALL of Hsu’s money? OMG!
Why isn’t there a warrant out for Winkle Paw? Did he disappear on the same day? It’ll be VERY interesting to see where this story goes from here.
I wonder how and from where WSJ learned about Paws and Hsu's "prior" history and illegal campaign contributions - at that point there was not even a hint of any "Ponzi scheme".
Hsu went to have a meeting with Waters after the articles assuring him that everything was going to be OK, not a behavior of "Ponzi scheme" perpetrator who would take the money and ran. Rosenman wouldn't put up $2 milllion for Hsu's original bail - if he thought his $40 million investment was scammed from him and in jeopardy, he would rush to authorities to freeze Hsu's accounts.
The problem that I see is that the story’s focus is being diverted - from original WSJ focus on illegal campaign financing scheme for which the money was laundered through Norman’s “enterprise” and how he got to be in such elite political company from virtual unknown just before “dupe millionaires” were clamoring to “loan” him money at exorbitant profits without checking out his business and personal history, and who were the real financiers of the scheme - into the story of Norman Hsu’s “massive Ponzi scheme” and its numerous victims.
Political / campaign story and Hillary’s (and Bill’s) moneyed friends are being gradually left out of the story and she and other Democrats are being turned into “victims” of Hsu’s illegal schemes.
Ed Rendell has announced that he will be returning Winkle Paw’s donation too. If he smells fishy to Rendell, just imagine how bad in normal nasal passages!
Rendell is also returning money from one Paul Su. Not, I trust, pronounced “shoo.”
The boy named Su is (su-prise!) another associate of Hsu.
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