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IRS – Former Political Fundraiser Norman Hsu Sentenced To 292 Months Prioson for Ponzi Scheme And Finance Crimes

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PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that former political
fundraiser NORMAN HSU was sentenced today to 292 months in prison
for operating an $80 million Ponzi scheme and violating federal
campaign finance laws. HSU pleaded guilty on May 7, 2009, in
Manhattan federal court to Counts One through Ten of the
Superseding Indictment. HSU was then convicted of four counts of
campaign finance fraud on May 19, 2009, following a six-day jury
trial. United States District Judge VICTOR MARRERO imposed the
sentence today in Manhattan federal court.

As established by the evidence at trial and statements
made during today’s sentencing proceeding:

HSU, 58, of New York, New York, was the Managing
Director of two companies, Components Ltd. and Next Components
Ltd. HSU solicited investments in the companies by promising
guaranteed short-term, high returns. HSU claimed that companies
would generate funds to pay these high returns by providing
short-term financing to other businesses. After receiving money
from victim investors, HSU, for a time, paid interest and
returned principal as promised. Believing HSU to be trustworthy
and the companies he controlled to be legitimate and based on
HSU’s public relationships with prominent political figures,
victims often agreed to roll over their invested funds into new
investments with HSU; to invest more money with HSU; and to
recruit friends to invest with HSU. In reality, money HSU
returned to earlier investors was paid with money HSU received
from subsequent investors. From 2000 through August 2007, HSU
convinced victims to invest at least $100 million in his
fraudulent scheme. In the end, after making some payments
intended to perpetuate the scheme, HSU swindled his victims out
of at least $80 million.

In addition to the wire and mail fraud charges, HSU was
found guilty by a Manhattan federal jury of four counts of
violating the Federal Election Campaign Act by making
contributions to various political campaigns in the names of
others. The evidence at trial established that in 2005, 2006,
and 2007, HSU asked other individuals to make contributions,
totaling more than $25,000 for each calendar year, to designated
federal candidates. HSU then directly reimbursed the individuals
for the political contributions they had made on his behalf.
HSU was sentenced to 240 months in prison for the wire
and mail fraud charges and 52 months in prison, to run
consecutively to the 240-month term, for the campaign finance
fraud charges.

In imposing HSU’s sentence, Judge MARRERO stated:
“Hsu’s dishonest use of political campaigns to perpetuate his
fraud strikes at the very core of our democracy.” Judge MARRERO
also sentenced HSU to three years of supervised release and
extended the time for ruling on an order of restitution for 90
days from the date of sentencing.

“Norman Hsu betrayed the trust of his victims by
stealing their money with false promises of fake returns in order
to finance a luxurious lifestyle,” said United States Attorney
PREET BHARARA. “He broke federal campaign finance laws to pump
up his public profile and bolster his victims’ belief in his
phony investment program. Today’s sentence underscores our
commitment to stop swindlers like Hsu in their tracks and bring
them to the bar of justice.”

Mr. BHARARA praised the outstanding investigative
efforts of the Federal Bureau of Investigation.
If you believe you are a victim of the Components Ltd.
and Next Components Ltd. investment fraud, including a victim
entitled to restitution, and you wish to provide information to
law enforcement and/or receive notice of future developments in
the case or additional information, please contact Wendy
Olsen-Clancy, the Victim Witness Coordinator at the United States
Attorney’s Office for the Southern District of New York, at
(866)874-8900, or Wendy.Olsen@usdoj.gov. For additional
information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html on
the Internet.

This prosecution is being handled by the Office’s
Public Corruption Unit. Assistant United States Attorneys
ALEXANDER J. WILLSCHER and RUA M. KELLY are in charge of the
prosecution.
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