US Attorney Charges Norman Hsu For Massive Fraud Scheme Over Campaign Donations

LAWFUEL – Law News Daily – Hsu Also Charged With Using Straw Donors to Make Illegal Federal Campaign Contributions Over A Three-Year Period
MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced today the unsealing of a
fifteen-count Indictment against NORMAN HSU, 56, for perpetrating
a massive scheme that defrauded investors across the United
States. HSU also was charged with violating federal campaign
finance laws by making contributions to various political
candidates in the names of others.

According to the Indictment unsealed earlier today in
Manhattan federal court:

At all times relevant to the charges, HSU operated and
was the Managing Director of two companies, Components Ltd. and
Next Components Ltd. (the “Companies”), which purported to
provide investment programs that extended short-term financing to
businesses. HSU recruited victims by guaranteeing them high
rates of return on short-term investments. After receiving money
from investors, HSU, for a time, repaid both the victims’
interest and principal as promised. Believing HSU to be
trustworthy and the Companies to be legitimate and potentially
profitable, victims often agreed to roll over their invested
funds into new investments with HSU, invest more money with HSU,
and recruit friends to invest with HSU. In reality, however, the
Companies were merely vehicles for HSU’s scheme, in which money
owed as returns to older investors was paid with money received
from newer investors. From 2000 through August 2007, HSU
convinced his victims to invest at least $60 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 $20 million.

In an effort to raise his public profile and thereby
convince more victims to invest in his fraudulent scheme, HSU
pressured many of his victims to individually contribute
thousands of dollars to various candidates for President of the
United States, the United States Senate, and the United States
House of Representatives whom HSU supported. HSU allegedly made
direct and implied threats to these victims, leading them to
believe that their failure to make the required political
contributions would adversely impact their ongoing investment
relationships with HSU.

In addition, HSU violated the Federal Election Campaign
Act by making contributions to various political campaigns in the
names of others. Specifically, 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 is charged in the Indictment with six counts of
mail fraud, six counts of wire fraud, and three counts of
violating the Federal Election Campaign Act. If convicted, HSU
faces maximum penalties of 20 years in prison on each of the mail
and wire fraud charges, and 5 years on each of the federal
campaign finance charges. HSU also faces a maximum fine of twice
the gross gain or loss resulting from his financial fraud crimes,
and an additional maximum fine of $250,000 for the campaign
finance crimes.

In addition, the Indictment contains an allegation
seeking the forfeiture of all property that constitutes the
proceeds traceable to the commission of HSU’s mail and wire fraud
offenses, including at least $20 million — obtained as a result
of those offenses.

Mr. GARCIA praised the work of the FBI in the
investigation of this case, and added that the investigation is
continuing.

If you believe you were a victim of these crimes,
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 [email protected] For additional
information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html on
the Internet.

HSU is in custody in California on unrelated charges
and is expected to be produced in New York in the coming weeks.
The case has been assigned to United States District Judge VICTOR
MARRERO.

This prosecution is being handled by the Office’s
Public Corruption Unit. Assistant United States Attorneys
KATHERINE A. LEMIRE, ALEXANDER J. WILLSCHER, and RUA M. KELLY are
in charge of the prosecution.
The charges contained in the Indictment are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.
07-296

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