Prosecutors say Hsu used contributions to promote a Ponzi Scheme

Posted Sep 21st 2007 1:05PM by Zac Bissonnette
Filed under: Rumors, Law, Scandals

Prosecutors are now saying that disgraced former Democratic fund-raiser Norman Hsu pressured high-profile figures to make donations through him in order to boost his public persona -- Then he used the facade of credibility this constructed to to fund a Ponzi scheme that bilked investors out of millions.

Hsu also allegedly gave people money to make donations, which is a crime. According to The Wall Street Journal (subscription required). "In one case, the complaint says, an investor donated $32,000 in 2006 to multiple campaigns, and Mr. Hsu agreed to reimburse the person. Another investor donated $28,600 in 2006 to multiple candidates, and Mr. Hsu wrote reimbursement checks, the complaint says."

Sam E. Antar, the CFO behind the infamous Crazy Eddie Fraud and now the author of the blog White Collar Fraud, explained how fraudsters construct images to coax investors into trusting them:

Fraudsters like myself, we build a whole world of respectability around ourselves. I gave money to a lot of charities while I was committing my fraud. My cousin Eddie, he gave a lot of money with his stolen money to a lot of charities. He gave a lot of money to politicians. He built wings on to hospitals and built a big aura of respectability around him and people were in awe of him. This is what fraudsters do.

In a recent post, Gary Weiss makes the case that Overstock.com CEO Patrick Byrne is doing something similar with his support for a school voucher program.

Tags: Hsu, inthenews, Ponzi Scheme, PonziScheme