Hsu Also Accused of Using Straw Donors to Make
Illegal Federal Campaign Contributions
MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, and MARK J. MERSHON, the Assistant
Director-in-Charge of the New York Office of the Federal Bureau
of Investigation (“FBI”), announced today the unsealing of
federal charges against NORMAN HSU, 56, for perpetrating a
massive Ponzi scheme that defrauded victims across the United
States of over $60 million. 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 Complaint 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 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, contribute additional, larger sums of money
to the scheme, or recruit friends to invest with HSU. In
reality, however, the Companies were merely vehicles for HSU’s
Ponzi scheme, in which money owed as returns to older investors
was paid with money received from newer investors, and HSU never
invested the money in the manner he represented to his victims.
In the end, HSU defrauded his victims out of more than $60
million.
In an effort to raise his public profile and thereby
convince more victims to invest in his fraudulent scheme, HSU
pressured investors to contribute tens of thousands of dollars to
various candidates for President of the United States, the United
States Senate, and the United States House of Representatives.
HSU made victims believe that failure to make political
contributions to candidates he supported would jeopardize their
investment relationship with him, and put their money at risk.
HSU also violated the Federal Election Campaign Act by
making contributions to various political campaigns in the names
of others. Specifically, in 2006, HSU asked two other
individuals to make contributions, totaling more than $20,000
each, to designated federal candidates. HSU then reimbursed
these two individuals for the political contributions they had
made on his behalf.
During a court-authorized search of the items seized
from HSU at the time of his arrest, FBI agents recovered
extensive evidence confirming HSU’s role in the charged crimes,
including, among other things: (1) thousands of dollars in cash;
(2) checkbooks for bank accounts used to carry out the fraudulent
scheme; (3) hundreds of thousands of dollars worth of checks from
HSU’s victims; (4) bank receipts reflecting millions of dollars
worth of financial transactions conducted by HSU; (5) handwritten
ledgers reflecting specific amounts of campaign
contributions to be made by specific victims on behalf of various
candidates for elected federal office; (6) a Cartier watch and
Tiffany jewelry; and (7) receipts reflecting HSU’s travel
throughout the United States via a corporate jet service.
HSU is charged in the Complaint with one count each of
mail fraud and wire fraud, and one count of violating the Federal
Election Campaign Act. If convicted, HSU faces maximum penalties
of 20 years’ imprisonment on the mail fraud charge, 20 years’
imprisonment on the wire fraud charge, and 5 years’ imprisonment
on the federal campaign finance charge. 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 on the
campaign finance crime.
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Mr. GARCIA praised the work of the FBI in the
investigation of this case. He added that the investigation is
continuing.
This prosecution is being handled by the Office’s
Public Corruption Unit. Assistant United States Attorneys
BOYD M. JOHNSON III, KATHERINE A. LEMIRE, ALEXANDER J. WILLSCHER,
and RUA M. KELLY are in charge of the prosecution.
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 Wendy.Olsen@usdoj.gov. For additional
information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html on
the Internet.
The charges contained in the Complaint are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.
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