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September 12, 2007

Bumped: WSJ: Hsu Got Money By Stealing From Investors


Updated and Bumped [Slublog] - For two reasons. One, the photoshop. Every scandal needs a graphic and this one was fun. Two, this is a big story that I believe has the potential to smash the aura of inevitability that surrounds Clinton's campaign.

This post by Sweetness-Light deserves to be highlighted - the acceptance of dirty cash seems to be a pattern, not a quirk. And like S-L points out - this is the same campaign that demanded Obama return money from David Geffen because the producer had the audacity to call Clinton a liar.


The Wall Street Journal thinks it has figured out where Norman Hsu's money came from and it's not the Chinese.

Apparently, an investment fund run by Woodstock co-creator Joel Rosenman invested $40 million in an apparel company run by Hsu. The regular procedure would be for Hsu to take the money in the form of a loan and use it in China to produce high-quality fashion items which are then sold to U.S. merchants. The investment fund would then get a check from Hsu for the amount of the loan plus profit.

Rosenman says that Hsu's last two checks bounced and that there are 37 outstanding loan deals in progress. In an understatement to his investors, Rosenman wrote in a recent letter, "This development, coupled with recent revelations led us to believe that payments due on our recent transactions with [Hsu's company] and Hsu may not be made."

My question: If Hsu was using the loan money for contributions to Democrats, how did he think that wouldn't be discovered when it came time to pay back Rosenman and the investors?

[Incidentally, I keep posting on Hsu because this story fascinates me. Hsu's ability to juggle money in such a way as to fundraise for Democrats and lead the sweet life while simultaneously keeping himself out of prison is worthy of some examination.]

Ace's Addendum: I'm glad Gabriel posted this because I've been trying to figure out how to add anything to Allah's big run-down and haven't been able to.

One juicy bit: Hillary! says she'll return the money, but will immediately ask the "donors" to redonate it right back. One problem: Those donors are almost certainly illegal donors. They were given this money by Hsu, who got it from shady sources,specifically to donate to Hillary!, in order to evade campaign donation laws. And you can bet they were paid a percentage of this. No one breaks the law without getting a little somethin'-somethin' out of it.

So she's going to return the money to the corrupt Paw family and then just ask each member to re-donate the money they got from Hsu?

I'm a little skeptical of this idea that Rosenman was utterly bamboozled by Hsu. A forty million dollar loan to a hustler with no real businesses? He doesn't even seem to have had much of a shell operation working; basically he had some offices with names on the doors and that's it.

Someone just loans forty million dollars to such a person? With no due dilligence whatsoever? None?

Was this guy duped or was part of the game?

And shouldn't Hillary! at least wait to see if Rosenman can get some of his corruptly-obtained (supposedly) money back, before attempting to steal it again from him?

UPDATE (Gabe, again): Ace's mention of "due diligence" on the part of Rosenman's investment fund made me wonder if his investors have good suits against him. Do we have any securities lawyers in the audience?

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posted by Gabriel Malor at 08:05 PM

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