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Hsu’s associates fell for his charm -- and his illusions

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Last year, to celebrate New York Sen. Hillary Rodham Clinton’s reelection victory, Norman Hsu capped an amazingly successful year as a Democratic fundraiser by treating members of her campaign staff to several days at the glitzy Mandalay Bay hotel and casino in Las Vegas, complete with free show tickets and dinners at posh restaurants.

Among Hsu’s guests was Patti Solis Doyle, who now heads Clinton’s presidential campaign and has long been one of Clinton’s most trusted advisors.

It was all legal and, Clinton campaign officials say, was typical of Hsu, the kind of thoughtful gesture for which they considered Hsu a treasure.

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First and foremost, he always came through when contributions were needed, an eye-popping $850,000 -- all of which Clinton’s presidential campaign is now returning. The money was bundled together from roughly 260 individual donors, whom Hsu brought into the Clinton fold.

Clinton’s campaign spokesman, Howard Wolfson, emphasized that Hsu never asked for any legislative favors from the senator in return.

It was only recently that serious doubts began to emerge. “Now we realize that this was all part of his persona,” a senior campaign aide said, requesting anonymity because he was not authorized to discuss details of the case.

Hsu’s business activity “was reinforced by his efforts in politics and philanthropy,” the aide said. “He seemed like a generous guy, but only later did you realize what he was up to.”

The Clinton campaign was not alone. Dozens of politicians -- along with clusters of private investors from Orange County and the Bay Area to New York -- tell much the same story about the man who now sits in a Colorado jail, facing new investigations by local and federal authorities.

For all who did business with Hsu, the pattern is remarkably consistent: an initial attraction to a likable individual who offered the moon, followed by disillusionment and feelings of betrayal -- sometimes tinged with embarrassment at having been gullible.

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Many questions remain about Hsu’s often murky career. How could he rise to such heights, given that he had been a fugitive on a felony grand-theft charge since 1992? Why did no one ever dig into the background of a benefactor who seemed to emerge from nowhere? Exactly where did the hundreds of thousands of dollars that he showered on politicians come from?

And how was Hsu able to continue organizing multimillion-dollar financial schemes despite a trail of business failures and disappointed, often accusatory, investors? After all, he had no obvious source of income and had gone bankrupt twice.

An examination of court documents and financial reports -- as well as interviews with government officials, business associates and others who dealt with Hsu -- suggests that the people who say he deceived them were lulled by a remarkable combination of personality traits and shrewdly constructed illusions.

With a gregarious if self-effacing demeanor, Hsu had a knack for winning friends and inspiring confidence. Classmates at UC Berkeley remember him as extremely popular. A manager at the Red Square bar at Mandalay Bay, where Hsu took the Clinton aides, said he was known as “a very friendly guy” who was nice to the staff.

A slight figure in exquisite suits, Hsu spoke softly and exuded an air of unthreatening success, associates say.

And beginning sometime around 2003, Hsu seemed to hit on a system for further leveraging those personal assets.

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By living on a lavish scale, he convinced associates that he was backed by great personal wealth. He also made a point of doing favors. He would provide hard-to-get dinner reservations at exclusive restaurants, or bestow elegant gifts on associates. Clinton confidant Solis Doyle got a coveted, and pricey, designer handbag -- a gift that made her so uncomfortable she returned it.

Even as he was ingratiating himself, Hsu used his ready access to the world of celebrity politics to enhance his credibility with potential business investors. And some investors said he or his associates pressured them to make campaign contributions, further cementing Hsu’s standing in the political world.

Several investors admitted they were agog when Hsu took them to fundraising parties with the likes of Barbra Streisand and Steven Spielberg.

“This guy took us to huge events,” one woman said. “We thought he was for real.”

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Friends lost money

In the late 1980s, Hsu began promoting an investment syndicate involving apartments. A group of former Berkeley classmates and other friends invested up to $50,000 each.

As some of them remember Hsu, he was an appealing figure with a poignant life story. An emigre from Hong Kong, he was apparently alone in the world after his parents died, yet he showed enough pluck to graduate from Berkeley in 1973 and earn an MBA from the Wharton business school eight years later.

One former classmate who invested in the apartment syndicate said he had considered Hsu “an orphan who needed to be taken care of.” The classmate, like others who participated in Hsu’s ventures, refused to discuss it on the record for fear that the association with Hsu might damage his reputation.

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A few years later, the investors learned that all their money was gone. Some thought Hsu -- who in fact may not have been an orphan at all -- had abused their trust.

A similar scheme involving a nonexistent contract to sell latex gloves left another set of investors empty-handed, leading to fraud charges against Hsu in 1991. He pleaded no contest to felony grand theft and to accept up to three years in prison. But instead of appearing for a 1992 sentencing hearing, Hsu disappeared, apparently returning to his native Hong Kong.

Sometime later in the 1990s, he returned to the United States and went back to hatching investment deals. In 2003, he also began delivering thousands of dollars in campaign contributions to Democrats.

After The Times identified the man who had become one of the Democratic Party’s most valued fundraisers as a fugitive, Hsu turned himself in and was released on $2 million bail. Then he disappeared again.

He was arrested Sept. 6 in Grand Junction, Colo., after he became ill on an eastbound train and was taken to a hospital.

A letter Hsu sent by FedEx the day he disappeared suggested he may have planned to commit suicide.

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‘Great while it lasted’

Long before he surrendered last month in San Mateo County on the original grand theft charge, Hsu had greatly expanded his operation. The scale of his ventures was suggested by a telephone call that Pete Hautzinger, the district attorney for Mesa County, Colo., received about a week ago at his office in Grand Junction.

According to Hautzinger, the caller identified himself as an Orange County resident with a story to tell about Hsu. The caller claimed to be a victim of a scheme that involved at least $33 million and a pool of as many as 50 investors.

Orange County apparently was just one of Hsu’s focal points. By 2003, records and interviews show, he was drawing investors into new ventures from coast to coast.

A New York investment fund has told authorities that it put $40 million into a Hsu venture on the promise of a 40% return.

In Orange County, the Bay Area, Florida, New York’s Long Island and elsewhere, scores of other people put millions of dollars into investment pools they were told would finance “bridge” loans to companies needing short-term infusions of cash. Some said Hsu told them their money went to Chinese apparel makers.

Investors say they were given almost no details about the loans they were supposedly backing or the companies involved. But all were promised -- and, for a time, received -- hefty profits. Hsu’s deals matured in as little as 90 days and paid 6% or more.

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“It was sure great while it lasted,” one investor said.

Now elation has given way to panic as payments on the investments have abruptly stopped. “People are going to lose their homes, their cars,” one woman said. “There are going to be bankruptcies.”

In New York, the Manhattan district attorney’s office is investigating whether funds were misappropriated in Hsu deals there, a development first reported by the Wall Street Journal.

Seth Rosenberg, a lawyer who represents the New York investment fund that stands to lose as much as $40 million, sidestepped the question of whether Hsu’s deals ever had any substance.

“Do we know if there were actual investments or the whole thing was a fraud? I don’t think it would be appropriate to answer that,” Rosenberg said.

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Currying favor

As they look back, Clinton staffers say Hsu’s efforts to ingratiate himself seem painfully, embarrassingly obvious. In addition to the post-victory trip to Las Vegas in November 2006 for Solis Doyle, two junior staffers and a New York-based fundraiser, Hsu provided a hotel stay in Las Vegas for two other campaign workers in April 2006.

While at the Mandalay Bay, Hsu took at least some of his guests to a favorite bar, Red Square. It features a huge statue of a decapitated Lenin at the entrance, and the top of the bar is sheathed in ice to maintain the chill of the caviar and exclusive vodkas.

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Clinton aides believed Hsu had gotten their rooms on a complimentary basis because he was a frequent visitor to Mandalay Bay, the aides said.

Hsu curried favor through more highbrow efforts as well. He helped fund a Robert F. Kennedy memorial dinner honoring former President Clinton. He gave $75,000 to the University of Arkansas Clinton School of Public Service and $30,000 to the Clinton Global Initiative. Hsu’s donations to the school and initiative have been returned, a campaign spokesman said.

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tom.hamburger@latimes.com

robin.fields@latimes.com

chuck.neubauer@latimes.com

dan.morain@latimes.com

richard.cooper@latimes.com

Times special correspondents Claudia Blume in Hong Kong and Mike Saccone in Grand Junction and Times researcher Janet Lundblad in Los Angeles contributed to this report.

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This article was reported by Times staff writers Tom

Hamburger, Robin Fields and Chuck Neubauer in Washington and Dan Morain

in Sacramento.

It was written by Times staff writer Richard C. Cooper.

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