Hsu associates touted his connections
Democratic fundraiser Norman Hsu reveled in his role as friend to Bill and Hillary Clinton.
As Hsu raised more than $800,000 for Sen. Hillary Rodham Clinton’s presidential campaign, the couple praised him at star-studded events and showered him with thank-you notes. Hsu often wore a bomber jacket that bore the presidential seal, a gift from the former president, he told associates.
But Hsu’s turn in the political limelight was about more than ego gratification.
Documents obtained by the Los Angeles Times show how Hsu’s business associates traded on his connections -- going so far as to claim that former President Clinton was a Hsu client -- to lure investors into a scheme that took in tens of millions of dollars nationwide.
A marketing brochure distributed by an Orange County firm to attract investors to Hsu’s business claimed the 56-year-old Hong Kong native’s “extensive political investment community includes former President Bill Clinton, who continues to invest to this day.”
Howard Wolfson, a Clinton spokesman, denied that the former president had invested with Hsu. And Sen. Clinton’s financial disclosure statements show no investments or income from Hsu for her or her husband.
Still, as a marketing tactic, the claim may have worked all too well: A Southern California couple recently filed a lawsuit saying they lost more than $3 million in a Hsu-run Ponzi scheme -- based in part on the brochure’s promises.
In September, federal prosecutors charged Hsu, saying he defrauded investors out of $60 million and violated federal election laws for reimbursing political donors for contributions made in their names.
Investigators and investors have alleged that Hsu used his status as an elite Democratic Party fundraiser to give the appearance of legitimacy to his investment scheme, which promised big profits from short-term bridge loans.
“Hsu’s political campaign fundraising activities were part of an effort to raise his profile and induce more people to invest in the Ponzi scheme,” FBI Special Agent David A. Cardona said when Hsu was charged.
Hsu invited business associates to fundraisers, where they rubbed shoulders with celebrities and Democratic Party luminaries. Their word of mouth helped establish Hsu’s bona fides with potential investors.
But the brochure and the lawsuit filed in October by Gregory and Joyce Adams lay out for the first time how Hsu’s network pitched the deals that allegedly turned his Clinton ties into gold.
The lawsuit -- filed against Adams’ investment advisor, Paul H. Heckler, and his firm, Yosemite Capital Management -- describes how Gregory Adams was approached by an acquaintance and given the brochure in December 2006.
The homemade booklet for Ashton & Associates, which pictured a bridge on its cover, emphasized Hsu’s political resume. It included a partial list of his campaign contributions to Hillary Clinton and an array of congressional candidates.
The brochure’s other claims carried equal weight with Adams, according to his lawyer, Jeffrey Tidus.
It said that the principals of Ashton & Associates and Ashton Investments, another firm handling the bridge-loan deals, had a relationship with Hsu that dated to college. And it guaranteed annual returns of up to 28%, stating that “through the past 17 years, not a single Ashton investment has failed to achieve its stated return.”
A spokesman for Hsu declined to comment on whether Hsu knew of the brochure or approved its claims.
To Adams, whose wealth derived from the sale of his family’s outdoor advertising company, the Ashton pitch satisfied his goal of having a high-yield, low-risk portfolio.
“He believed them when they said it was safe,” Tidus said.
Before investing, Adams said, he met with Ashton & Associates President Mark Cheshire and Ashton Investments President Kevin Cornish at Ruby’s Cafe in Tustin. He brought along Heckler.
At the meeting, the lawsuit alleges, “Heckler actually expressed the view that the bridge-loan investments sounded like a Ponzi scheme.” Yet after learning that he could earn commissions by bringing clients into the venture, Heckler became an “enthusiastic” supporter of the investment, the lawsuit says.
The lawsuit also says Heckler ignored a plea from Gregory Adams’ mother to keep him out of the bridge-loan deals because they sounded too good to be true.
Gregory Adams ended up putting most of his assets -- including his IRA -- into Hsu’s scheme, wiring more than $3 million into it between June and August, the lawsuit says.
In September, after the Los Angeles Times disclosed that Hsu was a fugitive wanted in connection with a 15-year-old theft case, the investment scheme swiftly came undone.
Heckler, Cheshire and Cornish did not respond to repeated requests for comment. A source close to Cornish said he did not write the brochure and did not endorse it.
According to the lawsuit, Heckler persuaded clients other than Adams to invest, telling them the minimum required to participate was $250,000.
Last month, Heckler and his firm were sued by another client, venture capitalist Robert Barron of Laguna Niguel, who said he lost $800,000 in the scheme.
Investment companies in New York and Orange County sued Hsu in September, saying that he had duped them -- along with hundreds of individual investors who participated in the bridge-loan deals through them.
The federal criminal complaint against Hsu alleges that he pressured investors to make contributions to Democratic candidates as a condition of doing business with him.
Hillary Clinton’s presidential campaign has donated to charity or to the U.S. Treasury the $23,000 that came directly from Hsu and has refunded more than $800,000 in contributions linked to him -- including $6,900 from Cornish and his wife.
Adams was not among the donors, Tidus said.
Hsu remains in the San Mateo County Jail, awaiting sentencing on the 1992 theft charge.
Times researcher Janet Lundblad in Los Angeles contributed to this report.
Get our Essential Politics newsletter
The latest news, analysis and insights from our politics team.
You may occasionally receive promotional content from the Los Angeles Times.