WASHINGTON — Norman Hsu, the scandal-plagued fund-raiser tied to presidential candidates Hillary Rodham Clinton and Barack Obama, has made much mileage out of his involvement in the fashion world — but his industry activities remain a mystery.
While the companies Hsu lists on his contribution forms no longer exist, if they ever did, his claim to a fashion background at least has some legitimacy — in the Eighties, he was an aspiring fashion executive trying to live out the American dream, driving around Los Angeles in a flashy sports car and attending to his men's wear import business.
There were signs, even then, that there was more than met the eye to the self-effacing Hong Kong native, whose most distinguishing feature was a nervous twitch. Associated with a number of men's sportswear companies that never gained critical mass, including H Two O Inc. and Laveno Sportswear, Hsu schmoozed with fashion reporters and carried himself with an assured air.
Most recently, Hsu allegedly used his fashion background in a sourcing scam, dropping names such as Prada and Gucci to attract millions of dollars from investors, who are now trying to recoup their funds. He also leaned heavily on his fashion background as he worked his way into the inner circles of Democratic presidential candidates, hobnobbing at fund-raising parties with people connected to the fashion industry.
Hsu's political and financial dealings are now the subject of state and federal investigations, and he is in custody, facing sentencing for an unrelated grand theft conviction in California and for skipping out of town when he was due to appear in court in Los Angeles.
Though not as dramatic as his recent downfall, Hsu exited his West Coast men's wear businesses with an equal flourish in the Eighties.
"I just remember he disappeared under very mysterious circumstances," said Michael Saylor, who was divisional merchandise manager at San Lorenzo, Calif.-based Grodins stores, which bought dress shirts from Hsu. "The wives' tale was there was a hit on him and that's why he beat it out of town, and we never heard from him again."
Prior to that, he was seen as a reliable vendor."He seemed like a nice guy," said Jack Abelson, retail consultant and another executive at Grodins. "He delivered, which I guess, when you're in the retail business, all the talk and all the slickness and all the charm don't mean anything if you can't deliver."
Hsu, who studied computer science at the University of California at Berkeley and received an M.B.A. from the University of Pennsylvania's Wharton School, was not afraid at the time to talk about his rookie missteps.
"We started Laveno [in 1982] when the economy was on the upside and not too many companies were in the young men's business," he told DNR, WWD's brother publication, in 1986. "Still, we made a lot of stupid mistakes. For instance, we only had one size box. So, when we sent out only a few items, we would fill the rest of the box with foam. It wasn't until we hired someone who knew warehousing and shipping that we found it was easier to cut the boxes down."
"He was a really nice guy and self-effacing, and really liked to please people," said Howard Ruben, a former DNR West Coast editor, who wrote about Hsu in the Eighties. "He ingratiated himself, wanted to be part of the sportswear market and wanted to be a big player."
Hsu left Laveno in 1984, a year before it went bankrupt.
Retail also called to Hsu, who reportedly led a group of investors who tried to buy Grodins for $5 million in 1986, though his bid apparently was too late to be considered. Early the next year, Hsu was working on a women's wear division.
After that, though, the trail ran cold. While numerous news reports have described him as a "sourcing executive" or "fashion industry executive," no one contacted by WWD was aware of his business activities since the late Eighties. He was accused in California of running a Ponzi scheme in the early Nineties under which he was buying latex gloves for resale, but ended up spending investors' money on himself, according to published reports. Hsu pleaded no contest to one count of grand theft in 1992, agreeing to three years in prison and a $10,000 fine.After failing to turn himself in that summer, Hsu spent 15 years on the lam, but turned out to be hiding in plain sight, fashioning himself as an apparel executive and making political connections. A representative for Hsu's attorney declined comment for this article.
Hsu worked his way to the top echelon of fund-raising for Clinton, becoming a member of the "Hillraiser" group by pledging to raise $100,000 for her presidential campaign. He also contributed thousands of dollars to other Democrats, including Obama and Sens. Dianne Feinstein (D., Calif.), Mark Pryor (D., Ark.) and Frank Lautenberg (D., N.J.).
In March, Hsu attended a fund-raising event for Clinton's presidential campaign at the Beverly Hills home of billionaire financier Ron Burkle, founder and managing director of The Yucaipa Cos. LLC, a private equity firm with a stake in Sean John and jeweler Stephen Webster. A spokesman for Burkle, who is a big Clinton supporter, said the financier has never met Hsu and does not know him.
"He was just one of several hundred people who attended a fund-raiser," the spokesman said.
Clinton's campaign has said it will return $850,000 in contributions from Hsu and his affiliated donors and tighten its scrutiny of fund-raisers. Many other Democratic recipients of Hsu's campaign donations have also returned the money.
Although big on the fund-raising scene, Hsu does not seem to have had any significant presence in the fashion world recently. His name or the companies he is associated with did not ring any bells with more than a dozen industry executives and observers contacted by WWD over the last week. The companies associated with Hsu in campaign finance records, such as Components Ltd. and Cool Planets, could not be located.
"I never ran into the guy, either on the political circuit or the apparel circuit," said Paul Charron, former chief executive officer of Liz Claiborne Inc., who is active politically and has contributed $4,400 to Clinton's presidential campaign this year. "I never heard about the guy until I read about him in the newspaper."
Charron didn't see a black eye for the industry from the Hsu scandal.
"There are people in the industry who have more than a passing interest in the business of politics," said Charron. "However, 99 percent of the people in this industry...operate on a personal level...they separate politics from business. It's not like Hollywood. People will check the credentials and try to understand the source of funds for some of these people who they don't know intimately. Long term, I don't think it's going to have a lasting impact."Hsu also used his fashion industry credentials to attract millions of dollars from investors at Source Financing Investors, a New York investment firm run by Joel Rosenman, one of the creators of the 1969 Woodstock music festival.
Hsu said the money would be used as short-term financing to manufacture men's wear apparel in China for Prada, Gucci, Theory and Hugo Boss, as well as other brands, which would yield a 40 percent profit, according to a source close to the investment firm, who spoke on the condition of anonymity.
Investors began investing in Hsu's apparel business in 2002 and Sourcing Financial was "in substantial part" formed to facilitate investing in the apparel deals, according to the source.
When Hsu's name first surfaced in the news last month, the investors made unsuccessful attempts to obtain the outstanding investments. The 100 or so investors now claim they are owed $40 million from 37 separate apparel deals with Hsu's company.
"Norman Hsu has an uncanny ability to deceive," said Seth Rosenberg, an attorney for the investment firm. "It appears that Source Financing Investors has joined Hillary Clinton and many others as his victims."
Manhattan District Attorney Robert Morgenthau has opened an investigation into Hsu's dealings with Source Financial.
The luxury brands Hsu named as clients said they never did business with him.
"Prada has never worked with this gentleman and we never intended to work with him," said Tomaso Galli, group communication and external relations director. "We have no knowledge of him and no interest in working with him and we have no proposition from him in our hands."
Galli also said Prada does not manufacture its products in China and has no intentions of producing there.
As for Hsu's contention that he represented Prada's interests, Galli said: "Prada and Gucci happen to be good names in fashion. I think you can't control people's actions and imagination."
Hugo Boss and Theory executives also said they had no knowledge of Hsu and had never done business with him.
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