Norman Hsu, a former men’s wear manufacturer and major Democratic fund-raiser, pleaded guilty Thursday to federal charges of defrauding investors of at least $20 million in a Ponzi scheme.
Hsu pleaded guilty in Manhattan federal court to five counts of mail fraud and five counts of wire fraud. He also is accused on four additional campaign finance fraud counts and faces trial on those charges starting May 11.
The investment fraud is similar to the $50 billion to $65 billion Ponzi scheme masterminded by Bernard Madoff, involved paying off investors with money received from subsequent investors, according to the U.S. Attorney’s office in Manhattan. Hsu is believed to have “swindled his victims out of at least $20 million,” the U.S. Attorney’s office said.
Hsu was indicted December 2007, and prosecutors said he faced a maximum penalty of 20 years imprisonment on each of the 10 fraud charges. Each of the federal campaign charges carries a maximum five-year prison term. In addition, he faces a top fine of $250,000 in the campaign finance case as well as fines for the other financial fraud crimes.
The indictment said the government is seeking a forfeiture of at least $20 million from proceeds traceable to the mail and wire fraud offenses.
Hsu raised money for the presidential campaign of former Sen. Hillary Rodham Clinton, who subsequently returned more than $800,000 from donors linked to Hsu. He also was a host for a 2005 event for then-Sen. Barack Obama’s political action committee.
Hsu’s connection to the fashion industry dates to the Eighties, when the Hong Kong native was associated with several men’s sportswear companies that never gained critical mass, including H Two O Inc. and Laveno Sportswear. He leaned heavily on his fashion background in 2007 as he worked his way into the inner circle of Democratic presidential contenders.