Democratic fundraiser held without bail

REDWOOD CITY, Calif. - Fallen Democratic fundraiser Norman Hsu was ordered held without bail Friday, and his attorney accused the FBI of extracting a confession while the convicted swindler was recovering from an apparent suicide attempt.

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Hsu appeared briefly in San Mateo Superior Court on a 15-year-old grand theft conviction, one day after federal authorities charged him in New York with bilking investors out of $60 million. Investigators say he donated some of that money to numerous Democratic candidates and causes over the past several years.

Hsu did not speak while his attorney asked a judge to return the $2 million Hsu had posted as bail before skipping a court date earlier this month. The judge told attorney Jim Brosnahan to file formal court papers and scheduled Hsu's next court appearance for Sept. 28.

Deputy Attorney General Ron Smetana said prosecutors would oppose the return of the money.

"If the federal charges are correct, then the money is stolen," Smetana said outside court. "It would be inappropriate to return it to Mr. Hsu."

Hsu, 56, had been wanted in California since 1992, when he pleaded no contest to grand theft charges related to a fraudulent clothing import business, then skipped town before he could be sentenced. Investigators believe he fled to Hong Kong.

His troubles began dogging big name Democrats, including Hillary Rodham Clinton, this summer when news reports revealed he was a fugitive. Many have since returned his donations or given them charity, including the Clinton campaign, which pledged to divest $850,000 raised by Hsu.

Handcuffed at the waist and ankles shackled, Hsu shuffled meekly into the shabby suburban courtroom dressed in an orange jailhouse jumpsuit, a marked departure from an earlier appearance here, on Aug. 31, when he still maintained the outward appearances of wealth and power.

That day, he was dressed in a tailored suit and flanked by a publicist and a lawyer from Brosnahan's firm, one of Silicon Valley's most expensive, both of whom insisted that his 15 years on the lam was nothing more than a big misunderstanding that would soon be resolved.

His lawyers said part of the $2 million cashier's check Hsu personally posted as bail after that hearing would be used to pay the victims of his first Ponzi scheme and hoped it would persuade the judge and prosecutors to take that into account when it came time to sentence Hsu.

But then Hsu's legal and personal situation rapidly worsened. He missed a Sept. 5 court date where he was supposed to surrender his passport and ask that half his bail be returned.

The next day he was hospitalized after being taken from an eastbound Amtrak train in Grand Junction, Colo. Brosnahan said Friday that Hsu had attempted suicide by overdosing on pills.

After a week in the hospital, he was transferred to jail where, according to a federal complaint unsealed Thursday, he summoned FBI agents and confessed to another, grander Ponzi scheme than the $1 million caper he pulled off in California 15 years before.

According to the complaint, he admitted taking $60 million from investors to fund "phony" companies and used the money to finance a lavish lifestyle and considerable campaign contributions. The complaint alleged that Hsu had written about $40 million worth of checks on an account that contained only about $83,000.

Brosnahan attacked that confession Friday because it came while he "was still under the influence of the pills he was taking." It was also given without a lawyer present, he said.

"It is a legal scandal," Brosnahan said.

FBI spokesman Jim Margolin declined to comment on Brosnahan's allegations.

Brosnahan also said he would seek to undo Hsu's 15-year-old no contest plea in San Mateo County. He said the conviction "suffers from several infirmities," including the fact that state prosecutors appeared to put little effort into looking for Hsu once he skipped town.

"Mr. Hsu was not acting as a fugitive," Brosnahan said. Hsu appeared at prominent fundraisers on both coasts for high-profile candidates such as Clinton.

"Why didn't they go get him?" Brosnahan said outside court. "He was contributing to California politicians."