Former top Democratic fundraiser Norman Hsu used his associations with famous political families like the Clintons and the Kennedys to polish his image and attract investors to his financial frauds, a prosecutor told a jury at the opening of a trial Tuesday.

Assistant U.S. Attorney Rua Kelly told the jury in Manhattan that it will see photographs of Hsu with famous politicians and will hear his former investors describe being pressured by Hsu to make political donations in their names that they would be reimbursed for.

The prosecutor said Hsu used that method to dodge campaign donation laws restricting how much a candidate can receive from a single contributor.

Hsu's trial comes just days after he pleaded guilty to 10 counts of wire and mail fraud, admitting that he cheated investors of at least $20 million in a Ponzi scheme in which he paid off early investors with the proceeds he collected from later investors. It also comes about 16 months after he was sentenced in a Redwood City courtroom for a grand theft case that dated back to the early 1990s.

His lawyer, Alan Seidler, described the plea to the jury and noted that his 58-year-old client faces 200 years in prison on those charges alone.

The mention of the potential penalty drew an objection from prosecutors that was sustained by U.S. District Judge Victor Marrero.

Seidler, though, had made his point and continued to cast his client in a more sympathetic light, saying the campaign contributions were made willingly by investors eager to impress Hsu "because they were greedy and frankly dumb."

"These people were blinded by greed," Seidler told the jury.

The prosecution told the jury that Hsu ripped off investors for nearly a decade with a variety of claims, including that he operated a business that provided short-term loans at high-interest rates to businesses and that he also invested in clothing and technology companies.

Kelly said he failed to invest their money, instead using it to pay off earlier investors or to live a lavish lifestyle that included lots of jewelry, fine wines and champagne, vintage clothing and four-star restaurants.

Kelly said many of his victims had no idea they were violating the law when they allowed Hsu to reimburse them for their political donations.

Seidler said Hsu donated about $850,000 of his own money to political candidates and helped raise another $1 million for Democratic candidates through about 75 people he knew who also made contributions. He said Hsu gave $3.5 million more to charitable causes.

After Hsu's 2007 arrest, Hillary Rodham Clinton returned more than $800,000 to donors whose contributions were linked to him.


This article appeared on page A - 4 of the San Francisco Chronicle


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