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Archive for August, 2007

Clinton Donor Story Gets More Interesting

Posted by Joshua Price on August 31, 2007

This is an article in The L.A. Times.

Wealth, mystery surround donor Hsu

Fugitive Democratic fundraiser Norman Hsu is linked to shadowy businesses and unsavory episodes.

By Greg Miller and Chuck Neubauer
Los Angeles Times Staff Writers

August 31, 2007

WASHINGTON — Money has brought both trappings and trouble for Norman Hsu. Major contributions to the campaigns of Sen. Hillary Rodham Clinton and other candidates have made the apparel executive an insider in elite political circles. He shows up in cozy pictures with politicians, at lavish fundraising events, and on the boards of prestigious organizations.

But Hsu’s history includes more unsavory episodes and associations. In 1990, he allegedly was kidnapped by Chinese gang members in San Francisco as part of an apparent effort to collect a debt. A year and a half later, he pleaded no contest to a charge of fleecing investors in what authorities called a Ponzi scheme of fraud. Along the way, he left a bankruptcy filing and bitter investors who accused him of making off with their savings.

Hsu is now at the center of a political scandal, with Sen. Clinton (D-N.Y.) and others rushing to return his contributions and sever embarrassing ties to a man still wanted on an outstanding warrant for the fraud case in California. Hsu could turn himself in as early as today in San Mateo County, where a hearing on the matter has been scheduled.

“The 15-year-old legal matter that Norman Hsu has is moving toward resolution,” said San Francisco attorney James J. Brosnahan in a statement to The Times. Hsu hired Brosnahan to represent him in California.

Court documents and interviews with close associates of Hsu have shed considerable light on his unlikely emergence as a major Democratic fundraiser. But much of Hsu’s story remains a mystery — including how to account for significant gaps on his resume and record, and where he got all the money that he has showered on Democratic candidates and causes.

Clinton and other candidates have scrambled to distance themselves from Hsu’s money. At a New York event Thursday, Clinton said: “I wish Mr. Hsu well in dealing with the problems he’s confronting.”

But he has powerful defenders. Former Sen. Bob Kerrey (D-Neb.) said in an interview that Hsu was being pilloried unfairly.

“This isn’t Osama bin Laden or some drug kingpin,” Kerrey said. “What he’s done is he’s volunteered to help people raise money for their campaigns. That doesn’t make him either unique or bad.”

Kerrey said he recruited Hsu to serve on a board of directors at New York City’s New School university, of which Kerrey is president. Kerrey said Hsu had called him earlier this week to warn him about coming media coverage. Kerrey added that Hsu had been “a terrific member” of the New School board and had not been asked to step down.

Former Hsu associates who lack the stature of the onetime Democratic senator offer a different account.

An ex-girlfriend — who is identified in court records but who asked not to be named in news accounts for fear of reprisal — said Hsu had conned her out of nearly $100,000. “He took advantage of me,” she said.

Hsu has some valid academic and business credentials. He received a master’s degree in business administration in 1981 from the University of Pennsylvania’s Wharton School, and he went on to set up a series of apparel-related companies in Southern California.

News clippings from the mid-1980s describe the Hong Kong native as a budding entrepreneur in the apparel industry, behind a collection of labels like H Two O and Charlie U.S.A. A 1983 business news story reported that one of Hsu’s companies, a San Francisco-based firm called Laveno, had sales of $400,000 and that the amount “should increase tenfold” in the coming year.

Hsu left Laveno in 1984; it went bankrupt a year later. Other clothing ventures followed a similar pattern. By the early 1990s, Hsu’s business dealings had landed him in trouble with law enforcement officials as well as investors.

The most alarming episode came in 1990, when police in Foster City, south of San Francisco, stopped a vehicle that had run a red light at 3:40 a.m. Inside, police found four men. According to news accounts, a frightened Hsu managed to tell police he had been kidnapped.

News accounts say Hsu was assaulted, and his former girlfriend said he later showed her burn marks on his arm that he said were inflicted by his abductors.

Police took the other three men in the vehicle into custody. Among them was Kwok Chung Chow, then 30, who was a high-ranking figure in one of the leading criminal gangs in San Francisco’s Chinatown. At the time, police speculated that the abductors intended to extort Hsu, but a lawyer’s filing in Hsu’s personal bankruptcy said he had been kidnapped “allegedly by individuals who are creditors of the debtor.”

The outcome of the case could not be determined by The Times. Police officials in the Bay Area said they had not been able to retrieve case records, and Chow and one of the other alleged abductors declined to comment when reached by phone by a Times reporter.

The debts that the alleged abductors appear to have been seeking could have stemmed from the business scheme in which Hsu convinced investors to help him raise money for a company that was to purchase latex gloves from a supplier and then sell them at a profit. Hsu never purchased the gloves and had no contract to sell them, authorities said.

Court records associated with that case outline what authorities described as a classic Ponzi scheme. Early investors were repaid and encouraged to recruit others to contribute cash to subsequent investments. In the end, more than a dozen invested in the latex glove scheme, contributing more than $1 million.

“We’ve established what amounts to a pattern here,” said prosecutor Ronald D. Smetana of the California attorney general’s office in a preliminary hearing, according to a transcript. “In fact, what Mr. Hsu was in the business of was running a Ponzi scheme; he was taking money and spending part of it on himself and returning it as it was available. As with any Ponzi scheme, the first ones in and the first ones out always do quite well. Those [who] hope that their investment will continue and stay to the end tend to lose their shorts.”

Most of the investors in the latex glove venture “certainly did,” Smetana said. Before the case went to trial, Hsu’s attorneys worked out a plea agreement. In return for dropping 15 counts, Hsu pleaded no contest in February 1992 to one count of grand theft and agreed to serve as long as three years in prison and pay a $10,000 fine.

But Hsu failed to show up for a sentencing hearing that summer, and the judge issued a bench warrant for his arrest in September 1992, setting his bail at $2 million. Authorities failed to locate Hsu for 15 years, until he was identified in news accounts this week as a prominent donor to Democratic candidates.

Brosnahan said Hsu was seeking to resolve the matter. “We arranged for him to appear in court and put up monies for bail, which can also be used for restitution to those, if any, who remain unpaid from the 1990s business transaction,” he said in the statement.

Hsu’s Washington-based attorney, E. Lawrence Barcella Jr., said Hsu was in Hong Kong from 1992 to 1996. Barcella said Hsu did not remember pleading to a criminal charge that included jail time and thought he had agreed to a settlement with creditors. At the time, Hsu was going through a separate bankruptcy proceeding.

Hsu has not responded to requests for an interview. Barcella said Hsu returned to California in 1996 and made a series of successful investments in Silicon Valley — which accounts for Hsu’s ability to contribute so heavily to Democratic causes in recent years, Barcella said. Hsu also continued to be involved in the apparel business, Barcella said.

But details about Hsu’s activities since 1996 are elusive. Unlike in the 1980s, when Hsu’s name appeared in a flurry of business and court records, there is scant evidence that he was actively launching businesses or making contributions to politicians.

At some point, Hsu began spending at least part of his time in New York City, where he appears to have pursued a private yet lavish lifestyle.

Hsu was affiliated with two businesses — Components Ltd. and Coopgors Ltd. — that have listed addresses on Fifth Avenue. But the building actually houses luxury apartments, not commercial offices, according to a doorman, who has worked there for the last 15 years. The doorman said Hsu lived in the building for a few years but moved out about four years ago.

The doorman, who did not want to be named out of concern that his managers would reprimand him for speaking about tenants, remembered Hsu clearly. He said Hsu lived alone in a marble-floored, one-bedroom apartment with mirrored walls on the 30th floor of the 34-floor building. The lobby has gold-colored panels and a chandelier.

The doorman said Hsu talked to him about the Yankees on occasion when he picked up packages, usually from Asia, at the building’s front desk. He said Hsu rarely had visitors, except for a younger man who appeared to be his son. Hsu’s son Oliver, who works at Stanford University, did not respond to an e-mail seeking comment. Hsu’s ex-wife Patricia declined to answer questions about him.

In New York, Hsu frequently went out at night dressed in a tuxedo and bow tie, and a limousine picked him up, the doorman said. “I know he was a very wealthy person,” he said.

A few blocks away on Broadway Avenue, office mates on the 10th floor of a building listed as the address for five of Hsu’s businesses said they had last seen him this week, when he picked up his mail.

He moved into the office about two years ago but never unpacked his boxes, said Ken Mulligan, 31, a sales executive for J.P. Doumak, a fabric supplier. He said Hsu would not visit the office space for months, then would show up for a few hours, say “hello,” check his mail, make a few phone calls and leave.

“He seems like a nice guy; he always dresses nicely in a suit,” Mulligan said. “He was very quiet.” Mulligan said he knew Hsu had been photographed with Sen. Barack Obama (D-Ill.) and Clinton. He said he thought Hsu lived in California most of the time and often traveled to China.

Hsu’s emergence as a major political fundraiser is equally mysterious.

Records indicate that he didn’t make his first federal campaign contribution until 2003, when he gave $2,000 to the presidential campaign of Sen. John F. Kerry (D-Mass.). Hsu rapidly established himself as a major donor, contributing to an array of Democrats — including California Sens. Dianne Feinstein and Barbara Boxer, Louisiana Sen. Mary L. Landrieu and New Mexico Gov. Bill Richardson.

All have said in recent days that they plan to divest their campaigns of Hsu’s donations.

Hsu has donated or raised more than $1 million for Democrats and their causes, often delivering large donations from multiple individuals. Some of these “bundled” contributions have raised suspicions. In particular, Hsu has worked closely with a family in Daly City, Calif., headed by William Paw, a mail carrier, and his wife, Alice, who is listed as a homemaker.

The Paws apparently never donated to national candidates until 2004. Since then, they have given $213,000, including $55,000 to Clinton. Barcella denies Hsu provided money for the contributions, which would violate federal law. The Paws, Barcella said, “have the financial wherewithal to make their own donations.”

As a result of his largesse, Hsu’s stock rose rapidly in Democratic circles.

He is a member of Clinton’s “HillRaiser” group, made up of individuals who each pledge to raise more than $100,000 for her presidential campaign. Hsu helped host a series of high-profile events, including one in March at the Beverly Hills home of Ron Burkle, an ardent Clinton backer. In May, he co-hosted a fundraiser in Palo Alto with Susie Tompkins Buell, another Clinton bundler.

In some cases, powerful Democrats have sought out Hsu. Kerrey, rumored to be weighing another run for public office, said he called Hsu to propose a meeting to recruit him to join the board at the New School.

“He had a very interesting background,” Kerrey said. “I was intrigued by the story of him coming from China to [attend UC Berkeley]. He went to Wharton.”

Kerrey said the university did not do background checks on prospective board members. Hsu gave thousands of dollars to the school in recent years, and helped host an event last year at which Clinton was the keynote speaker. Clinton helped steer nearly $1 million to the New School in a congressional earmark for a mentoring program for disadvantaged city youths.

Kerrey said Hsu had nothing to do with lining up Clinton to speak at the event, or with securing that earmark. Kerrey said Hsu had been an exemplary board member. “He came to meetings; he did the homework. He contributed financially,” Kerrey said.

Kerrey said he did not intend to ask Hsu to resign, despite Hsu’s criminal record. “It would be the board itself that would have to make the decision,” Kerrey said.

“Our board will be meeting in September. I’m sure it will be actively discussed.”

Kerrey said he never inquired about the source of Hsu’s wealth. “My presumption is that he’s rich,” he said.


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Chemical Agent Found in U.N. Office

Posted by Joshua Price on August 31, 2007

We have been given a very scary reminder of just how inept the United Nations is. It appears that a 10 year old chemical agent, phosgene, which is a choking gas used extensively during WWI, was found in a U.N. office. The chemical was apparently extracted from Iraq during previous inspections.

Of course the U.N. is playing this off as probably just an accident. Something is not right here. A spokeswoman for the U.N. said they will begin an investigation immediately and that we were is no “immediate risk or danger” (my emphasis added). No. Of course there is no danger.

Even if we have no confidence or desire for the U.N., their employees apparently do. Ewan Buchanan, a spokesman for the U.N., said the following according to The Washington Post:

“We have the expertise and equipment to do this kind of work.”

I find it difficult to see the word “expertise” used to characterize any aspect of the U.N.

This is just another example of how incompetent the United Nations is. We will be monitoring this story very closely.

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Another Flaw in Clinton’s Candidacy

Posted by Joshua Price on August 30, 2007

A couple of weeks ago on NBC’s “Meet the Press” Karl Rove, who I have disagreed with on many issues, said the following regarding Hillary Clinton’s ability to win the presidency:

He is correct when he describes her candidacy as being “fatally flawed.” And unfortunately for Mrs. Clinton it just got a lot worse.

A long-time Clinton and Democrat donor, Norman Hsu, has been a fugitive since 1991. According to The New York Times ” Mr. Hsu wrote checks totaling $255,970 to a variety of Democratic candidates and committees. ”

Hsu was wanted on a warrant for failing to appear in court on charges that he defrauded investors in a potential business venture.

The L.A. Times describers further his donation relationship with the Clintons:

As a Democratic rainmaker, Hsu — who graduated from UC Berkeley and the Wharton School of Business — is credited with donating nearly $500,000 to national and local party candidates and their political committees in the last three years. He earned a place in the Clinton campaign’s “HillRaiser” group by pledging to raise more than $100,000 for her presidential bid.

The L.A. Times goes on to cite one of the clear examples of some suspicious behavior that Mr. Hsu had undertaken in his donation efforts:

One example of the kind of first-time donors Hsu has worked with is the Paw family of Daly City, Calif., which is headed by William Paw, a mail carrier, and his wife, Alice, who is listed as a homemaker.

The Paws — seven adults, most of whom live together in a small house near San Francisco International Airport — apparently had never donated to national candidates until 2004. Over a three-year period, they gave $213,000, including $55,000 to Clinton and $14,000 to candidates for state-level offices in New York.

The family includes a son, Winkle Paw, who Barcella said was in business with Hsu. Another son works for a Bay Area school board, while one daughter works for a hospital and another for a computer company.

Whether there is any wrongdoing other than the warrant issued for Mr. Hsu, this example of his “bundling” of donors is quite suspicious.

I find it interesting that New York Governor Elliot Spitzer was quick to come to Hillary’s defense on this issue. He is quoted in the New York Times as saying:

“I think it’s a fair question to ask: was Senator
Clinton’s campaign or any campaign supposed to be doing better than
the authorities in California who theoretically had an open warrant
for this guy and they didn’t do anything? Come on guys, let’s get

This coming from a guy that made his name by going after corporate officers for any little inaccuracy 12 steps down the organizational chart. I’m not condoning any wrongdoing by the corporate officers Spitzer helped convict as Attorney General of New York, but I find it very interesting that he is quick to dismiss the notion that Hillary could have known anything about Mr. Hsu’s background.

Bottom line here is that Hillary continues to add to an already “fatally flawed” campaign.

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Interview with Former Head of Bin Laden Unit at the CIA

Posted by Joshua Price on August 30, 2007

We are excited to announce that we conducted in an interview with Michael Scheuer who is a 22 year veteran with the CIA, the former head of the Bin Laden Unit, and a New York Times bestselling author.

The transcript of the interview will be posted in the coming days, so please check back often

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Nine Nineties in Nine

Posted by Joshua Price on August 28, 2007

The following is an op-ed piece written by former Speaker of the House Newt Gingrich that appeared in The L.A. Times last week:

Debates that say something




The former speaker has a plan to get past the talking points.

By Newt Gingrich
August 23, 2007


Achallenge arrived at the office of every presidential candidate about two weeks ago. It was a letter, signed by journalist Marvin Kalb and me, challenging each one, Republican and Democrat, to sign on for “Nine Nineties in Nine.” That is, if nominated, they would pledge to take part in nine 90-minute debates in the nine weeks leading up to election day.

How is this different? We are asking the candidates to throw out the rule book that has stifled political debate. Each party’s nominee would be expected to present and defend solutions in a one-on-one dialogue with his or her opponent. The moderator would only keep time and introduce topics.

Former New York Mayor Rudolph Giuliani has informally agreed to “Nine Nineties in Nine,” but so far, former Arkansas Gov. Mike Huckabee is the only candidate to officially accept the challenge.

Our system to elect a president is not working for the American people. The big-city-machine bosses of the past have been replaced by professional political consultant bosses. Sadly, the role of the candidate — the man or woman who would lead the most powerful nation on Earth — largely has been reduced to raising the money to hire consultants and then reading what the consultants scrawl on 3-by-5 cards. It’s a stunningly dangerous development for a democracy.

We don’t really have presidential debates today; we have a kind of meaningless political performance art: a recitation of talking points choreographed to avoid any risk.

In the 2004 election, the Bush-Kerry debate rules ran a full 32 pages of do’s and don’ts, including one rule that ordered the moderator to stop any candidate who dared to depart from the script to reference someone in the audience.

The candidates also were ordered to turn over for inspection “all such paper and any pens or pencils with which a candidate may wish to take notes during the debate.” Pen and pencils. Talk about the vital stuff of democracy!

In telling contrast, the ground rules for the most famous debates in U.S. history were outlined in a two-sentence letter from Abraham Lincoln to Stephen Douglas, his opponent in the 1858 race for the U.S. Senate in Illinois. After a prompt exchange of letters, they settled on the terms for seven debates. Lincoln insisted only that “I wish perfect reciprocity, and no more.” There was no talk of pens and pencils.

Much as we did in 1858, the United States today faces a number of very serious challenges: How to protect ourselves from terrorism. How to educate our children so they can compete in the global economy. How to deal with an aging population of baby boomers who desire a better retirement with better healthcare.

These challenges require real solutions — and to arrive at them, the U.S. needs to have a substantive discussion about our future. But our system doesn’t provide that. Instead, we get attack ads, consultants who specialize in destroying opponents and news media coverage that is narrow, negative and so short in its attention span that no serious idea gets full consideration.

It is important that the 2008 campaign be different. The American people deserve a genuine dialogue in which our potential presidents — with adequate time for real detail — outline how they would solve the problems, meet the challenges and develop the opportunities facing the nation. Voters must be provided with clear choices about the future. Only then can the next president — Democrat or Republican — be elected with the political support necessary to move the country forward. In the spirit of the Lincoln-Douglas debates, the “Nine Nineties in Nine” challenge commits the nominees to meet once a week — say, on Sunday nights — starting after Labor Day 2008.

Let the candidates pick the topics. Let the answers be as long as they need to be. Let the conversation be open-ended.

Each debate would focus on one topic confronting the republic — such as the threat presented by radical Islam or the challenge of securing our borders — on which the American people expect their next leader to have solutions. Instead of debating Swift Boat veterans and National Guard papers, we would have a genuinely patriotic discussion about the future of our country.

And after nine 90-minute conversations broadcast to their living rooms and computer screens every Sunday night, Americans will have a remarkable sense of the two personalities vying for their votes. We will know, better than a 30-second ad could ever tell us, which person has the ideas, the character and the capacity to lead our nation.

To get the ball rolling, I propose the first and only ground rule: “Perfect reciprocity, and no more.”

Any more takers?

Newt Gingrich, former speaker of the House, is chairman of American Solutions and author of “Winning the Future.”

I am firmly behind this idea, and I hope Speaker Gingrich can get every candidate to sign on to this. It would be nice to have a similar format in the primary process, though the number of candidates would make it difficult to implement.

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