Fallout From Hsu Donations Trickles Down

Posted September 11, 2007 at 6:36pm

Democratic lawmakers have wasted little time shedding donations they received from recently detained fugitive and major party fundraiser Norman Hsu, but Sen. Hillary Rodham Clinton’s (D-N.Y.) decision Monday to also return the money Hsu had solicited for her campaigns set a new precedent for her peers and party campaign committees.

Ever since the revelation in late August that Hsu was a wanted fugitive in California, Democrats on both sides of Capitol Hill have returned or donated to charity tens of thousands of dollars Hsu directly gave to their campaigns.

But on the heels of Clinton’s move, this week other Democrats began assessing whether to keep money from donors linked to Hsu.

The Democratic Senatorial Campaign Committee, the top beneficiary of Hsu’s generosity among Democratic party committees and interest groups, already has donated the $43,700 it received directly from Hsu to charity. But a committee spokesman said Tuesday that the DSCC would probe further to determine the legitimacy of roughly $80,000 in contributions from Hsu associates.

“We’re sending letters to those donors who have been publicly associated with Hsu, asking them to certify that their contributions are their own,” DSCC spokesman Matt Miller said.

Asked whether the Hsu situation had prompted any changes in the way the committee checks out donors, Miller said it had not.

“We already have a vetting process in place,” he said.

Clinton announced Monday night she would return $850,000 that Hsu had solicited on behalf of her campaign — a practice commonly referred to in political circles as bundling.

Clinton’s campaign also made clear that donors could turn around and reinvest the money in her campaign if they so choose, effectively removing any possible taint from Hsu. The decision to return the bundled money came after Clinton’s campaign already had decided more than a week ago to give away the $23,000 that Hsu had personally donated to her campaigns and political action committee.

Democratic Senators and House Members found themselves in similar positions trying to unload any direct contributions from Hsu, who has given $264,000 to Democratic candidates and causes since 2004.

Sen. Mary Landrieu (D-La.) is one of several Senators up for re-election in 2008 who had received direct contributions from Hsu as well as from donors linked to him.

While Landrieu immediately gave Hsu’s $3,000 donation to charity, Landrieu spokesman Adam Sharp said that late Tuesday the decision was made to also give away $11,700 in contributions “associated with Mr. Hsu” in light of Clinton’s move.

“We are going to likely be donating that to [Hurricanes] Katrina- and Rita-related causes,” Sharp said.

Sen. Mark Pryor (D-Ark.) said he moved immediately to donate the $2,500 he’d gotten from Hsu in May to Big Brothers Big Sisters of Arkansas.

“We gave it back the day the story broke,” Pryor, who is up for re-election in 2008, said Tuesday.

In 1991, Hsu pleaded guilty to a grand theft charge after bilking investors in a sales scheme. When he didn’t show up for sentencing, a warrant was issued for his arrest in California. However, authorities lost track of Hsu, who is now based in New York, until his name surfaced at the end of August in a Wall Street Journal article detailing his efforts to help raise hundreds of thousands of dollars for Clinton’s campaign since the beginning of the year. The article noted some suspicious patterns in Hsu’s fundraising, highlighting one seemingly middle-class California family, the Paws, that gave $213,000 to Democrats over three years.

Hsu was taken into custody by law enforcement officials in Colorado late last week.

The DSCC and Senate Democrats were the primary beneficiaries of Hsu’s contributions and bundling efforts.

Senate Majority Leader Harry Reid (D-Nev.) donated the $2,000 Hsu gave to his Searchlight Leadership Fund in May to a Reno-based organization that helps abused women.

Aside from Pryor and Landrieu, Hsu sent donations earlier this year to Democratic Sens. Jay Rockefeller (W.Va.), Jack Reed (R.I.), Frank Lautenberg (N.J.) and Tom Harkin (Iowa) — all of whom face re-election next year. He also gave to several 2008 Senate candidates such as Reps. Tom Allen (D-Maine) and Mark Udall (D-Colo.), as well as comedian Al Franken (D), who is running in Minnesota.

Hsu donated to several House Members too, including a few Democratic freshmen who may face difficult re-election contests next year.

Rep. Kirsten Gillibrand (N.Y.) already has donated her $4,600 contribution from Hsu to the Anderson School for Autism in Staatsburg, N.Y., and a spokeswoman said the Congresswoman’s campaign is in the process of giving back even more money linked to Hsu.

“This week we went through our contributions. … We think we’ve received approximately $25,000, which we’ve returned or are in the process of returning,” said Gillibrand spokeswoman Rachel McEneny. “We felt it was the right thing to do.

Gillibrand and Reps. Joe Sestak (Pa.) and Dave Loebsack (Iowa) were the three Democratic freshmen to whom Hsu donated, while Reps. Patrick Kennedy (R.I.) and Mike Honda (Calif.) were the only other House Members Hsu donated to this year.

House Democratic Caucus Chairman Rahm Emanuel (Ill.) said it was up to Members to decide what to do with money connected to Hsu.

“Every Democrat will make their own decision,” Emanuel said, adding that he had not received any money from Hsu.

Still, it doesn’t appear that anyone is keeping the captured fugitive’s money.

The Democratic Congressional Campaign Committee received just $2,500 from Hsu, which it donated to the Disabled American Veterans Charitable Service Trust.

Sen. Barack Obama (D-Ill.) also returned $7,000 in direct contributions from Hsu and is in the process of sending letters to other donors with known connections to the fundraiser to confirm their validity.