Fugitive fundraiser Hsu jailed after turning himself in

By Dan Morain and Chuck Neubauer

REDWOOD CITY, Calif. -- Democratic fundraiser Norman Hsu, who had been a fugitive from a 1992 grand larceny case, was led to jail in handcuffs today after a judge ordered him to post $2 million bail.

Superior Court Judge H. James Ellis ordered Hsu held, although Hsu could post bail later today. Hsu, wearing a well-tailored black suit, turned himself in after news accounts identified him as a fugitive.

Supervising Deputy Atty. Gen. Ronald D. Smetana and the attorney representing Hsu had agreed that he could be freed on $1 million bail on the condition he surrender his passports and make all further court appearances. But Ellis rejected that arrangement and ordered Hsu into custody pending a full bail hearing Sept. 5.

Smetana said he expected to ask that Hsu serve some time in prison.

In 1992, Hsu agreed to serve three years, although that term could be modified if he makes full restitution, estimated at $1 million.

Only a week ago Hsu was in San Francisco raising money for Democratic politicians. But all that ended this week when the Wall Street Journal and Los Angeles Times raised questions about his fundraising activities and his past.

Hsu appeared at the San Mateo County courthouse before 8 a.m., more than 45 minutes early. Having suddenly found himself front-page news, he has retained attorney James Brosnahan of the blue-chip San Francisco law firm Morrison & Foerster and the Los Angeles-based public relations firm headed by Michael Sitrick.

As Hsu waited in the hallway for the hearing to begin, he huddled with an attorney and spokesman Jason Booth. They declined to comment. Hsu spoke on his cellphone and chewed his fingernails.

Prosecutors have described Hsu's case as a classic Ponzi scheme in which he sought investors to purchase and resell latex gloves. Hsu never purchased the gloves and had no contract to sell them, authorities say.

Early investors were repaid and encouraged to recruit others, according to prosecutors. In the end, more than a dozen invested more than $1 million in the glove business. In 1992, Hsu pleaded no contest in San Mateo County but disappeared before he could be sentenced.

He had filed for bankruptcy and left investors accusing him of making off with their savings.

In 1990, Hsu was kidnapped by Chinese gang members in San Francisco and rescued when police in suburban Foster City stopped their car for running a red light.

Police speculated that the abductors intended to extort money from Hsu, but a lawyer's filing in Hsu's personal bankruptcy said Hsu had been kidnapped "allegedly by individuals who are creditors of the debtor."

Starting in 2003, Hsu became a major donor to Democratic politicians, giving $255,000 directly to Democrats running for federal office and hundreds of thousands more to state and local politicians, from California to New York.

Hsu became one of Sen. Hillary Rodham Clinton's most reliable fundraisers, donating $22,300 directly to the New York Democrat's campaigns over the years and raising more than $100,000 from friends and business associates for her presidential bid.

In recent days, Clinton and other politicians have disgorged money donated by Hsu, giving it to charity. Sen. Barack Obama (D-Ill.), Clinton's main rival for the Democratic presidential nomination, was among those who donated what Hsu had given him -- $7,000.

Hsu was involved in state and local politics as well. New York Gov. Eliot Spitzer donated $62,000, the amount he got from Hsu, to charity. Los Angeles Mayor Antonio Villaraigosa, who received $1,000, and San Francisco Mayor Gavin Newsom, who received $1,250, also were turning their money over to charity, their aides said.

dan.morain@latimes.com

chuck.neubauer@latimes.com