Relationship with Paw family In August 2007, an investigation by
The Wall Street Journal revealed potential campaign finance irregularities involving Hsu, in his role as a "
bundler", and his long-time associates, the Paw family of
Daly City, California. Specifically, members of the Paw family made donations of over $200,000 to Democratic candidates since 2005. These donations closely coordinated with those of Hsu in terms of timing, amounts and donees. In addition, the donations appeared to be much larger than would be expected given the Paw's modest income. According to records obtained for the investigation, the Paws own a gift shop and live in a house that they recently refinanced for $270,000. William Paw, the 64-year-old head of the household, is a mail carrier with the
U.S. Postal Service and earns approximately $49,000 a year.
Status as fugitive One day after the release of
The Wall Street Journal's investigation, it was reported that the warrant issued after Hsu's failure to appear for sentencing for his 1992 fraud conviction was still valid. The California Attorney General's office had negotiated $1 million bail to be eventually applied to restitution, but the presiding judge set the amount at the $2 million. Hsu was jailed briefly that day until his attorney returned with the increased bail. The following week, Hsu failed to appear for a bail reduction hearing on 5 September at which he was expected to turn in his passport. A "no bail" warrant was immediately issued for his arrest and Hsu forfeited the $2 million. On 6 September, he was arrested by the
FBI in
Grand Junction, Colorado, after falling ill on the
California Zephyr train headed for Chicago. It was subsequently revealed that Hsu mailed suicide notes to several acquaintances and organizations before boarding the train, and was discovered with prescription pills loose in his compartment. It was unclear how Hsu could have remained at large for 15 years and engage in prominent political activity without being detected. It was also unclear how a convicted felon, having already fled prosecution once, was allowed out on bail without first having to surrender his passport. Prior to Hsu's second attempt to flee, James Brosnahan, Hsu's attorney in California, defended Hsu stating that Hsu's prominence showed that he did not behave like a fugitive and that Hsu was moving towards a resolution of the matter, including a plan of restitution for victims of Hsu's actions. The prosecutor reported Hsu to have a checkbook listing a balance of $6 million at the time of his capture in Grand Junction. The presiding judge remarked, "$2 million wasn't enough to keep Mr. Hsu from running. We'll see if $5 million will do it." On 4 January 2008, Hsu was sentenced to jail for 3 years by California Superior Court Judge Stephen Hall for the original fraud conviction, now 16 years old. Judge Hall rejected Hsu's argument that his right to a speedy trial was denied by authorities who could have easily found and arrested him.
Source of income The source of Hsu's income once he returned to the United States is unclear. While he claims to be involved in several businesses in the fashion industry, visits to those addresses "found no trace of Mr. Hsu." At several business addresses provided on Hsu's campaign donation forms, none of the listed businesses could be located. Hsu may in fact have been running multiple
cons on a massive scale. As an example, a New York investment fund run by
Woodstock Festival founder
Joel Rosenman invested $40 million spread over 37 separate deals with a Hsu company. Hsu reportedly told Rosenman the money would be used to manufacture apparel for well known luxury brands, yielding a 40% profit on each deal. When Rosenman's fund recently attempted to cash checks from Hsu's company in September 2007, there were insufficient funds. Federal charges of fraud have since been brought against Hsu. == Legal actions against Hsu ==