The curious case against Norman Hsu is going to continue and each layer seems to reveal something more.

Yesterday, Hsu turned himself into police on the fugitive warrant in California. He was wanted for bilking several businessmen of millions in an import scheme. He was later released on $2-million bail.

Now it turns out that the Department of Justice is looking into the donations that Hsu made to Hillary Clinton and several other powerful Democrats:

While California state prosecutors were dealing with the business-fraud case, the Justice Department was ramping up a look at Mr. Hsu's more recent political activities. People familiar with the new probe said Justice officials are investigating a pattern of donations by acquaintances of Mr. Hsu's in California. The investigation began following a Wall Street Journal story this past week about donations by these people -- mail carrier William Paw and the five other members of his family who list their Daly City address as 41 Shelbourne Ave., a small house near San Francisco airport.

Mr. Hsu has denied reimbursing any associates for their donations, which would be a felony, or other wrongdoing in his fund-raising activities. "I've asked friends and colleagues of mine to give money out of their own pockets, and sometimes they have agreed," he said in an email to the Journal this past week. A member of the Paw family also has said the family's donations were their own.

Let's take Hsu at his word and suppose he asked several people to make donations for candidates he endorses: what would be in it for them? Sure, Mr. Hsu may well give out of the goodness of his heart and truly support the Democrat party, but why would the Paw family when it clear they don't exactly make alot of money? Was it because Hsu is such a good friend and they trusted his word even though those donations would hurt them financially? That's doubtful.

Norman Hsu is the gift that keeps on giving, and now it isn't just the money to Democratic campaigns, it's a never ending series of headlines. And now he's skipped another hearing and is currently on the run. Even his lawyers don't know where he is:

Hsu's attorneys say they do not know his whereabouts, and that their client did not surrender his passport.

Hsu turned himself in to authorities last week after more than 15 years on the run from a felony conviction of grand theft. He admitted to defrauding investors of $1 million in a bogus investment scam.

He failed to appear in court for sentencing on that 1991 conviction, a revelation that prompted high profile Democrats -- including presidential candidate Hillary Clinton -- to return thousands of dollars donated by Hsu.

In light of this, I would think it would certainly be appropriate for Hillary and the rest of the Democrats to return all the money from this scam artist, including and especially those that were received from his bundlers, such as the Paws of Los Angeles.

Not only is there the problem of explaining where the money came from and why it was distributed illegally through third party nobodies. The problem is also that the Democrats were counting on Norman Hsu for funds:

Hsu was expected to organize at least three major Democrat events on the West Coast in the coming weeks, though at least two of those events are now in doubt.

Hsu, who has raised, by conservative estimates, more than $1 million for Democrats in the past election cycle, spent the latter part of 2006 being wooed by every major Democrat presidential campaign for high profile fundraising roles in their national campaigns. In fact, the Hillary Clinton campaign had offered Hsu a very clear role.

"Around the office it was known back in January or February that Hillary's finance people had offered Norman the finance chair job for the Western part of the country," says a DNC staffer with ties to the Clinton campaign. "It was a similar role that he was seeking from other campaigns before he made his final choice."

Guess he won't be getting that job after all. Despite the clear cut evidence that something is rotten in Denmark, it is not guaranteed that there is going to be much political fallout. Hillary Clinton's opponents are limited in their attack on Hsu by their complicity in taking his money as well. This is nearly a party-wide problem. By the time the primaries are done in the spring and Hillary has been anointed the Democratic nominee, the news cycle will have moved on to other things. The GOP may push the button in issue ads, but that will all be "old news". The Clintons are very good at brushing aside old news.

It may well be that the biggest Hsu effect is to the Democrats' wallet.

Norman Hsu caught in Colorado, according to the San Fran Chronicle:

Authorities said Hsu was taken into custody at St. Mary's Hospital in Grand Junction at 7 p.m. local time. He had been on the lam for almost two days after failing to appear in a Redwood City courtroom Wednesday to surrender his passport.

Hsu was taken off a passenger train at the Grand Junction train station earlier in the day by paramedics who requested a backboard to move him, said Sgt. Lonnie Chavez with the Grand Junction Police Department.

Authorities received a request for medical assistance at the train station at about 11:15 a.m., but the exact nature of Hsu's condition was unclear, Chavez said. Staff at St. Mary's Hospital declined to comment.

Is Hillary Clinton nervous? Perhaps she should be. If Hsu cuts a deal with federal investigators and pleas to violating federal election laws, one thing he could bring to a potential plea bargain is an offer to testify against certain politicians who definitely knew what was going on. Considering the breadth of the Hsu donations, this is beginning to have a certain Jack Abramoff-like smell.

I'm also wondering if we can find out where exactly he's been getting his money. One thing for sure, he won't be able to post bail this time.

The list of Democratic politicians who will now be forced into giving back money from Norman Hsu, the fundraiser who pleaded "no contest" to grand theft back in 1991, but then failed to appear in court to serve his 3-year-sentence. Hillary Clinton, Al Franken, John Kerry, Barack Obama, Edward Kennedy, Diane Feinstein, Joseph Biden, Barbara Boxer, to name a few, have been touched by the incident.

That's what happens when a chief fund-raiser turns out to be a crook, and the people on the receiving end are in the dark, or willfully bind themselves. Hsu, as the LA Times points out, was hiding in plain sight all this time, organizing high-profile events, and working his contacts on behalf of the Democrats. He even offered the Alberto Gonzales defense, claiming he "had no memory" that his plea agreement required him to serve jail time. Please.

Certainly, the Dems who benefited from Hsu's efforts should see fit to give that money to charity, as Hillary (Hsu's largest beneficiary) will do with the $23,000 donated to her presidential campaign. The larger question is whether or not we should expect our candidates to check the background of each and every person who wants to cut them a check, or host an event.

While this may boil down to a case-by-case assessment, Hsu was no mere one-time donor. He raised hundreds of thousands of dollars for the Democrats, and therefore should have been more thoroughly vetted by the establishment and the candidates themselves. Unlike Nixguy, this is just the kind of story that makes me long for true campaign finance reform. Simply put, it is in a politician's nature to accept money first and ask questions later (if at all), and that's a shame.

Hillary Clinton should be thanking her lucky stars that Larry Craig's Bathroom Abuse landed on the frontpages of the nation this week, of all weeks. If not for Craig, the ongoing unfolding revelations about Norman Hsu would be above the fold. The latest is that he has turned himself in to authorities in California, for an outstanding warrant from 15 years ago.

Hsu, who a judge ordered handcuffed, faces a grand theft charge. He is being held on $2 million bond. A bail hearing is scheduled for Sept. 5th, where a judge may consider reducing his bail to $1 million.

Hsu signed on to be a Clinton "HillRaiser," a group of individuals who pledged to raise at least $100,000 for the New York senator's presidential run. He has helped raise or donate money for many Democrats, including Clinton (during her presidential run), Obama (during his 2004 U.S. Senate run) and New York Gov. Eliot Spitzer.

The continuing saga of Norman Hsu is showing more and more the dark underbelly of political fundraising. It keeps getting worse for the Democrats as a whole and Hillary in particular:

A Laguna Beach investment firm filed a lawsuit against Democratic fundraiser Norman Hsu on Friday, claiming he defrauded investors out of at least $23 million and required them to donate to Democratic candidates.

According to the lawsuit filed by Briar Wood Investments, Hsu persuaded the company's operator to do business with him by taking him to star-studded Democratic Party events. There, the 56-year-old Hong Kong native was praised by New York Sen. Hillary Rodham Clinton, California Atty. Gen. Jerry Brown and others, the lawsuit said.

As a condition of doing business with the fundraiser, Hsu directed investors to make contributions to certain Democratic candidates, the lawsuit said. The investors turned over tens of thousands of dollars, including $30,000 worth of checks to Clinton's campaign on a single day.

Read that again, Hillary knew who he was and probably invited him to events. He used that access to persuade investors to give him money which he duly defrauded them of and also coerced them to donate to Hillary's campaign. One would think that $30,000 in one day would make the campaign take notice. $23-million will definitely make the country take notice.

Is Hillary Clinton's campaign playing fast and loose with donations? It sure seems that way, as the Wall Street Journal has uncovered some curious donations and they lead to one of Hillary's top fundraisers. The Paw family lives in a modest house and their income is not exorbitant. Amazingly, they've donated $45,000 to Hillary over the last two-years. It gets better:

The Paws' political donations closely track donations made by Norman Hsu, a wealthy New York businessman in the apparel industry who once listed the Paw home as his address, according to public records. Mr. Hsu is one of the top fund-raisers for Mrs. Clinton's presidential campaign. He has hosted or co-hosted some of her most prominent money-raising events.

...Lawrence Barcella, a Washington attorney representing Mr. Hsu, said in a separate email: "You are barking up the wrong tree. There is no factual support for this story and if Mr. Hsu's name was Smith or Jones, I don't believe it would be a story." He didn't elaborate.

Go right for the race card, hey Larry?

Anyway, this could hurt Hillary in ways that Edwards or Obama never could. This is not Whitewater or Travelgate, this is pure and simple cheating if the charges are true -- and the WSJ seems to have covered their bases well. Note the top donation people in the inset; they are all wealthy, where the Paw family is not. It warrants a serious look into the transactions to say the least. Let's watch this one.

Update (8/28/07 1836): Well don't ya know it, more irregularities with the Dems and their King Fundraiser. I. Am. Shocked!

Hillary Clinton has returned $23,000 in donations that she had received from Norman Hsu, a long time donator to the Democratic Party. He is also, according to an AP report, a long time fugitive from justice. Hence, this is the reason why Clinton returned the donations.

Few things in politics are as embarrassing as the actions of an associate. Additionally, when the actions of an associate turn out to be felonious the fallout can be even more catastrophic. While it is too early to tell how strong the fallout for the recent Democrat fundraising scandal will be, the fact remains that many top democrats are running for cover and are refunding the money they have received. Here is a little background on this coming scandal:

Hsu has donated a significant amount of money to Democratic candidates over the past several years. Hsu has been "on the lam" and had skipped out on his sentencing appearance in California in 1991. Additionally, there is speculation that Hsu has skirted campaign finance laws by funneling money to third parties who would then donate to candidates of choosing. At this point, this is merely a speculative point that has been brought up by a number of radio pundits.

This entire budding scandal is very similar to the campaign finance scandals that surrounded the Clintons in the 1990's when they accepted funds that were essentially provided by communist China. Will this new scandal have legs? Time will tell.

The mystery of where Norman Hsu got his money turns out to have a really simple answer: He stole it. The WSJ broke this story but it's behind a subscription wall, so I'm linking to Fox:

The newspaper reports that a company run by Norman Hsu, who donated nearly $2 million to Democratic candidates since 2004 - including presidential hopeful Sen. Hillary Clinton - recently received $40 million from a Madison Avenue investment fund run by Joel Rosenman, one of the creators of the fabled Woodstock rock festival in 1969.

Now, that $40 million is missing, Rosenman reportedly told investors this week.

This raises a new wrinkle for Hillary Clinton and her Democratic cohorts. Up to now they've been grudgingly returning the money by paying it to some unspecified charity. Now that the money turns out to be stolen, will they return the money to its rightful owners?

And how would one determine the rightful owner? Who gets paid first? This is going to be a first-class, grade-A mess. One question that just occurred to me is whether the Justice Department has the ability and willingness to freeze the funds wherever they may be. Then things would get really interesting.

Yesterday Scott posted on WSJ story about some very curious Hillary Clinton donations. Now the LA Times is reporting that the fundraiser, Norman Hsu, that coordinated those (probably) illegal contributions is now missing.

Over the years, Hsu and his associates have given to Democratic Sens. Dianne Feinstein of California, Edward M. Kennedy of Massachusetts, Barack Obama of Illinois and Joseph R. Biden Jr. of Delaware. Obama and Biden, like Clinton, are seeking the presidential nomination.

...Hsu pleaded no contest to one grand theft charge and agreed to accept up to three years in prison. He disappeared, Smetana said, after failing to show up for a sentencing hearing. Bench warrants were issued for his arrest but he was never found, Smetana said.

So throughout 2006, Democrats tagged the Republicans as the party of corruption and put them in a box with convicted felon Jack Abramoff. Now we find out that the Democrats are accepting big gobs of cash from a fugitive who is very likely breaking federal election laws.

So there is some schadenfreud happening here, but on another level, can we at least agree that this sort of thing illustrates why campaign contribution limits are ultimately hopeless? The politicians need money, the rich want influence, and if they can't find a loophole, they will hire better lawyers and make one up. How much more of this kind of crap do we want to put up with before we declare that McCain-Feingold and the whole idea of limits are a failure and a waste of time? Better to just let people donate what they want to who they want and publish everyone's name and their contributions. At least then we will know who's on the take to who.

Three cautionary tales have arisen on the campaign trail on the perils of raising mega-bucks in order to attain the highest office in the land.

Last night, The Politico ran an item on Fred Thompson's ties to a King Pharmaceuticals, a company that for years systematically overcharged Medicaid, among other programs, for drugs.

Fred Thompson accepted at least $13,800 from a Tennessee family that oversaw a pharmaceutical company accused of ripping off federal and state governments.

This morning, The Salt Lake Tribune shines a bit more light on a Mitt Romney donor caught up in an unseemly scandal involving child abuse at orphanage schools.

Robert Lichfield of La Verkin, who founded the umbrella group called Worldwide Association of Specialty Schools, brought in some $300,000 earlier this year for Romney during a single Utah event and has donated tens of thousands to the former Massachusetts governor and other Republicans in recent years.

Lichflield is named in a federal lawsuit charging that the students of the "behavior modification" schools with ties to WWASPS were subjected to "physical abuse, emotional abuse and sexual abuse."

And of course there's Hillary Clinton's to do involving her no-longer-on-the-lam supporter Norman Hsu. From The Seattle Times:

The strange case dates to 1991, when Hsu pleaded no contest to grand theft in San Mateo County, south of SanFrancisco, in connection with a scheme in which he bilked investors out of $1 million...

...He has been among Sen. Hillary Rodham Clinton's most aggressive fundraisers, generating more than $100,000 for her presidential run.

All three of these incidents, it seems to me, is a case of guilt by association. Thompson, Romney, and Clinton all look worse for accepting cash from tainted sources. So far, Clinton is the only one who has given the cash back.

Yes, the headline says $850-thousand. This has jumped from being a small donations scandal to being an organized campaign that raised money in a less than legal manner and a large portion of it went to Hillary Clinton. The campaign is being ambiguous on just what it knows about the "bundling" charges but the simple fact that they returned donations to 260 people says two things: they are scared of how this will play out and this is way more wide-spread than the Paw family, some managers in a Pennsylvania factory and Hsu's buddies.

Here we go, Clinton has yet to win anything and she's already involved in a scandal that could end up with one of her "Hill-raisers" in the pokey and hard scrutiny on her fund raising. Scrutiny that should have been focused earlier.

How could someone as politically astute as Hillary and Bill allow 260 people to donate to them without some investigation into where the money was coming from? I know you can't vet every donation, but they must have some evidence the money was tainted as they're returning it. Do they have evidence that it was all Norman Hsu-connected?

It's time for the Clinton's to come clean and it's time for the media to ask the tough questions as Hillary and Barack Obama have been named in case that involved violation of federal law.

Well this is interesting.John Edwards is attacking Hillary Clinton for corruption:

"Today's Clinton fundraising event is a 'poster child' for what is wrong with Washington and what should never happen again with a candidate running for the highest office in the land," Edwards' senior adviser Joe Trippi said in a letter to supporters.

Edwards and Barack Obama have declined money from individuals who lobby the federal government and have tried to portray Clinton, who does accept lobbyists' money, as beholden to special interests. Obama and Edwards do accept money from corporate executives whose industries have interests in government policies.

In response, Clinton campaign spokesman Phil Singer said, "Increasingly negative attacks against other Democrats aren't going to end the war, deliver universal health care or turn John Edwards' flagging campaign around."

Boo-yah Mr. Singer! I like the response. But what's interesting here is what John Edwards is not attacking. Hillary Clinton and her campaign has been roiled by the ongoing and seemingly never-ending revelations about Norman Hsu and his money.

There are so many layers to this story that it may well stretch well into next year. The Wall Street Journal started the ball rolling and it's picked up so much speed that the Philadelphia Inquirer, New York Times and San Francisco Chronicle have no choice but to jump in. This Inquirer story shows that this is not a localized case but is nationwide in scope. In fact, the Times seems to be going full-bore into this story even though it may directly effect the electability of their candidate Hillary Clinton (who seems to be involved with a new scandal every day):

The records show that Components Ltd., a company controlled by Mr. Hsu that has no obvious business purpose and appears to exist only on paper, has paid a total of more than $100,000 to at least nine people who made campaign contributions to Mrs. Clinton and others through Mr. Hsu. The payments occurred in the spring of 2003, several months before Mr. Hsu emerged as a contributor to Democrats and more than a year before he started bundling checks from those same people for various campaigns. In all, he has raised more than $1 million for Democrats.

Yes, that says "$1 million for Democrats." And this only what the Times uncovered this week, how much in total remains a mystery but I would suspect not for long.