NEW YORK — Former top Democratic fundraiser Norman Hsu pleaded guilty in federal court Thursday to charges he cheated investors out of at least $20 million in a massive Ponzi scheme.
The 58-year-old Hsu (SHOO) pleaded guilty to 10 counts of wire and mail fraud before U.S. District Judge Victor Marrero.
"I knew what I was doing was illegal," Hsu told the judge.
His lawyer, Alan Seidler, said outside court afterwards that his client was likely to testify on his own behalf at a trial on four counts of violating federal campaign-finance laws. Hsu is accused of violating those laws by making hundreds of thousands of dollars in contributions to more than 50 politicians.
"He's like a groupie. He just likes the political process," Seidler said, adding that Hsu was adamant that he never made a political contribution expecting something in return. Prosecutors said he made contributions to political candidates in the names of others.
Assistant U.S. Attorney Katherine Lemire told Marrero that the government will seek to prove that Hsu made political donations "to fuel" the Ponzi scheme and pressured victims of his fraud to contribute to political candidates.
She said one government witness will testify that Hsu played voice messages of politicians thanking him for donations to enhance his credibility and make it more likely he could recruit new investors to his fraudulent investment scheme.
Lemire said he also showed investors photographs of himself with politicians to boost his image. She said he "curried favor with a wide array of political candidates."
Seidler said Hsu considered Hillary Rodham Clinton his biggest prize among political candidates.
"That was his star," Seidler said of Clinton, who returned more than $800,000 to donors whose contributions were linked to Hsu.
Hsu was accused of raising more than $1.2 million for Clinton and other Democratic candidates. His donations became an embarrassment for Clinton's presidential campaign.
Before accepting the plea, the judge warned Hsu that the charges carry a maximum potential penalty of 200 years in prison and hundreds of millions in fines, though Seidler said a letter from prosecutors showed the government believes he faces about 30 years in prison under federal sentencing guidelines.
Seidler said the outcome of the campaign finance charges was unlikely to have much affect on any potential prison sentence. He said Hsu would cite significant charitable contributions when he seeks leniency at sentencing.
"He wants to get out and have a life," Seidler said.
Hsu was indicted in 2007 on charges of swindling $20 million from victims in what the government described as a $60 million Ponzi scheme that lasted from 2000 until August 2007.
Prosecutors said Hsu sought investors for two companies purporting to offer short-term financing to businesses. The government said Hsu recruited hundreds of victims by guaranteeing them high rates of returns on short-term investments.
The government said he also broke election laws by contributing more than $25,000 to federal candidates in the names of others from 2005 to 2007.
The indictment said Hsu asked individuals to make contributions to designated federal candidates and then reimbursed them from his fraud proceeds.
Federal election law requires that donors give their own money, for which they cannot be repaid; in addition, an individual can only give up to $25,000 in total contributions to federal candidates in a calendar year.
Prosecutors have said there was no evidence that any campaigns were aware of the scheme or acted criminally.
Hsu was arrested in August 2007 in California after it was revealed he was a fugitive after a 1992 no-contest plea to grand theft charges in a fraudulent clothing import business.
He posted $2 million bail and missed a court appearance a week after his initial arrest. He fled by train and was arrested at a Colorado hospital after attempting suicide. He has remained imprisoned since.
In January 2008, he was sentenced to three years in prison after a judge refused to toss out his 1992 plea to the fraud charge.
Seidler said his client will have to serve the three-year sentence in addition to the prison term he receives in the federal case.
(This version CORRECTS UPDATES with lawyer saying Hsu feels strongly that he did not violate campaign-finance laws and that prosecutors estimate Hsu faces about 30 years in prison, adds more from prosecutors and additional background, corrects pronouncer. Moving on general news and financial services.)