Democrat fundraiser guilty of illegal donations

NEW YORK Tue May 19, 2009 2:07pm EDT

Norman Hsu (L) speaks with his attorney, James Brosnahan, inside a courtroom in Redwood City, California, September 21, 2007. REUTERS/Paul Sakuma/Pool

Norman Hsu (L) speaks with his attorney, James Brosnahan, inside a courtroom in Redwood City, California, September 21, 2007.

Credit: Reuters/Paul Sakuma/Pool

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NEW YORK (Reuters) - A former U.S. Democratic Party fundraiser whose 2007 arrest prompted Hillary Clinton to return $850,000 in campaign contributions was found guilty on Tuesday of breaking federal campaign laws.

Businessman Norman Hsu, 58, was convicted by a jury in federal court in New York of violating election laws by making donations to political campaigns in other people's names. Hsu also pleaded guilty on May 7 to charges of mail fraud and wire fraud in running a Ponzi scheme of up to $60 million.

Jurors convicted Hsu of violating four counts of federal election law between 2004 and 2007. During the trial, prosecutors said Hsu pressured some of the investors involved in his Ponzi scheme to make thousands of dollars in contributions to political candidates on his behalf.

Under U.S. law, an individual can give only up to $25,000 to federal candidates in a calendar year.

Sentencing was set for August 19. The Hong Kong-born Hsu faces more than 30 years in prison for running the Ponzi scheme and an additional maximum of five years for each of the illegal campaign contribution charges.

A voicemail recording was played to the jury in which Clinton, then a U.S. senator from New York and now the U.S. secretary of state, praised Hsu for his support. Hsu's arrest in September 2007 prompted Clinton's presidential campaign to return contributions linked to Hsu.

Clinton lost her bid for her party's presidential nomination last year to Barack Obama. She now serves as a prominent member of her former rival's Cabinet.

Hsu's lawyer said several former investors testified against Hsu in order to avoid being criminally charged.

In January 2008, Hsu also was sentenced to three years in prison in California for his role in a different business fraud.

(Editing by Michelle Nichols and Will Dunham)

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