NEW YORK — The mystery of where a dirty Democratic fundraiser got the money to lead a lavish lifestyle, fund political campaigns and post a $2 million bond to get out of jail appears to have a Woodstock connection, according to a report published in Wednesday’s Wall Street Journal.
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.
Hsu reportedly told Rosenman the funds provided by Source Financing Investors would be used to manufacture apparel in China for top designers such as Gucci and Prada, and would yield a 40 percent profit, according to documents examined by the newspaper.
Rosenman now says that when Source Financing tried to cash checks from Hsu’s company, Components Ltd., the checks bounced.
Just blue-skying here, boss, but if I was a big-time lefty financier and I wanted to give a shit-pile of money to various liberal and lefty candidates, I might “loan” a bunch to some shifty Chinese con-man (permitting him the usual graft-off-the-top arrangement) which he would then re-package through a bunch of nobodies and send by the cartload to, oh, Hillary Clinton, maybe.
I mean, what’s my downside? If it blows up, it’s the crooked Chinese guy’s fault, and I’m just a poor moneyman taken to the cleaners by the clever Chinee. I wail woe is me, collect whatever insurance and tax benefits are available, and walk away clean as the driven snow.
Whaddaya think? Pretty good, no?
UPDATE: Ed Morrissey asks an interesting question:
However, the story still has some deep mysteries. One of the reasons Rosenman trusted Hsu was the 40% profits he and others received from investments in Hsu’s companies in 2000-2004. With these companies exposed as fronts, the question remains how Hsu made those profits, which sucked in Rosenman and others. Did some other deep-pocketed entity front the money for Hsu in order to thoroughly launder the cash? It seems like the perfect long con — show some flash up front and steal big in the end, but it still requires someone to supply the up-front money.
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If I were an investor in this “fund” — if there are investors in this “fund — I would sue Rosenmman foir breach of fiduciary duty.
Giving Hsu — a convicted Ponzi scheme swindler — $40 million of investors’ money — indicates either a criminal case of due diligence failure or deliberate fraud. Any internet search of Hsu would swiftly reveal his background.
I think you may be on to something. I certainly would expect investors to react.
When Hillary said she was going to “return” Hsu’s donations, some folks asked, “Return to whom?” Suspicious minds today wondered if the sudden appearance of Rosenman’s fund in the mix wasn’t to provide a friendly haven to which Hillary could return the money. (Possibly with the expectation of getting it back again by some other, later circuitous route….)
You’ll love this: This morning I saw a breathless panegyric from Jim Kuhnhenn of AP about how the Clinton campaign’s response to the Hsu scandal was going to “raise the bar” for campaigns to come. Read all about it.
“In returning $850,000 to donors associated with a disgraced fundraiser, Sen. Hillary Rodham Clinton sets a significant new standard for how campaigns should respond in the face of potential scandal.
Clinton’s decision also underscores the price — financial and political — that her campaign is paying for failing to spot trouble with the fundraiser, Norman Hsu, even after receiving a warning. The campaign announced it would now conduct background checks on its fundraisers, an extraordinary and potentially time consuming step.”
Why, they’ll be teaching this case in poli sci classes for generations to come, just like business schools do with Johnson & Johnson and the Tylenol case…
…not.
Wonder if the IRS will check Rosenman’s tax returns for the relevant years. After all, the 40% profits on a 4 to 5 month time line means the profits are ordinary income (not capital gains). You would like to think that poor, swindled honest Mr. Rosenman remembered to pay his taxes on those profits. Of course, this means the IRS would have to cross-check everything which will take some time.