’60s Figure Says He Financed Donor Hsu - WSJ.com
Mr. Rosenman’s partner, Ms. Cheng, met Mr. Hsu while working for an Internet company in 2000. She began investing in one of his businesses and made a profit, according to someone familiar with the matter. In 2002, she joined JR Capital and introduced Mr. Rosenman to Mr. Hsu. That year, Mr. Rosenman invested and also made a profit. He began telling friends and relatives about the investment opportunity.
Mr. Rosenman described the deal in a pitch letter he provided to prospective investors for Source Financing Investors, which he launched in 2005. The investment pool would “lend to U.S. private label designers that needed interim financing to fill orders for a select group of well-known, high-end U.S. apparel retailers.” Since 2001, he writes, “the return of these short-term (typically 4½ months) loans has been no less than 40%.”
In a “step-by-step” outline of a typical transaction prepared for investors, Source Financing describes the way a deal worked with Mr. Hsu. Source Financing would agree to provide bridge loans for seasonal high-ticket, high-quality retail goods made in China for exclusive brand names, according to investors. Mr. Hsu told the company that he would obtain from Chinese manufacturers a price quote for apparel production. He would then add a mark-up and give the quote to a high-end buyer in the U.S.
If the U.S. buyer accepted, according to the outline, Source Financing would transfer by wire what Mr. Hsu said was 80% of the necessary loan, with Mr. Hsu saying he would provide the other 20% himself. Mr. Hsu told the investors he would then receive a letter of credit from a Chinese bank and that the manufacturer would ship the apparel to the U.S., where Mr. Hsu would deliver it to the merchant.
Mr. Hsu would give the investment firm a check, post-dated for 135 days beyond the wire transfer, for the amount of the loan plus profit. When the check matured, Source Financing would deposit it and allocate the money to investors. The company that would carry out these transactions, Mr. Hsu told investors, was Components Ltd., set up in 1997.
Some investors in Source Financing said they got involved through friends who knew Mr. Rosenman. Some did not know who Mr. Hsu was until news about him broke in late August.
Excerpted from a much longer article in the Wall Street Journal. Read the whole thing. I suspect nemo may turn out to be right about due diligence. This whole thing looks like a tort lawyer’s wet dream.
Still, there is one prediction I can confidently make: No matter how bad it gets, no matter how many laws were broken and crimes committed, none of this will stick to Hillary Clinton.
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Consensus here seems to be that only a purebred bonehead would take Hsu’s “notes” seriously. “But we made money with him before” is a classic Ponzi scheme tactic; you pay off the initial investors with later inverstors’ money, producing remarkable returns in the process to lure in the big money.
Rosenman was gulled by an age-old con scheme, was unaware he was dealing with a convicted fraud, and clearly made no serious effort to validate Hsu’s claims, but simply either took them at face value or relied on Hsu himself for due diligence information.
In other words, Rosenman is a witless boob.
Now, the question is, where did the money go? If Hsu was using this ruse to fund Democrats, what were his motives? Who, if anyone, was behind him? What did he (they) wish to achieve?
It seems the Clintons just can’t wean themselves from Asian funding frauds. Maybe they should ask Gore for advice — he knows how to get money from Buddhist nuns, which is tantamount to squeezing blood from a stone (one of Al’s many miracles.)