Bad Day for Norman Hsu and Hillary Clinton

Norman Hsu booking photo (Smoking Gun)

When Norman Hsu turned himself in to authorities yesterday, I'm sure Hillary Clinton wasn't smiling.

I doubt that others with Hsu's money in their campaign coffers like Barack Obama, Bill Richardson, John Kerry, Dianne Feinstein, Barbara Boxer, Mary Landrieu and Al Franken were happy.

Add the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee to the list, too.

It's not good to have a campaign donor turn himself in on a grand theft charge, appear in court, be handcuffed, and held on $2 million bail. Then, there's also that annoying FBI investigation into Hsu's campaign donations.


The Los Angeles Times asks the question: "How did Democratic presidential front-runner Sen. Hillary Rodham Clinton's campaign fail to see the red flags in Hsu's contributions?"

Good question.

Until this week, Clinton counted Hsu as one of her most prolific money bundlers. He gave her campaign $22,300, regularly appeared as a co-host for major fundraising lunches and dinners, and raised more than $100,000 from his friends for her presidential run.

"Obviously, we were all surprised by this news, and we have a procedure that we follow and upon verifying it, we returned his money," Clinton said this week.

When a campaign has attracted more than 500,000 donors, as Clinton's has, there is no way a candidate's staff can check out each contributor. Clinton and her aides said there was little they could have done to protect themselves, but fundraising experts from both parties pointed to warning signs that should have given aides pause.

"If I were raising money for the prohibitive front-runner for president of the United States, I would be very, very careful about who these donors are and do some level of research," said Marty Wilson, a Republican strategist and fundraiser for Gov. Arnold Schwarzenegger and others.

The most obvious red flag: A check of a commonly used database produces a 1990 San Francisco Chronicle news story detailing how Norman Hsu had been kidnapped by gang members in the San Mateo County suburb of Foster City. A second widely used database discloses that Norman Yuan Yuen Hsu of Foster City had a bankruptcy in 1990.

Having established that he lived in San Mateo County, a check of the San Mateo County Superior Court's website reveals that Norman Yuan Yuen Hsu had a criminal case.

...In most instances, a donor's background is well-known. But if the person is not known to the campaign, that person will be vetted.

All major campaigns employ researchers who investigate their opponents, and pick over their candidates' donors, particularly those who are raising six-figure sums. Some campaigns retain consulting firms specifically to vet donors.

..."There is a concern, though nothing is proven, that there is some potential reimbursement of campaign contributions," said Richard L. Hasen, a Loyola Law School professor and election law expert. "Anytime you have an entire family or group of employees of apparently modest means making large contributions . . . it raises a red flag."

At an appearance in New York this week, Clinton vowed that her campaign would "continue to analyze all contributions and take action if that's warranted."

Hillary says she will continue to analyze all contributions?

She makes it sound as if her campaign checked Hsu out.

A few days ago, the LA Times reported:

"Norman Hsu is a longtime and generous supporter of the Democratic Party and its candidates, including Sen. Clinton," Howard Wolfson, a spokesman for the campaign, said Tuesday.

"During Mr. Hsu's many years of active participation in the political process, there has been no question about his integrity or his commitment to playing by the rules, and we have absolutely no reason to call his contributions into question or to return them."

Does that mean the Hillary camp did a bad job of "analyzing" Hsu? Was front-runner Hillary's campaign sloppy?

That's the best case scenario.

Knowing that Hsu's money was dirty and accepting it anyway would be a real problem for Hillary and all the Dems.

It's that cloud of corruption again.

It's that Clinton Cloud that hasn't dissipated.