A federal appeals court on Friday upheld the conviction and 24-year prison sentence of a former Democratic fundraiser in a case that became an embarrassment to Secretary of State Hillary Rodham Clinton and other marquee Democrats.
The 2nd U.S. Circuit Court of Appeals rejected efforts by Norman Hsu to reverse his conviction and reduce his sentence. It said a lower court judge acted properly during his trial.
And it also upheld the lower court's calculation of losses to investors, saying it was fair to include the fake profits Hsu was telling investors they were collecting in their accounts even though they did not really exist. The amount was significant at sentencing because higher totals result in longer prison sentences when financial crimes are involved.
The former fundraiser for Clinton and others was sentenced in September 2009 to 24 years and four months in prison. He was convicted of breaking campaign finance laws. The judge said Hsu stole more than $50 million from hundreds of investors in a 10-year Ponzi scheme. His 2007 arrest led Clinton to return more than $800,000 to donors linked to him.
Defense attorney Alan Seidler declined to comment on the appeals court ruling.
The appeals court noted that Hsu's victims frequently returned post-dated checks to him for reinvestment, losing the opportunity to cash those checks and withdraw from the scheme.
"When this occurred, the reinvested checks _ including the previously promised returns _ became part of their principal investment, and therefore constitute the very losses that Hsu intended to inflict upon his victims," the appeals court wrote. "The fact that such money may never have `existed,' or that the scheme may have collapsed sooner if all investors had attempted to withdraw their purported gains at once does not affect the loss calculation."
The 2nd Circuit panel added that the investors were induced to reinvest their checks based on fraudulent promises of continued gain.
Prosecutors said Hsu obtained millions of dollars from investors by claiming clothing or high-technology ventures would pay returns of 14 and 20 percent. Instead, he spent the money on himself or made charitable contributions to enhance his image, they said.
During the 2009 trial, prosecutors played a voicemail recording of then-Sen. Hillary Clinton effusively praising Hsu for his loyal support. Jurors also heard testimony from several investors who recounted how Hsu wowed them by showing off his political connections. Another witness testified she met President Barack Obama, Secretary of State Clinton, President Bill Clinton and Sen. John Kerry, among others, at fundraisers she attended with him.
Hsu's trial came just days after he pleaded guilty to 10 counts of wire and mail fraud, admitting that he cheated investors of at least $20 million in a Ponzi scheme.
Prosecutors said he used investors' money to pay off earlier investors and to live a lavish lifestyle that included lots of jewelry, fine wines and champagne, vintage clothing and four-star restaurants.