This latest news on the Hsu ponzi scheme has the scandal meter pegging the red:

Where did Norman Hsu get his money?

That has been one of the big questions hanging over the prominent Democratic fund-raiser, as reports have surfaced about hundreds of thousands of dollars he made in political donations, plus lavish parties, fancy apartments and a $2 million bond he posted to get out of jail earlier this month.

New documents reviewed by The Wall Street Journal may help point to an answer: A company controlled by Mr. Hsu recently received $40 million from a Madison Avenue investment fund run by Joel Rosenman, who was one of the creators of the Woodstock rock festival in 1969. That money, Mr. Rosenman told investors this week, is missing.

Mr. Hsu told Mr. Rosenman the money would be used to manufacture apparel in China for Gucci, Prada and other private labels, yielding a 40% profit on each deal, according to a business plan obtained by the Journal. Now the investment fund, Source Financing Investors, says Mr. Hsu’s company owes it the $40 million, which represents 37 separate deals with Mr. Hsu’s company. When Source Financing recently attempted to cash checks from the company, Components Ltd., the investors say they were told the account held insufficient funds.

Lots and lots of questions still on this one but I have to wonder on the timeline here. 

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.

2002.  The same year Hsu suddenly became interested in politics.  Until then he never even voted.  So the question is how much did Rosenman know?  Especially seeing as how he is a longtime Clinton supporter.

Basically this comes down to people giving lots of cash to a man who launders it and then gives it to Clinton, that’s the political end anyways….bout 1.8 million.  But there is lots of cash left of the 40 million and I’m sure one of the reasons Hsu tried to off himself.  The gig is up and Hillary should of known it.  I mean we are talking about the Clintons here.  Famous for doing background checks on people and ensuring they wouldn’t get burned.

That such a basic mistake could slip through the famously disciplined Clinton campaign has raised eyebrows among strategists in both parties. Clinton herself is known for doing background research on people before she meets them, digging for personal details she can introduce into a conversation. The sheer amount Hsu raised as a virtual unknown in a short period of time should have raised questions, some say.

“He is a bundler on steroids,” said veteran Republican campaign lawyer Jan W. Baran. “Just think back to the 2004 campaigns: The highest level of bundler recognition was $250,000, and that was at the end of the campaign. Here we are in September of ‘07, and this guy has apparently raised $850,000 in a matter of months. And for that same reason, he probably should have set off alarm bells.”…

Irvine, Calif., businessman Jack Cassidy told the FBI that he sent at least three e-mails to a Clinton campaign official on the West Coast this summer, specifically raising concerns that Hsu was engaged in a risky investment scheme and was using Hillary Clinton’s name “in vain” to solicit people for his business proposition, according to a person directly familiar with the matter.

Cassidy’s concern was that Hsu was using the Clintons to give credence to his business venture, the source said, speaking only on the condition of anonymity because of the ongoing FBI inquiry.

Which brings us back to the political angle of this fraud.  Rosenman comes onto the scene and Hsu suddenly becomes a Clinton supporter.  While I don’t believe Rosenman was in on the ponzi deal I how aware of the laundering of money into the Clinton campaign was he?

But in the end greed still wins out:

The campaign is refunding $850,000 to [Hsu’s bundled] donors, viewing the money as tainted. Yet the campaign is also risking another public relations mess by saying that it would take back the money if it clearly came from the donor’s bank account, not from Mr. Hsu or another source. The risk is that Mrs. Clinton will appear to want more cash no matter whether it was once colored by a disgraced donor.

The campaign will try to get most of the donors to give the money back right after the refunds, said a senior Democratic strategist who advises Mrs. Clinton’s campaign. “That’s the plan,” the strategist said.

The strategist, who spoke on condition of anonymity to discuss internal campaign deliberations, added that the Clinton campaign was deeply worried that the controversy could grow.

“They are worried there are more out there,” the strategist said. “Bundlers. The feeling is there are a few more that will have Hsu problems.”

What?

So people received money from Hsu to give to Hillary in an attempt to get around the limit deal.  It was not their money, it was Hsu’s.  But somehow in the Clinton world giving the money back to those who didn’t own the money in the first place, then asking them to redonate is legitimate.

Only the Clintons man….only the Clintons.

Crossposted from Flopping Aces