Will Norman Hsu Drop the Other Shoe?

On August 28, the Wall Street Journal published a story that described facts about certain contributions to a certain presidential campaign, facts which are unusual enough that a mildly curious person might reasonably wonder whether the contributors and the recipient campaign were in perfect compliance with law. That the contributing family has a Chinese surname and the donee is Hillary Clinton's campaign guaranteed that the story would get a lot of attention, because it reminded, well, everybody of the last big campaign finance scandal involving Chinese people and the Clintons. (For you history junkies, the Washington Post has conveniently organized its stories from the old scandal.)

Notwithstanding quick responses from a couple of lefty blogs that the WSJ's story contained no actual allegation and sustained its innuendo only because the donors in question had Chinese names, the story accelerated on August 29th. The Los Angeles Times reported that Norman Hsu --a top Democratic fundraiser and the apparent moneybags positioned between the various unconnected dots in the original WSJ article-- has long been a fugitive from a grand larceny conviction in California, undetected by law enforcement despite numerous high-profile appearances at Democratic fundraisers over the years. In the wake of this unfortunate news, John Kerry, Barbara Boxer, Al Franken and other Democrats who had taken money from Hsu announced they would give it back or donate it to charity, and finally Hillary Clinton said she would do as well. The question now is whether the speedy retreat will make the story go away.

The substance of the story remains fairly thin, even if embarrassing for Democrats. The WSJ reported that "[o]ne of the biggest sources of political donations to Hillary Rodham Clinton is a tiny, lime-green bungalow that lies under the flight path from San Francisco International Airport." The six members of the Paw family who live in that bungalow have given $200,000 to Democrats since 2004, the first year that any Paw gave money in any political campaign. Of that money, $45,000 went to Hillary Clinton's various campaigns for senator and president.

The Paws gave to many of the same campaigns as Norman Hsu, and Hsu once listed the Paws' house as his address. One of their sons, Winkle, who purports to be a successful investor (the article does not say whether he is the son who is "an executive at a mutual fund"), admits that Hsu has asked him to contribute to political campaigns from time to time, and that he has asked his family members to do so.

The Wall Street Journal made much of the Paw family's modest home, referring to the "dilapidated" garden and the "din" of the nearby freeway. Mr. Paw makes less than $50,000 as a mail carrier, and the family runs a gift shop. With the exception of the money manager, none of the children are obviously affluent.

The facts reported so far can be assembled into quite different malign and benign stories, both of which are essentially speculation.

The malign version is that Hsu, a fugitive from justice who once listed the Paw home as his address notwithstanding his residence in New York, has been laundering illegal contributions through a working-class family that does not appear to have the wherewithal or the inclination to give huge (for them) amounts to Democrats around the country.

The benign version is that Hsu, an ambitious guy with a past that is only mildly shady by Marc Rich standards, has over many years built a huge network of affluent people who want to give money to Democratic campaigns. One of those contributors was Winkle Paw, who multiplied his own leverage by rounding up his parents and siblings.

The benign version does not deal with Hsu listing the Paw's home as his address, but that might well have been a transcription error in the filling out of forms. Hsu bundles together checks from lots of people to get the most "credit" from the campaign, a virtually universal practice in the raising of political money. If he had lots of checks and lots of forms to fill out, one can easily imagine putting one person's address on another's form.

There is no evidence, yet, that any of the money putatively contributed by the Paws came from Hsu, foreigners, or otherwise from outside the Paw family. Nor is there any evidence that the donee campaign organizations knew of or suspected a violation of law.

The evidence is thin enough that the story will die unless new facts turn up or a government agency opens an investigation. Clinton's Democratic rivals will not want to make a big fuss because Hsu has raised money for many Democrats, including Barack Obama. The Republicans can barely choke their own talking points out between sex scandals, much less bother to hammer at Hillary almost a year before the general election campaign begins. No, the Democrats are in the clear on this unless either the donated money actually did come from China or it turns out that an important Democrat knew that Hsu was a fugitive or was breaking the campaign finance laws.

How would we learn about either of those things? When an ambitious prosecutor squeezes Hsu into pointing the finger at a bigger fish.

TigerHawk is the pseudonym of a middle-aged executive who lives in Princeton, New Jersey. He is also the founder of the blog of the same name, a lawyer of sorts, a former "Benedict Arnold CEO," numismatist, father of teenagers, husband, dog-lover, horse-financier, and general factotum.