Betsy's Page blog reports that the Clinton campaign was warned about Norman Hsu awhile back, but did not heed those warnings.

The Los Angeles Times, that rightwing rag, revealed that the Clinton campaign had been warned that fundraiser Norman Hsu was involved in a suspicious ponzi scheme.

Before the announcement, new evidence surfaced that the Clinton camp had dismissed allegations about Hsu made by a Southern California businessman. In an e-mail obtained by The Times, a Clinton campaign staffer told a California Democratic Party official in June that the businessman's concerns were unwarranted.

"I can tell you with 100 certainty that Norman Hsu is NOT involved in a ponzi scheme," wrote Samantha Wolf, who was a campaign finance director for the Western states."He is COMPLETELY legit."

In fact, Hsu was a fugitive wanted on a 15-year-old bench warrant stemming from an early 1990s investment fraud case.

The businessman's query prompted Clinton staffers to review public records about Hsu, but no problems surfaced, the campaign source said. In part because of that incident, the campaign also announced Monday that it would institute more stringent procedures to vet major contributors, including running criminal background checks.

Whoops! Somebody goofed.

But wait, there's more...

This story gets more interesting every day. Apparently, Norman Hsu reportedly ran off with a whole lot of money. Now what inquiring minds want to know is---where did it go?

Captain Ed over at Captain's Quarters takes a look see.

The following is an excerpt he took from the Wall Street Journal.

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.

Source Financing's arrangement with Mr. Hsu's company, according to court documents and investor accounts, echoes an older matter that came to light in recent weeks. In 1991, California officials charged Mr. Hsu with grand theft for failing to repay investors for money he raised to import latex gloves from China.

Wow, what a crook! What the heck did Hsu do with that $40 million? Can you believe that a person like Hsu could be affiliated with Hillary and the Democratic party? ha ha... ;)

Here's more from Captain Ed..

The Hillary Clinton campaign can stop the cash from going back to the bundled contributors. If Hsu stole $40 million, it explains how all of these families of modest means could afford to contribute eye-popping sums to her campaign and others. It also means that the FBI and Rosenman will want the money back.

This puts a brand new spin on the story, and a very bad development for the people through whom Hsu pushed these contributions. At a minimum, the donors who bundled Hsu's money face potential election-finance violations. The feds could add money laundering to the list of charges -- and since the money got sent around via wire transfers, wire fraud will likely get included. Finally, if the wire transfers show complicity to deceive, all of the contributors who participated may find themselves in the middle of a RICO prosecution, which could mean lengthy stretches in federal prison for everyone.

Furthermore, that would put the Democratic candidates and the organizations in a very uncomfortable position. The FBI would want to know just what involvement they had in Hsu's theft and subsequent manipulations of cash. While it would be unlikely that Hillary Clinton, Andrew Cuomo, Eliot Spitzer, the DSCC, and a host of other candidates and organizations would have knowingly approved embezzlement, some of their staff members could potentially have participated in the illegal activities that assisted it. In any case, it hardly paints the Democrats in a good light to have to answer depositions in a fraud involving the theft of $40 million, dragged out over the next several months.

Damn. Who's got the culture of corruption going now? This could potentially be the story that takes the Democrats "culture of corruption" line right out of their campaign vocabulary.

Also, if some on the left were afraid before that Hillary could cause them harm in a general election, you wonder what they must be thinking now?

This one's gonna hurt...

It looks like Team Hillary can't stand the smell.

Sen. Hillary Rodham Clinton's presidential campaign said Monday it will return $850,000 in donations raised by Democratic fundraiser Norman Hsu, who is under federal investigation for allegedly violating election laws.

Clinton, D-N.Y., previously had planned only to give to charity $23,000 she received from Hsu for her presidential and senatorial campaigns and to her political action committee, HillPac.

The FBI is investigating whether Hsu paid so-called straw donors to send campaign contributions to Clinton and other candidates, a law enforcement official said Monday.

"In light of recent events and allegations that Mr. Norman Hsu engaged in an illegal investment scheme, we have decided out of an abundance of caution to return the money he raised for our campaign," Clinton spokesman Howard Wolfson said in a statement Monday night. "An estimated 260 donors this week will receive refunds totaling approximately $850,000 from the campaign."

Wolfson said the Clinton campaign also will vigorously review its fundraisers, including thorough criminal background checks, in the future. "In any instances where a source of a bundler's income is in question, the campaign will take affirmative steps to verify its origin," he said.

Don't go holding your breath on that. This is the Clinton's, it's always best to hold your nose instead.

Add this to Hillary's not so great moments in fund raising.

"Hillraiser," fugitive Norman Hsu was apprehended by the FBI on an eastbound train out in Colorado last night.

Fugitive political fundraiser Norman Hsu, who skipped out on San Mateo County authorities this week rather than face sentencing for a 1992 fraud conviction, was apprehended Thursday night by federal and local lawmen in Grand Junction, Colo.

Authorities said Hsu was taken into custody at St. Mary's Hospital in Grand Junction at 7 p.m. local time. He had been on the lam for almost two days after failing to appear in a Redwood City courtroom Wednesday to surrender his passport.

Hsu was taken off a passenger train at the Grand Junction train station earlier in the day by paramedics who requested a backboard to move him, said Sgt. Lonnie Chavez with the Grand Junction Police Department.

Authorities received a request for medical assistance at the train station at about 11:15 a.m., but the exact nature of Hsu's condition was unclear, Chavez said. Staff at St. Mary's Hospital declined to comment.

FBI spokesman Joseph Schadler said Hsu will be returned to California on the 1992 conviction once released from the hospital.

I think I'd be sick too if I was in Hsu's shoes. This whole incident has to be a major embarrassment not just for him, but for what is shaping up to be a growing number of the Democratic Party.

Could this be a "culture of corruption" that we are witnessing? Silly me, those words only apply to Republicans. Nancy Pelosi told us so right? ;)