FBI Seizure Warrants Reveal New Hsu Financial Details

Two seizure warrants signed by a federal magistrate in the $63 million fraud case against Norman Hsu offer some new information about the finances of the Democratic fundraiser, convicted felon, and serial fugitive.  The warrants authorized the seizure of funds in four bank accounts in the name of Hsu and three of his companies at Bank of America and Philippines-based Metropolitan Bank and Trust.

• Metrobank Warrant (pdf)
• Bank of America Warrant (pdf)

An attachment to the Metrobank warrant shows the bank recently turned over an official check for just under $73,000, a small fraction of the tens of millions of dollars investors are hoping to recoup (and slightly less than the $83,000 said to be in one of Hsu's Bank of America accounts).  They must be feeling a little like Geraldo, circa 1986.

Bank of America has yet to supply the FBI with the funds in Hsu's three accounts at that bank or a statement of their contents, but the warrant does yield an interesting bit of information - a new business entity controlled by Hsu.

Searches of campaign finance reports and other records have already unearthed several corporate names used by Hsu in connection with his alleged investment scams and his political fundraising, including Components, Ltd., Next Components, Ltd., Because... Men's Clothing, James Stone Ltd., and Dilini Management.  Joining that list is newcomer Side B, Inc.

According to the NY State Department, Side B was incorporated in May 2005 (the same week as Next Components) and both give their address as 561 Seventh Avenue in midtown Manhattan.  I visited that address last month and neither company is listed on the building directory, nor had the front desk attendant heard of Components or Next Components.

Side B is unique among Hsu's business entities, both in terms of its form of incorporation ("Inc." typically indicating a U.S. corporation vs. "Ltd." generally indicating a U.K. limited company; Dilini is a U.S. LLC) and in that we've never seen the company cited as an employer by a Hsu-connected campaign donor or listed elsewhere in connection with Norman Hsu.

There is a "Side B Apparel" in Boulder (which caters to multiple outlets in Denver, the city en route to which Hsu was apprehended in September), but it appears to be a small silk screening boutique, which makes it unlikely to be connected to Hsu (if only because they appear to do actual business...).

Side B, Components, and Next Components, are the three names attached to the Bank of America accounts, which will hopefully prove to contain more of the missing funds than did the Metrobank account in Norman Hsu's own name.

A checkbook found on Hsu at the time of his arrest in Colorado showed a balance of $6 million.  A day earlier, he forfeited a $2 million bond by failing to appear for his court appearance in San Mateo, California.  We know of roughly $2.5 million that made its way into the campaign coffers of Hsu's favored political candidates and once we're able to see the 3rd quarter campaign disclosures later this month, that number could more than double.  That puts us in the neighborhood of $13 million accounted for.  If we assume Hsu's lifestyle was lavish enough to burn through a million dollars a year (one of his two Manhattan apartments goes for $8,000/month), dating back to his earliest deals with the New York investment group in 2001, the total might push as high as $19 million.

Between the New York and Orange County groups, investors say they entrusted a total of $63 million with Hsu, leaving $44 million unaccounted for, estimating conservatively.  Hsu's corporate accounts may yield a more meaningful chunk of the missing funds, but given that these assets weren't frozen until September 18th (13 days after Hsu gathered his things and skipped bail), they may well have been cleaned out.

If so, the accounts' transaction histories at least ought to show where the money went next.  And in either case, they ought to give investigators a much clearer picture of how Hsu's vast network of alleged straw donors operated.

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I'll update this post when details of the Bank of America accounts become available.  For all previous coverage, rollick in the convenience of the new Norman Hsu category page.