Clinton to return
$850,000 raised by Hsu

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

Clinton 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 fund-raisers, 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.

The amount that the campaign identified as raised by Hsu would make him one of her top fund-raisers. During the first six months of this year, her presidential campaign raised $52 million from individual contributors, second to Sen. Barack Obama, who raised $58.5 million.

While Clinton will return the money raised by Hsu, Wolfson said the individual contributors could make new donations.

''We will accept their contributions and ask them to confirm for our records that they are from their own personal funds,'' he said in an e-mail.

Since 2004, Hsu has donated $260,000 to Democratic Party groups and federal candidates and raised hundreds of thousands of additional dollars. He was regarded as a top party fund-raiser until recent reports surfaced that he was wanted on a warrant in California in connection with a 1991 grand theft charge.

Federal authorities are examining whether Hsu leaned on investors to contribute to political candidates after paying them big earnings from a shady business venture he was running, the law enforcement official said. Such a scam--using conduit contributors known as straw donors--is a violation of the Federal Election Campaign Act, which limits how much money individuals can give to candidates and political committees.

The FBI may be looking at other potential charges as well, according to the law enforcement official who spoke on condition of anonymity because of the ongoing investigation.

In addition to the $260,000 he contributed to federal candidates, Hsu also contributed at least $330,000 to state Democratic candidates and state party committees and ballot initiatives during the 2004 and 2006 election cycles. Among the state officials who received money were New York governor Eliot Spitzer and New York attorney general Andrew Cuomo. Both have said they would divest their campaigns of the donations.

Additionally, last week Pennsylvania governor Ed Rendell said he would donate nearly $40,000 in contributions, and Rep. Mark Udall of Colorado, said he had donated a $1,000 contribution to a charity that helps soldiers.

The purpose of Hsu's business venture was unclear. The Los Angeles Times reported Monday that it was an investment pool that had recently drawn the suspicion of associates who questioned its legality.

An attorney for Hsu did not immediately respond to a request for comment Monday.

Hsu remained hospitalized in Grand Junction, Colo., where he has been since failing to show up for a California court hearing last week. It was unclear when he might be returned to California to face charges.

Hsu pleaded no contest in 1991 to accusations that he defrauded investors of $1 million. He was facing up to three years in prison when he skipped town before his sentencing in 1992. He finally surrendered to the arrest warrant August 31, but he disappeared before last week's hearing where he was expected to turn over his passport and ask a judge to cut his $2 million bail in half.

Wolfson said Clinton campaign officials were ''unaware of Mr. Hsu's decade-plus old warrant,'' despite what he described as a thorough review of public records.

Since Thursday, Hsu has been at the Colorado hospital, when he was taken from an eastbound Amtrak train for treatment of an undisclosed ailment. He'd failed to show up for the hearing a day earlier. He is expected to be taken to the Mesa County Jail in Colorado to await extradition proceedings in state court once he is well enough to leave the hospital. (Lara Jakes Jordan, AP)