Norman Hsu isolated from other inmates "for his own safety"; PLUS See-Dub's Speculation on Hsu's Speculations Firms Up a Tiny Bit

Don't want any accidents to happen, now, do we?

According to Benjamin, because of the high level of media attention surrounding Hsu's case, he is being housed away from other inmates "for his own safety," she said. However, he is not under suicide watch, Benjamin said.

A spokeswoman with the San Mateo County Sheriff's Office has declined to discuss when or how Hsu will be returned to San Mateo County.

I am a superstitious man; should some unlucky act befall him, should he hang himself in his jail cell, should he get shot in the head by a police officer or if he gets struck by a bolt of lightning then I am going to blame some of the people in this room, and that I do not forgive.

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When the WSJ broke the connection between disgraced Democrat donor Norman Hsu and Joel Rosenman's company, Source Financing--from whose investors Hsu borrowed $40 million and now his checks are bouncing--I wondered the following in a post at Hot Air:

Source Financing, Mr. Rosenman’s company, has asked the beneficiaries of Mr. Hsu’s largesse to quit giving it away to charity in order to recover it for their investors.

No word on whether Mr. Rosenman wants his own contributions to Hillary back, nor those of a Ned Rosenman who also works for Source Financing, nor those of a Molly Rosenman, also of Source Financing–each of whom gave her $4600 back in March.
...
MORE: Like (apparently everyone) at Source Financing, Mr. Rosenman’s partner Yau Cheng was a longtime Hillary backer and gave her $4600 on 3/28. (I’m wondering whether their checks were in one of the “bundles” that Hsu took to Hill HQ.)

Looks like I got that right. From today's WSJ, ace scumbuster Ianthe Jeanne Dugan reports:

Several of Mr. Hsu's investors said they donated to Mrs. Clinton and other candidates at Mr. Hsu's request. The founder of Source Financing, Joel Rosenman, donated to Mrs. Clinton. Several of Source Financing's investors also contributed, saying they were asked to do so by Mr. Rosenman. His attorney declined to discuss the donations.

According to the suit, Mr. Rosenman met Mr. Hsu through his business partner, Yau Cheng. She had met Mr. Hsu in 2000, while working at a consulting company called AsiaCentral.com. She began investing with Mr. Hsu in 2001, and also handled part-time consulting work for him evaluating business proposals.

Here's the 2000 press release about the founding of AsiaCentral. But AsiaCentral.com is now just a cybersquatter site. I wonder what happened to it?

Now: I did some more speculation on the Hsu affair as well. Note the bolded sentence:

Now I’m going to put on my completely unfounded speculation hat. ... In that post linked above, I wondered about exactly what sort of con this is if so much of the money was being bundled into Democratic coffers:

What sort of contacts did Hsu have in China that he thought he could pull this off so profitably? Did Hsu even think this would work? Or was the whole thing another con? That doesn’t seem likely, because this would blow up in Hsu’s face later instead of sooner (although maybe he planned to move the money offshore and then vanish before the post-dated checks came due).
Maybe he thought he could fill those accounts again with money from another, even bigger Ponzi scheme. The other (speculative, I stress!) possibility is that this is an ideal money-laundering scheme:

A. Someone in China tells Hsu to claim that he can deliver an incredibly profitable deal on clothing-manuacturing contracts.

B. Hsu pitches the possibility of a 40% profit on clothing manufacturing, and he attracts investors (Rosenman and his investors) to the tune of $40 million based on this deal. (He might even show the investors some references in China who will vouch that Hsu is for real and can deliver at the price he claims.)

C. Hsu goes out and gets high-end apparel orders from American clothing companies. They are impressed by how cheaply he offers to manufacture the clothing.

D. The orders are sent to the PRC who have people make the clothing to order, and ship it to the USA. The American clothing companies are delighted at the cheap margins and pay Hsu forty million plus forty percent–fifty six million dollars.

E. Hsu pays the American clothing companies’ fifty six million back to the investors, who are happy with their forty percent profit. But Hsu never pays the factories in the PRC, and instead pockets the original forty million dollar investment. The PRC happily absorbs the cost, because they know exactly what Hsu will do with it.

F. The $40 million Hsu is holding never came from the PRC and can’t be traced to them. It’s all from Source Financing investors. The PRC never gave anyone any money except factory owners in China who did the work.

And again I say unto you–this is a spitball theory I’m just throwing up to generate discussion about the issue, and I’m not accusing anyone involved of money laundering. I’m just saying IF HE DID IT, how he could have done it. (You know, like OJ.) It’s not disproved on it’s face by the facts, and it ties up a couple of the loose threads left hanging by the idea that it was all just a big con. With this explanation, everyone gets what they want and no one’s left holding the bag to go to the police. It also doesn’t require the collusion of the Rosenmans. (One possible piece of evidence that might support it is prior completion of similar contracts at a very wide profit margin.)

Potential strike against it: Why were Hsu’s checks bouncing?

The new WSJ article offers that sort of evidence, which proves nothing but merely leaves this potential explanation of Hsu's behavior uncontradicted:

After making several successful investments with Mr. Hsu beginning in February 2003, Mr. Rosenman told his friends and family, and set up Source Financing in 2005 to provide short-term loans to Components and similar companies, the lawsuit says. Mr. Hsu told Source Financing that the money was being used to manufacture China private-label menswear and to import them for large retailers, such as L.L. Bean, Macy's, Nordstrom and DKNY.

Looks like Mr. Hsu in fact had connections in apparel manufacturing that could deliver, and was so successful that Rosenman set up the firm of Source Financing especially to deal with him. On the other hand, that fits with his MO from 1989--a few successful deals to build trust before the big con.

No answer yet to the crucial question of why the checks started bouncing (especially since Hsu is also accused of swinding unspecified investors in California out of $30 million, so he had some cash to keep the Ponzi scheme going). But I thought this was an interesting detail:

After the goods were accepted by the retailer, the suit says, Mr. Hsu collected an "accounts receivable." He said he would sell that receivable to a financial firm he called his "factor." Hsu said the factor paid a discounted amount in return for the right to receive full payment for the goods from the retailer. Source Financing would provide money upfront. It would get a postdated check for its investment, plus a guaranteed profit that typically exceeded 20%.

Who was Mr. Hsu's "factor", and why this extra step? It's a mystery that the WSJ's Dugan, as well as blogger-sleuth Flip Pidot might want to track down. Rosenman wants to track it down, too: he's suing Hsu on behalf of Source Financing to get his $40 million back.