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The Long Awaited Hsu Catalog

Today, The Wall Street Journal reports on the recent seizure warrants executed at Norman Hsu's SoHo apartment (pictured).  Thanks to the documents disclosed by the FBI, we now have a decently detailed accounting of what he'd left laying around.  And some of the details qualify as salacious.  Or at least intriguing.

Among the haul, find a previously unknown Hsu business entity, connections with 3 previously unknown investment firms (one of which is closely tied to some of Hsu's favorite politicians), and a possible connection to another huge Ponzi scheme (5 times huger than the one Hsu's currently charged with) which has already landed some folks behind bars.

So, on to the seized items...

In addition to that saxophone signed by Bill Clinton, agents found an extensive wine collection (including nearly a case of 1982 Chateau Lafite Rothschild, which fetches between $2,000 and $40,000 a bottle), a heap of highly relevant financial records, correspondence from politicians, and a Best Buy's worth of consumer electronics.  Anyone with a Motorola Verizon phone, a Samsung Sprint phone, and 3 Cingular Blackberrys likely either can't stand to be outside his service area or is trying to separate billing records.  Also seized were two laptops, a desktop, an iPod, and several portable drives and memory cards.  Even if the digital media has all been wiped clean and fried, investigators will be busying themselves blind with the trove of bank records, loan agreements, leases, investor materials, checks, and other financial records they turned up.  The FBI's itemized seizure inventory is available here (records and media) and here (wine collection) as PDFs of scanned handwritten pages.

But since few things in life are as unwieldy as PDFs of scanned handwritten pages, I've gone to the trouble of fixing us a nice, user-friendly spreadsheet instead.  This is the records and media tab and this is the wine collection tab.  Notable items (mainly the ones discussed below) are highlighted in an unpleasant shade of mint green.  It's even linked up so if you see a company or cohort you're interested in chasing down, you needn't but click.

I also took a whack at estimating the value of wine collection, using Wine Searcher.  No guarantees on the accuracy here (as I have less than zero wine knowledge), but generally speaking, these prices reflect something like the median retail price found for each bottle, as described.  My estimate of the total value is $68,000 (203 bottles), but given the wide price range for the 1982 Lafite alone, that could be low by a few hundred thousand dollars.  Any oenophiles who'd like to weigh in on the estimates, please do.

Anyway, on to the intriguing bits...

New Hsu entity:

Joining Components, Next Components, the only recently discovered Side B, and all the rest is New Equation.  All they found were incorporation documents and [something illegible], but this is pretty clearly another of Hsu's presumed shell companies as it officially shares that 561 7th Avenue address with Side B and Next Components (where none of them are).

New investment firms:

There are two allegedly defrauded investor groups involved in the complaints against Norman Hsu - Source Financing Investors in New York and Briarwood in Orange County.  In Hsu's home, however (in the same location in the same room as his bank statements and incorporation documents), agents found subscription agreements, adviser registrations, and marketing materials for 3 additional firms:

1. Robeco-Sage Capital Management (founded in 1994 by former Goldman Sachs partners)
2. Brentwood Capital (my best guess based on the handwriting - this could say Briarwood Capital, although Briarwood is actually called Briarwood Investors)
3. Marwood Group (site only accessible to investors)

At this point, there's no way to tell how (if at all) these firms or their principals fit into Hsu's world.  They could have invested in Hsu's ostensible apparel deals, much the way Briarwood and SFI did, but are reluctant to come forward.  They could be firms that employ acquaintances of Hsu's who were helping him develop his investor pitch.  Or Hsu could've been using the documents merely as templates of genuine investor materials.  But whatever the relationship, this third firm warrants further examination.

Marwood Group is an investment firm co-founded in 2002 by Edward Kennedy, Jr., son of Senator Ted Kennedy (recipient of nearly $50,000 in Hsu-connected funds) and brother of Rep. Patrick Kennedy (who received nearly $40,000 from Hsu and the gang).  Not surprisingly, many people at the firm make significant contributions to both the Senator and the Congressman.  Some have also given smaller amounts to the likes of George W. Bush, John Boehner, and the RNC, which is behavior we never see among Hsu's alleged straw donors, but since we won't be able to look at the contribution histories of Hsu's allegedly coerced donors (members of his two known investor groups), we don't yet know what their contribution patterns will reveal and can't yet make a good comparison with the Marwood folks.  In the meantime, here are all the federal donations made by those employed at Marwood Group since its founding.

[As a side note, while this may be completely coincidental, it's worth pointing out that the name and phone number of an actress named Shae Kennedy were printed on a recordable DVD retrieved from Hsu's apartment.  Kennedy was in a few films a few years back and now appears to be an assistant to comedian Lewis Black.  I had no luck determining whether she might be a "Kennedy" Kennedy.]

New huge Ponzi scheme:

This isn't so much a "new" scheme as one newly determined to be related to the Hsu case.  And it isn't so much "determined to be related" as it is "speculated by me to be related and kind of a long shot, but interesting enough to warrant discussion."

The seizure inventory refers to a letter from Samuel Somethingorother.  My best guess at what the handwriting was trying to convey was "Kefsal" (decide for yourself - page 4).  Google doesn't like "Kefsal" and instead suggests "Samuel Kelsall".  Samuel Kelsall is an interesting guy.  Samuel Kelsall V, no less, owns a two lawyer firm in Carlsbad, California.  Until 2001, Carlsbad was also home to a financial firm named PinnFund, where Kelsall appears to have served as in-house counsel.

PinnFund was shut down when federal investigators caught wind of a $330 million Ponzi scheme being perpetrated by the firm's principals.  Unlike Hsu's apparel-flavored schemes, PinnFund "invested" in sub-prime mortgages (years ahead of their time, finding their ruin in sub-prime).  Much like the alleged Hsu model, however, PinnFund's m.o. was to take money from their investors, "invest" it in these mortgage pools, and generate handsome (and guaranteed) returns for those investors.  In reality, they blew the money on, among other things:

...homes in Rancho Santa Fe, a yacht, a $31,000 dinner for nine people and a $5,000 tip at Laurel restaurant in San Diego, and...

...wait for it...

...a $5 million home in Laguna Niguel for [CEO Michael Fanghella's] then-girlfriend, a one-time porn star named Kelly Cook.

They shored up the missing principal and the guaranteed returns by recruiting new investors, using their antes to pay off the old, and round and round we go until it all collapses and the investors are left holding the bag.  In this case a very big bag.  A very big, very empty bag.

The Ponzi schemes Norman Hsu is accused of running are massive, weighing in at a combined $63 million.  But at $330 million, PinnFund was a monster, possibly the second largest in history, behind only the Bennett Funding scheme in the mid-1990s.

Samuel Kelsall does not appear to have been charged with any crimes in connection with the PinnFund scam (and he certainly isn't disbarred).  According to the SEC, as reported by San Diego Union-Tribune, both Kelsall and his boss's ex-porn star girlfriend "exercised their Fifth Amendment rights against self-incrimination."  Fanghella made out worst, with 10 years in prison, while others convicted in the case received somewhat shorter sentences.  A press release from the prosecuting U.S. Attorney's office at the time the indictments were handed down offers additional details of how the scam worked.

Bearing in mind the aforementioned caveats (the messy handwriting, my first guess having been "Kefsal", the up to IV other Sam Kelsalls out there (including Sam V's father, an estate lawyer in Phoenix), and the fact that the substance of the letter could have been about anything), at this point, this boils down to a connection with a fairly low certainty, but a very high salaciousness quotient.  Multiple them together and you get an expected salaciousness value of "just high enough to warrant spending this much time on."

More on that one as pieces fall into (or out of) place.

In the mean time, there are a bunch of new threads that have just frayed on the big fuzzy sweater that is Norman Hsu.  If you've got the time and inclination to help pull on them, follow the links above and feel free to avail yourself of the resources below.  Let me know if you see any errors, if you fit any interesting pieces together, or if you're mentioned or know someone or something mentioned herein that you want to clarify or correct.

Political contributions made by suspected Hsu-connected donors
(Google spreadsheet)

• Recipient totals
• Contributor totals
• By individual transaction

Political contributions made by individuals possibly indirectly connected to Hsu
(Google spreadsheet)

• Marwood Group officers and employees
• Lillian Vernon, Fred and David Hochberg (see this post for LV/Hochberg background)

Inventory of Items Seized from Hsu's Wooster Street Apartment
(Google spreadsheet)

• Paper records, electronic media and storage (and fabric swatches?)
• Wine collection

FBI Seizure Warrants and Handwritten Inventories
(PDFs)

• Paper records, media, and storage (warrant not included)
• Wine collection
• Metrobank Personal Account
• Bank of America Corporate Accounts

(To get at the older posts, please to enjoy the Norman Hsu category page.)

---

Update:  An alert reader points out another California lawyer named Samuel Keesal, a major Democratic contributor, the spelling of whose last name is a little easier to divine from the inventory-taker's handwriting than "Kelsall".

Comments

The Long Awaited Hsu Catalog

Today, The Wall Street Journal reports on the recent seizure warrants executed at Norman Hsu's SoHo apartment (pictured).  Thanks to the documents disclosed by the FBI, we now have a decently detailed accounting of what he'd left laying around.  And some of the details qualify as salacious.  Or at least intriguing.

Among the haul, find a previously unknown Hsu business entity, connections with 3 previously unknown investment firms (one of which is closely tied to some of Hsu's favorite politicians), and a possible connection to another huge Ponzi scheme (5 times huger than the one Hsu's currently charged with) which has already landed some folks behind bars.

So, on to the seized items...

In addition to that saxophone signed by Bill Clinton, agents found an extensive wine collection (including nearly a case of 1982 Chateau Lafite Rothschild, which fetches between $2,000 and $40,000 a bottle), a heap of highly relevant financial records, correspondence from politicians, and a Best Buy's worth of consumer electronics.  Anyone with a Motorola Verizon phone, a Samsung Sprint phone, and 3 Cingular Blackberrys likely either can't stand to be outside his service area or is trying to separate billing records.  Also seized were two laptops, a desktop, an iPod, and several portable drives and memory cards.  Even if the digital media has all been wiped clean and fried, investigators will be busying themselves blind with the trove of bank records, loan agreements, leases, investor materials, checks, and other financial records they turned up.  The FBI's itemized seizure inventory is available here (records and media) and here (wine collection) as PDFs of scanned handwritten pages.

But since few things in life are as unwieldy as PDFs of scanned handwritten pages, I've gone to the trouble of fixing us a nice, user-friendly spreadsheet instead.  This is the records and media tab and this is the wine collection tab.  Notable items (mainly the ones discussed below) are highlighted in an unpleasant shade of mint green.  It's even linked up so if you see a company or cohort you're interested in chasing down, you needn't but click.

I also took a whack at estimating the value of wine collection, using Wine Searcher.  No guarantees on the accuracy here (as I have less than zero wine knowledge), but generally speaking, these prices reflect something like the median retail price found for each bottle, as described.  My estimate of the total value is $68,000 (203 bottles), but given the wide price range for the 1982 Lafite alone, that could be low by a few hundred thousand dollars.  Any oenophiles who'd like to weigh in on the estimates, please do.

Anyway, on to the intriguing bits...

New Hsu entity:

Joining Components, Next Components, the only recently discovered Side B, and all the rest is New Equation.  All they found were incorporation documents and [something illegible], but this is pretty clearly another of Hsu's presumed shell companies as it officially shares that 561 7th Avenue address with Side B and Next Components (where none of them are).

New investment firms:

There are two allegedly defrauded investor groups involved in the complaints against Norman Hsu - Source Financing Investors in New York and Briarwood in Orange County.  In Hsu's home, however (in the same location in the same room as his bank statements and incorporation documents), agents found subscription agreements, adviser registrations, and marketing materials for 3 additional firms:

1. Robeco-Sage Capital Management (founded in 1994 by former Goldman Sachs partners)
2. Brentwood Capital (my best guess based on the handwriting - this could say Briarwood Capital, although Briarwood is actually called Briarwood Investors)
3. Marwood Group (site only accessible to investors)

At this point, there's no way to tell how (if at all) these firms or their principals fit into Hsu's world.  They could have invested in Hsu's ostensible apparel deals, much the way Briarwood and SFI did, but are reluctant to come forward.  They could be firms that employ acquaintances of Hsu's who were helping him develop his investor pitch.  Or Hsu could've been using the documents merely as templates of genuine investor materials.  But whatever the relationship, this third firm warrants further examination.

Marwood Group is an investment firm co-founded in 2002 by Edward Kennedy, Jr., son of Senator Ted Kennedy (recipient of nearly $50,000 in Hsu-connected funds) and brother of Rep. Patrick Kennedy (who received nearly $40,000 from Hsu and the gang).  Not surprisingly, many people at the firm make significant contributions to both the Senator and the Congressman.  Some have also given smaller amounts to the likes of George W. Bush, John Boehner, and the RNC, which is behavior we never see among Hsu's alleged straw donors, but since we won't be able to look at the contribution histories of Hsu's allegedly coerced donors (members of his two known investor groups), we don't yet know what their contribution patterns will reveal and can't yet make a good comparison with the Marwood folks.  In the meantime, here are all the federal donations made by those employed at Marwood Group since its founding.

[As a side note, while this may be completely coincidental, it's worth pointing out that the name and phone number of an actress named Shae Kennedy were printed on a recordable DVD retrieved from Hsu's apartment.  Kennedy was in a few films a few years back and now appears to be an assistant to comedian Lewis Black.  I had no luck determining whether she might be a "Kennedy" Kennedy.]

New huge Ponzi scheme:

This isn't so much a "new" scheme as one newly determined to be related to the Hsu case.  And it isn't so much "determined to be related" as it is "speculated by me to be related and kind of a long shot, but interesting enough to warrant discussion."

The seizure inventory refers to a letter from Samuel Somethingorother.  My best guess at what the handwriting was trying to convey was "Kefsal" (decide for yourself - page 4).  Google doesn't like "Kefsal" and instead suggests "Samuel Kelsall".  Samuel Kelsall is an interesting guy.  Samuel Kelsall V, no less, owns a two lawyer firm in Carlsbad, California.  Until 2001, Carlsbad was also home to a financial firm named PinnFund, where Kelsall appears to have served as in-house counsel.

PinnFund was shut down when federal investigators caught wind of a $330 million Ponzi scheme being perpetrated by the firm's principals.  Unlike Hsu's apparel-flavored schemes, PinnFund "invested" in sub-prime mortgages (years ahead of their time, finding their ruin in sub-prime).  Much like the alleged Hsu model, however, PinnFund's m.o. was to take money from their investors, "invest" it in these mortgage pools, and generate handsome (and guaranteed) returns for those investors.  In reality, they blew the money on, among other things:

...homes in Rancho Santa Fe, a yacht, a $31,000 dinner for nine people and a $5,000 tip at Laurel restaurant in San Diego, and...

...wait for it...

...a $5 million home in Laguna Niguel for [CEO Michael Fanghella's] then-girlfriend, a one-time porn star named Kelly Cook.

They shored up the missing principal and the guaranteed returns by recruiting new investors, using their antes to pay off the old, and round and round we go until it all collapses and the investors are left holding the bag.  In this case a very big bag.  A very big, very empty bag.

The Ponzi schemes Norman Hsu is accused of running are massive, weighing in at a combined $63 million.  But at $330 million, PinnFund was a monster, possibly the second largest in history, behind only the Bennett Funding scheme in the mid-1990s.

Samuel Kelsall does not appear to have been charged with any crimes in connection with the PinnFund scam (and he certainly isn't disbarred).  According to the SEC, as reported by San Diego Union-Tribune, both Kelsall and his boss's ex-porn star girlfriend "exercised their Fifth Amendment rights against self-incrimination."  Fanghella made out worst, with 10 years in prison, while others convicted in the case received somewhat shorter sentences.  A press release from the prosecuting U.S. Attorney's office at the time the indictments were handed down offers additional details of how the scam worked.

Bearing in mind the aforementioned caveats (the messy handwriting, my first guess having been "Kefsal", the up to IV other Sam Kelsalls out there (including Sam V's father, an estate lawyer in Phoenix), and the fact that the substance of the letter could have been about anything), at this point, this boils down to a connection with a fairly low certainty, but a very high salaciousness quotient.  Multiple them together and you get an expected salaciousness value of "just high enough to warrant spending this much time on."

More on that one as pieces fall into (or out of) place.

In the mean time, there are a bunch of new threads that have just frayed on the big fuzzy sweater that is Norman Hsu.  If you've got the time and inclination to help pull on them, follow the links above and feel free to avail yourself of the resources below.  Let me know if you see any errors, if you fit any interesting pieces together, or if you're mentioned or know someone or something mentioned herein that you want to clarify or correct.

Political contributions made by suspected Hsu-connected donors
(Google spreadsheet)

• Recipient totals
• Contributor totals
• By individual transaction

Political contributions made by individuals possibly indirectly connected to Hsu
(Google spreadsheet)

• Marwood Group officers and employees
• Lillian Vernon, Fred and David Hochberg (see this post for LV/Hochberg background)

Inventory of Items Seized from Hsu's Wooster Street Apartment
(Google spreadsheet)

• Paper records, electronic media and storage (and fabric swatches?)
• Wine collection

FBI Seizure Warrants and Handwritten Inventories
(PDFs)

• Paper records, media, and storage (warrant not included)
• Wine collection
• Metrobank Personal Account
• Bank of America Corporate Accounts

(To get at the older posts, please to enjoy the Norman Hsu category page.)

---

Update:  An alert reader points out another California lawyer named Samuel Keesal, a major Democratic contributor, the spelling of whose last name is a little easier to divine from the inventory-taker's handwriting than "Kelsall".