BUNDLE OF TROUBLE: Journalists untangle the story of Norman Hsu

Investigative Reporters and Editors, Inc. The IRE Journal, Jan/Feb 2008 by Rainey, Kate

When The Wall Street Journal first printed an article in late August of 2007 about the unusual connection between a relatively unknown political fundraiser named Norman Hsu and the Paw family of Daly City, Calif., no one at the paper had any idea how big the story would become. All they knew was that members of the Paw family, who lived in a working-class neighborhood under the flight path of the San Francisco International Airport, had donated more than $200,000 to Democratic political candidates beginning in 2004, and their donations almost matched Hsu's.

The next day, the Los Angeles Times broke the story that Hsu was in fact a fugitive with an outstanding warrant in California that dated back to his failure to appear for sentencing in a 1991 grand theft case. As more information about Hsu's past came to light in the next few weeks, Hsu ended up in jail, politicians returned hundreds of thousands of dollars of campaign contributions and the spotlight was put on "bundling" as a fundraising practice in America's political campaigns.

Bundling isn't new, but it's become crucial to a successful campaign. The price of running for office is high, and the 2002 reforms to campaign finance laws set limits on individual donations. Bundlers raise money themselves and combine the donations they've collected before presenting the funds to the candidate. The practice is legal but because there are no disclosure laws, bundling creates opportunities for abuse. For example, bundlers may recruit donors, then reimburse them, which is illegal.

Although the two newspapers ultimately followed different paths in their reporting, both the Journal and the Times began their investigations of Hsu following tips about suspicions surrounding his campaign contributions.

During the summer, the Wall Street Journal received a tip to look at Norman Hsu's activities. Investigative reporter Brody Mullins began examining records of political donations by using the Center for Responsive Politics and its Web site (www.opensecrets.org) and discovered the connection between Hsu's and donations from one family with the surname Paw. Hsu and the Paws had made donations on the same days to the same candidates for similar amounts of money. A member of the Paw family said he worked for a company owned by Hsu, and an AutoTrac search found that Hsu had once used the Paws' Daly City address as his own.

Mullins said it was clear from the beginning that something wasn't right.

"I went to my editor, Monica Langley, who's a great investigative journalist, and within 45 seconds, she said, 'You have to go there,'" Mullins said. "It was a no-brainer. All you had to do was take a look at the house, and there was a story there even if there wasn't anything illegal going on."

Working off the tip, Journal staff compiled a list with the help of the Federal Election Commission of the top addresses with donations to Hillary Clinton since 2005. Although they had never donated before the 2004 presidential election, the Paw family was third on the list, according to the JournaTs first article on Hsu on Aug. 28. They topped longtime backers of the Clintons and some of the wealthiest people in the country, and additional data eventually moved the Paws to the top of the list.

However, the links between Hsu and the Paw family was entirely circumstantial, and the first published article was restricted to detailing the strange relationship between the Paw family and Hsu.

"We never accused him of wrongdoing," Mullins said. "We just pointed out that it was odd."

The next day, the Los Angeles Times published its first story revealing Hsu's criminal history. Times reporters Robin Fields and Chuck Neubauer, also working off a tip on Hsu, had found the same connection between Hsu and the Paws regarding campaign contributions.

Who is this man?

Although the Paws lived in California, Fields and Neubauer used records from the city of New York to learn more about Hsu. Federal records of campaign contributions don't include fundraisers who bundle donations, but New York City is one of the few places in the country that identifies them. The city's Campaign Finance Board keeps records of all donations to candidates in city elections, and if an individual donated money through a bundler, the bundler is listed as an intermediary on the donation record.

The Times reporters also searched for lawsuits and criminal records. Early in their investigation of Hsu, they discovered an outstanding warrant stemming from grand theft charges in the 1990s, and records from two previous bankruptcies in California.

"It took us awhile to actually excavate those files because nothing was electronic in those days," Fields said. "But they proved to be very worthwhile once we did and led us to the sources that ultimately made us realize that the criminal hit that we got off of his background check was something more than, let's say, a DUI."

"We did the basics, and it was like a crapshoot to ask for the 1990 bankruptcy [record] and pay for it and wait the two weeks to get it, but it was good because it led us to people who had done business with him," Neubauer said.