Rendell returns funds from two Hsu associates

HARRISBURG - Gov. Rendell is returning $7,000 in campaign contributions from two associates of Norman Hsu, a former fugitive now in custody and awaiting trial on fraud charges.

The move comes three weeks after the governor announced he was giving to charity nearly $38,000 donated directly to his campaign by Hsu, the disgraced Democratic fund-raiser.

Chuck Ardo, Rendell's press secretary, said the governor decided to return the additional contributions "because sufficient questions about the donors were raised in the media." Published reports, including those in The Inquirer, "raised red flags about the true source of the money," he added.

Last week, federal authorities in New York accused Hsu of running a Ponzi scheme that defrauded investors nationwide out of $60 million. Hsu, who has raised hundreds of thousands of dollars for top Democrats, was also charged with reimbursing several unnamed donors for contributions they made and for forcing others to contribute to his handpicked candidates under a threat that their investments would otherwise go sour. Authorities allege Hsu used such "straw donors" to skirt federal campaign limits on political giving.

Pennsylvania has no such limits on campaign donations, and there is no indication that any of the donations in the New York case went to Rendell. But campaign records show a clear connection between Hsu and two other Rendell donors.

Ardo said Rendell was returning a $2,000 contribution made by Winkle Paw of Daly City, Calif., in May 2005. Paw and five members of his family have donated $200,000 to Democratic candidates nationwide since 2005. On campaign forms, all list the same address: a small bungalow near San Francisco. In many cases, the giving mirrors Hsu's, and Paw stated on campaign reports that he worked for several apparel companies allegedly run by Hsu.

Rendell also is giving back a $5,000 donation made by Paul Su of Long Island, N.Y., in April 2006. Around that time, Hsu spent $11,366 to host a fund-raiser for Rendell at a Manhattan restaurant.

Su lists his occupation as president of Dilini Management of Dix Hills, N.Y., on campaign reports to candidates across the county. Hsu, too, listed his occupation as president and chief executive officer of the company on at least one donation.

Ardo said Rendell has received contributions from thousands of people across the state and nation over the years and that it's "impossible for the campaign to know the relationship they have to one another."

By returning the money, Rendell - one of Pennsylvania's most prolific fund-raisers - hopes to end what has become a weeks-long distraction for his administration.

"Why would you want to keep this alive for $7,000?" said Chris Borick, a politics professor at Muhlenberg College. "To his war chest, it's a pittance."

The governor was one of Hsu's most ardent supporters late last month when news broke that the fund-raiser had been wanted by California authorities for 15 years after pleading no contest in the early 1990s to defrauding investors out of $1 million.

Initially, Rendell had defended Hsu as "one of the 10 best people I've met" in the field of political giving, and he refused to return the money Hsu had donated, although most other prominent Democrats had taken that step.

It was not until after Hsu skipped a bail hearing on Sept. 5 and again went on the lam that Rendell decided to give the $37,866 donated by Hsu in 2005 and 2006 to charity.

The governor has picked nine charities across the state - from an Erie soup kitchen to a Philadelphia charter school - to receive a piece of the money.