United States v. Hsu
2012 U.S. App. LEXIS 3257
| 2d Cir. | 2012Background
- Hsu ran a Ponzi scheme through two phantom entities, Components Ltd. and Next Components Ltd., falsely presenting them as a steady, low-risk financing business.
- Investors received post-dated checks with a guaranteed return, often reinvesting principal plus gains to sustain the scheme.
- In 2005, Hsu began a campaign-finance dimension, acting as a bundler and sometimes reimbursing straw donors to candidates.
- The scheme collapsed after his 2007 arrest on a California warrant, leading to a large pool of post-dated checks and investor losses exceeding $20 million.
- Hsu was indicted in December 2008 for 14 counts (mail and wire fraud tied to the Ponzi scheme and campaign-finance violations); he pled guilty to the fraud counts and was later convicted at trial on the campaign-finance counts.
- The district court sentenced Hsu to a combined 292-month term, with concurrent ten-year fraud counts and concurrent but consecutive to other penalties; on appeal he challenges statute-of-limitations issues, evidentiary rulings, loss calculations, mitigating factors, and counsel for sentencing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute-of-limitations challenge to counts pled guilty | Hsu argues Counts 1 and 6 were time-barred | N/A (Hsu asserts limitations defense) | Waived by guilty plea; limitations no bar to guilt |
| Admission of Ponzi scheme evidence at campaign-finance trial | Evidence relevant to motive and connections between schemes | Testimony risks unfair prejudice and may be cumulative | Not plain error; district court acted within discretion in balancing probative value and prejudice |
| Loss calculation for Ponzi scheme under Guidelines | Reinvested proceeds should be counted as loss | Only actual principal lost should be loss | District court properly included reinvested gains in intended loss; method reasonable under 2B1.1 |
| Mitigating factors in sentencing | Circumstances like depression and remorse warrant consideration | Mitigation improperly weighed or underemphasized | District court’s weighing of §3553(a) factors affirmed; no abuse of discretion |
| Sixth Amendment right to new counsel for sentencing | New counsel should be appointed due to counsel-conflict fracturing representation | No substantial complaint; retained counsel adequate for sentencing | No requirement to appoint new counsel under circumstances; no prejudice shown |
Key Cases Cited
- United States v. Riggi, 541 F.3d 94 (2d Cir. 2008) (standard for favorable view of evidence in weighing 404(b) testimony at trial)
- United States v. Bermudez, 529 F.3d 158 (2d Cir. 2008) (district courts balance probative value against prejudice; abuse of discretion only with clear error)
- United States v. Carboni, 204 F.3d 39 (2d Cir. 2000) (evidence of other crimes may be admissible if part of the same transaction or to complete the story)
- United States v. LaFlam, 369 F.3d 153 (2d Cir. 2004) (application of Rule 404(b) for purposes other than character evidence)
- United States v. Madoff Inv. Sec. LLC, 654 F.3d 229 (2d Cir. 2011) (discussion of Ponzi scheme characteristics and impact on victims)