Hillary Clinton’s presidential campaign was hit by scandal for the first time yesterday when it emerged that one of her leading fundraisers was a convicted fraudster who had been on the run for 15 years.

Mrs Clinton, who until now has run a relentlessly disciplined campaign, was forced on to the defensive after it emerged that Norman Hsu, who has raised hundreds of thousands of dollars for her, was wanted in California after failing to appear for sentencing on a grand theft conviction in 1991.

The Clinton campaign, which defended Mr Hsu earlier this week when questions first emerged about his integrity, said it would donate to charity the $23,000 (£11,000) he had given to the New York senator and former First Lady.

He has also raised nearly $1 million for Democratic candidates generally since 2003, including John Kerry, the 2004 White House candidate. Many were rushing last night to divest themselves of his contributions.

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For the words 'Clinton" and "scandal' to once again be linked is perhaps the greatest fear among Hillary Clinton's campaign aides

Tim Reid

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But concerns were emerging last night about the methods Mr Hsu, a Hong Kong businessman based in New York, had used in his role as one of Mrs Clinton’s big fundraisers.

Mr Hsu was a leading “bundler” for Mrs Clinton – a key fundraiser who finds donors and then packages their cheques together. He is a member of her “HillRaiser” team, individuals who have pledged to raise more than $100,000. Next week he was due to co-host a Californian fundraising gala featuring the musician Quincy Jones.

An unusual pattern of donations he and other acquaintances have made to Mrs Clinton has raised questions about whether he was reimbursing the others for their donations – a breach of campaign finance laws. A lawyer for Mr Hsu denied any wrongdoing.

The Clinton campaign dropped Mr Hsu abruptly after it emerged that after pleading guilty to defrauding investors in California in 1991 he disappeared before his sentencing hearing. A warrant for his arrest was issued in 1992, but he left the state and Californian authorities never pursued him vigorously.

The revelation is, so far, no more than an embarrassment for Mrs Clinton. There is no evidence that she or her campaign knew about Mr Hsu’s tainted past. On one level it reflects the enormous pressure that candidates for the 2008 race are under to raise ever greater sums, and that they thus use donors they do not vet properly. Earlier this month Mitt Romney, a leading Republican candidate, was forced to return contributions from a fundraiser who was charged with defrauding companies of $32 million.

But Mrs Clinton, more than any other candidate – because of the scandal-plagued White House years of her husband – has sought to project an image of financial and moral integrity.

For that reason, anything remotely smelling of scandal is likely to bring uncomfortable reminders of the sleaze that beset her husband’s presidency.

Teams of investigators from rival campaigns will now be combing through Mrs Clinton’s fundraising disclosure forms. If a pattern of compromised donors emerges it could develop into a grave threat to her campaign. The Hsu episode will also be used by her enemies to remind voters of a scandal that beset Bill Clinton in 1996. More than 20 people were convicted for fraud or for funnelling Asian funds into the US elections.

How they stand

Democrat nomination

Rudy Giuliani 28.0%

Fred Thompson 16.8%

Hillary Clinton 37.8%

Barack Obama 21.2%

Source: realclearpolitics.com

Tim Reid on Hillary’s first blunder timesonline.co.uk/americas

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