Hsu jailed upon his leaving hospital

A high-profile Democratic fundraiser who has fled twice from a 15-year-old grand theft conviction in the Bay Area was jailed in Colorado on Wednesday after being released from a hospital, where he had been treated for an unspecified ailment that got in the way of his latest escape.

Norman Hsu is now one step closer to returning to San Mateo County, where he pleaded no contest in 1992 to charges of defrauding investors by running a Ponzi scheme, but skipped town before he could be sentenced.

Hsu, 56, was moved Wednesday from St. Mary's Hospital in Grand Junction to the Mesa County jail, where he was booked at 6:30 p.m. MDT. He was arrested on federal charges of unlawful flight to avoid prosecution, but spokesmen for the FBI and the Mesa County Sheriff's Department said those charges would be dropped so California prosecutors can pursue their case.

Authorities will seek to extradite Hsu to San Mateo County. A court hearing on his status, conducted by video feed from the jail, is scheduled for today.

Hsu was supposed to have appeared in a Redwood City courtroom Sept. 5 for a bail-reduction hearing in his fraud case, but instead boarded Amtrak's eastbound California Zephyr that morning in Emeryville. He was taken off the train by paramedics the next day in Grand Junction after he stripped off his shirt and shoes and behaved erratically, witnesses and authorities said.

Hsu forfeited his $2 million bail.

Court documents filed by the FBI said the agency was alerted by phone that Hsu was at St. Mary's Hospital. A person familiar with the episode said someone at the hospital who was trying to figure out Hsu's identity called a number left on his cell phone. That person called the California attorney general's office, which alerted the FBI.

Hsu's attorney, James Brosnahan, said last week that Hsu had been under stress since his arrest Aug. 31 for skipping out on his 1992 sentencing. Hsu faced three years in prison before he dropped out of sight.

He reappeared in the late 1990s as a political rainmaker, raising hundreds of thousands of dollars for Democratic candidates in the past few years.

Democratic presidential candidate Hillary Rodham Clinton's campaign said this week that it would return $850,000 from 260 donors whose contributions were arranged by Hsu. But Wednesday, Clinton told reporters that those donors were free to contribute to her campaign again on their own.

Also Wednesday, New York City District Attorney Robert Morgenthau said he has opened an investigation into $40 million in business deals that Hsu has signed in recent years with Source Financing Investments, an investment group run by financier Joel Rosenman.

The Wall Street Journal said Rosenman, one of the creators of the 1969 Woodstock rock festival, has reported the money missing.