US News

EMPTY H$U BOX

Sen. Hillary Rodham Clinton‘s presidential campaign did an about-face last night, returning $850,000 in contributions raised by scandal-scarred Democratic donor Norman Hsu.

“In light of recent events and allegations that Mr. Norman Hsu engaged in an illegal investment scheme, we have decided, out of an abundance of caution, to return the money he raised for our campaign,” Clinton spokesman Howard Wolfson said.

He said the campaign conducted a thorough background check of Hsu – one of Clinton’s biggest fund-raisers – but was unaware he was a fugitive from the law.

The Clinton campaign also said it would conduct criminal background checks on people who raise large sums of money for the campaign.

Hsu has spent the last four years hiding in plain sight from officials in California, where he pleaded no contest in 1992 over a Ponzi scheme involving a phony business selling latex gloves. He skipped town just before his sentencing.

He went on the lam again last week after missing a California bail hearing, but was arrested in a Colorado hospital after witnesses said he was behaving erratically aboard a train.

The Clinton campaign had initially said it would turn over to charity the $23,000 Hsu had personally donated, but would not give back the much larger amount that he had “bundled” or raised from other supporters.

The campaign, which has raised more than $53 million, said Hsu was responsible for donations from some 260 people.

The Los Angeles Times yesterday reported the feds are looking into Hsu’s financial dealings, as well as whether he used other people as fronts to skirt campaign finance laws.

Questions about Hsu were first raised in a recent Wall Street Journal story that revealed a California family of modest means had donated over $40,000 to Clinton and $200,000 to other Democrats.

The newspaper reported the family lived in a home once listed as an address of Hsu, raising questions about whether Hsu was really behind their donations.

Among the contributions that will now be returned are those from members of that family, aides to Clinton said last night.

“In any instance where a source of a bundler’s income is in question, the campaign will take affirmative steps to verify its origin,” Wolfson said.

In addition to the $260,000 he contributed to federal candidates, Hsu also contributed at least $330,000 to state Democratic candidates and state party committees and ballot initiatives during the 2004 and 2006 elections.

Among the New York officials who received money were Gov. Spitzer and Attorney General Andrew Cuomo. Both have said they would divest their campaigns of the donations.

maggie.haberman@nypost.com