Source Financing Investors sent a letter to its investors this week saying that it was concerned about what had happened to the $40 million entrusted to Mr. Hsu, and that it had notified the Manhattan District Attorney’s Office, which is investigating. Mr. Rosenberg said fund managers were shocked by the discovery of Mr. Hsu’s past legal troubles.

“Obviously, people with a proven history of success in finance wouldn’t have invested unless they believed it made economic sense,” he said. “They had every reason to believe these were authentic financial transactions that related to real business deals.”

Mr. Hsu, a major bundler of campaign contributions for Senator Hillary Rodham Clinton’s presidential campaign, was arrested last week after skipping a court appearance related to the 1991 fraud case. It was the second time he had vanished, the first being in 1992 when he was due to be sentenced to up to three years in prison on the fraud conviction, but fled and went on to start a new life as a businessman and later as a political fund-raiser in New York. He turned himself in last month after news accounts revealed an outstanding warrant for his 1992 disappearance.

Since then, further disclosures have raised questions about the nature of his businesses and how he was able to raise hundreds of thousands of dollars for Democratic campaigns. Mr. Hsu presented himself as an apparel executive, but little public information was available for his company, Components Ltd., which accepted the $40 million investment from Source Financing Investors.

Financial records for Components Ltd. reviewed by The New York Times show that in 2003 it paid more than $100,000 to nine people who later made campaign contributions to Mrs. Clinton and other candidates. The records revealed a pattern of transactions  a flurry of transfers and checks, some of which bounced, totaling about $600,000 in a single month  that was similar in many respects to what was described in court records relating to the Ponzi scheme for which Mr. Hsu was convicted.