Democratic presidential hopeful Senator Hillary Clinton is returning about $850,000 in campaign contributions from a fundraiser, the campaign said last night.
Norman Hsu, a major donor to the Democratic Party, was arrested last week after trying to escape sentencing on a decade-old criminal charge.
"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," a campaign spokesman said.
The campaign is refunding about $850,000 (€616,000) to some 260 donors this week, he said.
Hsu was convicted of fraud in 1992 but had evaded authorities for years, spending time in Asia before emerging in recent years in the United States as a generous donor to Democrats, including Clinton presidential rival Senator Barack Obama of Illinois.
FBI agents arrested Hsu on federal charges of unlawful flight last week at a Colorado hospital. He had failed to appear at a hearing in California the previous day.
California Attorney General Jerry Brown's office said last week that Hsu would be returned to the state to face sentencing for his conviction arising from a business scheme that robbed about 20 investors of approximately $1 million.