News Source: AP
New York, NY – The campaign treasurer for New York City Comptroller John Liu was arrested on fraud charges Tuesday in a continuing probe of fundraising efforts by the Democrat, who had been widely viewed as a potential successor to Mayor Michael Bloomberg.
Jia Hou, 25, also known as Jenny Hou, was arrested on charges that she was part of a scheme that used straw donors to funnel large, illegal contributions to Liu’s campaign. The government said the investigation had turned up evidence of at least 40 fraudulent donations.
Hou, of Queens, was charged with conspiracy to commit wire fraud, attempting to commit wire fraud and obstruction of justice. If convicted of all charges, she faces up to 60 years in prison. Hou was scheduled to appear in federal court later Tuesday.
Defense attorney Martin Adelman said Hou will assert her innocence.
“She’s an idealistic young woman. I believe when all the proof comes out, that’s how she’ll be seen,” he said.
Asked if the news affected his confidence in Liu’s ability to perform his job, Bloomberg said he hadn’t yet heard the details of the case and couldn’t comment.
In a statement, Liu said he was “stunned” by the charges against Hou — the second arrest to stem from an ongoing federal investigation of his campaign.
“These accusations against her are uncharacteristic and unexpected,” Liu said. “Jenny is a smart, hardworking person who I hope will be treated fairly.”
The charges were brought several months after a New Jersey man was arrested on charges he conspired to funnel illegal contributions donated by an undercover FBI agent posing as a businessman. Liu has said that if those allegations are true, his campaign was not told the truth.
Once considered one of the top Democratic contenders for the 2013 mayoral race to lead the nation’s largest city, Liu has been dogged by falling approval ratings and months of headlines since an October report in The New York Times questioned whether his campaign was accurately reporting the identity of his donors and revealed that he had not been reporting the names of supporters raising money on his behalf.
Liu has said he remains determined to continue his campaign. He has defended his practices and said he is cooperating with investigators. Last month, he belatedly disclosed the names of the supporters who raised money for him.
“New York’s campaign finance laws are not optional,” U.S. Attorney Preet Bharara said Tuesday in a statement. “Today, we allege that Jia Hou, a campaign treasurer, was a central figure in a coordinated scheme to break the city’s campaign finance laws.”
He said she concealed the use of straw donors to subvert the city’s electoral system.
Janice K. Fedarcyk, head of the FBI’s New York office, said Hou circumvented campaign finance rules meant to limit the influence of wealthy contributors on political campaigns.
“In a very real sense, Hou is accused of undermining the democratic process,” she said.
Hou also was charged with obstructing the government’s investigation of fraud in connection with the campaign’s fundraising efforts.
Prosecutors said Hou was responsible for all financial disclosures related to the campaign. They said she participated in a scheme to use straw donors to circumvent the $4,950 limit on individual donations so that the campaign could more frequently collect up to a maximum of $1,050 in matching funds that the city provides for each contributor.
The government said Hou instructed one campaign volunteer to imitate the handwriting of campaign donors on contribution forms to disguise the campaign’s use of straw donors. It said she discussed with another campaign volunteer how to conceal information about campaign fundraisers to avoid bringing attention to the possible use of undisclosed intermediaries and straw donors.
Prosecutors said the obstruction of justice charge stemmed from Hou’s effort to frustrate the investigation by failing to produce documents in response to subpoenas and by representing that her production of documents was complete when it was not.
Related: [NYT] Campaign Aide to City Comptroller Held in Finance Case