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Queens Chronicle

John Liu campaign aide, fundraiser guilty in straw donor scheme

Attempted fraud in the race for NYC mayor

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Posted: Friday, May 3, 2013 11:45 am | Updated: 12:43 pm, Fri May 3, 2013.

The former treasurer of City Comptroller John Liu's campaign for mayor and one of his fundraisers were convicted of attempted fraud and other federal charges yesterday for their roles in accepting illegal contributions and attempting to rip off the taxpayers of New York City.

Jia "Jenny" Hou and Xing Wu "Oliver" Pan were each found guilty of playing a role in taking campaign contributions from straw donors — people whose names were entered as contributors even though someone else had provided the money — and could face decades in prison.

Hou, 26, who lives in Queens, was found guilty of one count each of attempted wire fraud, obstruction of justice and making false statements to the Federal Bureau of Investigation. The attempted fraud and lying charges each carry maximum sentences of 20 years in prison, while obstruction of justice can result in another five years. Attempted wire fraud also brings a fine of up to $250,000 or twice the gain or loss from the offense.

Pan, 47, of Hudson County in New Jersey, was found guilty of one count each of conspiracy to commit wire fraud and attempted wire fraud, and could be sentenced to up to 20 years in prison for each. Both charges also carry fines of up to $250,000 or twice the gain or loss from the offense.

The defendants were found guilty after a three-week trial and are expected to be sentenced Sept. 20.

According to the government, an undercover FBI agent provided Pan with $16,000 in cash that the two agreed would go to the campaign under the names of various straw donors, since the maximum legal contribution from an individual is $4,950. Pan dispersed the funds to the fake contributors. Meanwhile Hou taught a campaign volunteer how to imitate the handwriting of donors on contribution forms required by the city Campaign Finance Board, discussed how to conceal information from the agency, withheld records in defiance of a subpoena and lied to investigators.

Campaigns receive $6 in taxpayer matching funds for every $1 they raise in eligible contributions.

“As the jury found, Jia Hou and Oliver Pan stuck a knife into the heart of New York City’s campaign finance law by violating the prohibition against illegal campaign contributions, all to corruptly advantage the campaign of a candidate for city-wide office," prosecutor Preet Bharara, the U.S. attorney for the Southern District of New York, said in a prepared statement announcing the convictions.

Liu, a former city councilman from Flushing, has insisted his campaign did nothing wrong and has not been charged with any illegalities. He issued a statement yesterday that says, "I am deeply saddened by the verdict. I continue to believe in Jenny being a good person and exceptional individual. I look forward to this year's mayoral election and will continue to ask the voters for their support."

Hou, as the campaign's treasurer, was responsible for all its financial disclosures, as well as accounting for the contributions it received and making sure they were legal. She was also responsible for providing the CFB with the names of all fundraising intermediaries, known as bundlers, who take contributions from other people on the campaign's behalf. But although Liu had been fundraising for his mayoral run since at least December 2009 — a month after he won the election for comptroller — the campaign did not disclose the names of any bundlers until after it was subpoenaed in December 2011, according to the prosecution. And even when it did provide a list, it left out the names of multiple bundlers.

The government said straw donors were reimbursed for contributions that actually came from other people who were donating over the legal limit on multiple occasions, including the time the undercover FBI agent gave Pan $16,000. The straw donors then filled out contribution forms with their names, addresses and other information, after which they were paid back. The forms included statements saying that the donors were contributing their own money and were not being reimbursed.

"Hou worked closely with individuals who served as intermediaries in connection with multiple events where straw donors were reimbursed for their contributions, and nevertheless failed to disclose to the NYCCFB the involvement of these intermediaries in the campaign," the U.S. Attorney's Office said in its announcement of the convictions. In one case, Hou "explicitly offered" to pay back a friend for making a contribution, the office said.

She then obstructed the investigation by withholding emails and electronic "chats" regarding the scheme after the subpoena was issued, according to the authorities. When FBI agents questioned her about her role in the plot and her compliance with the government's subpoena, she "made multiple false statements" to them, the government said.

"Cases like this give the people of New York yet another reason to be troubled by the electoral process, and they have a right to demand fair, open, and honest elections untainted by cynical subversion of campaign finance laws," Bharara said. "With these convictions, it is our hope that some measure of the public’s confidence can be restored. We will continue our efforts to stamp out public corruption wherever we find it. We thank the jury for their time and service, and the outstanding prosecutors who so ably tried this case.”

Bharara has gone after a number of allegedly corrupt public officials and political operatives in Queens, the rest of the city and the suburbs lately, winning a guilty plea for conspiracy to commit mail fraud from former state Sen. Shirley Huntley of Jamaica in February and announcing a widespread bribery case against six people including state Sen. Malcolm Smith (D-Jamaica) and City Councilman Dan Halloran (R-Whitestone) on April 2.

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