John Liu Weighs Next Steps in NYC Mayoral Campaign After Treasurer Charged

Fraud charges against his campaign finance chief have New York City Comptroller John C. Liu considering “how to move forward” in his bid for mayor.

Jia “Jenny” Hou, Liu’s campaign treasurer, was charged with attempted wire fraud, conspiracy and obstruction of justice in helping to funnel illegally large contributions into a fund to finance a drive for “a citywide elective office in 2013,” in a criminal complaint unsealed yesterday in New York.

Hou is the second person tied to the comptroller’s campaign to face charges in U.S. district court. Xing Wu Pan, a fundraiser, was indicted Feb. 15 on four fraud counts stemming from a plan to direct $16,000 in contributions to the campaign. Liu wasn’t named in yesterday’s complaint.

“We’re going to sort through all this stuff and figure out what the next course of action will be,” Liu told reporters yesterday when asked whether he is putting his campaign on hold.

“Our campaign has acted properly at all times,” Liu said. “I am aware that the complaint suggests that there are instances where that is not the case. I’m going to review all the stuff that has transpired today and we’ll figure out how to move forward from here.”

Hou, 25, of Queens, New York, was responsible for campaign financial disclosures, including reporting donations by individuals. Each count against her carries a prison term of as long as 25 years.

‘Stunning’ News

“The news today was stunning and I hope that she will be treated fairly,” Liu said. “Jenny Hou is a young person but one whose intelligence and diligence and hard work has been among the very top percentiles of individuals of any age that I have known.”

At an appearance before U.S. Magistrate Judge Theodore Katz in Manhattan, Hou was released on a $100,000 personal recognizance bond. Katz ordered her to surrender all her travel documents and directed that she restrict her movements to the New York City area.

“Jia Hou, a campaign treasurer, was a central figure in a coordinated scheme to break the city’s campaign finance laws,” Manhattan U.S. Attorney Preet Bharara said in a statement. “Hou concealed the use of straw donors, subverted the city’s electoral system, and obstructed justice.”

Hou’s lawyer, Martin Adelman, said she intended to plead not guilty to the charges.

Fact Finding

“I’m going to review this complaint with my client, get the objectives and facts and then we’re going to see how we’re going to proceed,” Adelman said in an interview before Hou’s court appearance.

Asked whether he knew of Hou’s actions, Liu told reporters repeatedly that the campaign acted properly, despite suggestions in the complaint “that there are instances where it’s otherwise.”

Hou used at least 40 people to pose as legitimate donors in order to send the campaign large, illegal contributions far above the individual limit set by the city’s Campaign Finance Board, prosecutors said.

Using this method, Hou was also able to fraudulently increase the amount of matching funds the board provided to the campaign, the U.S. said. She worked with individuals who served as intermediaries in connection with fundraising events where the fake donors were reimbursed, prosecutors said.

Hou was also charged with obstructing a federal grand jury investigation in November. She allegedly failed to produce documents in response to subpoenas and falsely claimed that she had complied with investigators’ requests.

The case is U.S. v. Hou, 12-mag-539, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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