Aug. 5 (Bloomberg) -- New York City Comptroller John Liu was denied more than $3 million in public matching funds in his bid for the Democratic mayoral nomination after the Campaign Finance Board said it found evidence of possible “serious and pervasive” fundraising violations.
The board disqualified Liu from receiving a 6-to-1 match on city residents’ donations up to $175, dealing a setback to a campaign that has struggled in the polls. At a news conference this afternoon, Liu told a crowd of supporters that he would appeal the decision and said he plans to stay in the race.
“I utterly dispute and repudiate” the board’s findings, Liu said. “There’s no question this weakens my campaign. For the last couple of years I’ve taken body blow after body blow after body blow, but there’s not going to a knock down here.”
Liu’s campaign has been the subject of a federal investigation for at least two years. In May, the Manhattan U.S. Attorney’s office obtained convictions against his former campaign treasurer and a fundraiser, who were charged separately for trying to subvert the city’s campaign-finance system with straw donors to obtain matching funds.
“The evidence suggests that the potential violations are serious and pervasive across the campaign’s fundraising,” board Chairman Joseph Parkes, a Catholic priest, said in a statement.
The five-member board has two appointees of Mayor Michael Bloomberg and two selected by City Council Speaker Christine Quinn, one of Liu’s six Democratic rivals for the party’s mayoral nomination in a Sept. 10 primary. The mayor appoints the chairman after consultation with the speaker.
Bloomberg is founder and majority owner of Bloomberg News parent Bloomberg LP. Liu has been a frequent critic of his mayoral administration.
At a hearing before the board this morning, Liu attorney Martin Connor said the candidate and his campaign shouldn’t be held responsible for actions of two subordinates. They each told federal authorities Liu hadn’t been involved in their fundraising efforts, Connor said.
Connor told the board that while the jury’s guilty verdicts against the two Liu aides for wire fraud had to be respected pending an appeal, the jury found no evidence of conspiracy involving Liu or other top aides in his campaign, he said. The board reached its decision based on evidence revealed during the prosecution and through its own investigation, Parkes said.
“The candidate is ultimately responsible for the campaign’s compliance with the law,” Parkes said in the statement. “The choice to withhold payment does not require a finding that the candidate has personally engaged in misconduct.” Actions of a campaign treasurer or “other agents are legally indistinguishable from the campaign,” he said.
Liu, 46, was five years old when his parents arrived in the U.S. from Taiwan and settled in Flushing, Queens, where more Chinese live than in Manhattan’s Chinatown. After serving two terms in the City Council, he became the first Asian elected citywide.
As comptroller, he’s New York’s chief financial officer, responsible for overseeing $140 billion in pension assets and auditing city agency spending. In a July 29 Quinnipiac University poll, he came in fifth, with 6 percent support among likely Democratic voters, in a field of seven candidates competing in a Sept. 10 primary.
Last month Liu reported he’s raised almost $3.4 million from 5,800 donors and spent about $1.9 million in the mayoral race, giving his campaign treasury a balance of about $1.5 million. Liu expected to receive about $3.5 million, campaign spokeswoman Sharon Lee said.
Lillian Roberts, president of District Council 37 of the American Federation of State, County and Municipal Employees, the city’s largest public-workers union, pledged to step up its support of Liu.
“What we have to do now to show our resentment is put boots on the ground every-damn-where,” she said.
The board disbursed a total of almost $9.9 million to five candidates participating in the public-financing system, with Quinn receiving $3.4 million; Public Advocate Bill de Blasio, $2.2 million; former U.S. Representative Anthony Weiner, $1.5 million; and former city Comptroller William Thompson, $1.4 million. Former Metropolitan Transportation Authority Chairman Joseph Lhota, the lone Republican participating, received $1.4 million.
Liu backers demonstrated in support of the candidate in front of the board’s Lower Manhattan offices Aug. 2, and again today before the board approved the staff recommendation.
Under city law, a candidate who collects $250,000 in donations of $175 or less qualifies for 6-to-1 matching funds in a mayor’s race, on the condition that the candidate limit spending to $6.4 million the primary and again in the general election, and adheres to rules governing how the money may be spent.
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