NYC Candidate Workers Found Guilty in Campaign Trial

Two supporters of New York comptroller and mayoral candidate John Liu were found guilty of attempted wire fraud for scheming to use straw donors to funnel illegal contributions to his campaign.

Jia “Jenny” Hou, 26, Liu’s former campaign treasurer, was acquitted yesterday in federal court in Manhattan of conspiracy to commit wire fraud and convicted of attempted wire fraud, obstruction and making false statements to federal investigators. Xing Wu “Oliver” Pan, 47, a fundraiser, was convicted of conspiracy and attempted wire fraud.

Prosecutors accused both of engaging in a scheme to recruit straw donors into making small campaign contributions to obtain thousands of dollars in matching funds from the city. The U.S. alleged the defendants submitted the contributions to fraudulently inflate the amount of matching funds that would be provided to Liu’s 2013 campaign.

“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,” U.S. Attorney Preet Bharara in Manhattan said in a statement. “Cases like this give the people of New York yet another reason to be troubled by the electoral process.”

Sentencing Set

U.S. District Judge Richard Sullivan, who presided over the trial, set sentencing for both for Sept. 20. Conspiracy to commit wire fraud and attempted wire fraud carry terms of as long as 20 years in prison. Obstruction of justice also carries a term of as long as 20 years, while the maximum sentence for the false statements charge is five years.

Lawyers for both Pan and Hou said they will appeal the convictions. They had argued that the two didn’t engage in any conspiracy and were ensnared in the case only after the government failed to implicate Liu in wrongdoing.

“We’re obviously very disappointed,” Gerald Lefcourt, a lawyer for Hou, said in an interview after court. “We think it’s an unjust verdict and we believe our client is not guilty of any crime, and unfortunately she got caught up in the middle of an obsessive quest to get John Liu.”

Pan’s lawyer, Irwin Rochman, told the jury that his client was entrapped by federal investigators.

“We are terribly disappointed,” he said in an interview. “Mr. Pan is collateral damage in the government’s war against John Liu in an investigation that went on for many years.”

Undercover FBI

Jurors deliberated for about seven hours yesterday before announcing to Sullivan that they had reached a verdict.

The scheme was uncovered after a Federal Bureau of Investigation agent, posing as a businessman known as “Richard Kong,” approached Pan seeking to make a $16,000 donation to the Liu campaign, using straw donors which could be used to obtain matching campaign funds.

During the two-week trial, jurors saw secretly recorded conversations and videos of sessions between Pan, Hou and Kong, which prosecutors said were evidence of wrongdoing.

Prosecutors said that Kong’s donation was above the maximum allowed by the city campaign finance laws. Kong was actually FBI Special Agent John Chiue, posing as a rich businessman from Texas seeking to open a chain of restaurants in New York City.

Donation Limit

At an August 2011 meeting secretly recorded by the FBI and shown to the jury at trial, Pan discussed with Kong how to circumvent the city’s $4,950-a-person campaign donation limit. Pan was heard instructing Kong to find 20 straw donors who would purport to make contributions of $800 each in their own names. He later used money received from the undercover agent to reimburse the donors, the U.S. said.

After the agent gave Pan $16,000 in cash, the two discussed an event for which people were recruited to pose as Liu donors, the U.S. said.

“Would they get matching contribution?” the agent asked on the tape.

“Uh huh,” Pan replied, adding later, “Legally, in theory it comes from everybody, but ... it’s your event.”

Liu, who is seeking the Democratic nomination to succeed Michael Bloomberg as mayor, hasn’t been charged with wrongdoing. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

The case is U.S. v. Pan, 1:12-cr-00153, U.S. District Court, Southern District of New York (Manhattan).

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