N.Y. Comptroller Supporters Get Prison for Donor Fraud

Two supporters of New York comptroller and former mayoral candidate John Liu were sentenced to prison for a scheme to send thousands of dollars in illegal contributions to his campaign using straw donors.

Jia “Jenny” Hou, Liu’s former campaign treasurer, was sentenced to 10 months while Xing Wu “Oliver” Pan, a fundraiser, was ordered to serve four months.

Hou and Pan were convicted in May after a three-week trial in federal court in Manhattan of campaign finance fraud in a scheme to recruit people to pose as donors, conceal their identities on filings to the city’s Campaign Finance Board and then try to get matching funds provided by the city.

“The damage done by this crime in adding to the public’s cynicism over the process is incalculable,” said U.S. District Judge Richard Sullivan, who presided over the trial. “It makes people shrug and say the system is corrupt.”

Irwin Rochman, a lawyer for Pan, asked Sullivan to sentence his client to a term of five years’ probation, including four months of home detention. He argued a prison term would cause “substantial harm” to Pan’s efforts to rebuild his life. The trial was delayed for several months after Pan was involuntarily committed at a hospital.

Prosecutors argued today that Pan deserves eight to 14 months in prison.

Election Process

Before addressing the court, Pan bowed to Sullivan, prosecutors and to the courtroom audience. Then he apologized for his crimes.

“I take full responsibility for what I did,” Pan said. “It is a valuable lesson with a heavy price.”

Sullivan sided with probation officials who recommended a sentence of four to 10 months for Pan. He said the crime for which Pan was convicted “is really about undermining the election process and undermining the electoral system.”

Hou was also convicted of attempted wire fraud, false statements and obstruction of the federal investigation. Her lawyer, Gerald Lefcourt, asked Sullivan to impose a non-jail sentence, citing her age at the time the crimes occured and that she’d likely be deported to China if she was sentenced to more than a year.

Hou wiped tears from her eyes as she told Sullivan that she’d never broken the law or focused on matching funds for the campaign.

‘My Innocence’

“Throughout these proceedings, and in fact, prior to them, while the investigation was going on, I have maintained my innocence,” she said. “With respect for the court, I am not changing that position. I believed from day one that I never took any actions with the purpose of obtaining matching funds improperly.”

She blamed her conviction on her youth and lack of experience.

“What I lacked was experience in life, and that lack of life experience meant I did not have the judgment evidently required to step back and say, ‘Hey, what is really going on here?’ or to say, ‘Hey, if you impose a quota on fundraisers they may feel pressured to reimburse people,’” she said. “I did not have the life experience to exercise the judgment necessary to ask such questions.”

False Statements

Sullivan told Hou that while he was sympathetic to her situation, she was still convicted of fraud, making false statements to U.S. investigators and obstruction.

“I don’t doubt that you were thrust into a situation,” the judge said. “It’s not a crime to be overwhelmed, it’s not a crime to be naive and lack life experiences. But again, that’s not what the jury convicted you of. They convicted you of fraud.”

Assistant U.S. Attorney Justin Anderson, who sought a prison term of 24 to 30 months for Hou, said today that she had attempted to deceive the Campaign Finance Board in the straw donor scheme. The jury found Hou guilty of obstructing a federal grand jury investigation into the matter by failing to produce documents in response to federal subpoenas and falsely claiming that she’d complied with investigators’ requests.

Matching Funds

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 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.

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 wasn’t charged in the case, finished fourth in the Democratic primary for mayor in September.

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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