Citing Irregularities, City Board Rejects Public Money for Liu’s Campaign

Michael Appleton for The New York Times
Supporters and opponents of John C. Liu at the offices of the New York City Campaign Finance Board.

By DAVID W. CHEN
Published: August 5, 2013

Three months after the convictions of two former associates of John C. Liu for participating in an illegal fund-raising scheme, the New York City Campaign Finance Board voted on Monday to withhold as much as $3.5 million in public money from his mayoral campaign.



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Michael Appleton for The New York Times

Mr. Liu after the finance board’s decision on Monday. His lawyer said an appeal of the ruling was likely.

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“The evidence suggests that the potential violations are serious and pervasive across the campaign’s fund-raising,” the chairman, the Rev. Joseph Parkes, said in a statement, which he read aloud after the unanimous vote at the board’s offices in Lower Manhattan.

“The choice to withhold payment in this instance,” Mr. Parkes added, “is based on the campaign’s inability to demonstrate it is in compliance with the law.”

The lawyer for Mr. Liu, the city’s comptroller, said the decision dealt a “death penalty” to the campaign, which had already been struggling in the wake of news reports and criminal charges over fund-raising practices in the Liu campaign.

Mr. Liu was born in Taiwan and immigrated to the United States when he was 5.

In 2009, he became the first Asian-American elected to citywide office in New York, and his mayoral candidacy had been a symbol of the political aspirations of the city’s fast-growing Asian-American communities. But polls have shown him stuck in fifth place among the candidates vying for the Democratic nomination.

The lack of matching funds places Mr. Liu at a severe financial disadvantage to his rivals, because he will now have significantly less money to buy television advertising. The other leading Democrats all qualified for the matching funds under the city’s relatively generous campaign finance program, a voluntary system in which candidates also agree to abide by strict spending limits.

Mr. Liu did not attend the hearing, or a protest that preceded it, in which about 100 of his supporters chanted, “Give Liu the Money!” About two dozen of his opponents silently held signs, many in simplified Chinese characters, stating “Arrest John Liu!”

But in an afternoon news conference, Mr. Liu, 46, said, “I utterly dispute and repudiate” the board’s findings. He conceded that “there’s no question this weakens my campaign,” but said he believed that the strength of his support, from individuals and some labor unions, would help him overcome the loss of the public money.

“I’ve taken body blow after body blow after body blow,” he said, “but there’s not going to be a knockdown here.”

The decision by the board, based on what it said was “evidence of substantial noncompliance” with campaign finance laws, was not a surprise. It has previously denied payments to candidates with questionable contributions whose campaigns had not been charged with crimes; among them was Pedro Espada Jr., who in 2001 was running for Bronx borough president and was denied public matching funds after questions arose about the source of some of his contributions. But the decision on Monday was the highest-profile and largest penalty in the history of the city’s finance program.

Even as the board voted to deny Mr. Liu matching funds, it granted initial payments to a number of other candidates.

Among those running for mayor, Christine C. Quinn received the most, $3.36 million, reflecting the fact that Ms. Quinn, a Democrat who is the City Council speaker, raised more money faster than her competitors. She was followed by Public Advocate Bill de Blasio, another Democrat, who got $2.19 million. Former Representative Anthony D. Weiner, a Democrat, received $1.46 million; Joseph J. Lhota, a Republican and former chairman of the Metropolitan Transportation Authority, $1.44 million; and William C. Thompson Jr., a Democrat and former city comptroller, $1.43 million.

After the vote, Amy M. Loprest, the board’s executive director, told reporters that the board was troubled that several Liu aides continue to hold senior positions in the campaign even after it became clear that there were problems with the campaign’s fund-raising. One aide had admitted in court to offering to reimburse donors illegally.

Mr. Liu’s lawyer, Martin E. Connor, said Mr. Liu would quite likely appeal the decision, first to the board, then to a court. But Mr. Connor said “the real problem is time” because any resolution would probably come too late for Mr. Liu to receive matching funds that could be used on television advertisements before the primary. As a result, Mr. Liu, who has already spent hundreds of thousands of dollars out of his campaign coffers on legal fees, will probably have to make do with the $1.5 million that he has left.

“Don’t look for a lot of network TV ads,” Mr. Connor said.

Mr. Liu’s fund-raising troubles began in October 2011, when The New York Times found irregularities in his disclosure documents. Some people listed as donors said in interviews that they had not given to the campaign; some were listed as employees of companies at which they did not work. Federal prosecutors, who later suggested that an undercover operation into the Liu campaign had already been under way, arrested Xing Wu Pan, a Liu fund-raiser, in November 2011, and Jia Hou, a former campaign treasurer, in February 2012.

Prosecutors said the defendants relied on so-called straw donors — people whose contributions are reimbursed by others — to raise money. Mr. Liu was not charged, but federal investigators, in their trial testimony, depicted the Liu campaign as condoning, if not orchestrating, questionable fund-raising practices.

Mr. Pan was found guilty in May of conspiracy to commit wire fraud and attempted wire-fraud in relation to the straw-donor scheme. Ms. Hou was acquitted of conspiracy but convicted of her role in the scheme and lying to federal agents and obstruction of justice. They are scheduled to be sentenced on Sept. 20 — 10 days after the mayoral primary.

http://www.nytimes.com/2013/08/06/nyregion/campaign-finance-board-denies-liu-public-funds.html?_r=0