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Chinese Fund-raiser for New York City Comptroller John Liu Arrested

Posted by Author on November 19, 2011

A fund-raiser for the New York City comptroller, John C. Liu, whose campaign finances are under federal investigation, was arrested on Wednesday morning on charges that he helped illegally funnel thousands of dollars into Mr. Liu’s campaign account, according to court papers and people briefed on the case.

A criminal complaint unsealed on Wednesday says an undercover agent from the Federal Bureau of Investigation posed as a businessman seeking to donate $16,000 to an unidentified candidate for citywide office in New York. That candidate, the people briefed on the case said, was Mr. Liu.

The complaint details how the fund-raiser, Xing Wu Pan, in a series of meetings secretly recorded by the F.B.I., helped the purported businessman circumvent the city-imposed limit of $4,950 for individual donors by recruiting 20 fictitious, or straw, donors.

The arrest represents the latest political blow for Mr. Liu, a popular Democrat from Flushing, Queens, who has been reeling from questions about whether he relied on straw donors as part of his aggressive fund-raising machine.

It is unclear from the charges whether Mr. Liu knew of the scheme.

Mr. Pan told the purported businessman that they would organize a fund-raiser in which a handful of straw donors would attend to make it appear that the money was coming from many people, the complaint said. But Mr. Pan said it would be made clear to Mr. Liu that the event was underwritten by the businessman.

“Here’s the thing, only (the candidate) knows it’s your event,” Mr. Pan told the agent. “Legally, legally, on the form,” Mr. Pan explained, the campaign finance paperwork would make it appear that the contributions came from the checks and credit card payments from the straw donors, the complaint said.

At the Aug. 17 fund-raiser, Mr. Pan introduced the undercover agent to Mr. Liu as a “very good friend.” He then told Mr. Liu, “Tonight is his event,” referring to the agent.

The agent recorded the meeting with a concealed video camera.

Mr. Liu, in a statement released after news broke of Mr. Pan’s arrest, said: “I am saddened by what I read today. If it is true, then the conduct was clearly wrong and my campaign was not told the truth.”

Mr. Liu’s lawyer, Paul Shechtman, said Wednesday night that Mr. Pan was operating without Mr. Liu’s approval.

“John Liu is not the first person in public life to have someone try to ingratiate himself by violating the campaign finance laws,” he said. “Today’s arrest is a sad story, but there is no suggestion that Mr. Liu or anyone on his campaign staff did anything wrong.”

On Wednesday evening, before a plumbers’ union event in Long Island City, Mr. Liu refused to discuss his relationship with Mr. Pan.

The comptroller, who has in the past said he personally maintained strict controls on his fund-raising operation, has been struggling to address questions after a report last month in The New York Times found that some people listed as his donors in campaign documents said they had never given money to Mr. Liu.

The Times also found that Mr. Liu had failed to comply with a city requirement that he disclose the names of so-called bundlers — well-connected individuals, like Mr. Pan, who collect contributions for a candidate from friends, relatives, business associates and others. After initially pledging to disclose the identities of those bundlers, Mr. Liu has declined to do so.

The complaint and subpoenas issued last week by federal prosecutors suggest that the investigation is examining whether there is a broader pattern in which donors seeking to contribute sums larger than the legal limit are funneling the money to the campaign using straw donors.

Timothy Chuang, who has been active in a Taiwanese merchants association, on Wednesday told The World Journal, a Chinese-language newspaper, that he had helped the owner of Dynasty Stainless Steel — whose records were subpoenaed by federal authorities last week in connection with the Liu inquiry — find 10 people to give to Mr. Liu’s campaign.

Dynasty’s lawyer, Steve Zissou, had no comment on Wednesday.

Mr. Pan, a 46-year-old resident of Mendham, N.J., is no stranger to Mr. Liu, or to power brokers in New York’s Chinese-American community. He has long been closely allied with the United Fujianese of America Association, one of the city’s most prominent groups for the fast-growing Fujianese population, and its leader, Jimmy Cheng.

In the complaint, Mr. Pan, who is also known as Oliver, is quoted as saying that he had funneled large campaign contributions through straw donors to Mr. Liu in previous elections, and, to a much smaller extent, another politician. The other politician is not named in the complaint, which was signed by Donald M. Chu, an F.B.I. agent.

In New York City, campaign finance is closely scrutinized, in part because of the city’s generous matching program, in which up to $6 of public funds are provided to candidates for every $1 raised from individual donors. And in several conversations captured with the hidden video camera, according to the complaint, Mr. Pan explained the nuances and incentives of that matching program.

“Whatever they can raise,” Mr. Pan told the agent in a recorded conversation, “let’s say they can raise a million … the city or the state will match whatever the, the percentage to that.”

Dressed in a brown sweater and gray slacks, Mr. Pan appeared before Magistrate Judge Henry B. Pitman in Federal District Court in Manhattan shortly before 6 p.m. on Wednesday.

He was charged with one count each of conspiracy to commit wire fraud and attempted wire fraud. Mr. Pan admitted to the F.B.I. in October that he had “illegally funneled the money he received” from the undercover agent to Mr. Liu’s campaign, the complaint said. Each count carries a maximum sentence of 20 years. He was released on a $100,000 bond. His lawyer, Julia L. Gatto, declined to comment.

The alleged straw donor scheme, according to the office of the United States attorney, Preet Bharara, was fraudulent in two ways. It allowed for more money to be directly given to the candidate’s campaign by evading the maximum individual contribution limit. And by inflating the sums given directly by donors, it entitled the campaign to claim additional matching public funds fraudulently.

The complaint refers in several instances to two of Mr. Liu’s campaign aides who were in attendance at the Aug. 17 fund-raiser where the undercover agent met Mr. Liu. One aide is identified as Mr. Liu’s 2013 treasurer; public records indicate that she is Jia Hou, known as Jenny. Her father, Jian Li Hou, is the head of a Beijing civic association in New York. Messages left for Ms. Hou were not returned on Wednesday.

The secretly recorded conversations described in the complaint provide an up-close glimpse of what prosecutors characterize as an effort to funnel cash and conceal the source of money from the authorities. For example, on Oct. 13, after the article appeared in The Times suggesting Mr. Liu’s campaign may have relied on straw donors, the undercover agent feigns concern to Mr. Pan about their own reliance on fictitious contributors at their Aug. 17 event.

Mr. Pan told the agent that if he were ever asked about donations to Mr. Liu, he should “just decline to comment.” He added, “You have nothing to say.”

Mr. Pan assured the agent that the straw donors were his friends and would keep quiet about where the money came from.

“One thing for sure,” he said. “They won’t say the money’s from you.”

Source: New York Times

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