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AP Interview: Liu Defends Fundraising, Treasurer

Tuesday, March 20, 2012

Comptroller John Liu walks back to his office surrounded by reporters. (Jessie Wright-Mendoza for WNYC)

It has become a piece of generally held wisdom in New York political circles: City Comptroller John Liu has lost any shot of becoming mayor in 2013 amid a federal investigation into his fundraising practices that has led to two arrests.

The embattled Democrat, for weeks reluctant to provide details of his campaign workings, is now laying out an extensive defense of his fundraising and even speaking with optimism about his political future.

In an interview with The Associated Press, the comptroller described how he managed his campaign staff, including the 25-year-old treasurer who now could face up to 60 years in prison on charges of wire fraud and obstruction of justice. He said that he was aware of a history of fundraising improprieties in the city's Asian-American community, that he took the necessary steps to educate his donors and prevent problems, and insisted that ultimately his campaign was just as careful as those of other citywide candidates.

"I don't believe it's our campaign's responsibility or any campaign's responsibility to verify the home address, to verify the work address, to essentially run a credit check on any donor," Liu said in response to the allegations that his campaign made use of straw donors who funneled illegal contributions from wealthy individuals into the campaign. "Do we operate differently than other campaigns? Absolutely not."

Liu has previously stopped short of declaring the innocence of his arrested treasurer, but in Monday's interview he came forcefully to her defense and to the defense of his campaign.

"My campaign has and continues to act appropriately. We follow the rules," he said. "I believe in my campaign treasurer, and I believe in my campaign staff."

While he has said he takes responsibility for the actions of his staff, Liu insisted he had "no dealings" with the campaign's compliance with election law.

Eric Friedman, a spokesman for the city's Campaign Finance Board, said that while campaigns are not responsible for performing background checks, that doesn't absolve them of responsibility for their donors' actions.

"It's the campaign's responsibility to make sure it's following the law. Period," he said.

The picture Liu painted diverged sharply from that drawn by journalists and prosecutors since October, when a New York Times investigation questioned whether his campaign was accurately reporting the identity of his donors. In canvassing the homes of nearly 100 donors, the newspaper found dozens of irregularities, including cases in which donors said they never gave or that another person donated money on their behalf - a practice that is illegal. The newspaper also reported Liu had not given campaign authorities the names of intermediaries raising money on his behalf, as was required by law.

A month later, one of those fundraisers was charged with conspiring to funnel $16,000 from an undercover FBI agent into Liu's campaign through straw donors, evading a $4,950 contribution limit. In court papers, prosecutors said the fundraiser had promised the agent that Liu would know the money from the straw donors in truth came from him.

And when the campaign's treasurer, Jia Hou, also known as Jenny Hou, was arrested in February, prosecutors detailed an online conversation in which she offered to reimburse someone for a donation to the campaign, and another in which she instructed a volunteer to fake donors' handwriting on contribution forms, apparently to avoid scrutiny by authorities.

On Monday, Liu seemed to both distance himself from Hou and defend her, saying that as the candidate he was responsible for her actions but adding that their conversations had never focused on the details of fundraising. He claimed that he'd personally instructed his staff on precautions they should take to avoid any problems with straw donors but said he had never instructed Hou on the specifics of donation quality-control.

"She doesn't come to me for compliance or administrative type questions," he said of Hou, who held a position more often filled by campaign veterans with extensive experience in finance regulations. Instead, he said, their conversations had centered on preparations for fundraisers.

"`Are we all set for this fundraiser? Are we all set for that?' And just to make sure that everything was moving along properly," he said of their discussions. "It's like I don't tell my audit folks how to audit agencies, but I do stay on top of people to say, `Are we on track, are we on schedule with this audit and that audit."'

"When it comes to compliance and administration, those are issues that I have no dealings with. When it comes to the fundraising aspect, I try to keep everybody on target," he said.

Hou reported to him, Liu said, and was expected to reach out to the Campaign Finance Board for technical guidance, and later to the campaign's election lawyer, who wasn't hired until October, the same month in which the New York Times article appeared. The lawyer didn't immediately respond to a message seeking comment. Hou's lawyer, who didn't immediately comment, has said she is innocent and will fight the charges.

The nature of the charges have led some political analysts to question how Liu - the city's fiscal watchdog - can continue investigating the city's finances while dealing with his own allegations of impropriety. But Liu said that he had brought the skepticism that he uses as comptroller to his management of his campaign.

In fact, Liu said that as he looks back over the campaign's operations, he has found few things he wishes had been handled differently and believes there was only one major misstep.

"I struggle to find what is it exactly that I or my campaign did wrong," he said. "We were late with the intermediary filings. ... That is the main mistake that we've made."

Liu claimed that he'd told his staff to take certain precautions to avoid any problems with straw donors, and said that he was "unequivocally" certain they'd followed his directions at least 99 percent of the time.

Liu said he told them to accept only personal checks and personal credit cards. He said he told them - both verbally and in writing - that staff should inform would-be donors that they could only give their own money from personal accounts.

The comptroller said he instructed his staff to contact the city's Campaign Finance Board with any questions and turn away any contributions that raised their suspicions - something he said they've done for more than 100 donations worth more than $100,000. He said he told staff to reject all donations by money order in 2009, immediately after the board expressed concern that he had received sequentially numbered money orders - an indication that a single person may have paid for the donations of many.

But Liu also said his directives hadn't been fully followed. He had been surprised to learn of money orders that had been accepted by his 2013 campaign staff, he said. Records indicate that the campaign took in 15 money orders totaling $7,125. Prosecutors have alleged that Liu's treasurer's practice of accepting only some money orders was an effort to avoid scrutiny.

Many have speculated that prosecutors are likely pressing Hou and possibly others to turn on Liu or those close to him in exchange for leniency. Liu himself acknowledged that it's unlikely she's their primary target.

"I don't think it's Jenny they're after," he said. "But I'm proud of the way I've conducted my campaigns. I'm proud of the way I've conducted my office. I've done nothing wrong and I've got a clear conscience."

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Comments [1]

" . . . But Liu also said his directives hadn't been fully followed. . . "

Hey - that excuse worked for council president Quinn in 2008 embezzlement scandal ( http://www.youtube.com/watch?v=iOqecrHyzko ); but of course, she has more categories of progressive affirmative action "mojo" going for her.

Whatever happened to the Assistant U.S. Attorney's report on the investigation of this malfeasance?

May. 04 2012 12:54 PM

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