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The Empire

A long Fall for Comptroller John Liu

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Liu's future political forecast looks cloudy. (Colby Hamilton / WNYC)

Standing next to the other city elected officials yesterday, New York City Comptroller John Liu didn't appear to be a man under siege. He was introduced by Working Families Party deputy director Bill Lipton at the press event before chastising the Mayor and lauding Occupy Wall Street.

But outside of the ring of liberal city officials and labor leaders, Comptroller Liu is facing serious questions about his fundraising activities, the likes of which could make his future political aspirations dead on arrival.

"We assume there will be a fair investigation of the allegations, and of course we would not comment on anything until that's done," said WFP spokesperson TJ Helmstetter. But it's uncertain how long political allies will be standing by Liu.

Liu's trouble really started back in July when a little-seen piece in Crain's pointed to some suspiciously large campaign contributions from supermarket workers. At the time, the Liu campaign pushed back, essentially suggesting the question was thinly-veiled racism, calling it "a ridiculous assumption."

But then the New York Times started poking into the campaign's finances. They found a number of major irregularities, including the possibility that some donors didn't even exist. Liu came on WNYC's Brian Lehrer Show to defend his campaign, questioning how the Times conducted its reporting but vowing to get to the bottom of things. He later hired former New York State Attorney General Robert Adams to review his own fundraising efforts.

Earlier this week it was revealed that Federal authorities are now involved. Grand jury subpoenas have been issued to find out more information about a city contractor whose employees gave large donations to the campaign. The big question is whether or not that was their own money, or if funds were funneled through employees, which would potentially be a violation of Federal law.

Now, today, the Wall Street Journal is reporting more specifically that donations from donors connected to disgraced national Democratic fundraiser Norman Hsu were not returned back in 2008

According to campaign records, Mr. Liu accepted a $500 donation from [actress Susan] Chilman on April 11, 2007. In the midst of the scandal surrounding Mr. Hsu, a number of politicians returned the contributions they received from Ms. Chilman, including Sen. Kirsten Gillibrand and former Rep. Anthony Weiner. Mr. Liu did not.

In a recent interview with the Journal, Ms. Chilman said she isn't a supporter of Mr. Liu. She said she made the contribution solely at Mr. Hsu's behest and was reimbursed by him for it. "I don't know John Liu," she said.

The full extent of Mr. Hsu's influence on Mr. Liu's 2009 campaign is unknown, in part because Mr. Liu has yet to comply with city campaign finance laws that require the disclosure of bundlers, people such as Mr. Hsu who collect contributions for a political candidate from other people. Mr. Liu said he plans to disclose his bundlers but is awaiting the green light from the Campaign Finance Board; the board told the Journal on Tuesday that Mr. Liu is free to disclose immediately.

To add to this, the Comptroller's plan for a major overhaul of the city's pension system--announced alongside Mayor Michael Bloomberg--has come under fire since the plan was released.

How does all this add up for John Liu's mayoral ambitions?

"The mayoral race is out the window," said Hank Sheinkopf, a long-time Democratic political consultant. But Sheinkopf noted the question now is less about ambition and more about survival.

"The question is, can he run for reelection," Sheinkopf said. "If the revelations continue, that will also be very difficult because you can't have the city auditor audited by the federal prosecutor at the same time, with the potential for criminal indictment."