Jury weighs fraud charges against NYC mayoral hopeful's aides

Reuters News
Posted: May 02, 2013 12:11 AM
Jury weighs fraud charges against NYC mayoral hopeful's aides

By Jonathan Allen

NEW YORK (Reuters) - A federal jury weighed fraud charges on Thursday against two former fundraising associates of John Liu, a Democratic candidate for mayor of New York City.

U.S. prosecutors said Jia Hou, the Liu campaign's former treasurer, and Xing Wu Pan, a fundraiser for the candidate, were part of a conspiracy to get money fraudulently from the city's donation-matching program. The conspiracy by the campaign was thwarted only by a federal investigation, prosecutors said.

Defense lawyers for Hou and Pan said in closing arguments on Wednesday that the criminal charges resulted from the government's "obsessive" probe of Liu's campaign.

A jury in U.S. District Court in Manhattan began deliberating the case on Thursday.

Liu, now the city's comptroller, has not been charged with any crimes and denies knowing of any wrongdoing in his campaign to succeed Michael Bloomberg as mayor this year.

Liu ranked third in the large Democratic mayoral field, according to an NBC New York-Marist poll conducted earlier this month.

Hou, who goes by the name "Jenny," and Pan were barely acquainted, their defense lawyers told the jury.

Hou was described by her lawyer on Wednesday as an overworked, inexperienced 24-year-old "ingénue" when she was hired, who tried her best to follow complicated fundraising rules and to deal with donations from businessmen who admitted in earlier testimony they sometimes misled her to mask irregularities.

Pan's lawyer said his client agreed to recruit more than a dozen so-called straw donors only at the persistent urging of a wealthy Texan businessman whom he considered a friend and possibly a future business associate.

Pan learned later that the man was an undercover FBI agent investigating Liu's campaign. Straw donors are illegally reimbursed as a way of circumventing limits on individual donations.

"Mr. Pan is collateral damage in the government's obsessive pursuit in making a criminal case against John Liu," Pan's lawyer, Irwin Rochman, told the jury in his closing argument.

"That's how we got here, and they are now struggling to make this a federal case," he said. "This case doesn't belong in this courtroom."

Rochman told the jury that Pan admitted recruiting straw donors for the undercover agent, and in doing so almost certainly broke New York state laws. But Rochman said Pan did this only because of the undercover agent's months-long "courtship" involving lunches, fancy dinners and many telephone conversations.

Judge Richard Sullivan instructed jurors on Wednesday that they can convict Pan or Hou of the federal crime of attempted wire fraud only if they find that the defendants' actions were part of a deliberate attempt to defraud the city's donation-matching program.

Pan never thought that far ahead and barely understood the program, Rochman said. The lawyer pointed to FBI transcripts in which Pan repeatedly garbled the way the program works and said his client's only goal was to please the undercover agent by getting him a private meeting with Liu at a fundraising event.

Half the straw donors Pan found to secure the meeting were from outside New York City, Rochman said, and therefore ineligible for matching funds. And once the agent got his meeting with Liu, Pan paid scant attention to the fate of the donations he had arranged.

Prosecutors from the U.S. Attorney's Office for the Southern District of New York have cited only one instance of Hou apparently soliciting a straw donor. In an online chat with an ex-boyfriend the night before a fundraising deadline, Hou told him she would reimburse him if she processed his donation. Her lawyers said her offer was a polite gesture and that both knew he would never accept reimbursement from her.

Both sides agreed that the ex-boyfriend was a New Jersey resident and not eligible for the matching-funds program, and that his donation was never processed because the campaign had reached its $1 million goal the next day.

But in their closing argument on Tuesday, prosecutors said Hou's apparent willingness to find a straw donor and Pan's recruitment of several of them were evidence of a "playbook" the Liu campaign used in a "corrupt scheme to undermine an election." They told the jury that Liu must have known that straw donors were being used in his campaign, a charge he denies.

Pan, of Hudson County, New Jersey, and Hou, of Queens County, New York, each face one count of conspiracy to commit wire fraud and one count of attempting to commit wire fraud. Each charge carries a maximum sentence of 20 years in prison. Hou also has been charged with obstruction of justice and making false statements.

(Editing by Barbara Goldberg; Editing by Steve Orlofsky and Lisa Von Ahn)