MANHATTAN (CN) – A campaign treasurer for New York City comptroller John Liu used straw donors to funnel illegal contributions and fraudulently increase finance board matching funds, according to federal charges filed Tuesday.
Jia “Jenny” Hou, 25, worked as Liu’s campaign treasurer from 2009 to 2011. During his time in office, Liu, who could be a contender for the 2013 mayoral election, gained a reputation for spotting financial irregularities and waste across the city.
But prosecutors now say Liu’s own house was not in order.
In addition to the fraud charges, Hou is accused of obstructing the government’s investigation. The Queens resident was arrested this morning
New York City political candidates are eligible to receive matching campaign funds from a program administered by the New York City Campaign Finance Board.
The program provides $6 in matching funds for every dollar donated by a New York City resident over 18 years of age, up to a maximum of $175.
Individuals are allowed to donate up to $4,950 to candidates running for citywide elective offices.
Gearing up for next year’s race, Hou allegedly used straw donors to circumvent these limits and plump matching funds
“Certain individuals, who wanted to donate more than the legally allowed amount, would instead arrange for straw donors to make contributions that were under the limit,” the U.S. Attorney’s Office said in a statement. “The individuals would then reimburse the straw donors. As part of the scheme, the campaign submitted fraudulent contribution forms on behalf of the straw donors to NYCCFB. The forms included information about the straw donors as well as their purported signatures acknowledging that each individual donor was not being reimbursed. The information contained in these fraudulent contribution forms is used by the city to determine whether to release matching campaign funds to the candidate’s 2013 campaign.”
Hou allegedly discussed the reimbursements in a series of instant messages and she instructed a campaign volunteer to imitate donors’ handwriting on the contribution forms.
Another campaign volunteer received orders from Hou to vary the money orders because sequentially numbered money orders would raise suspicions, according to the complaint.
The government says that the campaign has been raising funds since December 2009, but it did not reveal the donation solicitors for the upcoming election until last month
Several so-called “bundlers” or “intermediaries” were left off the list of approximately 59 solicitors that Hou identified, according to the complaint.
“In an apparent attempt to frustrate the investigation, Hou failed to produce facially inculpatory documents in response to subpoenas served on her and represented that her production of documents was complete when in fact it was not,” the government said in a statement.
Hou faces 60 years in prison if convicted. She faces one count of conspiracy to commit wire fraud, one count of attempting to commit wire fraud and one count of obstruction of justice.