After only a short time as city comptroller, Liu had become regarded as a formidable fiscal watchdog, and with high approval ratings among New York voters, he was seen as a strong contender for mayor.
“People were banging on my door to get on the 2013 bandwagon,” Liu recalled. “In the middle of 2011, I was thinking to myself, it can’t be this easy.”
Soon after, scandal hit.
‘STRAW DONOR’ SCHEMES
Beginning October 2011, the New York Times published a series of articles about Liu’s campaign contributions that questioned the “source and legitimacy of some donations, as well as whether some of the donors even exist.” Liu, who called the Times’ articles “pieces of crap,” said he believes the newspaper had been given the scoop by federal investigators, who at that point, he says, had already been looking into his fundraising activities for more than two years.
Times spokesman John Bianchi said in an e-mail that the newspaper had no comment on Liu’s remarks.
Part of the government’s investigation included sending an undercover FBI agent to pose as a businessman looking to donate more than the legal amount for individual contributions to Liu’s campaign in August 2011.
“That undercover operation was successful in getting my campaign to accept illegal contributions, but contributions we had no way of knowing were illegal,” Liu said. “If they had run that undercover operation with any other campaign, they would have gotten the exact same outcome.”
To be sure, other campaigns, including that of former presidential candidate and former secretary of state Hillary Clinton in 2008, have also been linked to “straw-donor” schemes, in which one person uses another’s name to make donations in excess of what the law permits. A Virginia businessman pleaded guilty in that case, but Clinton was never charged.
Last year, a jury convicted Liu’s former campaign treasurer Jenny Hou (侯佳) and fundraiser Oliver Pan (潘心武) for their roles in the illegal fundraising scheme. Hou was sentenced to 10 months, and Pan four months.
Liu, however, was never charged.
Following the Times articles and federal investigation, the scandal’s ripple effects were soon felt throughout New York, creating what Liu called “a frenzy” in the media and sending his poll numbers into a tailspin. And with the city Campaign Finance Board, citing the irregularities, deciding last August to deny Liu US$3.5 million in matching funds, Liu said it was impossible to buy airtime to run commercials against his opponents.
“Many of my strongest supporters didn’t even know I was still running,” Liu said.
Liu said he was suing the board for its “arbitrary and capricious” decision. Campaign Finance Board spokeswoman Bonny Tsang said she could not comment on Liu’s allegations, referring instead to an August press release that said Liu was denied funds because of his “campaign’s inability to demonstrate it is in compliance with the law.”
In the end, Liu lost the September Democratic primary, garnering just 7 percent of the vote, and former Public Advocate Bill de Blasio became New York’s 109th mayor.
“What happened was that my campaign was derailed by this ridiculous federal investigation,” Liu said. “At the end of the day, it netted nothing, except for a couple of pawns they were able to capture.”