John Liu Campaign Denied Matching Funds

The mayoral bid of New York City Comptroller John C. Liu took a big hit Monday after the New York City Campaign Finance Board decided to withhold matching public funds to his campaign.

The decision is seen as part of the fallout from the conviction of his former fundraiser and a major contributor on fraud charges for using straw donors to funnel contributions into Liu’s successful 2009 campaign for city comptroller.

“The evidence suggests that the potential violations are serious and pervasive across the campaign’s fund-raising,” said a statement released by board chairman Rev. Joseph Parkes. “The choice to withhold payment in this instance is based on the campaign’s inability to demonstrate it is in compliance with the law.”

The decision deprives Liu of up to $3.5 million in public funds. That leaves him with just $1.5 million in his campaign treasury. He has had to spend a good deal of the $2.6 million he has raised so far on legal fees to argue his case before the board.

Liu is currently in fifth place and will face an uphill battle to improve his position in the September primary as the candidates out front will all receive public funds and be able to outspend him by a large margin on TV and online advertising.

About 150 Liu supporters rallied outside the board’s offices Monday morning, shouting, “Give Liu the money!”

Some see the decision as part of a conspiracy to undermine Liu’s political prospects, just as they had seen the three-year probe into Liu’s campaign fund-raising activities as having been a witch hunt against Liu because of his Chinese background. Liu wasn’t charged in the federal case against former campaign treasurer Jia Jou and contributor Xing Wu Pan but some of the trial testimony of federal investigators suggested that Liu had at least condoned the use of some of the straw donors.

Liu, however, has vehemently denied any knowledge the activities on which the convictions were based. Martin Connor, one of his campaign’s lawyers, argued before the board at a brief hearing, saying, “There’s smoke and no fire.”

Noting that many of Liu’s contributors are Asian-Americans, Connor added, “I see a bit of economic prejudice.”

Liu didn’t appear at the rally or the hearing but said he would speak with the media later Monday. Most likely he will spend the time to decide whether to stay in the race under the heavy shadow cast by the convictions and the board’s ruling or bow out and wait for a better opportunity to renew his quest for high political office.

As one of the most gifted and disciplined among the current crop of Asian American politicians, Liu has built a strong image as an aggressive champion of the working family. Regardless of his decision in the current mayoral race, he is unlikely to leave politics for long.