John Liu’s Aides Stand Trial for Defrauding City

Opening arguments reveal government’s case
By Joshua Philipp, The Epoch Times
April 18, 2013 10:45 am Last Updated: April 19, 2013 12:04 am

NEW YORK—After several delays, the trial officially began Tuesday for a fundraiser and the treasurer of New York City comptroller John Liu’s mayoral campaign.

On Tuesday, jury selection was finalized by the late afternoon. Afterward, the defense and prosecutors gave their opening statements to the jury—describing what the charges are, what the defense will be, and what evidence will be presented. Liu, also Democratic candidate for mayor, has not been charged.

Liu’s former treasurer, Jia (Jenny) Hou, and a former fundraiser, Xing Wu (Oliver) Pan, are standing trial together. Both are being charged with conspiracy to commit wire fraud and attempt to commit wire fraud. Hou has two additional charges of obstruction of justice and making false statements to an FBI agent.

Lead prosecutor for the government Brian Jacobs told the jury the case is about two individuals who “tried to corrupt an election here in New York City” by fraudulently acquiring matching city funds through the use of straw donors, which refers to people who illegally make political donations with someone else’s money, in their own names.

New York City provides matching funds for political donations, by giving an additional $6 for every $1 donated, up to a maximum of $1,050 in public funds for each donor.

Pan’s case

The Federal Bureau of Investigations (FBI) sent an undercover agent to speak with Pan in early 2011. The undercover agent, known as Mr. Richard, claimed he was a businessman interested in opening a restaurant chain in New York. According to Jacobs, Richard “made it clear” to Pan that he was willing to pay to get access to a local politician for help.

Jacobs described to the jury how it was decided that Richard would give $16,000 to Liu’s mayoral campaign. This led to the question “So what could Mr. Pan do for Mr. Richard?” said Jacobs.

Since the amount exceeds the $4,950 individual limit, Pan “executed the scheme” by organizing a fundraising event where individuals would use their names to help divide the funds into $800 donations. Jacobs said only half the donors were New York residents.

After recruiting the straw donors, Pan held an event at a restaurant where Richard, the undercover agent, was introduced to Hou and given a private meeting with John Liu.

One of Pan’s two attorneys, Erwin Rochman, argued that Pan would not have engaged in an activity like this had he not been approached by the undercover agent—an argument similar to saying someone charged with selling narcotics to an undercover agent would not have done so had they not been approached for the purchase.

Rochman is also claiming that Pan was not a significant fundraiser on Liu’s campaign, and that there was no fraud involved in his actions.

One of Hou’s two attorneys, Jarold Lefcart, previously said that Pan had already admitted guilt, according to Politicker.

Hou’s case

As for Jenny Hou, Jacobs said she is “no stranger to straw donors.” He said evidence will be presented during the trial, showing that Hou recruited straw donors.

Lefcart, representing Hou, claims that Hou didn’t understand what she was doing—and this argument is being applied to her training through the Campaign Finance Board, wire fraud that took place, and her review of the contributions with one of Liu’s campaign attorneys.

Jacobs said Hou was trained by the Campaign Finance Board on all the rules she allegedly violated. “Soon after she learned these rules, Ms. Hou started to break them,” he said.

Hou took steps to conceal intermediaries who transferred donations, and instructed someone on how to alter their writing to resemble that of the straw donor to fool the Campaign Finance Board, Jacobs said.

Lefcart, speaking in Hou’s defense, said the Campaign Finance Board has numerous rules, and suggested that Hou couldn’t remember all of them.

On May 9, 2011, John Liu and his deputy allegedly met with a Chinese businessman named Mr. Wu, who agreed to hold a fundraising event for Liu’s mayoral campaign and bring donors.

Lefcart said that many of the businessmen wanted to get donors to impress Wu, in order to score business deals, and when they couldn’t get donors, they decided to use straw donors by giving people $800 to donate to Liu’s campaign.

Lefcart claims Hou was not aware the donations were made with straw donors.

By July 15, 2011, Liu’s campaign wanted to report a million dollars in funds in order to out-do Christine Quinn’s finances for her mayoral campaign, Lefcart told the jury.

In a piece of evidence related to Hou using straw donors, Lefcart showed a Google chat log between Hou and a friend, where the friend offered to donate money to Liu’s campaign. In the chat, Hou says she’ll hold the donation as a backup, in case they did not meet their goal. At the end, Hou says she almost used Wong’s credit card number for a donation, but didn’t because the campaign had already reached the million dollar goal.

Lefcart claims the chat log shows Hou would not have used straw donors. This claim may be contested, however. The prosecutors may call John Liu’s deputy, Sharon Lee, to testify against Hou. Lee admitted to soliciting donations and offering to reimburse them.

Lee had spent a week at Hou’s residence prior to this to discuss the campaign.

The defense does not want Lee to testify. On Monday, they claimed there is no direct evidence between the actions of Lee and Hou. Judge Richard Sullivan disagreed, however, and said Lee’s involvement shows circumstantial evidence that puts their actions in context to each other.

At one point, Hou reviewed donations with Liu’s campaign lawyer. Lefcart claims Hou followed the advice of the lawyer, suggesting it was the lawyer’s doing, and Hou was not aware of the laws. “She operated in good faith,” Lefcart said.

Evidence concealed

Later in 2011, investigators sent a subpoena asking for documents and records related to Liu’s campaign donations. Hou gave a stack of documents, yet according to the lead government prosecutor Jacobs, “Ms. Hou withheld some important documents” that could be used as evidence.

When Hou was given the opportunity to meet with the FBI, Jacobs said Hou was asked if she gave all the required documents, to which Hou answered that she did. “This was a lie. Ms. Hou knew she withheld documents,” Jacobs said.

Jacobs said that Hou and Pan are being charged with attempted wire fraud and conspiracy to commit wire fraud because they were arrested before they could go through with the crimes.

Judge Sullivan expects the trial to last around three weeks. Since Hou and Pan pleaded not guilty, the prosecutors will need to show evidence proving their guilt.

Jacobs said the evidence will consist of videos and audio of Pan’s dealings with the undercover agent, and Hou’s email and chat logs allegedly “showing what she tried to hide.” They will also bring out agents involved in the case, people who recruited, and reimbursed donors, as well as others.