Liu Denied Public Matching Funds For Campaign Due To 'Substantial Evidence' Of Wrongdoing

NEW YORK (CBSNewYork/AP) -- The New York City Campaign Finance Board on Monday denied public matching funds for Comptroller John Liu, dealing a severe financial blow to the Democrat's campaign to become New York City's first Asian-American mayor.

His lawyer said an appeal is planned.

"The evidence suggests that the potential violations are serious and pervasive across campaign's fundraising,'' the board said in a statement read at the hearing. The board said it had received "substantial evidence'' of wrongdoings, including straw donors.

"The choice to withhold payment in this instance is based on the campaign's inability to demonstrate that it is in compliance with the law," board chair Joseph Parkes said.

Liu, an actuary with a bachelor's degree in mathematical physics, has said his campaign has complied with all requirements.

"There's no question that this weakens my campaign," Liu said after the board's decision Monday. "I utterly dispute and repudiate those kinds of comments. I disagree with the Campaign Finance Board."

Liu has had to contend with the recent convictions of a former campaign worker and a former fundraiser on charges of scheming to circumvent donation limits. Treasurer  Jenny Hou and Oliver Pan were found guilty in federal court of plotting to cheat New York City out of campaign funds, CBS 2's Marcia Kramer reported. They are due to be sentenced sometime next month after the primary on Sept. 10.

The candidate was never charged with any wrongdoing, but the case racked up enormous legal fees for his campaign and, in his own estimation, has affected his image.

"I have a new nickname: 'the embattled comptroller,''' he once said at a rally. "Well, let me say this: I am ready, willing and able to go into battle for what I think is right for the city of New York.''

His lawyer, Martin Connor, told the board before its unanimous decision that it's no secret there were problems in his 2011 campaign. But "sometimes where there's smoke, there's smoke. No fire,'' he said.

He said that accepting last week's recommendation by board staff to deny public matching funds would amount to "the death penalty for a minor transgression.''

Liu had raised approximately $3.4 million, less than most of his major Democratic rivals. But because he has the most number of small contributions, he was eligible to receive the most in matching funds, approximately $3.5 million. Candidates in the program agree to a spending cap. The real problem for Liu is he has just $1.5 million left, Kramer reported.

And that's an issue because Liu is currently fifth in most Democratic primary polls, trailing City Council Speaker Christine Quinn, Public Advocate Bill de Blasio, ex-comptroller Bill Thompson and former U.S. Rep. Anthony Weiner. The other candidates have steadfastly declined to comment on Liu's controversy.

About 150 chanting demonstrators, many pro-Liu, clogged the street outside the campaign finance headquarters before the hearing. Many held Liu campaign signs and wore orange Liu shirts.

"This was a disgrace is what this was," one man said.

"I think they are going after John Liu because he is a threat to the establishment,'' said Maureen Pyne, a 74-year-old retired teacher who lives in Manhattan.

"Liu's supporters' money should count like anyone else's. This is so unfair,'' said Jack Zhang, 17, one of many Queens high school students who attended the protest.

Before launching his mayoral bid, the Taiwan-born politician already was the first person of Asian descent to be elected citywide in New York.

"Come here, work hard, dream big, and work even harder, and if you do all that, you have a chance to make good,'' he said in March while formally announcing his candidacy.

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