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NYC comptroller reconsidering political bid

New York City Comptroller John Liu — a Democrat who had been widely viewed as a potential successor to Mayor Michael Bloomberg — said he plans to reassess whether to run for office in 2013 following the arrest of his campaign treasurer on Tuesday.

"We're going to sort through all this stuff and figure out what the next course of action will be," he said during an appearance hours after the arrest of the campaign worker.

He said he would continue to serve as the city's comptroller. "I have vigorously followed through on my responsibilities, and will continue to do so," he said.

He said he believed his campaign had acted properly at all times.

"But I am aware that the complaint suggests that there are instances where it's otherwise," he said, adding that both he and his office were cooperating with prosecutors.

Campaign treasurer Jia Hou, 25, also known as Jenny Hou, was arrested on charges that she was part of a scheme that used straw donors to funnel large, illegal contributions to Liu's campaign. The government said the investigation had turned up evidence of at least 40 fraudulent donations, including some in which donors were reimbursed afterward.

Hou, of Queens, was charged with conspiracy to commit wire fraud, attempting to commit wire fraud and obstruction of justice. If convicted of all charges, she faces up to 60 years in prison. After a brief court appearance, Hou was released on $100,000 bail. She declined to speak to reporters.

She was represented in court by Martin Adelman, an attorney who has represented the campaign in connection with the investigation. He told The Associated Press that Hou will assert her innocence in legal proceedings, though he told a magistrate judge that he expected another lawyer will represent her in the future.

"She's an idealistic young woman. I believe when all the proof comes out, that's how she'll be seen," he said.

Bloomberg said he hadn't yet heard the details of the case and couldn't comment when asked if the news affected his confidence in Liu's ability to perform his job.

In a statement, Liu said he was "stunned" by the charges against Hou — the second arrest to stem from an ongoing federal investigation of his campaign.

"These accusations against her are uncharacteristic and unexpected," Liu said.

He said at his appearance hours after Hou's arrest that he met her initially when she worked as a volunteer on his 2009 campaign. Questioned about employing such a young person in such a position of responsibility, he said Hou was "one whose intelligence and hard work has been among the very top percentiles of individuals of any age that I have known."

He added: "I have come to know her very well and depend on her."

The charges were brought several months after a New Jersey man was arrested on charges he conspired to funnel illegal contributions donated by an undercover FBI agent posing as a businessman. Liu has said that if those allegations are true, his campaign was not told the truth.

Once considered one of the top Democratic contenders for the 2013 mayoral race to lead the nation's largest city, Liu has been dogged by falling approval ratings and months of headlines since an October report in The New York Times questioned whether his campaign was accurately reporting the identity of his donors and revealed that he had not been reporting the names of supporters raising money on his behalf.

Liu has said he remains determined to continue his campaign. He has defended his practices and said he is cooperating with investigators. Last month, he belatedly disclosed the names of the supporters who raised money for him.

"New York's campaign finance laws are not optional," U.S. Attorney Preet Bharara said Tuesday in a statement. "Today, we allege that Jia Hou, a campaign treasurer, was a central figure in a coordinated scheme to break the city's campaign finance laws."

He said she concealed the use of straw donors to subvert the city's electoral system.

Janice K. Fedarcyk, head of the FBI's New York office, said Hou circumvented campaign finance rules meant to limit the influence of wealthy contributors on political campaigns.

"In a very real sense, Hou is accused of undermining the democratic process," she said.

Hou also was charged with obstructing the government's investigation of fraud in connection with the campaign's fundraising efforts.

Prosecutors said Hou was responsible for all financial disclosures related to the campaign. They said she participated in a scheme to use straw donors to circumvent the $4,950 limit on individual donations so that the campaign could more frequently collect up to a maximum of $1,050 in matching funds that the city provides for each contributor.

The government said Hou instructed one campaign volunteer to imitate the handwriting of campaign donors on contribution forms to disguise the campaign's use of straw donors. It said she discussed with another campaign volunteer how to conceal information about campaign fundraisers to avoid bringing attention to the possible use of undisclosed intermediaries and straw donors.

Prosecutors said the obstruction of justice charge stemmed from Hou's effort to frustrate the investigation by failing to produce documents in response to subpoenas and by representing that her production of documents was complete when it was not.

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