City Comptroller John Liu’s run for mayor took a potentially catastrophic hit yesterday after officials withheld $3.5 million in public matching funds, saying his campaign’s violations were far more extensive than originally reported.
The Campaign Finance Board’s chair and its executive director said their decision relied on the recent trial of two Liu campaign members and a new probe that found a “pattern” of questionable financial transactions.
A newly released 106-page report by the firm Thacher Associates found cases of “straw” donors who had been reimbursed for their donations — an illegal tactic used to conceal the true source of money and to hike a campaign’s eligibility for matching funds.
The CFB matches every dollar contributed from a city resident, up to $175 per donor, with $6 in public money.
Other Liu donors didn’t live at the addresses listed on their contribution forms or couldn’t identify the Liu campaign person listed on the form as an intermediary.
One donor, an ex-cashier at the Great Wall Supermarket in Flushing, Queens, told probers she gave $800 because her boss promised to reimburse her — and she didn’t even know who Liu was, the probe found.
One donor said he was reimbursed by the owner of Yang Shing Trading Co. in Maspeth, Queens, where at least 13 employees each contributed $800, while a former bookkeeper for the law firm McCormick & O’Brien LLP said she’d been directed by a partner to instruct employees to donate.
At least three of the law-firm employees did, but later canceled the $800 donations, the probe found.
“The evidence suggests that the potential violations are serious and pervasive across the campaign’s fund-raising . . . in particular, the solicitation, receipt and reporting of ‘straw donations,’ ” said CFB chairman, the Rev. Joseph Parkes. “The candidate is ultimately responsible for the campaign’s compliance with the law.”
At a press conference later in the day, a defiant Liu slammed the ruling, while his backers questioned the board’s political makeup.
Of the five board members, three were appointed by Mayor Bloomberg and two were named by rival mayoral hopeful — and City Council Speaker — Christine Quinn.
“The Campaign Finance Board is absolutely wrong in its characterization of my campaign,” Liu said. “I utterly dispute and repudiate those kinds of comments.”
He said his campaign has about $1.5 million remaining in its coffers, a relatively small amount with only five weeks remaining until the Sept. 10 Democratic primary.
“There’s no question that this weakens my campaign,” added Liu. “For the last couple of years I have taken body blow after body blow after body blow. But there’s not going to be a knockdown here.”
Liu’s ex-campaign treasurer and a former fund-raiser were convicted last May of trying to scam matching funds from the Campaign Finance Board, in part through the use of “straw” donors.
Liu’s election lawyer, Martin Connor, said the campaign was still deciding whether to appeal.
Additional reporting by Leonica Valentine and Aman da Lozada