In a serious blow to City Comptroller John Liu's 2013 campaign effort, authorities on Tuesday announced the arrest of one of his top campaign aides on fraud charges, and the comptroller said he was shocked by the allegations.
The U.S. Attorney's office says Jenny Hou, 25, seen above right, was taken into custody in connection to what authorities call a scheme to use straw donors to get over the limit campaign contributions to Liu.
According to Tuesday's complaint, Hou is accused of instructing campaign volunteers to fraudulently fill out donor cards, which are typically used as proof that a contributor is using his or her own money to donate to a campaign.
Hou, a resident of Queens, was also responsible for overseeing the comptroller's bundling operation, which essentially keeps track of those who collect donations for the comptroller.
According to the U.S. attorney's office, Hou worked closely with bundlers at multiple events where straw donors were reimbursed for their contribution.
By allegedly using straw donors, Liu could be eligible for more public matching funds than he should be receiving under the city's campaign finance law.
The complaint alleges there are at least 40 fraudulent donations linked to Hou.
Liu suddenly canceled an appearance at the Citizen Budget Commission's Tuesday dinner to address the media in front of his campaign consultant's office.
"I was rather stunned when I heard the news this afternoon. These allegations against Jenny Hou are uncharacteristic and unexpected of this intelligent and hard-working person I have come to know and depend upon," said Liu.
The comptroller took responsibility for his campaign staffers' actions.
"Every candidate is responsible for what happens with their own campaign and campaign finance. And I'm no different with that," said the comptroller.
Asked whether he would suspend his campaign, Liu said have to review the latest allegations, and stressed that he thought his staff had acted ethically.
"My campaign has acted properly at all times. I am aware that the complaint suggests that there are instances where that is not the case," said Liu. "I'm going to review all the stuff that has transpired today and we'll figure out how to move forward from there. Thank you."
This is the second arrest associated with Liu's fundraising effort.
In November, one of Liu's bundlers, Oliver Pan, was arrested on wire fraud charges for also allegedly trying to get over the limit campaign contributions to the comptroller.
Pan has since pleaded not guilty.
Despite the ongoing investigation, Liu said Tuesday these recent allegations will in no way prevent him from doing his current job as the city's chief fiscal officer.