As the federal probe into city Controller John Liu‘s mayoral campaign widens, the embattled Democrat is so politically toxic that some of his bigwig union supporters are afraid to speak with him, sources said Thursday.
In recent days — as the investigation reached higher up the campaign hierarchy, ensnaring the 25-year-old treasurer for her role in an alleged fund-raising conspiracy — Liu quietly called around to labor leaders, seeking their backing of his plan to reform the city’s pension funds. But one union president said he was very nervous to be chatting with Liu — for fear the controller might be wearing a wire.
“He’s under federal investigation,” said the union president, who spoke under the condition of anonymity and speculated that Liu might be cooperating with authorities to bust others. “I know how this game works.”
The fund-raising firestorm has damaged Liu’s credibility and imperiled his plan to create a super-board to oversee the city’s five pension funds — a change the controller insists will more quickly deliver savings than Gov. Cuomo‘s proposed raft of reforms for the public pension system.
“It’s totally dead,” a City Hall official said of Liu’s cost-saving push.
The young treasurer for Liu’s 2013 mayoral bid, Jia (Jenny) Hou, a Rutgers University graduate who was paid just $27,678, was arrested Tuesday and charged with two counts of fraud and one for obstruction of justice.
A federal complaint accused Hou of being a central figure in a coordinated subterfuge that used straw donors to hide donations in excess of a legal limit on individual contributions. One of the supposed big-fish donors was actually an undercover FBI agent. Late last year, a Liu fund-raising intermediary was nabbed and hit with similar charges stemming from the same alleged trickery.
The complaint doesn’t say Liu knew alleged illegal acts were going on, but it strongly suggested that he was aware.
Liu has steadfastly proclaimed that his campaign didn’t break any laws — and has said in a series of vague statements that he will persevere with a mayoral run.
“Allegations against my supporters, my campaign staff, and by extension me, are unproven,” Liu told a horde of reporters while attending an event in Chinatown Thursday.
Some of Liu’s labor allies are standing by him, even as insiders predict the feds may cut Hou a deal to cooperate against her boss. A well-placed source at District Council 37, long a Liu-friendly labor shop, signaled that the union’s head, Lillian Roberts, is still behind the controller — but is growing wary. “He’s been very good to us,” the source said. “We still think he’s been a very good controller. But we hope he can take care of his problems.”
Gregory Floyd, president of Teamsters Local 237 and a vocal Liu critic, predicted the city’s top fiscal watchdog will be sunk by the accusations.
“The likelihood of him not knowing means that he was either inept or complicit,” Floyd argued.
Hou’s parents, who are close with Liu and have donated to his campaign,
appear to be proud of her. They told a Chinese-language newspaper that they were grateful for her part in Liu’s quest to politically empower the Chinese community. They added that they could accept their daughter being imprisoned because she would be able to use the time to complete her master’s degree, the paper reported.
“Jia’s hard work for the campaign was also for the Chinese community,” Hou’s mother, Zhu Suixiang, told the World Journal newspaper.
After Hou was released from jail on $100,000 bond late Tuesday, she posted a message on Weibo, the Chinese version of Twitter, telling her friends: “I’m okay, please don’t worry,” according to the World Journal.
With Vera Chinese, Jonathan Lemire and Sharyn Jackson
