New York, NY – Federal authorities are investigating the fund-raising operation of the New York City comptroller, John C. Liu, seeking records from his campaign and from a city contractor whose employees were listed as having contributed thousands of dollars to his campaign, people with knowledge of the matter said.
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Grand jury subpoenas issued last week in the inquiry followed a report in The New York Times last month detailing a number of fund-raising improprieties, including questions about the sources of Mr. Liu’s donations, whether people listed as contributors had actually given their own money and whether some donors listed even existed.
It is unclear whether the current inquiry is related to an investigation begun by Manhattan federal prosecutors and the Federal Bureau of Investigation in late 2009. That investigation, which had not previously been made public, focused on whether foreign money flowed into Mr. Liu’s 2009 campaign for comptroller, two people with knowledge of the inquiry said.
Five people discussed the inquiry into Mr. Liu’s fund-raising with The Times; three of them spoke on condition of anonymity because the proceedings of a grand jury are bound by secrecy.
Mr. Liu, a Democrat and a rising star in the city’s political world who has been viewed as a mayoral contender in part because of his fund-raising prowess, said in a brief interview on Monday that his campaign would fully cooperate with the investigation.
He added, “I am confident that my fund-raising efforts were proper at all times.”
The subpoenas issued to Mr. Liu’s campaign and the company, Dynasty Stainless Steel, say that the records are being sought to determine whether there have been violations of federal wire fraud and conspiracy laws.
Dynasty, in Maspeth, Queens, was ordered to produce personnel records for nine people who, according to city campaign finance records, each gave $800 to Mr. Liu in January. All nine – one is Dynasty’s president – were listed on campaign records as company employees.
But at least four have said they did not work for the company, and two of those said they did not give money to the campaign, The Times found.
The same pattern was found at other companies that gave to Mr. Liu. For example, Mr. Liu’s campaign records show that 11 employees of Farewell International, a seafood company in Brooklyn, each gave him $800 earlier this year.
But on Monday, an official at the company, who identified himself as Peter Zhang, said in a telephone interview that the company only had three employees and that he was puzzled by the information contained in Mr. Liu’s campaign report.
“They put other peoples’ names under our company,” Mr. Zhang said. “We don’t know why.”
To protect against so-called straw donors, candidates in New York City are required to vouch for the identity of each individual contributor and ensure that they are personally making the donations listed on the campaign finance records. But in the article by The Times, several people listed as donors to Mr. Liu said an employer or relative had given on their behalf. In addition, all the donor cards accompanying the Dynasty contributions bore the same handwriting, suggesting they were filled out by one person.
The Times also found that Mr. Liu had failed to comply with a city requirement that he disclose the names of so-called bundlers – well-connected individuals who collect contributions for a candidate from friends, relatives, business associates and others. After initially pledging to disclose the identities of those bundlers, Mr. Liu has declined to do so.
Mr. Liu has reached out to a prominent criminal defense lawyer, Paul L. Shechtman, a former senior federal and state prosecutor who served as Gov. George E. Pataki’s criminal justice coordinator; Mr. Liu is expected to hire him in the coming days.
As criticism of his fund-raising practices mounted, Mr. Liu asked a former state attorney general, Robert Abrams, to conduct a review of his campaign practices. But on Monday evening, Mr. Liu said he was considering suspending that review.
“I’m sorting it out with Bob,” he said. “I would not want the review Bob is conducting to interfere with this investigation.”
Mr. Liu said he was unaware that an inquiry had begun in 2009.
That investigation was conducted, as the current inquiry is, by public corruption units in the United States attorney’s office in Manhattan and the F.B.I.’s New York office. Representatives of the United States attorney, Preet Bharara, and for the F.B.I. declined to comment.
A lawyer for Dynasty, Steve Zissou, said, “We are going to comply with the subpoena.”
Mr. Zissou said he had done his own investigation of the contributions attributed to Dynasty employees, which “revealed no wrongdoing whatsoever on the part of the comptroller or his campaign organization.”
The company’s president, Ming Kun Lee, has repeatedly declined requests for comment in recent weeks and on Monday, Mr. Zissou said, Mr. Lee had no comment.
Mr. Liu, the first Asian-American elected to citywide office in New York, is a hero to many in the city’s heavily Chinese neighborhoods and businesses. His picture adorns the walls of many Chinese stores and restaurants and his election to comptroller two years ago set off excitement that he would someday rise to become mayor.
This is something. His HIGHNESS is in trouble with the Feds.