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Trial starts for former aides to New York mayoral hopeful Liu

New York City Comptroller and mayoral candidate John Liu speaks in support of a demonstration against the New York Police Department's "stop
New York City Comptroller and mayoral candidate John Liu speaks in support of a demonstration against the New York Police Department's "stop

By Jonathan Allen

NEW YORK (Reuters) - Opening arguments began on Tuesday in the conspiracy trial of two former fundraising associates of John Liu, New York City's comptroller and a Democratic contender in this year's mayoral election.

Jia Hou, the former treasurer for Liu's campaign, and Xing Wu Pan are charged with breaking campaign financing laws by helping donors to Liu's 2013 mayoral election campaign fund circumvent individual donation limits through so-called straw donors, who are illegally reimbursed for their donations.

Their defense attorneys, in opening statements on Tuesday, said the two were minor players unfairly caught up in an overzealous federal investigation into Liu's campaign.

Prosecutors say Hou and Pan coordinated straw donors and helped forge donor contribution forms between 2009 and 2011 in an attempt to increase their own donations and the amount the campaign would be eligible to receive in matching funds from the city.

The New York City Campaign Finance Board limits the amount an individual can donate to a campaign to $4,950, in part to try to prevent wealthy people from having an outsize influence in elections.

Hou's defense attorney said some of the seemingly suspicious activity cited by the government, such as filling out and signing donation forms on behalf of others, could be explained as a good-faith attempt to help the many donors to Liu's campaign who are of Asian origin and whose English is limited.

"One of the things this case is about is Asian-Americans," said the attorney, Gerald Lefcourt.

Both defendants were born in China before moving to the United States as youths, he said.

Liu was the first Asian-American to be elected to citywide office in New York City. As comptroller, Liu serves as fiscal watchdog, analyzing and auditing the city's finances. He also helps run the city's $110 billion pension fund.

Liu is not charged with any wrongdoing following the federal probe of his fundraising methods, although the alleged irregularities by his associates may prove a liability to his campaign. He is not expected to testify in the trial.

Prosecutor Brian Jacobs told the jury that the case was an attempt "to corrupt an election here in New York City."

He said the jury would hear evidence from an undercover FBI agent who posed as a restaurateur seeking access to Liu in his effort to open a chain of restaurants.

Pan helped him make a $16,000 contribution to Liu's campaign using 20 straw donors so he could meet Liu at a fundraising event, the prosecutor said.

"Pan would make clear to the Liu campaign that the money was coming from a single donor," the prosecutor said.

Pan's attorney Irwin Rochman argued it was a case of entrapment and said that without the "extensive involvement and inducement by the government agent," Pan would never have agreed to recruit straw donors.

The trial comes less than two weeks after U.S. Attorney Preet Bharara, whose office is prosecuting the case, called corruption in the state "downright pervasive" as he announced the arrest of six politicians accused of being involved in a bribery scheme to help a high-ranking Democratic state senator, Malcolm Smith of Queens, get on the Republican ticket for New York City's mayoral race.

Pan, of Hudson County in New Jersey, and Hou, of Queens County in New York, each face one count of conspiracy to commit wire fraud and one count of attempting to commit wire fraud. Hou has also been charged with obstruction of justice. Each charge carries a maximum sentence of 20 years in prison.

(Editing by Barbara Goldberg, Leslie Adler, Ellen Wulfhorst and Lisa Shumaker)

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