Trial starts for former aides to New York mayoral hopeful Liu

NEW YORK Tue Apr 16, 2013 3:54pm EDT

New York City Comptroller and mayoral candidate John Liu speaks in support of a demonstration against the New York Police Department's ''stop and frisk'' crime-fighting tactic outside of Manhattan Federal Court in New York, March 18, 2013. REUTERS/Lucas Jackson

New York City Comptroller and mayoral candidate John Liu speaks in support of a demonstration against the New York Police Department's ''stop and frisk'' crime-fighting tactic outside of Manhattan Federal Court in New York, March 18, 2013.

Credit: Reuters/Lucas Jackson

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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. Both have pleaded not guilty.

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.

Liu is not charged with any wrongdoing following a 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.

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, have each been charged with 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.

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

(Editing by Barbara Goldberg and Leslie Adler)

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