By Jonathan Allen
NEW YORK (Reuters) - A federal jury on Thursday convicted two former fundraising associates of John Liu, a Democratic candidate for mayor of New York City, a setback in his attempt to emerge from a crowded field to succeed Michael Bloomberg as mayor later this year.
Jia Hou, the Liu campaign's former treasurer who is also known as Jenny, was found guilty of three of four counts against her; she was cleared of the fourth count. Xing Wu Pan, a fundraiser for the candidate also known as Oliver, was found guilty of both counts against him.
U.S. prosecutors said the two were part of a conspiracy to fraudulently obtain money from the city's donation-matching program and that the conspiracy was thwarted only by a federal investigation.
"As the jury found, Jia Hou and Oliver Pan stuck a knife into the heart of New York City's campaign finance law," U.S. Attorney Preet Bharara, the chief federal prosecutor for Manhattan, said in a statement.
"Cases like this give the people of New York yet another reason to be troubled by the electoral process," said Bharara, who has made corruption cases against political figures a hallmark of his tenure.
Bharara brought two separate corruption cases against New York politicians last month, accusing some of selling their votes and another of trying to bribe his way onto the ballot for mayor. Those cases have yet to come to trial.
Liu, the city's comptroller, was not charged and denied knowledge of any wrongdoing. After the verdicts he issued a statement saying he was "deeply saddened by the verdict," and in which he spoke well of Hou but neglected to mention Pan.
"I continue to believe in Jenny being a good person and exceptional individual," Liu said.
In an impromptu news conference later in the day, Liu vowed to press on with his campaign.
"I am proud of the way my campaign has been conducted," he told reporters.
After one day of deliberations, the jury convicted Pan of conspiracy to commit wire fraud and attempted wire fraud, each charge carrying a maximum sentence of 20 years in prison.
Hou was acquitted of conspiracy to commit wire fraud but convicted of attempted wire fraud, obstruction of justice and making false statements.
Sentencing was set for September 20, or 10 days after the Democratic Party primary. Liu ranked third in the Democratic field, according to an NBC New York-Marist poll conducted earlier this month.
"Anytime you have a conviction it's a bad news," said Doug Muzzio, a professor of public affairs at Baruch College, the City University of New York. "It's got to hurt. The question then becomes how much does this hurt."
Lawyers for both defendants promised to appeal, after having accused the prosecutors during closing arguments of being "obsessive" in their pursuit of the case.
"Any political campaign has to be very concerned that the U.S. government is going to be looking at New York City politics in that way," said Gerald Lefcourt, who represented Hou.
Hou was described by her lawyer on Wednesday as an overworked, inexperienced 24-year-old "ingénue" when she was hired, who tried her best to follow complicated fundraising rules and to deal with donations from businessmen who admitted in earlier testimony they sometimes misled her to mask irregularities.
Pan's lawyer said his client agreed to recruit more than a dozen so-called straw donors only at the persistent urging of a wealthy Texan businessman whom he considered a friend and possibly a future business associate.
Pan learned later that the man was an undercover FBI agent investigating Liu's campaign.
(Additional reporting by Ellen Wulfhorst and Edith Honan; Editing by Daniel Trotta, Leslie Adler, Tim Dobbyn and Paul Simao)