Prosecutors: Liu Aides Didn't Count On Getting Caught In Campaign Finance Scheme

NEW YORK (CBSNewYork/AP) -- Prosecutors said Tuesday that in the midst of a fundraising drive for mayoral candidate John Liu, two of his aides met a man named Richard Kong who portrayed himself as a wealthy donor willing to go along with a scheme to skirt campaign finance rules.

"What neither of them counted on was that Richard was an undercover FBI agent," prosecutor Brian Jacobs told a jury on Tuesday in U.S. District Court in Manhattan. "What they didn't count on was getting caught."

The jurors also heard lawyers for Liu's ex-campaign treasurer, Jia "Jenny" Hou, and former fundraiser Xing "Oliver" Wu Pan portray them as political neophytes caught in the crossfire of an overzealous corruption investigation of Liu's campaign finances.

"Jenny Hou is not guilty, and the evidence will show you she's not guilty," said defense attorney Gerald Lefcourt, calling his client a mere "record keeper."

Likewise, Pan "had no significant role in the campaign," said his lawyer, Irwin Rochman.

The remarks came during opening statements at a trial that could impact Liu's fortunes in the race for mayor. The city comptroller hasn't been charged and has denied any wrongdoing, saying that his fundraising has "always been in full compliance with all the campaign finance rules."

Hou, of Queens, and Pan, of Hudson County, N.J., have pleaded not guilty to conspiracy and attempted wire fraud; Hou also has pleaded not guilty to obstructing justice and making false statements.

Prosecutors alleged the pair plotted to circumvent a $4,950 contribution limit by using straw donors, people recruited to funnel other people's money, so they could boost the Democrat's campaign account.

In a sting, the agent posing as Kong contacted Pan, saying he wanted to make a $16,000 donation. Hou and Pan are accused of arranging for 20 people to make donations of $800 each -- contributions that would have fraudulently qualified Liu for matching funds, according to the charges.

The evidence at trial will include secretly recorded audio and video tapes of the defendants hatching the scheme, the prosecutors said. After a day off on Wednesday, prosecutors are expected to call their first witness on Thursday.

Each count against Hou, 26, and Pan, 47, carries a maximum 20-year prison sentence upon conviction.

Liu commented Monday on the judicial proceedings against his two former associates.

"The outcome of the trial will hopefully be true in terms of what has actually happened and what did not happen. But no matter what, my campaign for mayor goes full steam ahead," Liu told reporters including WCBS 880's Rich Lamb.

Liu added he is happy the trial is here and said it should yield more information about the exhaustive four-year investigation into his campaign's finances.

The trial began less than two weeks after prosecutors in Manhattan unleashed one of their broadest attacks ever on political corruption by bringing conspiracy charges against a state senator, a state assemblyman and a city councilman, among others. The assemblyman was accused of trying to bribe his way onto the mayoral ballot.

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