Former Campaign Treasurer And Fundraiser Found Guilty In Manhattan Federal Court Of Campaign Finance Fraud
Former Campaign Treasurer Also Found Guilty Of Obstruction Of Justice And Making False Statements In Connection With The Fraud
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JIA HOU, a/k/a “Jenny Hou,” and XING WU PAN, a/k/a “Oliver Pan,” were found guilty today in Manhattan federal court of fraud in connection with a fraudulent scheme that involved the use of “straw donors” to funnel large, illegal campaign contributions to the campaign of a candidate (the “Candidate”) for Citywide elective office in 2013 (the “Campaign”). The straw donor scheme was fraudulent in two primary ways. First, it allowed for more money to be directly given to the Candidate’s campaign by evading the maximum individual contribution limit. Second, by fraudulently inflating the amount of money directly given by donors to the campaign, it correspondingly entitled the campaign to claim greater matching funds from the City of New York through the City’s matching campaign funds program. The jury found that HOU, the former Campaign treasurer, attempted to commit fraud, obstructed justice, and made false statements in connection with the straw donor scheme. The jury found that PAN, a fundraiser and contribution bundler for the Campaign, conspired and attempted to commit fraud in connection with the straw donor scheme. They were convicted after a three-week trial before U.S. District Judge Richard J. Sullivan.
Manhattan U.S. Attorney Preet Bharara said: “As the jury found, Jia Hou and Oliver Pan stuck a knife into the heart of New York City’s campaign finance law by violating the prohibition against illegal campaign contributions, all to corruptly advantage the campaign of a candidate for city-wide office. Cases like this give the people of New York yet another reason to be troubled by the electoral process, and they have a right to demand fair, open, and honest elections untainted by cynical subversion of campaign finance laws. With these convictions, it is our hope that some measure of the public’s confidence can be restored. We will continue our efforts to stamp out public corruption wherever we find it. We thank the jury for their time and service, and the outstanding prosecutors who so ably tried this case.”
According to the Complaint and the Indictment filed in Manhattan federal court and the evidence presented at trial:
HOU and PAN participated in a scheme to defraud New York City by using straw donors to funnel multiple illegal campaign contributions to the Candidate’s 2013 campaign for Citywide elective office. One object of the scheme was to increase the amount of matching campaign funds the Campaign would receive from the City. New York City law mandates an individual contribution limit of $4,950. On various occasions, certain individuals – including an individual who was actually an undercover FBI agent (the “U/C”) – who wanted to make donations in excess of that limit arranged for multiple Straw Donors to make a series of contributions to the Campaign that were under the $4,950 limit. The Straw Donors were then reimbursed for their contributions. On behalf of each Straw Donor, a campaign contribution form was filled out containing, among other things, the straw donor’s name, address, employment information, the amount donated to the Candidate, and the Straw Donor’s purported signature acknowledging that the Straw Donor was not being reimbursed in any manner for making the campaign contribution. The City would rely upon the information contained in these fraudulent contribution forms, among other things, in order to determine whether to release matching campaign funds to the Candidate’s 2013 campaign on the basis of these contributions.
HOU served as the Candidate’s treasurer for the 2013 election cycle and was responsible for all financial disclosures related to the 2013 Campaign. She was also responsible for accounting for every donation made to the Campaign and for ensuring that all donations by individuals to the Campaign were within the maximum allowed by New York City. HOU and the Candidate were the only individuals authorized to submit disclosure statements on behalf of the Campaign. In addition, HOU was responsible for disclosing to the New York City Campaign Finance Board (“NYCCFB”) the identities of “intermediaries” or “bundlers” involved in soliciting and receiving donations for the Campaign. NYCCFB records show that the Campaign did not disclose any “bundlers” or “intermediaries” for the 2013 New York City election cycle until January 17, 2012, despite the fact that the Campaign had been raising funds for the 2013 New York City election cycle since at least in or about December 2009. On January 17, 2012, the Campaign disclosed a list of approximately 59 intermediaries to the NYCCFB, but that disclosure did not include multiple individuals who were intermediaries. Further, the disclosure was not made until a grand jury subpoena seeking information about intermediaries was served on the Campaign in December 2011.
In addition, the U/C and PAN had multiple conversations concerning the U/C making a large campaign contribution to the Candidate’s 2013 Campaign that would exceed the maximum allowable contribution of $4,950 for a Citywide elective office during the 2013 election cycle. During these conversations with the U/C, which occurred over the telephone and in person, PAN discussed facilitating this contribution through the use of Straw Donors who would make contributions to the Candidate’s 2013 campaign in their own names and then be reimbursed with cash that PAN received from the U/C. Subsequently, the U/C provided PAN with $16,000 in cash.
The Straw Donors filled out campaign contribution forms that contained, among other things, their names, home addresses, employment information, the amount they each donated to the Candidate, and whether it was by check or credit card. The Straw Donors then signed the contribution forms acknowledging, among other things, that the campaign contributions were in their names, from their own funds, and that they were not being reimbursed in any manner for making the campaign contributions. PAN, using the money received from the U/C, then reimbursed the Straw Donors for their campaign contributions. PAN also provided to the U/C copies of the completed contribution forms for 18 Straw Donors, including one for PAN himself, that were submitted to the Candidate’s 2013 campaign.
In furtherance of the scheme, HOU instructed a campaign volunteer how to imitate the handwriting of campaign donors on donor contribution forms required by the NYCCFB. She also discussed with that campaign volunteer ways to conceal information about intermediaries from the NYCCFB. HOU also offered to reimburse an individual for a donation to the Campaign. HOU worked closely with individuals who served as intermediaries in connection with multiple events where straw donors were reimbursed for their contributions, and nevertheless failed to disclose to the NYCCFB the involvement of these intermediaries in the Campaign.
Finally, in response to the Government’s subpoena for documents relevant to the straw donor scheme, HOU obstructed the Government’s investigation by withholding e-mails and electronic chats showing her knowledge of, and participation in, the scheme. In one of those electronic chats, Hou explicitly offered to reimburse a friend for making a contribution to the campaign. In addition, when questioned by Government officials about her involvement in the scheme and her compliance with the Government’s subpoena, Hou made multiple false statements regarding the disclosure of intermediaries who reimbursed straw donors and her production of documents showing her participation in the scheme.
HOU, 26, of Queens, New York, was convicted of one count of attempted wire fraud, which carries a maximum sentence of 20 years in prison, and a maximum fine of $250,000 or twice the gross gain or loss from the offense. She was also convicted of one count of obstruction of justice and making false statements to the FBI. These counts carry a maximum sentence of five and 20 years, respectively. HOU was acquitted of one count of conspiracy to commit wire fraud.
PAN, 47, of Hudson County, New Jersey, was convicted of one count of conspiracy to commit wire fraud, and one count of attempted wire fraud, both of which carry a maximum sentence of 20 years in prison, and a maximum fine of $250,000, or twice the gross gain or loss from the offense. HOU is scheduled to be sentenced by Judge Sullivan on September 20, 2013 at 3:30 p.m. PAN is scheduled to be sentenced by Judge Sullivan on September 20, 2013 at 2:00 p.m.
Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation and expressed appreciation to the New York City Department of Investigation for its contribution to this ongoing investigation.
This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Brian A. Jacobs and Justin Anderson are in charge of the prosecution.