Liu Sues CFB Over Matching Funds

Former New York City comptroller John Liu filed a federal lawsuit alleging that the New York City Campaign Finance Board acted unconstitutionally in denying him matching funds during his 2013 mayoral campaign. 

Liu was denied $3.8 million in public matching funds by the CFB last August after an investigation into his fundraising showed widespread potential violations. In addition, Liu’s campaign treasurer, Jia “Jenny” Hou, was found guilty in federal court in May for attempting to defraud the city by using straw donors.

The lack of funding crippled the Liu campaign, leading to a fourth place finish in the Democratic primary on Sept 10. Liu’s lawyer, Richard Emery, argued the denial of funds was a violation Liu’s First Amendment rights, leaving him unable to get his campaign message out. In the lawsuit, Liu also challenged the appointment of the CFB chairperson.

Liu, who left his post as city comptroller on Dec. 31, said that he waited to take action because he did not want to sue a city agency as a citywide elected official. He said the suit is not about money or revenge for his campaign loss, but about reforming what he deems a broken system.

“I am not looking for a re-do on the election. The election is long past, and I am past that,” Liu said from his lawyer’s office in Midtown Manhattan. “This is not a suit about me, or my election, or my campaign. This is about reforming a system that is broken.”

Liu continued, “This agency is in dire need of reform. It is at best inconsistent, rife with whim and caprice and at worst, tainted politically.”

The CFB took heat for denying all of Liu’s matching funds just weeks before the election, but officials maintained they were within the law to withhold the money. It was not the first time the CFB denied funds. It was, however, the first time a candidate’s campaign treasurer had been convicted in federal court of attempting to use straw donors. 

“Over 25 years and seven mayoral elections, the Board’s oversight has always been tough, but fair,” said Amy Loprest, the CFB’s executive director, in an emailed statement. “It protects taxpayers, and ensures campaigns that receive funds are playing by the rules. We will not comment further on the litigation until the appropriate time.”

The CFB was founded in 1988 and designed to take big money out of politics by placing limits on contributions and matching donations six-to-one with public money. It has become a model around the country, and Gov. Andrew Cuomo has pushed (unsuccessfully) for a similar model at the state level.

Liu said he supports having a campaign finance system, but argued that the city’s system has become corrupted and needs reform.

“The problem is it has now been adulterated by some out-of-control bureaucrats and board members, some of whom should have recused themselves from certain decisions,” Liu said.

The nonpartisan city agency is composed of five board members, two of which are appointed by the mayor, two appointed by the Speaker of the City Council, and a chairperson who is appointed by the mayor but only after the Speaker is consulted.

Two days before former Mayor Michael Bloomberg left office he named Rose Gill Hearn, who was the outgoing City Department of Investigation Commissioner, as the new chairwoman of the CFB. In the lawsuit, Liu claims Bloomberg did not consult then-Speaker Christine Quinn on the appointment.

City & State reached out to a spokesperson for Quinn and Bloomberg to confirm if a consultation was made, but emails were not immediately returned.

On Jan. 29 Rose Gill Hearn joined Bloomberg Associates, a pro-bono consulting group, as a consultant. Liu’s attorney said that with the unanswered questions about the appointment, he doubts whether an audit of his campaign could not be done fairly by a board with Hearn at the helm.

If Liu wins, he would be awarded monetary damages. However, Liu said he is “not looking for a single nickel” for his own pocket. The money would be used to pay back loans for his campaign. According to CFB records, his campaign coffers have a balance of $91,106. There are no loans listed and outstanding liabilities (which are for fundraising and payroll costs) total $5,205. 

Emery said discovery for the case could take months, and it could be a year before the case is wrapped up.

“If we have to go before a jury to show that John Liu’s civil rights were violated, we are committed to doing that and we look forward to a jury of his peers making a decision,” Emery said.