NEW YORK — City Comptroller John Liu knows that plenty of people are predicting his political breakdown, saying that with his campaign finances under federal investigation there's no way he can become the next mayor of the nation's largest city.
And Liu, the first Asian-American to win major elective office in New York, sees their point.
"That's certainly an understandable assessment," Liu said this week in an Associated Press interview in which he laid out for the first time an extensive defense of his fundraising practices while claiming he had "no dealings" with the campaign's compliance with election law.
Still, the embattled Democrat did not talk like someone who was merely running for re-election. He referred repeatedly to unnamed rivals. And he said those rivals were all likely to reach the maximum contribution level allowed by campaign regulations – a prediction frequently cited among political insiders discussing the race for City Hall.
Liu noted more than once that many months remain before the 2013 primary. He spoke about how he had defied expectations in the past, and he said he was speaking obliquely about his future not because of the federal investigation but because it is too early in the election cycle.
"Am I being vague or evasive? You could say on one level, yes. But for the same exact reasons that most of my rivals are answering the questions the same way," Liu said.
Political analysts no longer see the comptroller as one of the top contenders to replace independent Mayor Michael Bloomberg next year. The arrests of his 25-year-old campaign treasurer and a fundraiser, accompanied by allegations from prosecutors that his campaign made use of straw donors who funneled illegal contributions from wealthy people into his coffers, have cast a shadow over his future.
Liu has "effectively been taken out of the picture for the current cycle" for the mayoral race, said Gerald Benjamin, a political science professor at the State University of New York at New Paltz.
"If he survives this process, which is still in question ... then the test will be whether he can be nominated and re-elected to his current position," Benjamin said.
Voters are bound to have questions about how a mishandling of funds, if proved true, could happen on the watch of the comptroller, the official charged with guarding the city's finances and unearthing government waste.
"We have a special expectation of the comptroller," Benjamin said. "He's to be the watchdog of fiscal probity."
But Liu's perceptions may be influenced by the steady stream of messages of support he says he's hearing, especially from within the Asian-American community, which has long formed much of his donor base. Many in the community, which has been surging in political influence and growing in numbers, have felt unfairly targeted by similar campaign finance allegations over the last two decades, said Peter Kwong, an Asian-American studies and urban affairs professor at Hunter College.
Liu, speaking of the sting operation that snared his fundraiser, said people in the community question whether there are undercover FBI operations into all the major campaigns.
"People ask me almost every day: `How come they're only investigating your campaign?'" he said.
And Liu, who immigrated to New York from Taiwan at the age of 5 and became the city's first Asian-American City Council member, leaves the door open to the theory that his campaign's troubles are driven by prejudice.
"I can't answer definitively if there's racial or ethnic targeting going on here," said Liu, who's in his 40s and is married with a son.
A spokesman for the FBI declined to comment.
Liu's poll numbers have shifted downward under the steady stream of headlines connected with the investigation. A Quinnipiac University survey this month found his approval rating at 40 percent, down from 51 percent before his campaign troubles became public. His disapproval rating has more than doubled to 37 percent.
Pressure has been mounting on him since October, when a New York Times report questioned whether his campaign was accurately reporting the identities of his donors and said some of his supposed donors alleged that someone else had given money in their names. The article also reported Liu had not given campaign authorities the names of supporters raising money on his behalf, as was legally required, a failing Liu says was his campaign's only major misstep. Prosecutors contend the list he eventually submitted was incomplete.
The newspaper's report was followed a month later by the arrest of one of those fundraisers, accused of conspiring to help an undercover FBI agent funnel $16,000 into the campaign. Then, Jia Hou, also known as Jenny Hou, was arrested in February on charges of wire fraud and obstruction of justice that could place her in prison for up to 60 years.
In a complaint that spoke of unnamed "co-conspirators," prosecutors detailed online conversations in which the 25-year-old treasurer had instructed a volunteer to imitate donors' handwriting on contribution forms and offered to reimburse someone for a donation to the campaign.
Liu, in his interview with the AP last Monday, said that his campaign had acted appropriately and that, because he was aware of the history of allegations regarding straw donors in the Asian-American community, he had instructed his staff to take specific precautions. He insisted his campaign shouldn't be held responsible for confirming information provided by donors, although, according to the city's Campaign Finance Board, compliance with the law is ultimately the campaign's responsibility.
As for Hou, Liu seemed to both distance himself from his treasurer and defend her, saying that as the candidate he was responsible for her actions but adding that their conversations had never focused on the details of fundraising and saying he had "no dealings" with compliance. Liu said Hou reported to him but was expected to reach out to the Campaign Finance Board for technical guidance.
Hou's lawyer, who has said she is innocent and will fight the charges, declined to comment.
Liu acknowledged that prosecutors most likely don't consider Hou the investigation's primary target, but he declined to say whether he believes they hope to come after him. Some political observers have questioned why someone so young was given a position more often filled by campaign veterans with extensive experience in finance regulations, but Liu has said Hou is smart and diligent beyond her years.
Hunter College political science professor Kenneth Sherrill said Liu was "basically doing the best that can be done in a very difficult situation."
"He's denying any personal responsibility," Sherrill said, "and he's assuming the responsibilities for having delegated this to a young and inexperienced person."
Still, Sherrill said, Liu's approach to defending himself – saying that he never spoke with Hou about the details of her compliance work – opens him up to more criticism.
"There was no oversight," he said. "No matter how bright and hardworking, someone who was young and inexperienced was given responsibility for one of the most significant things that a campaign does."
Samantha Gross can be reached at http://www.twitter.com/samanthagross