08/05/2013 01:21 pm ET

John Liu Mayoral Campaign Denied Matching Funds


NEW YORK -- City Comptroller John Liu's struggling campaign for mayor suffered a severe blow Monday when the Campaign Finance Board voted to withhold millions of dollars in public funds.

Liu was denied up to $3.5 million in public matching funds "because there is reason to believe that violations ... have been committed by his campaign," said CFB chairman Father Joseph Parkes in a statement.

Liu's campaign for the Democratic nomination, stuck in fifth place in recent polls, has been dogged by allegations of illicit fundraising since reports of questionable practices surfaced in 2011.

In May, two of Liu's former associates were convicted of participating in an illegal scheme to circumvent fundraising laws by using straw donors. Prosecutors said the associates reimbursed donors whose contributions enabled the campaign to qualify for as much as $6 in matching funds for every dollar received.

Though Liu hasn't been charged with any wrongdoing, the scandal has cast a pall over his candidacy. Monday's ruling sets him back in a much more direct, material way.

"The evidence suggests that the potential violations are serious and pervasive across the campaign's fundraising," Parkes' statement said. "Several key personnel involved in fundraising while potential violations have occurred have maintained positions of significant responsibility within the campaign throughout the 2013 election cycle. The campaign has placed in a major role at least one person who admitted to a plan to violate campaign finance law."

Without the matching funds, Liu must rely on the roughly $1.5 million left in his campaign war chest and any new donations he can drum up before the Sept. 10 Democratic primary.

That leaves him at a disadvantage against City Council Speaker Christine Quinn, Public Advocate Bill de Blasio, former Comptroller Bill Thompson and ex-Congressman Anthony Weiner, all of whom lead Liu in the polls and have more cash on hand.

"Don't look for a lot of network TV ads," said Liu's attorney Martin Connor, according to the New York Observer.

Liu's campaign didn't respond to requests for comment, but announced that the comptroller intended to speak about the board's decision Monday afternoon outside the CFB's office.