Hard political questions facing City Comptroller John Liu (36436)

John Liu’s hope to become the first Asian-American mayor of New York City seems to be dimming with every passing day.

On Tuesday, Liu’s campaign treasurer, Jia “Jenny” Hou, a native of Beijing who currently lives in Flushing, was charged with conspiracy to commit wire fraud, attempting to commit wire fraud and obstruction of justice. She was released on $100,000 bail after a court appearance.

Hou is being accused of involvement in a scheme to funnel large and illegal campaign contributions to Liu through straw donors. According to the federal government, an investigation revealed close to 40 fraudulent donations, some of which were reimbursed after the fact. She faces 60 years in prison if convicted of all charges.

In a statement, Liu said he was surprised by Hou’s arrest.

“These accusations against her are uncharacteristic and unexpected,” said Liu. “Jenny is a smart, hardworking person who I hope will be treated fairly.”

But U.S. Attorney Preet Bharara fired back in a statement, saying it was a planned operation to funnel more money into Liu’s campaign. “New York’s campaign finance laws are not optional,” he said. “Today, we allege that Jia Hou, a campaign treasurer, was a central figure in a coordinated scheme to break the city’s campaign finance laws.”

Hou was represented in court by Martin Adelman, who has represented Liu’s campaign in the ongoing investigation. Adelman told the Associated Press that Hou is “an idealistic young woman. I believe when all the proof comes out, that’s how she will be seen.”

Liu stands by the story that his hands are clean and that his campaign’s hands are clean as well.

“My campaign has acted properly at all times,” said Liu to a band of reporters in Manhattan Tuesday night. “I’m going to review all the stuff that’s transpired today so we can move forward.” Liu said his office is cooperating with prosecutors.

Liu was considered one of the top Democratic candidates for the 2013 New York City mayoral election, but he has found himself swimming upstream over the past several months. In November, a New York Times report revealed that Liu had not reported the names of people who were raising funds on his behalf and accused him of not accurately reporting the identity of his donors.

CBS News reported Wednesday that Liu was reconsidering his run for elected office in 2013 in light of the recent allegations against Hou and the ongoing federal investigations.