John Liu, the NYC Comptroller and Democratic mayoral candidate, was denied matching funds from the Campaign Finance Board today. Capital New York reports, "The decision effectively denies Liu's campaign from obtaining $3.5 million in matching funds, putting him at a huge disadvantage in the crowded Democratic mayoral primary."

Liu's mayoral run so far has been known for two things: His prodigious and exhausting energy for campaigning; and being overshadowed by the illegal fund-raising conducted by a staffer and an associate. The staffer, his campaign treasure Jenny Hou, and fund-raiser Xing Wu Pan were convicted in May for their role in a scheme to mask large donations (donations to candidates from individuals are limited to $4,950 each). Liu himself was never charged with wrongdoing.

In a statement, Campaign Finance Board chair Father Joseph Parkes, S.J. said, "Under the Board's rules, public matching funds may not be paid if there is reason to believe that violations of the Act and Board rules have been committed. The Board did not approve a public matching funds payment to John Liu’s campaign for mayor during today's meeting, because there is reason to believe that violations of the Act and Board rules have been committed by his campaign. The evidence suggests that the potential violations are serious and pervasive across the campaign’s fundraising."

Liu's lawyer Martin Connor said, "Sometimes, where there's smoke, there's smoke and no fire," and suggested, "I see a bit of economic prejudice," because many donors are Asian.

The Campaign Finance Board explains on its site, "Public matching funds are intended to increase the value of small contributions from individuals, making candidates less dependent on large contributions and assisting candidates who do not have access to large moneyed sources. The overall purpose of matching funds is to reduce the role of money in politics and to help make elections more competitive. Due to a recent change in the law, the Program will match each dollar a New York City resident gives up to $175 with six dollars in public funds, for a maximum of $1,050 in public funds per contributor."

Liu's team plans to appeal.