A donor to New York City Comptroller John Liu may turn the fairy tale of the miller who claimed his daughter could spin straw into gold into the rising politician's worst nightmare. Doner Xing Wu Pan, whose fundraising is under a federal probe, was indicted Wednesday by prosecutors in Manhattan for funneling an illegal $16,000 contribution to an unnamed candidate using phony straw donors.

Pan, also known as Oliver Pan, was arrested and charged with conspiracy to commit wire fraud related to a campaign contribution to an unnamed candidate for citywide office in 2013.

According to campaign finance records Pan of Mendham N.J., who is listed as the president of company called Golden Arrow Property LLC, is a fundraiser for Liu, the first Asian-American to hold citywide office in New York. Pan has donated $3,150 to Liu's 2009 comptroller campaign.

There is no indication from the U.S. Attorney's Office in Manhattan that Pan's indictment is related to their probe of Liu's campaign finance operation, which was subject to an investigation from The New York Times.The Times reported that prosecutors' investigation of Liu began in late 2009. Grand jury subpoenas were issued last week, according to the report.

Prosecutors say that he took $16,000 from an FBI agent posing as a businessman who wanted to make a contribution to this unnamed candidate, far above the $4,960 cap New York City law placed on contributions to citywide candidates.

To get around the cap, Pan allegedly dispersed the $16,000 among 20 so-called straw donors--people who are reimbursed for making donations in their name--each receiving $800. The alleged scheme also inflated the amount of public matching funds the unnamed candidate would receive under the city's public campaign finance system.

According to the indictment, Pan admitted to the FBI in an October interview that he illegally funneled money from the undercover agent to the candidate through straw donors who were eventually repaid. Pan said that the straw donors were his friends, family members and co-workers.

Corruption in campaign finance corrupts the entire political process, and it can call into question the legitimacy of our elections, Preet Bharara, U.S. Attorney for the Southern District of New York, said in a statement.

In the Times' investigation of Liu's campaign, donors said they never gave money or that their donations came from their boss or another Liu supporter. Some donors may not even exist, the investigation found.

Pan, Xing Wu Complaint

The New York Times New York Elections Fbi