Federal prosecutors in Brooklyn have opened a criminal investigation of Dao Yin, a recent New York State Assembly candidate suspected of using fake donors and forged signatures to artificially inflate his allotment of matching funds, according to several people familiar with the matter.
The pattern of behavior, first reported by The New York Times this summer, allowed Mr. Yin to receive more than $162,000 in taxpayer money under a new program designed in Albany to boost the value of small-money donors and reduce the corrupting influence of big money in state campaigns.
But more than two dozen donors Mr. Yin listed as cash contributors told The Times they did not donate.
Many of them also said their signatures were forged onto the contribution cards he submitted to the state. Several of those people told The Times that they have been questioned by F.B.I. agents as potential witnesses.
“He is defrauding the public, stealing people’s identities,” said Asif Alli, who said he was contacted by the F.B.I. and asked about his appearance on Mr. Yin’s campaign report as a donor even though he never gave the candidate anything. “Of course they should be investigating.”
Mr. Yin, when asked for comment at his home in Queens on Thursday night, declined to do so and threatened to call the police after a reporter knocked on his door.
Mr. Yin previously denied any intentional wrongdoing, saying that any inconsistencies in the reporting of the State Assembly donations were the result of innocent mistakes.
State campaign finance guidelines call for candidates receiving matching funds to submit phone numbers and emails alongside a donor’s address. But of the nearly 300 contribution cards Mr. Yin turned in, only nine had donors’ phone numbers or email addresses.
The guidelines, however, were not legally binding, and the Public Campaign Finance Board allowed Mr. Yin to bypass them after he vowed to make a good-faith effort to get the rest of the data. After The Times revealed the faked donations, the state board closed the loophole to prevent future abuses.
The board referred Mr. Yin’s case to the office of the state attorney general, Letitia James, people familiar with the matter said. But the federal prosecutors in Brooklyn, from the office of the U.S. attorney for the Eastern District of New York, Breon Peace, were already investigating the matter, the people said.
A spokesman for that office declined to comment, as did the F.B.I. and the Public Campaign Finance Board.
Mr. Yin got only 6 percent of the vote in the Democratic primary in June for his long-shot bid to unseat Assemblyman Ron Kim. It was not his first failed candidacy: He ran for Queens borough president in 2020 and the City Council the following year.
In both previous campaigns, Mr. Yin took advantage of the city’s matching funds program, which was created in 1988 and provided the inspiration for state lawmakers in Albany to create a similar program that began this year.
All told, Mr. Yin has collected more than $1.2 million in public matching funds in the three races. Several people who were listed as donors to Mr. Yin’s two New York City campaigns said their contributions were also faked.
“I feel cheated,” said Qiu Qin Zhao after viewing the contribution card where she is listed as having donated $50 to Mr. Yin on Aug. 19, 2020, for the Queens borough president race. “How did he get my name and address? Those are mine. But not my signature. I never donated to him. I never donated to anyone.”
The New York City Campaign Finance Board, which oversees the city’s matching fund program, did not immediately respond to a request for comment.
The city and state matching fund programs offer campaigns a generous taxpayer-funded match for donations, depending on the race, of $250 or less. The idea is that candidates supported by small donors won’t be beholden to wealthy people and lobbyists. The problem is that the lure of the match — up to 12 taxpayer dollars for every dollar raised from donors in the state system — can provide an incentive to cheat.
The scope of the federal investigation into Mr. Yin’s dealings is not clear. However, the F.B.I. has made inquiries not only about the fake donations in his State Assembly race, but also about where the campaign money went.
Some of those interviewed by the F.B.I. indicated that agents were interested in an expenditure for an apartment rental in Flushing, Queens, that went to a consultant named Jessica Grandel. According to campaign finance reports, she received $8,000 in rent and another $3,725 in salary.
In addition, a company in Flushing tied to Ms. Grandel, Royal Productions International, received $4,440 for “masks and hand sanitizer,” campaign finance records show. The company was incorporated on Ms. Grandel’s behalf only a few months before the primary election. In Mr. Yin’s 2020 Queens borough president race, Ms. Grandel received $25,435 as a campaign worker and consultant, according to campaign disclosures.
Ms. Grandel did not immediately respond to voice mail and text messages Friday. She has not been accused of wrongdoing.
“It’s pretty disheartening, honestly, to know that they’re using taxpayer money for this type of stuff,” said Raheem Zadran, whose name and signature were used by Mr. Yin’s campaign to unlock state matching funds without, he said, his knowledge or consent. “If you’re going to run a campaign, just run it, you know, fairly. You don’t need to completely scam the state government and taxpayers.”
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