A general view of the U.S. Capitol building in Washington February 28, 2013. Positions hardened on Wednesday between U.S. President Barack Obama and Republican congressional leaders over the budget crisis even as they arranged to hold last-ditch talks to prevent harsh automatic spending cuts beginning this week. Looking resigned to the $85 billion in "sequestration" cuts starting on Friday, government agencies began reducing costs and spelling out to employees how furloughs will work. REUTERS/Jason Reed (UNITED STATES - Tags: POLITICS BUSINESS)

San Francisco - A California state senator denied Tuesday plotting to smuggle guns from the Philippines and trading political favors for cash, in a colorful case centred on San Francisco's Chinatown underworld.

Appearing in a federal courthouse, now-suspended Democratic Senator Leland Yee pleaded not guilty to eight felony charges for which he could face life in prison if convicted.

The five-year FBI sting that ensnared the politician was initially aimed at triad gangs linked to the West Coast city's renowned Chinatown.

Authorities say that a desperation for campaign cash led Yee into that world.

He is accused of offering a man he believed to be a mafia member Äactually an undercover agent Ä his services as an arms trafficker.

Yee allegedly told the agent he had connections to a weapons dealer in the Philippines who was arming Muslim rebels.

Yee lost a race for mayor of San Francisco in 2011, which left him deeply in debt. He was campaigning for another statewide office, secretary of state, before he was arrested.

Even in a state accustomed to scandal Ä Yee is one of three state senators suspended this year after criminal charges Ä the case is among the most bizarre in recent memory.

While he cautioned the undercover agent about the dangers of arms trafficking Ä being kidnapped or arrested, mainly Ä Yee also expressed admiration for the mafioso's lifestyle, according to the affidavit.

“There is a part of me that wants to be like you. ... Just be a free-agent out there,” Yee is quoted as saying.

At another point he allegedly warned an agent to be careful when paying for political influence, which is illegal. “I'm just trying to run for Secretary of State, I hope I don't get indicted,” he is quoted as saying.