The clouds swirling around Harlan Kelly finally let loose today as FBI agents raided his home before the U.S. Attorney’s office charged the Public Utilities Commission general manager in an alleged long-running bribery scheme.
Today’s charges stem from a purported illegal arrangement with contractor and permit expediter Walter Wong, the Zelig-like avatar of San Francisco institutional corruption. Wong is the man connecting many of the litany of San Francisco figures charged by the feds following Public Works head Mohammed Nuru’s January arrest.
Kelly has resigned, the Mayor’s Office said Monday afternoon.
Kelly and other SFPUC figures were hit with a bevy of subpoenas in June. On Monday, he was charged with “honest services wire fraud” in connection to a series of alleged fraudulent actions, bribes and kickbacks from 2014 until 2019. This is described in an affidavit publicized today as a “long-running bribery scheme and corrupt partnership between Kelly and Walter Wong.”
In a straightforward arrangement, Kelly is accused of receiving things of value from Wong in exchange for preferential treatment of Wong and his many business ventures.
Wong pleaded guilty in June to conspiracy to commit fraud and conspiracy to commit money-laundering, and then decided to cooperate with the ongoing investigation. His guilty plea came shortly after Kelly and others were served with subpoenas demanding detailed records for numerous business deals.
Wong clearly provided reams of the evidence recounted today, both in oral interviews with investigators as well as material documents.
Today’s affidavit notes that the ties between Kelly and Wong were “extensive and involved coded text messages, multiple international trips paid for or subsidized by Wong, cash exchanges, free meals, and even personal car service provided by Wong (or his employees at Wong’s direction) to Kelly.”
Wong allegedly treated Kelly and his family — Kelly is married to city administrator Naomi Kelly — to a March 2016 trip to Hong Kong and China. This came as Wong was seeking a multimillion-dollar PUC streetlight contract. Kelly purportedly acknowledged this gift in an intercepted WeChat text: ““Thank you for the best family vacation ever! A little something for everyone!”
Congratulations to my brother Harlan Kelly celebrating 55 years on Mother Earth. Amen. pic.twitter.com/xW993TvJul
— Mohammed Nuru (@MrCleanSF) July 30, 2017
Wong then followed this up by performing extensive work on the Kelly’s home, allegedly at a steep discount.
Wong also purportedly subsidized trips to China and South America for Nuru.
In his interviews with the FBI, Wong was purportedly candid about his motives: “Wong told investigators that he provided benefits like these to Kelly because of Kelly’s position at the PUC and the understanding that Kelly would, in return, use his official position to benefit Wong’s business ventures, including Wong’s attempts to win business from the PUC in connection with its ongoing efforts to convert to LED streetlights,” the affidavit states.
Kelly purportedly held up his end of the deal. He is accused of hand-delivering confidential internal PUC bid documents to Wong, and delaying the process when Wong couldn’t get his bid organized in time — an effort Kelly codified in an intercepted text message. (“You told me [t]hat you had everything? I don’t know what to do? I don’t know how to stop the process anymore.”)
The affidavit filed Monday reveals a longstanding relationship between Kelly and Wong, in which they texted frequently — and referred to “a former San Francisco mayor” by the code name “35.” These are, purportedly, the numbers of that mayor’s initials on a telephonic numerical keyboard.
Those numbers align with the initials “EL.”
Kelly and Wong met, repeatedly, in the run-up to the close of the streetlight bid, when Kelly purportedly provided sheafs of information on would-be competitors (some of these documents were marked “Confidential: Draft”). These documents were, notably, provided by hand, thereby not generating electronic records.
They even met, at one point, at Mayor 35’s birthday dinner. At all times, Wong told investigators, he comped Kelly’s meals.
Those documents purportedly ranked Wong’s bid toward the bottom of the pile. As such, the bid was canceled and put out again the next year, in 2016. Kelly allegedly provided similar assistance once more, but Wong told investigators his bids were still not successful. That led to this shocking passage in the affidavit:
Wong said that they decided to withdraw from the process after the city made multiple changes to the contract requirements. According to Wong, after expressing frustration to Nuru about the changes, Nuru told him to forget about the project because someone else had bribed Kelly with a much larger sum and Wong was not going to win…
It was around this time, in 2016, that Wong purportedly treated the Kellys to a far-flung vacation. This section of the affidavit relies heavily on Wong’s own interviews with investigators:
Wong said his practice, when arranging international travel for San Francisco public officials like Kelly and Nuru, was to have the officials purchase their own airfare. Wong would then reimburse the officials in cash for the airfare in order to avoid leaving a paper trail for investigators.
When Wong reviewed his American Express credit card records from the trip, he also identified expenses – including meals costing hundreds of dollars and jewelry – which Wong said he bought for Kelly and his family. Wong told me he used both his American Express credit card ending in the digits 7-51005 and his Citi Advantage credit card ending in the digits 8980.
Charges included a $615 meal and a hotel bill for the extended Kelly family, and Wong himself, exceeding $2,000.
In June of this year, Naomi Kelly told investigators that she “paid Wong a lot of money for the trip” and “brought lots of cash on the trip to give to Rose Pak.” The feds, however, found only minimal withdrawals from the Kelly family’s bank accounts in the weeks prior to the trip, as well as minimal expenditures during the trip.
And Harlan Kelly purportedly tipped his hand on WeChat, thanking Wong for the trip. His bank account, additionally, received a deposit after the trip closely matching the value of the airfare.
Mission Local wrote last week that, with a new president — and, presumably, a new San Francisco U.S. Attorney — it stands to reason that a lot of action may occur on this case between now and the end of next month.
Today’s action, though hardly unanticipated considering those June subpoenas, does fit that bill. What remains in question is the ultimate goal of this yearslong FBI probe — clearly busting the public works boss and PUC head of a mid-sized American city were not the end goals.
Considering the time invested, one may wonder if the original bullseye was the man who appointed both Kelly and Nuru to their jobs — Mayor 35.
Harlan Kelly is facing a potential prison sentence of up to 20 years, and a fine of up to $250,000.
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I’m appalled at the alleged behavior of Harlan Kelly. I met him once at a Sun Reporter’s annual dinner. He was very nice. I know Naomi too and based on what I’ve read, she didn’t know all this was going on?
I am very disappointed that no one in the local press has figured out what Trump is doing to our local Government!!
On August 16, 2018, President Donald Trump announced his intent to nominate Anderson to be the U.S. Attorney for the Northern District of California. On August 27, 2018, his nomination was sent to the United States Senate. On January 2, 2019, his nomination was confirmed by voice vote.
President Trump has now weaponized the DOJ to go after all Democrat controlled cities. By Trump appointing the new Prosecutor for northern district of California they are told to find any little infraction i.e…. casual corruption (friends helping friends) which SF has found to be working for a 100 years. The way it works is the FBI comes in and sets up small fish to get to the big fish. Feeds the media spin chum to cause infighting with local progressives. They all eat each other while Trump out played us all in a 3 level chess game. As a big picture overview Trump blames or throws counter accusations at us for using the FBI during the 2016 election while he weaponized the Justice Dept. to go after the Democrat run Cities. He will do anything to destroy and divide our great city’s including SF so don’t be fooled by this trumped up corruption case.
Please look into what is really going on Anderson comes in on January 2019 and in 1 year shakes our city with a bunch of weak trumped up casual corruption cases. Next step is take out the mayor, city administrator, and maybe he can connect the dotes up all the way to the Governor ? Every Democratic run city has a new Trump appointed US attorneys.
Anyway the press and the local government will continue to bad mouth and attack each other about exaggerated corruption while Trump and his newly appointed Army of US Attorneys, Marshals, and Judges will be masterminding the take over.
NOMINATIONS & APPOINTMENTS
President Donald J. Trump Announces Seventeenth Wave of United States Attorney Nominees and Twelfth Wave of United States Marshal Nominees
Left unexplained is why someone who did “nothing wrong” brought “lots” of money to Rose Pak!
Still waiting on when the Planning Department will be investigated. The project that spawned this investigation was 555 Fulton. Clearly, Planning staff had a hand in this project. And it is common knowledge that the development review process is dictated by cozy relationships between permit review managers, expediters, developers, and land use attorneys. This process is neither transparent, honest, fair nor equitable and has not been under the recent and current management of the division. It would be very simple to review all emails, voicemails and texts of division managers to reveal a clear legacy of discriminatory and unfair practices. Yet, as we have seen, this moral turpitude and behavior are repeatedly rewarded.
The physical beauty of San Francisco obscures an ugly truth – City Hall has always been shrine to corruption. But everyone is in on it. This a seedy town built on back room deals and graft abs everyone feeds at the trough. Even the evil gay baiting Archbishop is a drunk driving dandy. City Hall is overrun with petty grifters padding their pockets and remodeling their sad Inner Sunset hovels into 5900 sg ft mini-mansions fit for their newly- yet dirty – monied occupants. Before the pandemic the prosecutors socialized with the defense bar – vilifying each other before the Court during the day while making deals waiting for their spoiled kids outside the French American School. Everyone is corrupt – Nuru, Recology, the Kelly’s , the lawyers, the prosecutors, Ed Lee, Rose Pak, Willie, most of the bench, Big Tech, Big Law, London Breed, the City Attorney, the DA – its time they clean all of them out. Hopefully Dave Anderson can get it done before they all get together at Nancy Clarence’s Xmas party where his replacement will be gossiped about and unofficially coronated. Canapé anyone.
San Francisco is a changing city. In this year’s election 16,000 more Republican votes were cast than in 2016.
All of this is alleged until proven factual. Perception is not always based in reality.
When will the investigation look more thoroughly into Planning Department development permitting Directors and Managers and their cozy associations with expediters and favored development attorneys — as 555 Fulton was noted in the complaint? Surely it would be easy to scrutinize email, voicemail and cell phone records to shed light on misconduct. The Planning Department development review process has never been fully transparent nor equitable.
Joe. Has anyone looked into Phoenix Electric or Bay Area Light Works contracts for street lighting? They are owned by two brothers and get the vast majority of public works street lighting jobs. They have been caught numerous times violating prevailing wage acts and still are awarded contracts worth millions through DPW and PUC.
The part of this story I don’t understand is why would they take cash overseas for a political activist? Cover story in case they had to report a large amount of cash when leaving or entering the country?
Dear Harlan, Good Riddance. You promoted and protected the worst of the SFPUC and demeaned people who told the truth and acted in the best interest of the ratepayers (and could spell!) – or had you had your underlings do it because you can’t do anything for yourself. Going after the lowest paid folks in the agency, who tell the truth, is about as low as it gets in my book. That’s your legacy.
With any luck, the FBI (or even the City Attorney) are continuing to review the SFPUC enablers that Harlan favored in order for them to twist positions, promotions and invoices. How did the child of a SFPUC Commissioner get a job at the PUC – in a top position? That’s ethical? What does the Contracting Assistance Center do? Infrastructure, Finance and HR should be at the top of the list for investigation and accountability. There was supposed to be an audit of community benefits last year and it never really got off the ground. Why? That audit was the talk of the City and it died. Harvey Rose and BLA (BOS auditors) should have moved forward. Why did the PUC get 15 whistleblower complaints in a single quarter this year – the second highest in the City? Where did all the documentation from that audit go? What did it say?
Dear Ted from Marin,
How did a child of an SFPUC commissioner get a job at the PUC? To ask the question is to answer it. How did Jared Kushner get I to Harvard? How did Bobby Kennedy become AG? How did Eric Trump survive to be an adult ? I was shocked that someone from Marin could be so naive. I’ll bet my wife’s Aston-Martin that if you go research the most expensive real estate bought and sold in Marin County (heck let’s limit it to Kentfield) in the last five years at least 75 per cent of the homes were bought with inherited wealth – the good old fashioned way. Ted, Ted, Ted – surely you still don’t believe in the American dream. That ship has sailed. Marry well / it’s the only way.
Run, Ed, run! https://www.sfweekly.com/news/run-ed-run-turns-mayor-ed-lee-into-a-castro-street-bear/
Someone once said that people get the government they deserve. Where were the voters of SF during all this? Housing, homeless and gay rights were always in the news while underneath it all the structural supports of government were rotting in a culture of greed, arrogance and deceit.
Article forgot to mention the Department of Corrections ( Probation Department) is a major tenant at Walter Wongs building at 1727 mission street along with a bunch of other San Francisco public services. His construction company is also in the same building. Wondered how Walt got all those great paying tenants. Guess those deals were struck awhile back.
Funny thing when they get on Parole and probation they could be service by this tenants, where the schemes were plotted.
As a life long public servant, i am so upset by these allegations. If true, they are giving bad names to the thousands of us who are actually ethical and follow the rules on behalf of the people of and visitors to San Francisco.
I just retired from the PUC ,if I were to take a box of nails home the PUC would fire me and I would lose all my retirement and go to jail for 2 years ,Mr Kelly resigned so he could keep all his retirement and benefits,fight the case for a couple years,and then do community service or wear an ankle bracelet but cheated the taxpayers out of millions.
Someone should investigate PUC wastewater millions spent for wastewater plant rebuild over the coarse of years but until last year .no real work performed .The Feds should check that out .That’s probably not fraud or embezzlement because there engineers are to dumb to profit from there misuse of tax payer funds .
D
So true. Thanks Steve.
Why be coy about saying deceased Mayor Ed Lee’s name? I understand why Kelly and Wong would speak in code, but why does this story only hint without explicitly saying?
Daved, because they (Kelly, Wong) didn’t explicitly say it.
Projects take twice as long as they should and cost three times as much. Every Mayor is crooked, there is know way to even get there otherwise, especially Ed Lee. What a disgrace. Lock them up, take their homes. Lets make an example out of them
And what of Naomi Kelly – does she still have her job? Is, why?
* if so, why?
Why is it always people of color get busted, while the Colonial Oppressors are allowed to engage in convenient and beneficial relationships? Ah, the Double Standard of Tolerant SF…🤷🏽♂️👊🏾🤔
Very true.
This vintictive investigation seeks to rather Black people.
Look out for Whites, Chinese and Filipinos fixing their relatives and friends into juicy positions in the City with help from HR.
Leave Black people alone !!!
From the Mayor’s statement after the arrest: “As I’ve said from the beginning, any City employee involved in issues related to this investigation needs to cooperate and come forward with any information”…she is aware his wife runs the Mayor’s Office right?
Yes, it’s become pure silliness at this point.
As someone who worked with countless hard-working people at nonprofits (who end up providing essential services under neoliberalism, yes nonprofits are not a good system but some do vital work none the less ) that did things above-board, never had enough money and enough funding from the city, it’s all so disgusting. Mayor Breed, Newsom, and of course Willie are all deeply involved in this corruption .
In 1985, I was hired as a busser at a UC Berkeley cafeteria. After completing all of the paperwork, but before actually starting, I received notice that I could not actually start work.
The problem? My brother scooped ice cream in the same cafeteria. When I inquired about this, I was told that California has laws to prevent nepotism in government employment. Apparently, these laws were established to prevent the huge danger of having two related college kids from capsizing the entire University of California empire – and probably the entire Golden State. I mean, the danger was real. Very real. Think of all the quarters I could have helped my brother steal. Think of all the dirty dishes he could have helped me bring home. No, really.
When I sought clarification from a better-placed university functionary, I was told that the laws were vital to the stable operation of the corporation. I mean, university. I pointed out, with no effect, that there was at least one “famous” married couple who had been hired to SHARE a tenured position (that is, in the same department at presumably half the salary and benefits each), obviously against the best interests of the corporation. As happens, the two got tired of each other, so they divorced. But that wasn’t a problem for the corporation. With university blessing and finances, their department magically created a new tenured position so each ex-spouse could stay at Berkeley and keep the elite diploma mill humming. “Fiat lux,” my eye.
Though he was no longer a UC Regent when I lost the job I never started, I am confident that Willie Brown supported that kind of “integrity.” Gavin Newsom is currently a UC Regent. Anyone doubt what his take is?
Alaric Degrafinried, Acting San Franciso Public Works Director, is the “Al” referred to on Page 8 of the FBI Filing. He was appointed as the Purchaser (i.e. Director of the Office of Contract Administration) by City Administrator Naomi Kelly (i.e. wife of Harlan Kelly) and then appointed as the Acting San Francisco Public Works Director by City AdministratorNaomi Kelly upon Ex-Director Nuru’s resignation.
True. Though at the time of this HK text on p.8, Alaric was the deputy in Contracts Division under Kathy How – one of HK’s oldest friends. She’s the AGM for Infrastructure, HK’s last job before being GM.
When do you think Naomi will be charged? And when is she resigning?
Don”t forget the scandal involving the previous Streetlight boss. Parties on Treasure Island with prostitutes and personal home improvements – all on the city’s dime.
Hey Ted, I bet WWE PUC !!!
Great report……I wonder what agency is next on the hit list
It’s not always a given that a new US Attorney would be installed if a new administration takes over. If the current USA is good, they would continue onto the next administration.
Even if the USA is replaced, the staff attorneys remain therefore this case will see a conclusion in court. Biden isn’t like the Schmuck that is currently sitting in our house, he will not interfere with the investigation. Since this case is already in court, the cup has already tipped over and you can’t put the water back in.
Will they nail Slick Willie Brown in time?
How about Nuru’s ex.. Mayor LB…?
Hope the current investigation is the tip of the iceberg, hundreds of millions of dollars of SF tax payers money have been wasted by corrupt PUC officials. Starting from the $5B Water Infrustacture Improvement Project (WSIP) to the ongoing $7B
Sewer System Improvement Project (SSIP).
Is Muhammad Nuri in prison? Or on bail spending all the money he illegally obtained?!
Interesting… Nuru’s daughter works for the PUC. I wonder how she landed that gig?
Nuru’s daughter has a Master’s degree from UC Berkley so stop being Petty.
Ask SFPUC HR. Sorry, Harlan’s HR. The Civil Service Commission could surely tell a tale or two of what the PUC does with its positions.
The stench of corruption at SF City Hall exceeds even the stench of human feces on City streets. Where was the District Attorney and City Attorney with their squads of highly paid staff while the bribes were being doled out for years under their noses? Biden should keep David Anderson on as a U.S.Attorney and let him clean house. But my bet is that Pelosi/Feinstein won’t let that happen.
I wonder if ANY of the Community Benefit Districts are involved…
Re: Joe/Community Benefit Districts
I started and am currently on BOD of a CBD, and can tell you that Nuru solicited & threatened us in an outrageous meeting attended by other non-DPW city employees. This happened immediately after our approval. At the time, he did not know any of us personally, which makes me confident that he solicited every Community Benefit District in SF. Thank god that (compared to proper City depts) he had no real leverage over us. We just ignored him, and he blew up shortly thereafter.
once again, good work joe.
Bet they all get to keep their fat pensions. I’m sure the Supervisors are taking care of their own. Un-professional courtesy.
So, they’re pinning it in on Rose Pak, who is conveniently dead.
Great Reporting–
Charlie —
It would seem another major San Francisco political figure is also deceased.
As for Pak, Naomi Kelly’s claims to the feds do not match their investigation of bank transactions. Let’s see where that goes.
JE
Thanks Joe!