A much-criticized bike lane that runs through the middle of a San Francisco street could be relocated less than a year after it was built.

It was a bold and different plan. Cyclists would ride in the middle of Valencia Street between the traffic lanes. The center bike lane was installed last August between 15th and 23rd streets in the Mission District.

The goal was to make cyclists feel safer and create an efficient traffic artery along the Mission. But the project has since come under criticism. People in the area say there are no clear directions for cyclists or motorists, leading to confusion and danger.

The SFMTA is currently seeking approval from the city's Department of Transportation for a side-by-side bike lane. Two concepts are under discussion:

• One proposal would force cyclists to ride around restaurant parklets, bringing them closer to traffic.
• The other design would have cyclists ride between the curb and the parklets.

Some local business owners KPIX spoke to are fed up with the whole thing.

“It's terrible. It's not an attractive part of town anymore. Nobody wants to be here,” said Sahar Milani, owner of Rossi Mission SF.

Kevin Ortiz, a member of VAMANOS, a newly formed coalition against the current design of the bike lanes, expressed the community's concerns.

“We have seen 20 companies close, the latest being Los Amigos. So the question is how many more companies will have to suffer,” he said. “The problem is that the SFMTA has not reached out to our organization. We want to meet with them, but they are basically only making contact a week before the actual hearing, which is next week,” he added.

“They don’t ask us or discuss with us, and then they ask people,” says Eiad Eltaweil, owner of the Yasmi restaurant.

In fact, some business owners have filed a lawsuit with the city because they're upset about the loss of parking and other changes in the neighborhood. KPIX spoke with a cyclist today who understands their concerns but still enjoys the ride.

“From a cyclist’s perspective, it’s safer for bikes,” said Craig Sakowitz, a cyclist.

Sakowitz said that while the center bike lane reduces the risk of being hit by a car door or colliding with pedestrians, it also makes it more difficult to turn onto other streets.

All of this information will feed into the next debate on moving the lane to the curb. The San Francisco Municipal Transportation Agency will hold a public hearing on the issue a week from now, on Tuesday, June 18.

More from CBS News

Anna Makovec

Anne Makovec is the Breaking News Anchor for the KPIX 5 Morning News. She reports breaking news from across the Bay Area and around the world every weekday from the Live News Desk and compiles reports from Bay Area neighborhoods for later KPIX broadcasts.

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Rosemary and Pine, the casual restaurant from the group behind hits like Dumpling Time and the Michelin-starred Niku Steakhouse, is on the move. But fans don't have to worry about the restaurant leaving the neighborhood. The restaurant's new home will be at 55 Division Street, in the spot where Dumpling Time Express used to be – and in case you're unfamiliar, it's right around the corner, less than a five-minute walk from the original one Location located at 1725 Alameda Street.

The last day of service in the previous space was Sunday, March 24th, and the new Rosemary and Pine will launch tomorrow, Thursday, May 16th.

The move also shifts the restaurant's focus: Rosemary and Pine will no longer serve dinner. Instead, the restaurant will be open from 8 a.m. to 2 p.m. on weekdays and 9 a.m. to 2 p.m. on weekends. The breakfast and lunch menus will showcase some of the dishes guests have come to know and love since Rosemary and Pine's debut in 2022. For example, the eggs Benedict with Benton's country ham and shiso hollandaise will be moving to the new location, as will the buttermilk biscuit with sausage gravy.

But there will also be a lot of new additions. Look for a selection of soups, salads and sandwiches, including stracciatella toast with balsamic and honey-roasted grapes and a fried chicken sandwich with furikake ranch slaw and gochujang aioli. Coffee service will be quick and friendly, a press release promises, and for those who want breakfast on the go, Rosemary and Pine will offer milk bread donuts until 11 a.m. daily

The new Rosemary and Pine represents a downsizing of the restaurant, which now has 48 seats, including 12 on the outdoor patio. The restaurant's name is inspired by Chef Dustin Falcon, who added dishes that reflected his childhood in Florida and New Jersey to the original menu.

Rosemary and Pine will reopen Thursday, May 16, at 55 Division Street.

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The Mission District will have one less place for casual vibes and upscale beer and burgers: The Monk's Kettle is closing its original location at 3141 16th Street and moving to Oakland's Rockridge neighborhood. According to a press release, the 16th Street location will remain open through June; The Monk's team will then move operations to the Oakland space and plans to host a grand opening in early fall. In the press release, co-owner Christian Albertson cites an expired rental agreement and the possibility of a new location with larger space and better offerings as the reason for the move. The San Rafael outpost remains unchanged.

As part of the farewell, Albertson also wrote a letter titled “Reflections on a 16-Year Run on 16th Street,” in which he discussed the vastly different landscape in San Francisco than when the dimly lit destination for hazy IPAs and pretzel rolls opened . Albertson says that when he opened in 2007, San Francisco was a “community.” [that] was more focused on going out and experiencing the world through its restaurants, bars and shops.” The app-based delivery boom in the early 2010s for a gastropub was never a good thing, he writes. If 20 percent of every sale goes to another company, the money dries up—plus the experience of hanging out with friends over a basket of fries and a Cellarmaker beer. “For the first nine years of our tenure, our kitchen was open until 1 a.m. every night and we kicked people out at 2 a.m.,” the note reads in part. “These days, closing at 11 p.m. often feels too late.”

The monk's kettle

The monk's kettle

In addition to changing restaurant trends, Albertson cites the recent influx of tech workers as a major problem for his industry. Instead of people in neighborhoods like the Mission investing and taking the time to become regulars at bars and restaurants, “the workers at these companies are here on short-term contracts with contracts for a year (or less)” and “that's what they are.” far less inclined to support their local district; They're more likely to head to desirable hotspots before heading to wherever the next job takes them.” He says these reasons and more make San Francisco more ephemeral than ever, adding to the reality of being a small business owner here make challenge.

The Monk's Kettle will take over the former Citron space at 5484 College Avenue. The release touts an open floor plan for a large bar — fans of the business can expect the lion's head bar to move to the East Bay — and a dining room with a large back patio next to a lemon tree and a trellis overhead. Parklets in front of the restaurant expand seating capacity. Closing events and sales, including a time travel tour of vintage menus and cellar beers, will take place in the following months. Updates will be posted on Monk's Kettle's social media channels. “So we head to Rockridge to start the new neighborhood bar,” Albertson’s letter continued. “We hope to see you all there.”

Monk's Kettle (3141 16th Street) will remain open through June and is open Sunday through Thursday from noon to 11 p.m. and Friday and Saturday from noon to midnight.

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SAN FRANCISCO – Alan Varela and William Gilmartin III appeared in federal court today and each pleaded guilty to the charge of conspiracy to commit honest services wire fraud, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.  Gilmartin further agreed in his plea agreement to cooperate with federal investigators in the San Francisco City Hall corruption investigation. 

“Contractors with San Francisco like Alan Varela, William Gilmartin, and their ilk are not off the radar of our San Francisco City Hall corruption investigation just because they are not public officials,” said Acting United States Attorney Stephanie M. Hinds.  “If you bribe a public official and our investigation uncovers it, you will face justice.  Involved individuals who come to the FBI with what they know about bribes and kickbacks will be treated differently than those who don’t and get caught.”

“The investigation into San Francisco city government continues and we believe there are even more city employees and contractors who may have pertinent first-hand knowledge of the insidious corruption plaguing San Francisco,” said FBI Special Agent in Charge Craig D. Fair. “Instead of waiting for the FBI to knock on your door, we encourage others who have knowledge of this corruption to reach out to us and cooperate with our investigation.”

Today’s developments follow the September 17, 2020, federal complaint charging Varela, 59, of Orinda, and Gilmartin, 60, of San Mateo, with bribery of a public official.  According to that complaint affidavit, Varela and Gilmartin, the president and vice-president of a Bay Area civil engineering and construction firm, respectively, provided gifts and benefits to Mohammed Nuru, then Director of San Francisco’s Department of Public Works (DPW), in exchange for inside information about an upcoming lucrative San Francisco public contract.  Varela and Gilmartin were the seventh and eighth defendants charged in the federal San Francisco City Hall graft probe that has to this date charged a dozen defendants.

Varela’s plea agreement expounds on those complaint allegations.  Varela admitted in his plea agreement that from 2013 until January 28, 2020 (the day of Nuru’s arrest), he conspired with his co-defendant Gilmartin, Balmore Hernandez – a construction company CEO who earlier pled guilty and is cooperating with the FBI – and others to pay bribes and kickbacks to Nuru.  Nuru’s position as DPW Director provided him great influence over San Francisco public contracts, permits, and construction projects as well as other City departments and private companies requiring contracts from DPW.  The bribes and kickbacks to Nuru were intended to influence his conduct in official actions.  The items of value Varela and his co-conspirators provided to Nuru included cash, equipment for Nuru’s ranch, free meals and entertainment, and the prospect of portions of the proceeds from the expected awards of City contracts.

Varela further admitted that he and his co-conspirators focused on winning a DPW contract and a related Port of San Francisco lease to operate an asphalt recycling plant and a concrete plant on the Port of San Francisco’s land.  According to Varela’s plea agreement, Nuru agreed in exchange for cash and other valuables to use his official position to get Varela and his co-conspirators’ bid selected.  Nuru began sending early drafts of San Francisco’s Request for Proposals for the asphalt recycling plant project as well as other inside information to Varela and his co-conspirators to better position them to have their bid selected.  Nuru also regularly met with Gilmartin and Hernandez to discuss the plans over expensive restaurant dinners, always paid for by Gilmartin. 

According to Varela’s plea agreement, Gilmartin arranged to compensate Nuru by asking an unnamed company to award a $100,000 contract to Balmore Hernandez.  The proceeds of that contract were intended to pay Nuru, and Hernandez used the proceeds to benefit Nuru.  Once the co-conspirators’ bid was selected in September 2015, Nuru continued to meet with Varela and the co-conspirators and supply additional inside information, all over meals paid for by Gilmartin that ultimately totaled approximately $20,000.  At one point during discussions, Nuru requested a tractor for his ranch.  Varela admitted that in February 2019 he coordinated with Gilmartin and Hernandez to deliver the tractor to Nuru. 

In January 2020, while the asphalt recycling plant agreements with DPW and the Port of San Francisco were still being finalized, Nuru was arrested.

Gilmartin also pleaded guilty today to the charge of conspiracy to commit honest services wire fraud.  The terms of his plea agreement require Gilmartin to cooperate with the ongoing investigation and surrender assets acquired as a result of his illegal conduct.  The criminal conduct Gilmartin admits was submitted to the Court in a separate “Exhibit A” that is filed under seal and thus unavailable to the public at this time.  

Varela and Gilmartin both entered their guilty pleas before United States District Judge William H. Orrick. Judge Orrick set Varela’s sentencing hearing for September 16, 2021, at 1:30 p.m.  Gilmartin’s next hearing date is a status conference set for December 2, 2021, at 1:30 p.m.

Varela and Gilmartin each pleaded guilty to one count of conspiracy to commit honest services wire fraud, in violation of 18 U.S.C. §§ 1343, 1346 and 1349.  The charge carries a maximum statutory penalty of 20 years in prison and a fine of $250,000 or not more than the greater of twice the gross gain or twice the gross loss.  However, any sentence following conviction would be imposed by the Court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

The prosecution is being handled by the Corporate Fraud Strike Force in the Office of the U.S. Attorney for the Northern District of California and is the result of an investigation by the FBI. 

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SAN FRANCISCO – Bernard Curran, a former San Francisco Senior Building Inspector, pleaded guilty today to two counts of accepting gratuity payments as rewards for approving building permits, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp. 

Curran, 62, of San Francisco, was employed at the San Francisco Department of Building Inspection (DBI) from 2005 until he resigned from his supervisory position as Senior Building Inspector while on administrative leave in May 2021. Curran’s official duties included conducting physical inspections of buildings and construction sites in San Francisco. For a San Francisco property owner intending to shepherd a construction or remodeling project from inception to completion, the first hurdle is to obtain a permit from DBI. Once the permit is obtained and the work is underway, the next hurdle is to pass on-site physical inspections by DBI inspectors who determine whether the work completed complies with the work authorized by the permit. If a project passes all inspections and is deemed completed successfully, DBI inspectors “final” the permits and issue a certificate of final completion and occupancy (CFC), allowing the property to be used. 

In his plea agreement today, Curran admitted that he accepted illegal payments from two people in connection with his official duties. The first was a long time San Francisco real estate developer who Curran developed a friendship with in the 1990s. Over time, Curran inspected dozens of properties and projects connected to the developer. Curran admitted that during his DBI career, he received numerous financial benefits from the developer that he knew were improper. Upon Curran being promoted to Senior Building Inspector in 2009, he accepted cash payments as “rewards” from the developer in connection with final inspections and/or CFC issuances that Curran conducted at the developer’s properties. In one instance in March 2017, Curran accepted $260,000 from the developer to assist Curran in paying down his existing residential mortgage so he could obtain favorable refinancing rates. Though Curran intended to repay the money, he knew that accepting it was improper and created a forbidden conflict of interest. Moreover, though Curran paid most of the $260,000 back, he admitted the developer never required him to repay $30,000 of the outstanding balance. Curran understood that the $30,000 debt forgiveness was an improper reward for conducting past and future inspections at the developer’s building projects. 

The second person Curran admitted receiving illegal gratuities from was an engineer who worked with project owners and contractors seeking building permits in San Francisco. The engineer worked frequently with Curran and knew he was a volunteer coach and supporter of a San Francisco non-profit adult and youth athletic organization. Curran admitted in his plea agreement that the engineer arranged for the engineer’s clients to make charitable donations to the athletic organization as rewards for and in connection with inspections by Curran of the clients’ properties. The donations were typically made by check and several times were delivered directly to Curran, who in turn delivered the checks to the athletic organization. According to the plea agreement, in several instances the engineer advised Curran of a client’s donation while asking for a final permit or inspection on the client’s property. From May 2017 through April 2019 the athletic organization received 13 such checks from the engineer’s clients, totaling $9,600. Curran admitted that he took official action for each of the clients who wrote the 13 checks, knowing this conduct was not permitted.

Curran entered his guilty pleas before United States District Judge Susan Illston, who scheduled a sentencing hearing for Curran on March 31, 2023. Curran remains out of custody pending his sentencing hearing.

Curran pleaded guilty to two counts of accepting illegal gratuities in violation of 18 U.S.C. § 666(a)(1)(B). Each count carries a maximum statutory term of imprisonment of 10 years. However, any sentence following conviction imposed by the court will occur only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

The Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation. 

This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, twelve individuals have been charged, including high-ranking San Francisco public officials Harlan Kelly and Mohammed Nuru. Nuru was sentenced to seven years in federal prison in August 2022. Multiple city contractors and facilitators have also been charged and several have been sentenced to prison. 
 

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SAN FRANCISCO – Three former executives of a San Francisco based construction planning and design firm were charged today paying bribes to employees of the San Francisco Department of Building Inspection (”DBI”), announced the Chief of the Criminal Division of the Office for the U.S. Attorney Thomas A. Colthurst and Federal Bureau of Investigation Special Agent in Charge Robert Tripp.

Siavash “Sia” Tahbazof, 72, was charged in an Information filed today with one count of conspiracy to commit honest services wire fraud for paying bribes to DBI employees in return for their agreement to expedite and issue building plan permits and approve building inspections, beginning in 2003. According to the Information, Tahbazof conspired to bribe city employees including former DBI plan checkers Cyril Yu and Rodolfo “Rudy” Pada, and DBI building inspector Bernard Curran.

In a separate information also filed today, Reza Khoshnevisan, 54, was charged with one count of conspiracy to commit honest services wire fraud for paying bribes to Pada and Yu in return for their agreement to expedite and issue building plan permits. The conspiracy allegedly began in 2012.

In addition, Bahman Ghassemzadeh, 38, was charged in a third Information filed today. Ghassemzadeh is charged with one count of conspiracy to commit honest services wire fraud for paying bribes to Pada, Yu, and Curran, beginning in 2014, in return for their agreement to expedite and issue building plan permits and approve building inspections.

DBI is a regulatory city agency in San Francisco responsible for overseeing enforcement of building, electrical, plumbing, and housing codes for the City of San Francisco’s more than 200,000 commercial and residential buildings. Contractors and builders submit construction plans to DBI for approval and permitting; the plans are required to be reviewed and approved by DBI to insure that the proposed construction and building meets city codes and regulations.

An Information merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The defendants were each charged with one count of conspiracy to commit honest services wire fraud in violation of 18 U.S.C. § 1349. If convicted, each defendant faces a maximum sentence of twenty years imprisonment, and a fine of up to $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Pada, 68, and Yu, 41, have both already been charged in separate Informations with conspiracy to commit honest services wire fraud. The Informations, filed on November 3, 2023, allege Pada accepted bribes in return for expediting and approving permits for building and construction plans and allege that Yu accepted bribes in return for approving permits for construction and building plans.

Assistant U.S. Attorneys David Ward and Casey Boome are prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation.

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SAN FRANCISCO – Two former San Francisco Department of Building Inspection (DBI) construction plan engineers have been charged in federal court with participating in an honest services wire fraud conspiracy for accepting bribes in return for expediting and approving building and construction plan permits, announced Attorney for the United States Thomas A. Colthurst and Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp.

According to a criminal Information filed on November 2, 2023, Rodolfo “Rudy” Pada, 68, of Millbrae, California, began accepting bribes in 2003 and continued to do so until he retired in September 2017. The Information alleges the bribes consisted of cash, free meals, drinks, and other benefits bestowed upon Pada by executives at a construction planning and design firm in return for Pada expediting and approving permits for building and construction plans. In addition, Pada is alleged to have solicited, accepted, and concealed an interest-free $85,000 loan facilitated by a construction planning and design firm executive.

According to a separate Information filed on November 2, 2023, Cyril Yu, 41, of San Francisco, began accepting bribes in January 2018 and continued to do so until February 2021. The Information alleges the bribes consisted of cash, free meals, drinks, and other benefits bestowed upon Yu by executives at a construction planning and design firm in return for Yu expediting and approving permits for building and construction plans.

The Informations allege that DBI is a regulatory agency in the City and County of San Francisco responsible for overseeing enforcement of building, electrical, plumbing, and housing codes for San Francisco’s more than 200,000 commercial and residential buildings. According to the Informations, contractors and builders submit construction plans to DBI for approval and permitting; the plans must be reviewed and approved by DBI to ensure that proposed construction plans meet City codes and regulations.

An information merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. Pada and Yu were each charged with one count of conspiracy to commit honest services wire fraud in violation of 18 U.S.C. § 1349. If convicted, each defendant faces a maximum sentence of 20 years imprisonment, and a fine of up to $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The case is being prosecuted by the Corporate and Securities Fraud Section of the United States Attorney’s Office. Assistant U.S. Attorneys David Ward and Ilham Hosseini are prosecuting the case, which is the result of an investigation by the FBI

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SAN FRANCISCO – Bernard Curran, a former San Francisco Senior Building Inspector, was sentenced today to serve a year and a day in prison in connection with charges that he accepted cash payments and charitable donations from developers and property owners whose projects Curran had responsibility for approving, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp. The sentence was handed down by United States Senior District Judge Susan Illston.

Curran, 62, of San Francisco, pleaded guilty to the charges on December 9, 2022. According to his plea agreement, Curran acknowledged that he was a Building Inspector for the San Francisco Department of Building Inspection (“DBI”) in 2005, and in approximately 2009, was promoted to Senior Building Inspector. As a Senior Building Inspector, Curran was responsible for conducting physical inspections of buildings and construction sites in San Francisco to verify that construction or renovation work had been completed according to approved permits and plans. Curran admitted that after he became a Senior Building Inspector, he received improper financial benefits in connection with his employment.

“San Francisco government officials must always work with the public’s best interest in mind and rebuff invitations for corrupt personal gain,” said U.S. Attorney Ramsey. “Curran is not the first, and he will not be the last, defendant sentenced in rooting out corruption in San Francisco. Today’s sentence makes clear that officials who abuse the public trust will serve time in federal custody.”

“Bernard Curran chose to line his own pockets instead of performing his duties with integrity,” said Special Agent In Charge Robert K. Tripp. “That’s not a small lapse: building inspectors ensure our new construction is safe, and play a key role in creating new housing and businesses that make San Francisco a vibrant place to live and work. Curran’s time in prison should be a stark warning to all that if you’re a public servant who takes a bribe, you will be held to account.”

According to his plea agreement, Curran admitted that he received cash payments from a San Francisco developer “in connection with and as rewards for” the inspections that he conducted or for the approvals that Curran granted as an inspector. In addition, Curran admitted that he accepted what amounted to a $260,000 interest-free loan from the same developer, $30,000 of which was never paid back. Curran admitted that he understood the developer never required the outstanding $30,000 balance to be repaid, “in part due to our friendship, but also in connection with and as a reward for conducting past and future inspections,” on the developer’s projects. Further, Curran admitted that in 2021, the San Francisco City Attorney’s Office investigated potential conflicts of interest related to his employment and, in response, Curran falsely certified that the loan he received was not from the developer, but rather was from a relative and had been issued at a 6% interest rate. Curran admitted that he submitted this false statement in an effort to deceive the City officials.

In addition to the improper gifts from the developer, Curran also admitted in his plea agreement that he accepted illegal gifts from co-defendant Rodrigo Santos. Santos, a licensed civil engineer, worked with project owners and contractors seeking building permits in San Francisco. Curran admitted that between May of 2017 and April of 2020, Santos asked some of his San Francisco clients to make “charitable” donations in connection with inspections that Curran conducted. Specifically, Curran was a volunteer for, and supporter of, a non-profit organization and Santos instructed his clients to write checks for the organization. Curran admitted that on several occasions Santos discussed with Curran the checks that his clients donated while also asking for official action to be taken on specific projects. Curran admitted that the government could prove that between May of 2017 and April of 2019, Santos’s clients wrote $9,600 in donations from 13 clients and that Curran took at least one official action for all 13 of the donors.

On November 28, 2022, Curran was charged by superseding information with two counts of accepting illegal gratuities, in violation of 18 U.S.C. § 666(a)(1)(B). Curran pleaded guilty to both counts.

In addition to the prison term, Judge Illston sentenced Curran to two years of supervised release following his prison term. The court set a further hearing on September 8, 2023, to determine the amount of restitution that Curran must pay to DBI to compensate the agency for the costs of an internal audit of projects that Curran inspected. DBI initiated the audit after the charges in this case

The case is being prosecuted by the Special Prosecutions Section of the U.S. Attorney’s Office. The case is being investigated by the FBI and the IRS-CI.

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SAN FRANCISCO – A federal jury today convicted Harlan Kelly, the former General Manager of the San Francisco Public Utilities Commission (PUC) of charges that he accepted bribes and gifts from a local businessman in a scheme to provide confidential information about the city public bidding process and steer city contracts to that person’s businesses, announced First Assistant United States Attorney Patrick Robbins, Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp, and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Darren Lian. The verdict follows a two-week trial before United States Chief District Judge Richard Seeborg.

Kelly, 61, of San Francisco, was arrested on a criminal complaint in November 2020, and he was tried on charges contained in a May 31, 2022, superseding indictment that included charges of conspiracy to commit honest services wire fraud and honest services wire fraud. The superseding indictment also included charges of false statements to a bank, conspiracy to make false statements to a bank, bank fraud, and bank fraud conspiracy, related to a scheme to defraud Quicken Loans in connection with a $1.3 million mortgage refinance loan obtained by Kelly.

Kelly was convicted of one count of conspiracy to commit honest services wire fraud, one count of honest services wire fraud, and all four counts related to the bank fraud scheme. The jury found Kelly not guilty of two honest services wire fraud counts.

The charges against, and prosecution of, Kelly grew out of a years-long investigation into bribery and public corruption in San Francisco city government, led by the U.S. Attorney’s Office, the FBI, and IRS-CI. To date, 13 individuals have been charged in connection that larger set of investigations, including Mohammed Nuru, former director of the San Francisco Public Works department, and multiple city contractors and other facilitators of bribes and corruption.

The evidence at trial showed that Kelly, appointed in 2012 as General Manager of the San Francisco PUC, had access to confidential information about city contract bidding processes, and the ability to influence the awarding of some city contracts. Documents and testimony showed that Kelly had a close personal and professional relationship with San Francisco business owner and contractor Walter Wong, and that during the time Wong both conducted business with the city and sought additional lucrative contracts to supply the PUC with LED streetlights. While he was doing business with the city and seeking contracts, Wong provided numerous gifts, benefits, and bribes to Kelly. These bribes including discounted construction work on Kelly’s personal residence and a lavish international trip hosted by and in part paid for by Wong. Evidence showed that Wong paid travel and personal expenses for Kelly and his family during a March 2016 Kelly family vacation to Hong Kong, Macau, and China, and that Wong paid for hotel expenses and incidentals such as meals and luxury excursions. Wong has previously pleaded guilty to charges that he engaged in an honest services fraud conspiracy in connection with his interactions with Kelly and others.

The evidence at trial showed that as part of the bribery conspiracy, Kelly provided confidential information and documents about the details of bids submitted by other contractors, including proprietary pricing and cost information, and information and documents with internal notes about how city employees in the PUC were evaluating and rating the bidders. The evidence showed that Kelly delivered these documents to Wong and his associates in violation of Kelly’s fiduciary obligations to the city and its residents, and that the confidential information assisted Wong and his company in improving Wong’s chances to obtain the contract award.

Trial evidence also showed that Kelly defrauded Quicken Loans, a financial institution, in a $1.3 million dollar real estate mortgage loan provided to Kelly. The evidence at trial showed that Kelly worked with an associate, prominent city businessman and property manager Victor Makras, to mislead the bank. According to the evidence, in the application for the loan Kelly falsely represented that he had a $915,000 mortgage and concealed the true nature of his debts from Quicken. According to the trial evidence, these misrepresentations were material to the bank’s evaluation of the borrower and the loan. The outstanding debts that Kelly concealed from Quicken included a construction debt owed to the contractor, Walter Wong that amounted to about $89,000. Another debt concealed from the company was a $70,000 unsecured personal loan made by Makras to Kelly, a result of Makras directly paying Kelly’s credit card debt in order to conceal the fact that Kelly received this loan from Makras.

Co-defendant Makras, 64 of San Francisco, was also charged in the May 31, 2022 superseding indictment, and was convicted of making false statements to a bank and bank fraud at a separate trial in August 2022.

The federal jury today convicted Kelly of the following:

•    One count of conspiracy to commit honest services wire fraud, in violation of 18 U.S.C. §§ 1343, 1346, and 1349, which carries a maximum possible penalty of 20 years in prison and a fine of $250,000, or the greater of twice the gross gain or gross loss
•    One count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346, which carries a maximum possible penalty of 20 years in prison and a fine of $250,000, or the greater of twice the gross gain or gross loss
•    One count of making false statements to a bank in violation of 18 U.S.C. § 1014, which carries a maximum possible penalty of 30 years in prison and a $1,000,000 fine
•    One count of conspiracy to make false statements to a bank in violation of 18 U.S.C. § 371, which carries a maximum possible penalty of 5 years in prison and a fine of $250,000
•    One count of bank fraud, in violation of 18 U.S.C. §§ 1344(1),(2), which carries a maximum possible penalty of 30 years in prison and a fine of $1,000,000, or not more than the greater of twice the gross gain or gross loss
•    One count of conspiracy to commit bank fraud, in violation of 18 U.S.C. §§ 1344(1),(2) and 1349, which carries a maximum possible penalty of 30 years in prison and a fine of $1,000,000, or not more than the greater of twice the gross gain or gross loss

As part of any sentence, the court also may order the defendant to serve an additional period of supervised release to begin after any prison term, to pay additional penalties, and to pay restitution, if appropriate. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553. Defendant Kelly remains out of custody pending sentencing. No future date has yet been set.

The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. Assistant U.S. Attorneys David Ward and Kristina Green prosecuted the case at trial with the assistance of Tina Rosenbaum. The case is being investigated by the FBI and the IRS-CI.

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Officials from the Lamar County School District have voted to accept a settlement of $78,000 as a result of a class action lawsuit against two organizations involved in e-cigarettes and accessories, following a 2020 lawsuit alleging the companies targeted school-age children with vaping products, leading to underage vaping at schools across the country.

That decision was made at the October 9 meeting of the district’s board of directors, where board members voted to the provisions put forth by JUUL and Altria. JUUL is a San Francisco-based manufacturer of e-cigarettes and accessories, while Altria – according to its website – offers a portfolio of smoke-free products designed to transition adults to a smoke-free future via various nicotine options.

“Vaping, especially with young children in our high schools and middle schools, has reached epidemic proportions,” district superintendent Steven Hampton said. “It’s something that (kids see as) cool, and it’s an issue – students are buying vapes, and they don’t know what’s in the vapes.

“We’ve had some medical issues that we’ve had to deal with, from students that have passed out from vaping. So we felt it was important that – because we are seeing issues in our schools – that we participate in this lawsuit so that we can send the message that we do not support (vaping).”

District officials will use the funds from the settlement to further vaping awareness and prevention, and to educate students on the harmful side effects of that measure.

“(That will be) presentations, guest speakers, deterrent devices to detect vapes and things like that,” Hampton said. “It’ll be a multitude of things that we’ll be implemented.”

Board members voted to join the suit, which is being handled by Frantz Law Group out of Los Angeles, on August 10, 2020. The suit accused JUUL of design defect, failure to warn, negligence and being a public nuisance.

It also stated that the cigarette industry has a long history of marketing to young people under the age of 21, but while “Big Tobacco” is prohibited from many marketing tactics promoting cigarette use among young people, JUUL has been allowed to implement those strategies in order to build their customer base.

“The lawsuit says that JUUL has targeted teenagers,” school board attorney Rick Norton said in a previous story. “They’ve got a large, large share of the market – I think it’s 70 or 80 percent of the market of e-cigarettes for those under 21 years of age.

“And it has caused problems in our schools, with kids trying to vape between classes, before school, after school, et cetera. The lawsuit is asking for JUUL to stop targeting teenagers, and that’s the primary purpose.”

The lawsuit specifically referred to the Montebello Unified School District in California, which it said had been required to redirect valuable school resources, and administrators have had to strategize on how to best deal with the JUUL problem. Some schools responded by taking extreme measures such as removing bathroom doors or shutting bathrooms down.

“Schools have had to ban flash drives to avoid any confusion between flash drives and JUULS,” the suit stated. “Schools have also paid thousands of dollars to install special monitors to detect vaping, or pay for the costs of plumbing repairs spent as a result of students flushing vaping paraphernalia down toilets.

“Other school districts have sought to create new positions for tobacco prevention supervisors, who get alerts when vape smoke is detected in bathrooms. In order to implement … anti-vaping programs, teachers have to prepare lessons and study materials for these sessions with information on the marketing and health dangers of vaping – extra work which requires teachers to work extra hours in addition to the work required for the normal curriculum.”

The suit went on to say vaping hurts individual student learning and has led to a rise in student absences because of sickness.

“In addition to skipping class or being late to class to address their addiction, students often share vape devices, which accelerates the spread of viruses and other illnesses that impact student attendance,” the suit stated. “The district has had students end up in the emergency room as a result of vaping at school.”

The suit stated that a 2015 JUUL advertising campaign was particularly designed to appeal to young people, as the advertisements in that campaign included bright colors and models in their 20s posing in manners that were meant to evoke those of underage teenagers rather than adults. JUUL also has advertised on the front page of VICE Magazine, which has marketed itself as the “No. 1 youth media company in the world.”

The lawsuit also said that JUUL further targeted youth by manufacturing, selling, and promoting an array of youth-oriented flavors for its JUUL pods, which came in flavors including mango, fruit medley, cool mint, cool cucumber and crème brulee. According to one survey, 81 percent of youth e-cigarette users reported the first product they used was flavored, and 81.5 percent reported product flavoring as a reason for use.

In addition, JUUL also purchased banner advertisements on children’s television networks, including Nickelodeon and Cartoon Network, as well as websites for children such as allfreekidscrafts.com, hellokids.com and kidsgamheroes.com.

“JUUL also purchased advertisements on a range of websites designed to help middle school and high school students develop their mathematics and social skill studies,” the lawsuit states. “JUUL purchased advertisements on websites for high school students hoping to attend college, such as colleconfidential.com and collegereview.com.

“JUUL targeted college students with its paid online advertisements and purchased video advertisements on sites such as collegehumor.com and thecollegeprepstercom, as well as banner ads on survivingcollege.com. The teen vaping epidemic, which JUUL has had a massive influence in creating and maintaining, has and will continue to have significant costs, both for individual users and for society overall.”

JUUL also held more than 50 parties in cities across the United States in the first year after its 2015 launch, at which young attendees were give free nicotine-filled JUUL pods. Afterwards, the company posted pictures of various young people using the products across its various social media channels.

The suit requested compensatory damages, costs to abate or mitigate vaping, injunctive relief and abatement, punitive damages, reasonable attorney’s fees, statutory pre-judgment, costs of the suit, and any and all other relief allowed by the court.

“Any type of vaping or nicotine delivery devices (are prohibited on our campuses),” Hampton said. “Now they even deliver THC, which is a controlled substance.

“So any type of tobacco or vaping paraphernalia is not allowed on our campuses. We haven’t had any instances in our district with this, but there have been reports with Fentanyl being loaded into them. We haven’t had that on our campuses, but we’re trying to be prepared if that does happen.”

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