SAN FRANCISCO – Former San Francisco City Hall public official Mohammed Nuru agreed in a plea agreement filed today to plead guilty to honest services wire fraud, announced Acting United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and Internal Revenue Service–Criminal Investigation Special Agent in Charge Mark H. Pearson.  

Today’s development follows the January 15, 2020, 79-page federal complaint filed against then San Francisco Department of Public Works (DPW) Director Mohammed Nuru charging him with public corruption and describing a long-running scheme involving multiple bribes and kickbacks during his tenure as DPW’s Director.  Nuru, 59, of San Francisco, served as DPW’s Director from 2011 until charges were brought against him in 2020.  Nuru was also charged in a second federal complaint filed on January 28, 2020, with lying to a federal agent in the course of the San Francisco City Hall corruption investigation.  Today, in anticipation of entering his plea agreement resolving his cases, Nuru was arraigned today on an information – a charging document – that charges him with his sweeping scheme to defraud the San Francisco public of its right to his honest services in violation of 18 U.S.C. §§ 1343 and 1346.

“Mohammed Nuru admits to a staggering amount of public corruption in his plea agreement,” said Acting United States Attorney Stephanie M. Hinds.  “For years, Nuru held a powerful and well-paid public leadership position at San Francisco City Hall, but instead of serving the public, Nuru served himself.  He took continuous bribes from the contractors, developers, and entities he regulated.  He now faces a prison sentence for enriching himself at the expense of the public as he sat in high office.  Federal authorities will investigate public corruption wherever it leads in San Francisco and throughout the district.”  

“Today’s announcement, while significant, is by no means the end of the FBI’s investigation into the corrupt conduct we have uncovered in San Francisco city government,”  said FBI Special Agent in Charge D. Fair.  “We will continue to hold accountable those who seek to personally benefit by corrupting the fair administration of public business and we will persist in our commitment to protect the integrity of the institutions that serve the people of San Francisco.”

“Our communities place great trust and responsibility in our public figures.  Mohammed Nuru ultimately betrayed this trust when he abused his power to defraud the City and County of San Francisco and its people,” said IRS Criminal Investigation Special Agent in Charge Mark H. Pearson.  “We will not tolerate public corruption and will hold perpetrators accountable for their actions.  Today’s guilty plea is a direct result of the hard work and dedication of IRS Criminal Investigation and our law enforcement partners towards obtaining justice.”

Nuru signed today’s plea agreement and the agreement has been filed with the United States District Court in preparation for Nuru’s upcoming appearance to enter his guilty plea orally.  As the plea agreement outlines, before Nuru was appointed Director of DPW in 2011 he became DPW’s Deputy Director of Operations in 2000.  The Deputy Director of Operations is DPW’s second most senior position, behind only the Director.  In 2014, Nuru was also appointed to the Board of the Transbay Joint Powers Authority (TJPA) and eventually served as its Chair.  As Deputy Director and eventually Director of DPW, and as Chair of the TJPA, Nuru exercised great influence over San Francisco (the City) business and policy, including public contracts, permits, and construction projects.  His power and influence extended beyond DPW’s jurisdiction to numerous other City departments and agencies, making him one of the most powerful public officials in the City.

Nuru admits in his plea agreement to a spectrum of public corruption involving bribery and kickbacks he received while in DPW leadership.  His admissions are summarized below:

Walter Wong:

In his plea agreement, Nuru admits he received a stream of bribes from Walter Wong.  Wong did business in the City through Walter Wong Construction, among other businesses. In exchange for Wong’s bribes, Nuru helped Wong secure City contracts.  Sometimes Nuru provided Wong with confidential insider City information on competitors’ bids or specifications.  At other times Nuru allowed Wong to structure the requirements for the City’s Request for Proposals (RFP) for projects ahead of time, to tailor their requirements to ensure that Wong’s company would be the most-qualified bidder.  Nuru also helped Wong expedite permit approvals.

Nuru admits in his plea agreement that his “corrupt relationship” with Wong began in approximately 2008 when Nuru was the Deputy Director for Operations at DPW.  Wong installed a gate for free at Nuru’s San Francisco home in exchange for future business with DPW and the City. Wong continued to perform construction services for free, or nearly free, at Nuru’s San Francisco home and later primarily at Nuru’s vacation ranch property in Colusa County. 

Nuru admits that, in exchange for Wong providing construction and other things of value, he exercised his official influence and took actions to benefit Wong.  In one example outlined in the plea agreement, Nuru used DPW’s emergency contract process, which did not require a public bidding process, to direct construction work to Walter Wong Construction on a navigation center located at 1515 South Van Ness Street and on the Jelani House (a housing shelter), resulting in City payments to Wong’s company during fiscal years 2017-2018 and 2019-2020.  In another example, Nuru used his position and official influence to direct DPW, the Market Street Association, and the San Francisco Public Utilities Commission to purchase Christmas lights from one of Wong’s businesses, regularly leading to tens of thousands of dollars’ worth of purchases.

Nuru further admits in his plea agreement that:

 o between approximately 2008 and January 2020, Wong provided in excess of $260,000 in labor and materials for work on Nuru’s San Francisco home and Colusa County ranch.
 o Wong paid for home furnishings for Nuru, including a chandelier, kitchen appliances, and furniture.
 o Wong paid for Nuru to travel to China multiple times and to South America on one occasion, which included reimbursing Nuru in cash for the cost of international flights.  Wong paid for Nuru and Sandra Zuniga, his girlfriend at the time, to accompany Nuru to South America and paid for their stay at the Ritz-Carlton in Santiago, Chile. 
 o On multiple occasions, Wong handed Nuru envelopes of cash, often as much as $5,000 at a time. 

Walter Wong was charged in June 2020 with conspiracy to defraud the public of its right to honest services and with conspiracy to engage in money laundering, both involving Nuru.  Wong entered a guilty plea and agreed to cooperate with the government’s San Francisco City Hall corruption investigation.

Multimillion-Dollar Mixed-Use Development:

Nuru admits he received free travel, gifts, and benefits, for working with Walter Wong to use Nuru’s official position to benefit a billionaire developer from China, referred to as DEVELOPER 1 in the plea agreement, who was developing a large multimillion-dollar mixed use project in San Francisco.  Wong, who worked as a consultant for DEVELOPER 1 on several of his large developments in the City, introduced Nuru to DEVELOPER 1.  Nuru met with Wong, another Department of Building Inspection official, DEVELOPER 1, and others over dinner on multiple occasions and discussed DEVELOPER 1’s projects.  Nuru never paid for the dinners.  Nuru admits that he also met with DEVELOPER 1 multiple times in China.  According to Nuru, DEVELOPER 1 owned multiple hotels in China, including five-star hotels.  Nuru received gifts from him, including free hotel stays. 

Nuru admits that, in exchange, he used his official position and influence to help DEVELOPER 1 obtain necessary approvals for his large, multimillion-dollar mixed-use project.  Nuru admits, among other things, that he told Sandra Zuniga that DEVELOPER 1 was upset because he had spent large amounts of money and had provided “a whole list of things” that Nuru said “we need to get done[.]”  Nuru admits that whenever DEVELOPER 1 or one of his employees notified him of an issue, Nuru directed one of his DPW managers to solve the problem and expedite the process.  Nuru also used his official influence with other City officials to solve problems encountered by DEVELOPER 1 that fell within the other City officials’ area of responsibility.

Recology:

Recology Inc. is a waste management company headquartered in San Francisco and the parent company of Sunset Scavenger Company, Golden Gate Disposal & Recycling Company, and Recology San Francisco (referred to as the “SF Recology Group” and, collectively with Recology Inc., as “Recology”).  Recology Inc. provided refuse collection and disposal services for residential and commercial customers in the City, as well as for the City itself, through the SF Recology Group.

As Director of DPW, Nuru presided over the process governing the rates Recology could charge in San Francisco.  Nuru recommended to the Rate Board whether to approve any rate increase for Recology.  Nuru also influenced “tipping fee” rates that Recology charged DPW when DPW dumped materials at a Recology facility, Sustainable Crushing.  Nuru could approve, deny, or affect operational changes that Recology wanted to make in San Francisco which, Nuru admits in his plea agreement, gave him the ability in his official capacity to affect Recology’s business. 

Nuru admits he accepted numerous valuable items from Recology and used his official position to help Recology’s business.  Among other things, Recology paid for soil to be delivered to Nuru’s ranch property in Colusa County, for expensive meals for Nuru, and for a two-night trip to New York on the City’s business in December 2017. 

Nuru admits that he also requested Recology to pay, and Recology did pay, hundreds of thousands of dollars to a San Francisco non-profit (Non-Profit A) in the form of donations for a cleaning program known as Giant Sweep.  Non-Profit A would then donate the payments to another non-profit that administered funds for the Giant Sweep program.  Nuru admitted he could then access the funds for a variety of other uses—including procuring goods and services for staff meals and appreciation events, volunteer programs, merchandise, community support, and events from specific vendors—in addition to their originally designated purpose for Giant Sweep.  From 2014 through the end of 2019, Recology donated approximately $150,000 per year for Giant Sweep, in $30,000 installments—for a total of approximately $750,000.

Nuru also admits he requested Recology hire his son.  Recology hired him and paid him, between 2015 and 2017, approximately $17,000.  Recology also funded a paid internship for Nuru’s son at a different non-profit organization and, between 2017 and 2018, paid approximately $23,600 to fund the paid internship.

Nuru admits he requested that Recology fund his DPW holiday parties.  Between 2016 and 2019, Recology paid approximately $60,000 for that purpose.  Recology made the payments through the Lefty O’Doul’s Foundation, a non-profit organization run by Nick Bovis. 

Two former Recology executives, Paul F. Giusti and John F. Porter, have been charged in this investigation.  Giusti was charged in November 2020, and Porter was charged in April 2021.  Both men were charged with bribery of Nuru and money laundering involving Nuru.  Giusti pleaded guilty in August 2021 to engaging in a conspiracy to bribe Nuru and is cooperating with the government’s San Francisco City Hall corruption investigation.  Porter’s charges remain pending.

The three subsidiaries of Recology, Inc. now have new leadership and have implemented enhanced corporate compliance programs to end any corrupt practices.  Recology resolved corporate charges brought against them through a deferred prosecution agreement with the government.  Pursuant to the agreement, the companies paid a $36 million fine, agreed to implement enhanced corporate compliance programs, and agreed to fully cooperate in the government’s San Francisco City Hall corruption investigation.

Nick Bovis:

Nuru admits in his plea agreement that he received multiple bribes from restaurateur Nick Bovis.  The bribes were in exchange for Nuru using his official acts and influence to assist, or to promise to assist, in public business opportunities with the City.  The bribes included free meals and entertainment for Nuru, his family, and associates at restaurants owned by Bovis and thousands of dollars in free appliances for Nuru’s ranch property.  Nuru also anticipated and expected tens of thousands of dollars in kickbacks from proceeds that Bovis would earn from the City concessions or contracts awarded due to Nuru’s official acts or influence to assist Bovis.

In one plea agreement example, Nuru admits he helped Bovis in a plan to win a bid for a restaurant lease at San Francisco International Airport (SFO).  Bovis expected to make money from the SFO concession, and Nuru expected Bovis would continue to provide bribes in exchange for Nuru’s help with the airport concession process and other public contracts.

In another example, Nuru admits he gave Bovis a price list of appliances that Nuru wanted for his ranch in or about 2018, a time when Bovis was seeking Nuru’s assistance with the SFO concession and other City business opportunities.  Bovis purchased the appliances and brought them to Nuru’s ranch.  Nuru accepted them as an exchange for his continued official acts and influence to help Bovis, and he did not pay for them.  The appliances were worth approximately $22,000.

Nick Bovis pleaded guilty in May 2020 to wire fraud and honest services wire fraud involving Nuru and agreed to cooperate in the government’s San Francisco City Hall corruption investigation. 

Florence Kong:

Nuru admits in his plea agreement that he accepted a gold Rolex watch from Bay Area businesswoman Florence Kong.  The watch was valued at approximately $36,550.  Nuru admits he used his official position to benefit Kong’s businesses and did so in exchange for the Rolex and for cash, free meals, and other items of value provided by Kong, including an iron fence that Kong installed at Nuru’s ranch.  In one example, Nuru states that he used his official position to direct business to SFR Recovery Inc., a recycling business that Kong owned. 

Florence Kong was charged and pleaded guilty to bribery of Nuru and to making false statements to FBI agents during the investigation.  She was sentenced in February 2021 to one year and one day in prison and ordered to pay a $95,000 fine.

Balmore Hernandez, William Gilmartin, & Alan Varela:

Nuru admits in his plea agreement that between 2013 and January 2020 he accepted a series of bribes and kickbacks from Balmore Hernandez, William Gilmartin, and Alan Varela in exchange for past and future official actions benefitting their City business ventures.  Nuru received free meals and entertainment, cash, and free labor and materials for his ranch – including a brand new tractor.  Nuru also expected to receive a portion of the proceeds  from anticipated City contracts awarded to them or their associates as a result of Nuru’s official acts or influence on their behalf.

In one example, Nuru admitted he helped Varela and Gilmartin’s joint venture win a DPW supply contract and a related lease with the Port of San Francisco (the “Port”) to operate an asphalt recycling plant and a concrete plant on the Port’s land.  In the early stages, Nuru helped the group prepare their proposal by providing them inside non-public information on the project.  The non-public information was delivered to Hernandez through emails or phone calls or through regular dinning meetings in San Mateo with Gilmartin and Hernandez.  Gilmartin paid approximately $20,000 for the dinners, with the parties agreeing that Nuru’s dinners were worth approximately $7,000.

Nuru admits that Gilmartin promised him $100,000 for his official assistance to pressure a large developer to select one of Gilmartin and Varela’s joint-venture partners for a large project in San Francisco.  The large developer complied with Nuru’s request because, as Nuru admits, the large developer needed DPW approvals for the project and for other large developments in the City.

Nuru admits that he received approximately $25,000 in cash from Hernandez and received approximately $250,000 in free labor and materials from Hernandez at Nuru’s ranch. 

Nuru also requested the group give him a tractor.  In February 2019, Alan Varela delivered a new tractor to the Nuru’s ranch, a benefit valued at approximately $20,000.

Balmore Hernandez was also charged in connection with this investigation.  He pleaded guilty to honest services wire fraud in October 2020 and agreed to cooperate in the government’s San Francisco City Hall corruption investigation. 

William Gilmartin was charged in connection with this investigation.  He pleaded guilty to conspiracy to commit honest services wire fraud in May 2021 and agreed to cooperate in the government’s San Francisco City Hall corruption investigation.
Alan Varela was charged in connection with this investigation.  He pleaded guilty to conspiracy to commit honest services wire fraud and was sentenced in September 2021 to two years in prison and ordered to pay a $127,000 fine. 

Sandra Zuniga Money Laundering:

Nuru admits that in or about 2010 he bought a 10-acre lot in Colusa County and developed it into his vacation ranch with free labor and materials provided by City contractors seeking favors from him. Nuru admits he also used the proceeds of his crimes to pay the mortgage.  To conceal and launder the source of the proceeds, Nuru states he funneled the money through Sandra Zuniga who made the monthly $1,000 mortgage payments out of her checking account. Nuru admits that from 2014 through August 2017, he typically gave Zuniga approximately $1,000 per month, generally in cash, and she deposited the money into her bank account.  She then made the $1,000 payment towards the mortgage.  In this way, Zuniga paid at least $42,000 of the mortgage.

Zuniga was charged and pleaded guilty in March 2021 to engaging in a conspiracy to launder money with Nuru.  She agreed to cooperate in the government’s San Francisco City Hall corruption investigation.

Other Bribes:

Nuru admits in his plea agreement that around 2018 he accepted a bribe of $20,000 in cash from a former government employee in exchange for Nuru using his position to help a particular person obtain an engineering job with the City. Nuru received the cash in three installments of $10,000, $5,000, and $5,000.  Ultimately, the individual failed to maintain employment with the City.

Nuru also admits he accepted cash bribes from a prominent developer in San Francisco.  The cash bribes usually consisted of a few thousand dollars.  The developer would later call Nuru when he had any problems with DPW-related approvals or other matters that Nuru could help resolve. 

In his plea agreement, Nuru admits guilt and agrees to plead guilty to one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346.  If convicted of the count, he faces a maximum 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 of the crime. 

The government indicates in the plea agreement its intent to ask for up to a 108 month (9 year) sentence for Nuru.  However, any sentence imposed by the court will follow only after the court’s consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Today, in a procedural step towards orally entering his guilty plea, Nuru was arraigned and pleaded not guilty before United States Chief Magistrate Judge Joseph C. Spero to an information charging him with a count of honest services wire fraud in violation of 18 U.S.C. §§ 1343 and 1346. 

Nuru’s next appearance is currently set before United States District Judge Susan Illston on January 14, 2022, at which he is currently scheduled to formally enter his guilty plea pursuant to his plea agreement.  Nuru remains out of custody on bond.
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This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco.  To date, 12 individuals and three corporate entities have been charged, including two high-ranking San Francisco public officials, Nuru and Harlan Kelly.  Multiple city contractors and facilitators have been charged.  Allegations in the complaint filed against Harlan Kelly assert that he received thousands of dollars in airfare, meals, jewelry, and travel expenses, along with repair work on his house.   

The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office.  The case is being investigated by the FBI and IRS-Criminal Investigation. 

The post Former San Francisco Public Works Director Admits To String Of Briberies And Corruption Throughout Years In Workplace | USAO-NDCA appeared first on DAILY SAN FRANCISCO BAY NEWS.

SAN FRANCISCO – Former San Francisco City Hall public official Mohammed Colin Nuru was sentenced today to 84 months (7 years) in federal prison for honest services wire fraud, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Sean Ragan, and Internal Revenue Service—Criminal Investigation Special Agent in Charge Mark H. Pearson. The sentence was handed down by United States District Judge William H. Orrick.

Nuru, 59, was first arrested on January 17, 2020, following the filing of a 79-page federal criminal complaint against him. Nuru was then the Director of the San Francisco Department of Public Works (DPW) and had held that position since 2011, when he was elevated from the DPW Deputy Director of Operations position that he had held since 2000. The complaint charged Nuru with honest services Fraud in public office, alleging a long-running scheme of bribes and kickbacks during his DPW tenure. A second federal complaint filed January 28, 2020, charged Nuru for lying to a federal agent following his arrest.

On January 6, 2022, Nuru pleaded guilty to the charge of defrauding the public of its right to his honest services, in violation of 18 USC §§ 1343 and 1346.

“Mohammed Nuru’s prison sentence is punishment for more than a decade of public corruption,” said United States Attorney Stephanie Hinds. “As San Francisco’s Department of Public Works Deputy Director and then its Director, Nuru owed the people of San Francisco a duty of faithful, honest services. Instead, he betrayed that duty. For at least twelve years, Nuru shook down contractors eager for city business, trading his authority and influence for millions of dollars in cash, construction work, travel, meals, and gifts. His abhorrent conduct erodes the public’s trust in its government, and this case demonstrates the justice system can and will punish corrupt public officials.”

“Mohammed Nuru’s long-running scheme of bribes and kickbacks ultimately earned him seven years in prison. Today’s sentence sends a clear message that public officials who abuse their power for personal gain will be punished,” said FBI Special Agent in Charge Sean Ragan. “The FBI’s investigation into this case is not over. We will continue to unravel and disrupt corruption within the city of San Francisco.”

“Corruption happens in the shadows, often with the help of professional enablers who perpetuate fraudulent schemes and the corrupt who launder and hide their illicit wealth. The Oakland Field Office of IRS Criminal Investigation has dedicated resources to unraveling the truth behind the extensive web of corruption, which Mohammed Nuru presided over, during his tenure leading the San Francisco Department of Public Works,” said IRS Criminal Investigation Special Agent in Charge Mark H Pearson. “Today’s sentencing is a true reflection of the collaborative commitment between IRS-CI, the FBI, and the USAO-NDCA to protect public welfare, the people in our communities, and bring justice to light.”

In his plea agreement, Nuru admits to a pervasive corruption scheme involving bribery, kickbacks and fraud that spanned at least his last 12 years in office. During that time, Nuru sat not only as Deputy Director of Operations and then Director at DPW but also as a member of the Board of the Transbay Joint Powers Authority (TJPA). Appointed to the TJPA board in 2014, Nuru eventually became his Chair. From these positions, Nuru exercised substantial power and influence over San Francisco (the City) business and policy, including its public contracts, permits, and construction projects. Nuru’s authority made him a powerful public official in the city.

Nuru’s admissions detail his broad array of graft in office, and a sample of them are below:

Walter Wong: Nuru’s corrupt relationship with San Francisco-based contractor Walter Wong began in 2008. Nuru accepted envelopes of cash containing as much as $5,000 at a time from Wong, and Wong bribed Nuru with more than $260,000 in construction labor and materials provided to Nuru’s San Francisco home and his vacation ranch property located in Stonyford in Colusa County. Wong also paid for Nuru to travel to China multiple times and to South America, footing the bill for international flights and a stay at the Ritz-Carlton in Santiago, Chile, for Nuru and his then-girlfriend Sandra Zuniga, another city official. In exchange, Nuru helped Wong secure City contracts by structuring the City’s Request for Proposals (RFPs) to ensure Wong’s company secured the contract, by providing Wong with confidential information on competitors’ bids, and by helping Wong expedite permit approvals.

Recology: Recology Inc. is a waste management company headquartered in San Francisco and the parent company of Sunset Scavenger Company, Golden Gate Disposal & Recycling Company, and Recology San Francisco (collectively referred to as Recology) that provided collection and disposal services for residential and commercial customers located in the city and for the city itself. In his DPW Director’s position, Nuru presided over the process governing the rates that Recology could charge, including “tipping fee” rates that Recology charged DPW when DPW dumped materials at a Recology facility. In exchange for favorable treatment from Nuru, Nuru describes that Recology bribed him with soil delivered to his Colusa County ranch, expensive meals, and a two-night trip to New York in December 2017. At Nuru’s request, Recology also donated hundreds of thousands of Dollars to a San Francisco non-profit for a cleaning program that Nuru could access and use for other purposes, and Recology further funded DPW holiday parties with $60,000 in donations. Recology also arranged and funded the hiring of a Nuru family member.

Nick Bovis: Nuru received multiple bribes from restaurateur Nick Bovis, including free meals and entertainment for Nuru, his family, and associates at restaurants owned by Bovis and thousands of dollars in free appliances for Nuru’s ranch property. Nuru also expected tens of thousands of dollars in kickbacks from proceeds that Bovis would earn from City concessions or contracts awarded to Bovis. In exchange, Nuru used his official acts and influence to assist Bovis in obtaining public business and contracts with the City.

Florence Kong: Nuru accepted a gold Rolex watch valued at $36,550, cash, and an iron fence installed at Nuru’s ranch from businesswoman Florence Kong. In exchange, Nuru used his official position to benefit Kong’s businesses, including a recycling business owned by Kong.

Balmore Hernandez, William Gilmartin, & Alan Varela: In a series of bribes and kickbacks from Balmore Hernandez, William Gilmartin, and Alan Varela, Nuru received a brand new tractor for his vacation ranch, free meals, and cash. Nuru also expected to receive a portion of the proceeds from anticipated City contracts awarded to them. In exchange, Nuru exercised his official authority and influence to benefit their City business ventures.

These are just examples of some of the bribes Nuru admitted in his plea agreement. Multiple other individuals paid Nuru in exchange for favorable official acts from him.

In addition to the sentence of imprisonment, United States District Judge William H. Orrick ordered a three year term of supervision of Nuru upon his release from prison. He also ordered the forfeiture to the United States of Nuru’s vacation ranch property in Stonyford, California. Nuru will surrender to begin serving his sentence on January 6, 2023.

This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, twelve individuals and multiple corporate entities have been charged, including another high-ranking San Francisco public official, the former San Francisco Public Utilities Commission General Manager Harlan Kelly. Charges against Harlan Kelly remain pending. Multiple city contractors and facilitators have also been charged.

The case is being prosecuted by the Corporate and Securities Fraud Section of the US Attorney’s Office. The case was investigated by the FBI and IRS-CI.

The post Former San Francisco Public Works Director Sentenced To Seven Years In Federal Jail | USAO-NDCA appeared first on DAILY SAN FRANCISCO BAY NEWS.

SAN FRANCISCO – Former San Francisco City Hall public official Mohammed Colin Nuru was sentenced today to 84 months (7 years) in federal prison for honest services wire fraud, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Sean Ragan, and Internal Revenue Service—Criminal Investigation Special Agent in Charge Mark H. Pearson. The sentence was handed down by United States District Judge William H. Orrick.

Nuru, 59, was first arrested on January 17, 2020, following the filing of a 79-page federal criminal complaint against him. Nuru was then the Director of the San Francisco Department of Public Works (DPW) and had held that position since 2011, when he was elevated from the DPW Deputy Director of Operations position that he had held since 2000. The complaint charged Nuru with honest services Fraud in public office, alleging a long-running scheme of bribes and kickbacks during his DPW tenure. A second federal complaint filed January 28, 2020, charged Nuru for lying to a federal agent following his arrest.

On January 6, 2022, Nuru pleaded guilty to the charge of defrauding the public of its right to his honest services, in violation of 18 USC §§ 1343 and 1346.

“Mohammed Nuru’s prison sentence is punishment for more than a decade of public corruption,” said United States Attorney Stephanie Hinds. “As San Francisco’s Department of Public Works Deputy Director and then its Director, Nuru owed the people of San Francisco a duty of faithful, honest services. Instead, he betrayed that duty. For at least twelve years, Nuru shook down contractors eager for city business, trading his authority and influence for millions of dollars in cash, construction work, travel, meals, and gifts. His abhorrent conduct erodes the public’s trust in its government, and this case demonstrates the justice system can and will punish corrupt public officials.”

“Mohammed Nuru’s long-running scheme of bribes and kickbacks ultimately earned him seven years in prison. Today’s sentence sends a clear message that public officials who abuse their power for personal gain will be punished,” said FBI Special Agent in Charge Sean Ragan. “The FBI’s investigation into this case is not over. We will continue to unravel and disrupt corruption within the city of San Francisco.”

“Corruption happens in the shadows, often with the help of professional enablers who perpetuate fraudulent schemes and the corrupt who launder and hide their illicit wealth. The Oakland Field Office of IRS Criminal Investigation has dedicated resources to unraveling the truth behind the extensive web of corruption, which Mohammed Nuru presided over, during his tenure leading the San Francisco Department of Public Works,” said IRS Criminal Investigation Special Agent in Charge Mark H Pearson. “Today’s sentencing is a true reflection of the collaborative commitment between IRS-CI, the FBI, and the USAO-NDCA to protect public welfare, the people in our communities, and bring justice to light.”

In his plea agreement, Nuru admits to a pervasive corruption scheme involving bribery, kickbacks and fraud that spanned at least his last 12 years in office. During that time, Nuru sat not only as Deputy Director of Operations and then Director at DPW but also as a member of the Board of the Transbay Joint Powers Authority (TJPA). Appointed to the TJPA board in 2014, Nuru eventually became his Chair. From these positions, Nuru exercised substantial power and influence over San Francisco (the City) business and policy, including its public contracts, permits, and construction projects. Nuru’s authority made him a powerful public official in the city.

Nuru’s admissions detail his broad array of graft in office, and a sample of them are below:

Walter Wong: Nuru’s corrupt relationship with San Francisco-based contractor Walter Wong began in 2008. Nuru accepted envelopes of cash containing as much as $5,000 at a time from Wong, and Wong bribed Nuru with more than $260,000 in construction labor and materials provided to Nuru’s San Francisco home and his vacation ranch property located in Stonyford in Colusa County. Wong also paid for Nuru to travel to China multiple times and to South America, footing the bill for international flights and a stay at the Ritz-Carlton in Santiago, Chile, for Nuru and his then-girlfriend Sandra Zuniga, another city official. In exchange, Nuru helped Wong secure City contracts by structuring the City’s Request for Proposals (RFPs) to ensure Wong’s company secured the contract, by providing Wong with confidential information on competitors’ bids, and by helping Wong expedite permit approvals.

Recology: Recology Inc. is a waste management company headquartered in San Francisco and the parent company of Sunset Scavenger Company, Golden Gate Disposal & Recycling Company, and Recology San Francisco (collectively referred to as Recology) that provided collection and disposal services for residential and commercial customers located in the city and for the city itself. In his DPW Director’s position, Nuru presided over the process governing the rates that Recology could charge, including “tipping fee” rates that Recology charged DPW when DPW dumped materials at a Recology facility. In exchange for favorable treatment from Nuru, Nuru describes that Recology bribed him with soil delivered to his Colusa County ranch, expensive meals, and a two-night trip to New York in December 2017. At Nuru’s request, Recology also donated hundreds of thousands of Dollars to a San Francisco non-profit for a cleaning program that Nuru could access and use for other purposes, and Recology further funded DPW holiday parties with $60,000 in donations. Recology also arranged and funded the hiring of a Nuru family member.

Nick Bovis: Nuru received multiple bribes from restaurateur Nick Bovis, including free meals and entertainment for Nuru, his family, and associates at restaurants owned by Bovis and thousands of dollars in free appliances for Nuru’s ranch property. Nuru also expected tens of thousands of dollars in kickbacks from proceeds that Bovis would earn from City concessions or contracts awarded to Bovis. In exchange, Nuru used his official acts and influence to assist Bovis in obtaining public business and contracts with the City.

Florence Kong: Nuru accepted a gold Rolex watch valued at $36,550, cash, and an iron fence installed at Nuru’s ranch from businesswoman Florence Kong. In exchange, Nuru used his official position to benefit Kong’s businesses, including a recycling business owned by Kong.

Balmore Hernandez, William Gilmartin, & Alan Varela: In a series of bribes and kickbacks from Balmore Hernandez, William Gilmartin, and Alan Varela, Nuru received a brand new tractor for his vacation ranch, free meals, and cash. Nuru also expected to receive a portion of the proceeds from anticipated City contracts awarded to them. In exchange, Nuru exercised his official authority and influence to benefit their City business ventures.

These are just examples of some of the bribes Nuru admitted in his plea agreement. Multiple other individuals paid Nuru in exchange for favorable official acts from him.

In addition to the sentence of imprisonment, United States District Judge William H. Orrick ordered a three year term of supervision of Nuru upon his release from prison. He also ordered the forfeiture to the United States of Nuru’s vacation ranch property in Stonyford, California. Nuru will surrender to begin serving his sentence on January 6, 2023.

This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, twelve individuals and multiple corporate entities have been charged, including another high-ranking San Francisco public official, the former San Francisco Public Utilities Commission General Manager Harlan Kelly. Charges against Harlan Kelly remain pending. Multiple city contractors and facilitators have also been charged.

The case is being prosecuted by the Corporate and Securities Fraud Section of the US Attorney’s Office. The case was investigated by the FBI and IRS-CI.

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SAN FRANCISCO – Former San Francisco City Hall public official Mohammed Nuru agreed in a plea agreement filed today to plead guilty to honest services wire fraud, announced Acting United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and Internal Revenue Service–Criminal Investigation Special Agent in Charge Mark H. Pearson.  

Today’s development follows the January 15, 2020, 79-page federal complaint filed against then San Francisco Department of Public Works (DPW) Director Mohammed Nuru charging him with public corruption and describing a long-running scheme involving multiple bribes and kickbacks during his tenure as DPW’s Director.  Nuru, 59, of San Francisco, served as DPW’s Director from 2011 until charges were brought against him in 2020.  Nuru was also charged in a second federal complaint filed on January 28, 2020, with lying to a federal agent in the course of the San Francisco City Hall corruption investigation.  Today, in anticipation of entering his plea agreement resolving his cases, Nuru was arraigned today on an information – a charging document – that charges him with his sweeping scheme to defraud the San Francisco public of its right to his honest services in violation of 18 U.S.C. §§ 1343 and 1346.

“Mohammed Nuru admits to a staggering amount of public corruption in his plea agreement,” said Acting United States Attorney Stephanie M. Hinds.  “For years, Nuru held a powerful and well-paid public leadership position at San Francisco City Hall, but instead of serving the public, Nuru served himself.  He took continuous bribes from the contractors, developers, and entities he regulated.  He now faces a prison sentence for enriching himself at the expense of the public as he sat in high office.  Federal authorities will investigate public corruption wherever it leads in San Francisco and throughout the district.”  

“Today’s announcement, while significant, is by no means the end of the FBI’s investigation into the corrupt conduct we have uncovered in San Francisco city government,”  said FBI Special Agent in Charge D. Fair.  “We will continue to hold accountable those who seek to personally benefit by corrupting the fair administration of public business and we will persist in our commitment to protect the integrity of the institutions that serve the people of San Francisco.”

“Our communities place great trust and responsibility in our public figures.  Mohammed Nuru ultimately betrayed this trust when he abused his power to defraud the City and County of San Francisco and its people,” said IRS Criminal Investigation Special Agent in Charge Mark H. Pearson.  “We will not tolerate public corruption and will hold perpetrators accountable for their actions.  Today’s guilty plea is a direct result of the hard work and dedication of IRS Criminal Investigation and our law enforcement partners towards obtaining justice.”

Nuru signed today’s plea agreement and the agreement has been filed with the United States District Court in preparation for Nuru’s upcoming appearance to enter his guilty plea orally.  As the plea agreement outlines, before Nuru was appointed Director of DPW in 2011 he became DPW’s Deputy Director of Operations in 2000.  The Deputy Director of Operations is DPW’s second most senior position, behind only the Director.  In 2014, Nuru was also appointed to the Board of the Transbay Joint Powers Authority (TJPA) and eventually served as its Chair.  As Deputy Director and eventually Director of DPW, and as Chair of the TJPA, Nuru exercised great influence over San Francisco (the City) business and policy, including public contracts, permits, and construction projects.  His power and influence extended beyond DPW’s jurisdiction to numerous other City departments and agencies, making him one of the most powerful public officials in the City.

Nuru admits in his plea agreement to a spectrum of public corruption involving bribery and kickbacks he received while in DPW leadership.  His admissions are summarized below:

Walter Wong:

In his plea agreement, Nuru admits he received a stream of bribes from Walter Wong.  Wong did business in the City through Walter Wong Construction, among other businesses. In exchange for Wong’s bribes, Nuru helped Wong secure City contracts.  Sometimes Nuru provided Wong with confidential insider City information on competitors’ bids or specifications.  At other times Nuru allowed Wong to structure the requirements for the City’s Request for Proposals (RFP) for projects ahead of time, to tailor their requirements to ensure that Wong’s company would be the most-qualified bidder.  Nuru also helped Wong expedite permit approvals.

Nuru admits in his plea agreement that his “corrupt relationship” with Wong began in approximately 2008 when Nuru was the Deputy Director for Operations at DPW.  Wong installed a gate for free at Nuru’s San Francisco home in exchange for future business with DPW and the City. Wong continued to perform construction services for free, or nearly free, at Nuru’s San Francisco home and later primarily at Nuru’s vacation ranch property in Colusa County. 

Nuru admits that, in exchange for Wong providing construction and other things of value, he exercised his official influence and took actions to benefit Wong.  In one example outlined in the plea agreement, Nuru used DPW’s emergency contract process, which did not require a public bidding process, to direct construction work to Walter Wong Construction on a navigation center located at 1515 South Van Ness Street and on the Jelani House (a housing shelter), resulting in City payments to Wong’s company during fiscal years 2017-2018 and 2019-2020.  In another example, Nuru used his position and official influence to direct DPW, the Market Street Association, and the San Francisco Public Utilities Commission to purchase Christmas lights from one of Wong’s businesses, regularly leading to tens of thousands of dollars’ worth of purchases.

Nuru further admits in his plea agreement that:

 o between approximately 2008 and January 2020, Wong provided in excess of $260,000 in labor and materials for work on Nuru’s San Francisco home and Colusa County ranch.
 o Wong paid for home furnishings for Nuru, including a chandelier, kitchen appliances, and furniture.
 o Wong paid for Nuru to travel to China multiple times and to South America on one occasion, which included reimbursing Nuru in cash for the cost of international flights.  Wong paid for Nuru and Sandra Zuniga, his girlfriend at the time, to accompany Nuru to South America and paid for their stay at the Ritz-Carlton in Santiago, Chile. 
 o On multiple occasions, Wong handed Nuru envelopes of cash, often as much as $5,000 at a time. 

Walter Wong was charged in June 2020 with conspiracy to defraud the public of its right to honest services and with conspiracy to engage in money laundering, both involving Nuru.  Wong entered a guilty plea and agreed to cooperate with the government’s San Francisco City Hall corruption investigation.

Multimillion-Dollar Mixed-Use Development:

Nuru admits he received free travel, gifts, and benefits, for working with Walter Wong to use Nuru’s official position to benefit a billionaire developer from China, referred to as DEVELOPER 1 in the plea agreement, who was developing a large multimillion-dollar mixed use project in San Francisco.  Wong, who worked as a consultant for DEVELOPER 1 on several of his large developments in the City, introduced Nuru to DEVELOPER 1.  Nuru met with Wong, another Department of Building Inspection official, DEVELOPER 1, and others over dinner on multiple occasions and discussed DEVELOPER 1’s projects.  Nuru never paid for the dinners.  Nuru admits that he also met with DEVELOPER 1 multiple times in China.  According to Nuru, DEVELOPER 1 owned multiple hotels in China, including five-star hotels.  Nuru received gifts from him, including free hotel stays. 

Nuru admits that, in exchange, he used his official position and influence to help DEVELOPER 1 obtain necessary approvals for his large, multimillion-dollar mixed-use project.  Nuru admits, among other things, that he told Sandra Zuniga that DEVELOPER 1 was upset because he had spent large amounts of money and had provided “a whole list of things” that Nuru said “we need to get done[.]”  Nuru admits that whenever DEVELOPER 1 or one of his employees notified him of an issue, Nuru directed one of his DPW managers to solve the problem and expedite the process.  Nuru also used his official influence with other City officials to solve problems encountered by DEVELOPER 1 that fell within the other City officials’ area of responsibility.

Recology:

Recology Inc. is a waste management company headquartered in San Francisco and the parent company of Sunset Scavenger Company, Golden Gate Disposal & Recycling Company, and Recology San Francisco (referred to as the “SF Recology Group” and, collectively with Recology Inc., as “Recology”).  Recology Inc. provided refuse collection and disposal services for residential and commercial customers in the City, as well as for the City itself, through the SF Recology Group.

As Director of DPW, Nuru presided over the process governing the rates Recology could charge in San Francisco.  Nuru recommended to the Rate Board whether to approve any rate increase for Recology.  Nuru also influenced “tipping fee” rates that Recology charged DPW when DPW dumped materials at a Recology facility, Sustainable Crushing.  Nuru could approve, deny, or affect operational changes that Recology wanted to make in San Francisco which, Nuru admits in his plea agreement, gave him the ability in his official capacity to affect Recology’s business. 

Nuru admits he accepted numerous valuable items from Recology and used his official position to help Recology’s business.  Among other things, Recology paid for soil to be delivered to Nuru’s ranch property in Colusa County, for expensive meals for Nuru, and for a two-night trip to New York on the City’s business in December 2017. 

Nuru admits that he also requested Recology to pay, and Recology did pay, hundreds of thousands of dollars to a San Francisco non-profit (Non-Profit A) in the form of donations for a cleaning program known as Giant Sweep.  Non-Profit A would then donate the payments to another non-profit that administered funds for the Giant Sweep program.  Nuru admitted he could then access the funds for a variety of other uses—including procuring goods and services for staff meals and appreciation events, volunteer programs, merchandise, community support, and events from specific vendors—in addition to their originally designated purpose for Giant Sweep.  From 2014 through the end of 2019, Recology donated approximately $150,000 per year for Giant Sweep, in $30,000 installments—for a total of approximately $750,000.

Nuru also admits he requested Recology hire his son.  Recology hired him and paid him, between 2015 and 2017, approximately $17,000.  Recology also funded a paid internship for Nuru’s son at a different non-profit organization and, between 2017 and 2018, paid approximately $23,600 to fund the paid internship.

Nuru admits he requested that Recology fund his DPW holiday parties.  Between 2016 and 2019, Recology paid approximately $60,000 for that purpose.  Recology made the payments through the Lefty O’Doul’s Foundation, a non-profit organization run by Nick Bovis. 

Two former Recology executives, Paul F. Giusti and John F. Porter, have been charged in this investigation.  Giusti was charged in November 2020, and Porter was charged in April 2021.  Both men were charged with bribery of Nuru and money laundering involving Nuru.  Giusti pleaded guilty in August 2021 to engaging in a conspiracy to bribe Nuru and is cooperating with the government’s San Francisco City Hall corruption investigation.  Porter’s charges remain pending.

The three subsidiaries of Recology, Inc. now have new leadership and have implemented enhanced corporate compliance programs to end any corrupt practices.  Recology resolved corporate charges brought against them through a deferred prosecution agreement with the government.  Pursuant to the agreement, the companies paid a $36 million fine, agreed to implement enhanced corporate compliance programs, and agreed to fully cooperate in the government’s San Francisco City Hall corruption investigation.

Nick Bovis:

Nuru admits in his plea agreement that he received multiple bribes from restaurateur Nick Bovis.  The bribes were in exchange for Nuru using his official acts and influence to assist, or to promise to assist, in public business opportunities with the City.  The bribes included free meals and entertainment for Nuru, his family, and associates at restaurants owned by Bovis and thousands of dollars in free appliances for Nuru’s ranch property.  Nuru also anticipated and expected tens of thousands of dollars in kickbacks from proceeds that Bovis would earn from the City concessions or contracts awarded due to Nuru’s official acts or influence to assist Bovis.

In one plea agreement example, Nuru admits he helped Bovis in a plan to win a bid for a restaurant lease at San Francisco International Airport (SFO).  Bovis expected to make money from the SFO concession, and Nuru expected Bovis would continue to provide bribes in exchange for Nuru’s help with the airport concession process and other public contracts.

In another example, Nuru admits he gave Bovis a price list of appliances that Nuru wanted for his ranch in or about 2018, a time when Bovis was seeking Nuru’s assistance with the SFO concession and other City business opportunities.  Bovis purchased the appliances and brought them to Nuru’s ranch.  Nuru accepted them as an exchange for his continued official acts and influence to help Bovis, and he did not pay for them.  The appliances were worth approximately $22,000.

Nick Bovis pleaded guilty in May 2020 to wire fraud and honest services wire fraud involving Nuru and agreed to cooperate in the government’s San Francisco City Hall corruption investigation. 

Florence Kong:

Nuru admits in his plea agreement that he accepted a gold Rolex watch from Bay Area businesswoman Florence Kong.  The watch was valued at approximately $36,550.  Nuru admits he used his official position to benefit Kong’s businesses and did so in exchange for the Rolex and for cash, free meals, and other items of value provided by Kong, including an iron fence that Kong installed at Nuru’s ranch.  In one example, Nuru states that he used his official position to direct business to SFR Recovery Inc., a recycling business that Kong owned. 

Florence Kong was charged and pleaded guilty to bribery of Nuru and to making false statements to FBI agents during the investigation.  She was sentenced in February 2021 to one year and one day in prison and ordered to pay a $95,000 fine.

Balmore Hernandez, William Gilmartin, & Alan Varela:

Nuru admits in his plea agreement that between 2013 and January 2020 he accepted a series of bribes and kickbacks from Balmore Hernandez, William Gilmartin, and Alan Varela in exchange for past and future official actions benefitting their City business ventures.  Nuru received free meals and entertainment, cash, and free labor and materials for his ranch – including a brand new tractor.  Nuru also expected to receive a portion of the proceeds  from anticipated City contracts awarded to them or their associates as a result of Nuru’s official acts or influence on their behalf.

In one example, Nuru admitted he helped Varela and Gilmartin’s joint venture win a DPW supply contract and a related lease with the Port of San Francisco (the “Port”) to operate an asphalt recycling plant and a concrete plant on the Port’s land.  In the early stages, Nuru helped the group prepare their proposal by providing them inside non-public information on the project.  The non-public information was delivered to Hernandez through emails or phone calls or through regular dinning meetings in San Mateo with Gilmartin and Hernandez.  Gilmartin paid approximately $20,000 for the dinners, with the parties agreeing that Nuru’s dinners were worth approximately $7,000.

Nuru admits that Gilmartin promised him $100,000 for his official assistance to pressure a large developer to select one of Gilmartin and Varela’s joint-venture partners for a large project in San Francisco.  The large developer complied with Nuru’s request because, as Nuru admits, the large developer needed DPW approvals for the project and for other large developments in the City.

Nuru admits that he received approximately $25,000 in cash from Hernandez and received approximately $250,000 in free labor and materials from Hernandez at Nuru’s ranch. 

Nuru also requested the group give him a tractor.  In February 2019, Alan Varela delivered a new tractor to the Nuru’s ranch, a benefit valued at approximately $20,000.

Balmore Hernandez was also charged in connection with this investigation.  He pleaded guilty to honest services wire fraud in October 2020 and agreed to cooperate in the government’s San Francisco City Hall corruption investigation. 

William Gilmartin was charged in connection with this investigation.  He pleaded guilty to conspiracy to commit honest services wire fraud in May 2021 and agreed to cooperate in the government’s San Francisco City Hall corruption investigation.
Alan Varela was charged in connection with this investigation.  He pleaded guilty to conspiracy to commit honest services wire fraud and was sentenced in September 2021 to two years in prison and ordered to pay a $127,000 fine. 

Sandra Zuniga Money Laundering:

Nuru admits that in or about 2010 he bought a 10-acre lot in Colusa County and developed it into his vacation ranch with free labor and materials provided by City contractors seeking favors from him. Nuru admits he also used the proceeds of his crimes to pay the mortgage.  To conceal and launder the source of the proceeds, Nuru states he funneled the money through Sandra Zuniga who made the monthly $1,000 mortgage payments out of her checking account. Nuru admits that from 2014 through August 2017, he typically gave Zuniga approximately $1,000 per month, generally in cash, and she deposited the money into her bank account.  She then made the $1,000 payment towards the mortgage.  In this way, Zuniga paid at least $42,000 of the mortgage.

Zuniga was charged and pleaded guilty in March 2021 to engaging in a conspiracy to launder money with Nuru.  She agreed to cooperate in the government’s San Francisco City Hall corruption investigation.

Other Bribes:

Nuru admits in his plea agreement that around 2018 he accepted a bribe of $20,000 in cash from a former government employee in exchange for Nuru using his position to help a particular person obtain an engineering job with the City. Nuru received the cash in three installments of $10,000, $5,000, and $5,000.  Ultimately, the individual failed to maintain employment with the City.

Nuru also admits he accepted cash bribes from a prominent developer in San Francisco.  The cash bribes usually consisted of a few thousand dollars.  The developer would later call Nuru when he had any problems with DPW-related approvals or other matters that Nuru could help resolve. 

In his plea agreement, Nuru admits guilt and agrees to plead guilty to one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346.  If convicted of the count, he faces a maximum 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 of the crime. 

The government indicates in the plea agreement its intent to ask for up to a 108 month (9 year) sentence for Nuru.  However, any sentence imposed by the court will follow only after the court’s consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Today, in a procedural step towards orally entering his guilty plea, Nuru was arraigned and pleaded not guilty before United States Chief Magistrate Judge Joseph C. Spero to an information charging him with a count of honest services wire fraud in violation of 18 U.S.C. §§ 1343 and 1346. 

Nuru’s next appearance is currently set before United States District Judge Susan Illston on January 14, 2022, at which he is currently scheduled to formally enter his guilty plea pursuant to his plea agreement.  Nuru remains out of custody on bond.
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This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco.  To date, 12 individuals and three corporate entities have been charged, including two high-ranking San Francisco public officials, Nuru and Harlan Kelly.  Multiple city contractors and facilitators have been charged.  Allegations in the complaint filed against Harlan Kelly assert that he received thousands of dollars in airfare, meals, jewelry, and travel expenses, along with repair work on his house.   

The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office.  The case is being investigated by the FBI and IRS-Criminal Investigation. 

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SAN FRANCISCO – Alan Varela was sentenced to 24 months in prison in federal court today and fined $ 127,000 for a seven year conspiracy to commit honest service fraud by bribing a public official in San Francisco, Acting US Attorney Stephanie M said Hinds and Federal Bureau of Investigation Special Representative Craig D. Fair. The verdict was passed by the Honorable William H. Orrick, District Judge of the United States.

A federal complaint filed on September 17, 2020 accused Varela, 60, of Orinda and William Gilmartin, 61, of San Mateo, of bribing a public official. In 1991, Varela founded ProVen Management, a Bay Area civil engineering and construction company engaged in major infrastructure projects. Varela and Gilmartin served as the company’s president and vice president, respectively, during the conspiracy period. According to the complaint, Varela and Gilmartin granted Mohammed Nuru, then director of the Department of Public Works (DPW) of San Francisco, a number of benefits in exchange for favorable treatment of their business interests, including non-public inside information.

As Varela on the 27. The aim of the bribe was to use Nuru’s fame as a powerful official in San Francisco to ensure the success of Varela and his co-conspirators. Nuru’s position as DPW director gave him great influence on public contracts, permits and construction projects in San Francisco, as well as on other city governments and private companies seeking DPW contracts. In his plea agreement, Varela admitted that for seven years, from 2013 to the day Nuru was arrested on federal charges on February 27, he cooperated with the FBI – and with others, to pay Nuru bribes consisting of cash and free meals and entertainment, equipment for Nuru’s ranch and the prospect of a cut in future profits from anticipated city contracts.

Varela’s settlement agreement contained a plan in which he and his co-conspirators focused on winning a lucrative DPW contract and related lease for the Port of San Francisco to operate an asphalt recycling plant and concrete factory on the port’s land. The plea agreement describes that in exchange for cash and other valuables, Nuru agreed to use his official position to select Varela and the proposals of his co-conspirators. Gilmartin arranged to compensate Nuru by asking an undisclosed company to give Hernandez a $ 100,000 contract, and Hernandez, in turn, used the proceeds of the contract on Nuru. In turn, Nuru sent drafts of San Francisco’s proposal for the project and other inside information to the conspirators to increase their chances of being selected. Nuru also regularly discussed the plans and inside information with Gilmartin and Hernandez at expensive restaurant dinners, always paid for by Gilmartin, which ended up being around $ 20,000.

The conspirators’ proposal was selected in September 2015. Under the agreement, Nuru continued to meet with the group to provide additional inside information during the expensive meals Gilmartin paid for. At one of their meetings, Nuru asked for a tractor for his ranch. Varela coordinated the delivery of the tractor to Nuru with Gilmartin and Hernandez.

Nuru was arrested on January 27, 2020 on federal bribery charges prior to finalizing negotiations to finalize the asphalt recycling plant agreements with DPW and the Port of San Francisco.

In a submitted memorandum on Varela’s conviction, the government argued that Varela’s behavior towards Nuru was normal for Varela. The government claimed Varela, whose business success had given him a luxurious 50-acre life in Napa, had for years fostered a casual culture of corruption, a culture that ultimately undermines public confidence in their government and the rule of law. Regarding the tractor’s kickbacks, the Judgment Memorandum indicates that the value of the new John Deere tractor, including its attachments, was approximately $ 40,000. Varela lined up the purchase of the tractor and hurried to have it delivered to Nuru at Nuru’s ranch on February 18, 2019. After outlining these and other acts of bribery, the government issued a recommendation of 30 months in prison.

This case is part of a larger state investigation into public corruption in the city and county of San Francisco. Eleven people have been charged so far, including two senior San Francisco officials, Mohammed Nuru and Harlan Kelly. Several city contractors and mediators have been charged. According to charges against Mohammed Nuru and others, Nuru allegedly accepted hundreds of thousands of dollars in bribes in cash, meals and work in his vacation home from contractors who received public contracts in San Francisco. The lawsuit against Harlan Kelly alleges that he received thousands of dollars in airfare, meals, jewelry and travel expenses, and repairs to his home.

In addition to a term of imprisonment and a fine, US District Judge Orrick also sentenced the defendant to a three-year supervised release. Varela will serve his sentence from January 2022.

The case is being prosecuted by the US Attorney’s Corporate and Securities Fraud Department. The FBI is investigating the case.

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SAN FRANCISCO – A federal indictment filed today charges Harlan Kelly, former general manager of the San Francisco Public Utilities Commission (PUC), and Victor Makras, a locally known San Francisco real estate investor, of bank fraud and bank fraud conspiracy. announced Acting US Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Envoy Craig D. Fair, and Internal Revenue Service Special Envoy Mark H. Pearson. The indictment also alleges honest wire fraud and honest wire fraud conspiracy in connection with a bribery program first brought against Kelly in a November 2020 federal complaint. This lawsuit is being replaced by today’s federal prosecution.

Today’s indictment, like the November 2020 complaint, alleges that Kelly, 59, was involved in a longstanding bribery program and corrupt partnership with someone named “Contractor No. 1” in the indictment. Kelly was named general manager of the San Francisco PUC in 2012 and held that position until November 30, 2020 when he resigned after filing a criminal complaint in the federal complaint. Contractor # 1 is a senior construction company officer in San Francisco and a permit expediting consultant who directed or controlled several companies doing business with the city of San Francisco. Today’s indictment alleges that Kelly provided the # 1 contractor with confidential PUC internal documents and information in order to give the # 1 contractor a competitive edge in public procurement competitions. In turn, # 1 Contractor showered Kelly with personal financial benefits, including discounted construction work for Kelly’s residence and an international vacation for Kelly and his family, with # 1 Contractor paying hotel fees, hundreds of dollars for meals, and jewelry.

The other charges in the indictment, first made public today, describe the conduct that led to the bank fraud and bank fraud charges against Kelly and Victor Makras. Makras, 63, a San Francisco resident, is a San Francisco real estate agent and the director of Makras Real Estate. He also brokered a consortium of individual real estate investors (referred to here as Makras investors) who jointly issued residential real estate loans backed by real estate in the San Francisco Bay Area and real estate elsewhere. Makras has served on a number of San Francisco commissions and boards, including the San Francisco PUC, the San Francisco Port Commission, and the San Francisco Employees Retirement System Board.

According to the indictment allegations, Kelly and Makras have conspired to defraud Quicken Loans, the financial institution, with a $ 1.3 million real estate loan to Kelly. The indictment describes that when Kelly and Makras applied for the $ 1.3 million loan to Quicken Loans, they falsely represented an excessive amount of debt that Kelly owed Makras Investors on his existing home loan. This falsely inflated amount enabled Kelly to obtain a larger loan amount from Quicken Loans at a lower loan rate. The alleged conspiracy also included hiding Kelly’s other outstanding debts from Quicken Loans, including thousands of dollars given to Contractor No. The program also included the repayment of Kelly’s undisclosed debt with the loan proceeds from Quicken Loans. The undisclosed debt is believed to have been paid by Makras in a method designed to hide the fact that Quicken Loans’ loan proceeds were used to repay those other debts.

Kelly is out of custody and will appear for the first time on the indictment tomorrow, October 20, at 10:30 am in the United States Federal Court of Justice, Thomas S. Hixson.

Makras is out of custody and his first appearance in today’s indictment has not yet been determined.

Kelly is charged with honest service fraud and conspiracy to commit honest service bank fraud in violation of 18 USC Sections 1343, 1346 and 1349. If convicted, each charge carries a maximum statutory 20 year sentence in prison and a fine of $ 250,000 or double gross profit or loss. Kelly and Makras are both charged on bank fraud charges and bank fraud conspiracy charges in violation of 18 USC §§ 1344 (1), (2) and 1349. If convicted, each charge has a maximum statutory penalty of 30 years imprisonment and a fine of $ 1,000,000 or no more than double gross profit or loss. However, a post-conviction penalty would be imposed by the court only after taking into account the US Sentencing Guidelines and the Federal Act on the Imposing of a Penalty, 18 USC § 3553.

The allegations in the indictment are mere allegations. As in any criminal proceeding, the accused is presumed innocent unless proven guilty in court.

This case is part of a larger state investigation aimed at public corruption in the city and county of San Francisco. Twelve people have been charged so far, including two senior San Francisco officials, Mohammed Nuru and Harlan Kelly. Several city contractors and mediators were charged. According to charges against Mohammed Nuru and others, Nuru allegedly accepted hundreds of thousands of dollars in bribes in cash, meals and work in his vacation home from contractors who received public contracts in San Francisco.

The case is being pursued by the US Attorney’s Corporate and Securities Fraud Team. The case is being investigated by the FBI and the Internal Revenue Service-Criminal Investigation (IRS-CI).

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SAN FRANCISCO – Former San Francisco officer Sandra Zuniga, charged yesterday with conspiracy to commit money laundering, agreed to plead guilty and to work with federal investigators on the San Francisco City Hall corruption investigation in a consent form filed today . announced acting US attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Representative Craig D. Fair, and Internal Revenue Service – Criminal Investigation Special Representative Michael Daniels.

“Today a senior San Francisco City Hall official agreed to plead guilty to our political corruption investigation and will work with the FBI against others involved,” said acting United States attorney Stephanie M. Hinds. “This investigation continues, but the window of opportunity for collaboration is closing. If you are involved in public corruption at any level, check with the FBI before the FBI reaches out to you. Early collaboration is always rated positively. ”

“The FBI is very interested in interviewing employees and contractors of the San Francisco city government who may know firsthand about this public corruption scandal,” said FBI special agent Craig D. Fair contractors who may have relevant knowledge that are critical to the ongoing investigation. In her plea agreement, Sandra Zuniga agreed to work with the FBI. We encourage others who know to do the same. “

“Sandra Zuniga thought she could bypass the law,” said IRS Criminal Investigation, Special Agent in charge Michael Daniels. “Through numerous financial transactions over a period of nearly a decade, she attempted to hide the true source of Mohammed Nuru’s funds. No official should be allowed to behave as if he were above the law. “

Today’s developments follow a federal complaint dated June 3, 2020 accusing 45-year-old Zuniga of South San Francisco of being involved in a money laundering conspiracy. This earlier complaint against Zuniga followed allegations of corruption against Mohammed Nuru, then director of the Public Works Department (DPW) in San Francisco. The charges against Nuru allege that he had plans to bribe a San Francisco airport inspector and accept bribes from people doing business with DPW and the city. Several people have been accused of bribing Nuru and some have pleaded guilty and are cooperating with the government investigation.

In the federal complaint against Zuniga dated June 3, 2020, it was alleged that she laundered the proceeds of Nuru’s programs from 2014 to January 2020. The Zuniga complaint details how she made cash deposits in excess of her San Francisco government paychecks by tens of thousands of dollars. She allegedly deposited checks from Nuru employees and tracked those deposits with transactions that benefited Nuru. For example, the complaint alleged that Zuniga had been making monthly mortgage payments on Nuru’s Colusa County vacation home for years, almost always after depositing approximately $ 1,000 in cash in her own checking account and then writing a check for $ 1,000 to pay Nuru’s monthly mortgage bill . The complaint also lists a series of transactions in September 2018 in which Zuniga received a check for USD 5,000 from a contractor doing business with DPW and the City of San Francisco deposited that check, a series of transactions with those funds through various banks and then paid a $ 2,400 building bill for Nuru’s vacation home by writing a check for $ 2,500 to herself, transferring it to another bank account, and sending a check from that account to the builder for Nuru’s account to pay. In another example, Zuniga made two cash deposits totaling $ 5,600 into her account on one day in May 2014. Four days later, she wrote a check for $ 3,800 to Nuru and paid $ 1,000 for Nuru’s mortgage bill the next day. In addition, the June 2020 complaint against Zuniga describes how she traveled to South America with Nuru on a lavish two-week trip to South America in the fall of 2018, with business class flights and Ritz-Carlton accommodations all subsidized by a contractor or paid in full with the city.

The information submitted yesterday accuses Zuniga of participating in the money laundering conspiracy with Nuru by engaging in financial transactions with the proceeds of fraud, particularly wire fraud, with the intent to hide the nature and source of these funds while they became aware of the funds derived from illegal activities. Zuniga today signed a plea agreement with the court admitting the money laundering crime and expressing her intention to plead guilty to the crime.

In her plea agreement, Zuniga declares her readiness to cooperate with federal investigators in the ongoing federal investigations.

Zuniga’s admission of her own criminal behavior in her signed plea agreement, as well as a description of her circumstances and the people involved, was presented to the court in a separate “Appendix A” to the plea agreement. Appendix A is being filed under seal with the court and is currently not available for viewing. While the description of Appendix A is not public, the information filed publicly yesterday reveals more details. The money laundering conspiracy charged in today’s information is now said to have started years earlier than in the original complaint against Zuniga from June 2020. While this complaint alleged that the conspiracy began in March 2014, yesterday’s information alleged that the money laundering conspiracy was involved in a ” unknown date, but at least as early as 2010 “and continued until January 2020. Today’s information alleges that Zuniga conspired with Mohammed Nuru and other individuals known to the United States Attorney General in conducting and attempting to conduct financial transactions to launder the proceeds of wire fraud.

Zuniga is due to be tried tomorrow, Wednesday March 10th, over the information given by Judge Sallie Kim, United States Judge. Zuniga is expected to appear before US District Judge William H. Orrick in San Francisco on March 18, 2021. Zuniga remains out of custody.

Zuniga is charged with a money laundering conspiracy in violation of 18 USC § 1956 (h). The indictment provides for a maximum statutory sentence of 20 years in prison, a fine of $ 500,000, or double the value of the property involved in the transactions, or both. However, a post-conviction penalty would be imposed by the court only in accordance with US Sentencing Guidelines and Federal Act on the Imposition of a Penalty, 18 USC Section 3553.

A notice merely alleges that a crime has been committed and all the accused are presumed innocent until found guilty beyond any doubt.

Investigators are asking anyone with additional information that may be relevant to the investigation to email the FBI tip number at tips.fbi.gov or call the FBI at (415) 553-7400.

The prosecution is being carried out by the US Attorney’s Office, the new Corporate Fraud Strike Force in the Northern District of California, and is the result of an investigation by the FBI and the IRS-CI.

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