Source: US State of California
SAN FRANCISCO – Harlan Kelly, the General Manager of the San Francisco Public Utilities Commission (SF PUC), has been charged in a federal criminal complaint with honest services wire fraud, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The complaint alleges that Kelly, 58, of San Francisco, engaged in a long-running bribery scheme and corrupt partnership with Walter Wong, a San Francisco construction company executive and permit expediting consultant who ran or controlled multiple entities doing business with the City of San Francisco. The complaint alleges that as part of the scheme, Wong provided items of value to Kelly in exchange for official acts by Kelly that benefited or attempted to benefit Wong’s business ventures.
“Public officials owe their honest services to the people of San Francisco,” said U.S. Attorney Anderson. “Bribery scams undermine our faith in City government. Our investigation into City Hall corruption will continue.”
“The allegations against Harlan Kelly and the nine other individuals charged in this case are extremely troubling. The citizens of San Francisco deserve nothing less than transparency, honesty, and integrity from their city officials. However, through the course of this ongoing investigation, the FBI has uncovered a pattern of criminal activity committed by those in positions of trust,” said FBI Special Agent in Charge Craig D. Fair. “The FBI is surging our resources in this investigation, and we urge anyone with information on this matter, or any other suspected public corruption, to come forward and contact the FBI.”
The complaint alleges that Kelly, appointed in 2012 to be the SF PUC’s General Manager by Mayor Ed Lee, developed an extensive relationship with Wong that involved coded text messages, multiple international trips paid for or subsidized by Wong, cash exchanges, free meals, and even personal car service provided by Wong or by Wong’s employees to Kelly. One example in the complaint alleges that Wong paid travel and expenses for Kelly and his family during a March 2016 vacation that the Kelly family took to Hong Kong and China. The complaint alleges Wong paid for hotel expenses and incidentals such as meal and jewelry purchases. The complaint also alleges that Kelly’s airfare was purchased with a credit card to create a record of the expense, but the airfare was later reimbursed by Wong with cash deposited into Kelly’s bank account. The complaint further alleges that Kelly acknowledged the gifts he received from Wong in China using an encrypted messaging application, writing to Wong: “Thank you for the best family vacation ever! A little something for everyone!”
The complaint further alleges that during this same time Wong was seeking a multi-million dollar contract from the SF PUC for Green Source Trading, LLC, a company Wong ran through his son, to convert thousands of San Francisco city streetlights to smart LED technology. Shortly after the bidding for that contract ended, the complaint alleges Wong performed extensive repair work on Kelly’s personal residence, provided to Kelly at a substantial discount.
As part of Wong’s agreement with the government, he pleaded guilty to conspiracies to commit honest services fraud and money laundering and is now providing information to the government. According to the complaint, Wong provided evidence that he gave these benefits to Kelly because of Kelly’s position at the PUC, and Wong expected that Kelly would in return use his official position to benefit Wong’s business ventures, including helping Wong’s attempts to win business from the PUC to convert streetlights to LED. The complaint alleges Kelly and Wong repeatedly communicated about the project before it was bid, and during the bid process Kelly provided Wong with confidential non-public information, including documents containing inside information that were hand-delivered to Wong. Kelly engineered at least one delay in the process, the complaint alleges, to benefit Wong. These acts gave Wong an unfair competitive advantage in the bid process, though in the end Wong withdrew his bid due to multiple contract changes.
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Kelly is charged with one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346. If convicted of this 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. 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 imposition of a sentence, 18 U.S.C. § 3553.
Kelly is out of custody and is expected to make his initial appearance in federal court in San Francisco on December 8, 2020, before U.S. Magistrate Judge Laurel Beeler.
The case is being prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The case is being investigated by the FBI and IRS Criminal Investigation.