The clouds swirling around Harlan Kelly finally let loose today as FBI agents raided his home before the U.S. Attorney’s office charged the Public Utilities Commission general manager in an alleged long-running bribery scheme.
Today’s charges stem from a purported illegal arrangement with contractor and permit expediter Walter Wong, the Zelig-like avatar of San Francisco institutional corruption. Wong is the man connecting many of the litany of San Francisco figures charged by the feds following Public Works head Mohammed Nuru’s January arrest.
Kelly has resigned, the Mayor’s Office said Monday afternoon.
Kelly and other SFPUC figures were hit with a bevy of subpoenas in June. On Monday, he was charged with “honest services wire fraud” in connection to a series of alleged fraudulent actions, bribes and kickbacks from 2014 until 2019. This is described in an affidavit publicized today as a “long-running bribery scheme and corrupt partnership between Kelly and Walter Wong.”
In a straightforward arrangement, Kelly is accused of receiving things of value from Wong in exchange for preferential treatment of Wong and his many business ventures.
Wong pleaded guilty in June to conspiracy to commit fraud and conspiracy to commit money-laundering, and then decided to cooperate with the ongoing investigation. His guilty plea came shortly after Kelly and others were served with subpoenas demanding detailed records for numerous business deals.
Wong clearly provided reams of the evidence recounted today, both in oral interviews with investigators as well as material documents.
Today’s affidavit notes that the ties between Kelly and Wong were “extensive and involved coded text messages, multiple international trips paid for or subsidized by Wong, cash exchanges, free meals, and even personal car service provided by Wong (or his employees at Wong’s direction) to Kelly.”
Wong allegedly treated Kelly and his family — Kelly is married to city administrator Naomi Kelly — to a March 2016 trip to Hong Kong and China. This came as Wong was seeking a multimillion-dollar PUC streetlight contract. Kelly purportedly acknowledged this gift in an intercepted WeChat text: ““Thank you for the best family vacation ever! A little something for everyone!”
Congratulations to my brother Harlan Kelly celebrating 55 years on Mother Earth. Amen. pic.twitter.com/xW993TvJul
— Mohammed Nuru (@MrCleanSF) July 30, 2017
Wong then followed this up by performing extensive work on the Kelly’s home, allegedly at a steep discount.
Wong also purportedly subsidized trips to China and South America for Nuru.
In his interviews with the FBI, Wong was purportedly candid about his motives: “Wong told investigators that he provided benefits like these to Kelly because of Kelly’s position at the PUC and the understanding that Kelly would, in return, use his official position to benefit Wong’s business ventures, including Wong’s attempts to win business from the PUC in connection with its ongoing efforts to convert to LED streetlights,” the affidavit states.
Kelly purportedly held up his end of the deal. He is accused of hand-delivering confidential internal PUC bid documents to Wong, and delaying the process when Wong couldn’t get his bid organized in time — an effort Kelly codified in an intercepted text message. (“You told me [t]hat you had everything? I don’t know what to do? I don’t know how to stop the process anymore.”)
The affidavit filed Monday reveals a longstanding relationship between Kelly and Wong, in which they texted frequently — and referred to “a former San Francisco mayor” by the code name “35.” These are, purportedly, the numbers of that mayor’s initials on a telephonic numerical keyboard.
Those numbers align with the initials “EL.”
Kelly and Wong met, repeatedly, in the run-up to the close of the streetlight bid, when Kelly purportedly provided sheafs of information on would-be competitors (some of these documents were marked “Confidential: Draft”). These documents were, notably, provided by hand, thereby not generating electronic records.
They even met, at one point, at Mayor 35’s birthday dinner. At all times, Wong told investigators, he comped Kelly’s meals.
Those documents purportedly ranked Wong’s bid toward the bottom of the pile. As such, the bid was canceled and put out again the next year, in 2016. Kelly allegedly provided similar assistance once more, but Wong told investigators his bids were still not successful. That led to this shocking passage in the affidavit:
Wong said that they decided to withdraw from the process after the city made multiple changes to the contract requirements. According to Wong, after expressing frustration to Nuru about the changes, Nuru told him to forget about the project because someone else had bribed Kelly with a much larger sum and Wong was not going to win…
It was around this time, in 2016, that Wong purportedly treated the Kellys to a far-flung vacation. This section of the affidavit relies heavily on Wong’s own interviews with investigators:
Wong said his practice, when arranging international travel for San Francisco public officials like Kelly and Nuru, was to have the officials purchase their own airfare. Wong would then reimburse the officials in cash for the airfare in order to avoid leaving a paper trail for investigators.
When Wong reviewed his American Express credit card records from the trip, he also identified expenses – including meals costing hundreds of dollars and jewelry – which Wong said he bought for Kelly and his family. Wong told me he used both his American Express credit card ending in the digits 7-51005 and his Citi Advantage credit card ending in the digits 8980.
Charges included a $615 meal and a hotel bill for the extended Kelly family, and Wong himself, exceeding $2,000.
In June of this year, Naomi Kelly told investigators that she “paid Wong a lot of money for the trip” and “brought lots of cash on the trip to give to Rose Pak.” The feds, however, found only minimal withdrawals from the Kelly family’s bank accounts in the weeks prior to the trip, as well as minimal expenditures during the trip.
And Harlan Kelly purportedly tipped his hand on WeChat, thanking Wong for the trip. His bank account, additionally, received a deposit after the trip closely matching the value of the airfare.
Mission Local wrote last week that, with a new president — and, presumably, a new San Francisco U.S. Attorney — it stands to reason that a lot of action may occur on this case between now and the end of next month.
Today’s action, though hardly unanticipated considering those June subpoenas, does fit that bill. What remains in question is the ultimate goal of this yearslong FBI probe — clearly busting the public works boss and PUC head of a mid-sized American city were not the end goals.
Considering the time invested, one may wonder if the original bullseye was the man who appointed both Kelly and Nuru to their jobs — Mayor 35.
Harlan Kelly is facing a potential prison sentence of up to 20 years, and a fine of up to $250,000.