Like former longtime Public Works director Mohammed Nuru, the next line on former longtime Public Utility Commission GM Harlan Kelly’s resume will be a stint in a federal penitentiary.
Today, Kelly today was sentenced to four years in prison for six fraud and bribery charges. There are many takeaways from this, but one may be the most relevant to the people of San Francisco: The man long tasked with keeping San Francisco clean and the man long tasked with overseeing San Francisco’s infrastructure have both been arrested, tried and convicted on federal corruption charges.
And — wonder of wonders, miracle of miracles— San Francisco is dirty and coming apart at the seams.
The crimes for which Kelly was sentenced today will not remind anyone of a Bond-villain plot. But federal charges are a bit like wandering into an emergency room without insurance (or even with it): The numbers add up fast.
Kelly was popped for feeding insider information to contractor and permit expediter Walter Wong, who was seeking a city contract to convert streetlights to LED lighting (a contract he still lost out on). The feds accused Kelly of taking gifts from Wong such as lavish vacations in China and deeply discounted work on his deeply problematic family home.
The former PUC boss and city engineer was also nabbed for executing a bank fraud scheme with real-estate maven Victor Makras, lying on a $1.3 million loan application, and funneling the inflated amount he obtained for a refi loan into paying down other debts.
Within a federal courtroom this morning, there were many stern words and much contrition. Federal prosecutor David Ward wrote in his sentencing memo that Kelly’s crimes “were a stunning betrayal of the public trust … he engaged in acts that cut at the heart of open and honest governance.” U.S. District Court Judge Richard Seeborg added that Kelly “betrayed the public trust and made a mockery of his oath to serve the public.”
Kelly — who, like Nuru, suffered a heart attack between his guilty verdict and his sentencing — apologized profusely for what he’d done. Four years isn’t nearly as much time as he could be doing. But it’s no small thing for a 62-year-old who nearly died last month and has a wife and two children.
Nuru is gone. Kelly is going. But the oratory within the courtroom didn’t resonate the same outside of it.
“We have a $14.6 billion budget, and there’s a hobo shitting in front of my office,” said a longtime City Hall player. “Now that’s a betrayal of the public trust.”
It’s good that dishonest people are no longer atop two of San Francisco’s most vital and lucrative city departments. There’s no downside to that. What’s more depressing is that, absent longrunning, meticulous federal investigations and intervention, nothing would’ve happened here.
San Francisco fancies itself a world-class city, but the years-long, costly federal investigations did not turn up world-class crime. Nuru is in prison, in large part, because he attempted to slip an Airport Commissioner $5,000 in an envelope to get a chicken shack into SFO — a bribe she did not ultimately accept. Kelly was popped for feeding confidential information on an LED contract to a chiseler who also failed to get what he wanted — and then spilled his guts to the feds and served up Kelly on a silver platter.
These are bad things, and Nuru and Kelly will pay with years of their lives (as well a likely pension curtailment: Kelly bagged nearly $23,000 a month since his December 2020 resignation. Nuru has already lost out on city matching funds, and is receiving a monthly annuity of $2,879 of his own contributions.).
Nuru is gone, and Kelly is going — but San Francisco’s problems remain. Envelopes full of cash and lavish free vacations featured large in these criminal trials, but San Francisco more often finds ways to overpay and underdeliver without such cinematic details. Or, more to the point, without laws even being broken.
Public restrooms are priced on par with Beverly Hills homes, with soft costs inexplicably eating up nearly six-tenths of the budget — but nobody broke the law. San Francisco spent years sinking money into designing the perfect boutique trash can, with a price tag exceeding the price of a Subaru, while filth piled up on city streets. But nobody broke the law.
On this, the day Harlan Kelly was sentenced for his crimes, it’s worth revisiting a blip on the radar I wrote about back in 2020. Tucked away in item 10e at the Dec. 8 PUC meeting was an approval of a pair of $9 million contracts for two ventures to undertake, among other endeavors, “Construction Management Services for the East Bay Region, to provide construction management services and staff augmentation to manage multiple overlapping Regional Water Enterprise construction projects … ”
Sounds technical. It is technical. And, technically, the small businesses attached to these proposals grossed more money than the city-mandated ceiling allows, and/or had lapsed certificates that should’ve disqualified them from this process. But there was no hard-charging federal agent to get involved in this matter. Nothing came of it. These contracts were summarily approved.
The money involved here, $18 million, dwarfs the chicken shack and LED stuff that put Nuru and Kelly behind bars. Nuru would’ve had to push that envelope across the table 3,600 times to equal that.
San Francisco’s business-as-usual really is costlier and worse than the corruption exposed by the feds. Players enter and exit. The game endures.
So, Nuru is gone. Kelly is going. But San Francisco remains dirty. San Francisco continues to come apart at the seams.
Great article. Follow up question: Do we have any data/information/anecdotes/etc on how San Francisco govt corruption compares to peer cities?
I know this is not easy to diagnose but I’d be interesting to know. We 100% need to do what we can to stamp out this type of corruption but to think we can eliminate it entirely is naïve IMO. I’d be curious how SF stacks up but I don’t really follow any other cities politics as closely as I do SF so I feel my perception is skewed.
Thank you for your work Joe. We’re so lucky to have you. Mission Local deserves every award it’s received, and more. Thank you.
A third of the recommended minimum sentence. Joke. If I were a journalist I’d ask how many convicted felons who go to trial get that sentence in federal court. A $25,000 fine? This is a sweetheart deal given to a party operative and I’ll bet a dollar to a donut he’s in and out of prison by Xmas and his pension is magically reinstated. He’ll have to be compensated for keeping his mouth shut. Everyone knows he and his wife were recruited as protégés ( bag men) of Willie Brown going back to their high school days at Lowell
Gigi —
Pensions don’t get reinstated. You’re going to lose your dollar or your doughnut.
JE
Just to be clear. Harlan doesn’t lose all his pension. He will lose the portion of city matched since the day he committed the crime related to his job. For example, if Harlan stole from a shop due to personal habit, that crime alone would not affect his pension at all.
AG —
You’re right. I believe this was covered within the story and spelled out regarding Nuru: A conviction and sentencing for a moral turpitude crime, followed by action from the SFERS committee, will result in the revocation of a pension. You are correct that a crime such as stealing from a store on his own time would not be a moral turpitude crime.
As noted in the article, this affects the city contributions and not the employee’s own contributions. That’s what happened to Nuru and will (all but certainly) happen to Kelly. At that point, he can either get his own contributions as a lump sum or an annuity. Nuru opted for the annuity.
So, yes, you were correct!
JE
I bet with you. The sentence seems minimum to be too. But federal charges are different than state. There is no parole on federal charges. There is no early release even on good conduct. Deducting holidays, he will have to serve at least 80% time of his sentence
What’s more depressing is that absent longrunning, meticulous federal investigations and intervention, LAUNCHED BY THE TRUMP JUSTICE DEPARTMENT, nothing would’ve happened here.
Now that’s depressing.
I agree with Joe on this issue. It’s dispiriting because so much could have been accomplished. The PUC and DPW are not the only ones. Corruption is so rampant that even I know about fundraiser golf tournaments paid for by contractors and overseas fact finding trips paid from department funds. But isn’t the big money going to contracts such as Forward Observer mentioned as well as absentee senior staff who were once politically connected but still collect their salaries?
Thank you for your extensive reporting on City government. Your emphasis on its practices and policies is important, and appreciated.
As an example of “San Francisco’s business-as-usual”, your article cited two contracts, each worth about $9M for construction managment services, that the Public Utilties Commission eventually approved. To what extent do the members of this commission rely on agency staff to explain these contracts, as well as other technical issues, and to recommend approval or disapproval? To what exent can the members of this commission provide effective oversight?
nice summary. pathetic crimes. sad how this city burns $ on frivolities, especially when there are so many real, pressing needs.
“There must be some way out of here,” said the joker to the thief
“There’s too much confusion, I can’t get no relief
Abe Ruef Deja Vu
I would think a now convicted felon who took SF Pension funds in the amount of $23,000 a month while a court process was taking place over 3 years and 2 months years will have to pay the SF Pension system back the $874,000 ($23,000 X 38 months) he received less his personal contributed pension portion.
Frank —
You’d be mistaken. There is no means of clawing back pension payments like that. There might be if some manner of fraud was involved regarding his contributions or service time, but that’s not the issue. As was the case with Nuru, Kelly will lose his pension *after sentencing* by a vote of the San Francisco Employee Retirement System Board. He will receive either a lump sum of his own contributions or, as Nuru opted to receive, an annuity.
JE
Colorful language for a *prototype* trash bin, yet ignoring the history of corruption behind the previous version involving both Nuru and Wong. Don’t get suckered into the shiny headline-grabbing things Joe – that’s what they want you to do. Take a peek behind the curtain instead.
Thanks for the advice, dude. Here’s the backstory you’re citing, which ran in our paper.
https://missionlocal.org/2021/09/city-of-san-franciscos-settlement-with-walter-wong-includes-387k-worth-of-garbage-can-parts/