Bay Area Contractors Convicted in Bid-Rigging Scheme

SAN FRANCISCO (CN) – A federal jury on Thursday convicted two San Francisco Bay Area contractors of defrauding the U.S. government by submitting phony bids for a renovation project at the Lawrence Berkeley National Laboratory, a scheme uncovered during an FBI investigation into a Chinese crime boss’ racketeering enterprise. 

In 2016, Raymond “Shrimp Boy” Chow was sentenced to life in prison for his role in the 2006 fatal shooting of a prominent Chinese businessman and for running a criminal organization. 

During the FBI’s investigation of Chow and the local politicians with whom he was suspected of doing business, wiretaps hinted at a bid-rigging scheme headed by Derf Butler, owner of the San Francisco-based Butler Enterprise Group, who was overheard saying he knew contractors who would “play ball.” 

This led to further investigation of bid-rigging throughout the Bay Area, and the indictment of Clifton Burch, 50, of San Lorenzo, and Peter McKean, 50, of San Mateo.

According to federal prosecutors, Burch and McKean agreed to help Butler submit fraudulent and noncompetitive bids to the U.S. Department of Energy to renovate a building at the Lawrence Berkeley National Laboratory. 

Butler met with a developer who was actually an undercover FBI agent in July 2013. He then met with Burch and McKean, who agreed to intentionally submit bids higher than $5.7 million – the amount the “developer” planned to bid for the project.

Burch and McKean submitted bids of $7.1 million and $6.3 million, respectively, with the promise of work as a subcontractor and constructor manager on the project.

Burch and McKean were charged with one count each of conspiracy to commit fraud against the United States and conspiracy to commit mail and wire fraud. They face maximum sentences of 25 years in prison and will be sentenced by U.S. District Judge Charles Breyer on June 19.

The Shrimp Boy investigation also targeted a number of Bay Area politicians and San Francisco city officials for money laundering and public corruption, ultimately ensnaring former state Sen. Leland Yee, former school board member Keith Jackson, former Human Rights Commissioner Nazly Mohajer, and former commission staff member Zula Jones. 

Yee was sentenced to 60 months in prison in 2016 after pleading guilty to federal racketeering charges for accepting bribes from undercover FBI agents between 2012 and his arrest in March 2014. Jackson, who was also Yee’s political consultant, was sentenced to nine years in federal prison.

Mohajer’s charges were dismissed, along with a money laundering charge against Jones and charges of money laundering and grand theft against Jackson. Jones and Jackson will go on trial in state court in April on charges of trading political favors for campaign donations.

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