SAN FRANCISCO (CN) — In closing arguments Wednesday, federal prosecutors painted former San Francisco Public Utilities Commission chief Harlan Kelly as a conniving businessman who misused his authority and connections to rig the bidding process for city contracts. His defense argued that Kelly was simply naïve.
Kelly, the former head of the city's Public Utilities Commission, stands accused of two separate schemes — collaborating with businessman Walter Wong to get Wong a city contract to install streetlights, and defrauding Quicken Loans of $1.3 million by lying on a loan application to remodel his home.
Prosecutor Kristina Green told the jury that Kelly “betrayed his fiduciary duty” to the people of San Francisco when he passed confidential information about streetlight contracts to Wong. The documents of information were sometimes handed by Kelly to Wong in front of the PUC building, and contained information about competing bids for the city’s LED streetlights, a contract Wong coveted.
Green told the jury that Kelly sought to get Wong the streetlight contract as repayment for several bribes. An invoice shown in court indicated Wong heavily discounted construction work performed on Kelly's home, and even performed some of the work for free.
“Kelly acted with the intent to give Wong an unfair advantage. Repeatedly handed him documents. When he accepted the work on his home, he knew Wong wanted city business. These are bribes,” Green said.
Wong also financed a trip to China for the Kelly family in 2016, where hotels, meals and entertainment were provided free of charge. Wong’s credit card showed charges for the trip, including a bill for the hospital Kelly stayed in when Kelly became ill.
At trial, Wong testified he intentionally did not charge Kelly because he was seeking a city contract.
“Harlan Kelly enjoyed a stream of benefits from Walter Wong,” Green said.
Green showed the jury text message evidence in which Kelly told Wong the minimum requirements to bid on city streetlights to help Wong’s construction company bolster its bid for the contract. Bidder information is supposed to remain confidential until the contract is awarded.
“Wong had his eyes on a bigger prize: the city lights contract. Kelly knew that, and knowingly embarked on a crusade to pass Wong confidential info about the project,” Green said.
Wong testified that he passed the information to his factory in China so that his company could make better lights than its competitors.
Wong pleaded guilty in 2020 to federal charges of conspiring to commit fraud and money laundering. He agreed to assist the federal government in the corruption probe in exchange for a lighter sentence.
“Kelly gave Walter Wong confidential information. He gave him an unfair advantage,” Green said.
In the other scheme, prosecutors say Kelly conspired with Victor Makras, a real estate agent, to knowingly make false statements to Quicken Loans for a $1.3 million loan. Makras was convicted of bank fraud in 2022 and fined $15,200.
Green said Kelly knowingly lied on his loan application by not disclosing his debts to Quicken Loans.
Kelly was “out of time, and out of money” when he defrauded Quicken Loans, Green said. Kelly owed Makras $70,000 on a previous loan, and had credit card and construction debt.
“Victor Makras and Harlan Kelly were working together to get the money,” Green said. “They concealed the true nature of his debts to ensure his loan was approved.”
Kelly used the money from the loan to pay off his debts. He then texted Makras to confirm the payments, prosecutors said.
Defense attorney Jonathan Baum told jurors the trial was not about ethics; it was about proving Kelly committed a federal crime. He said there was no proof of a crime, and pointed the finger at Walter Wong.
“This case is not about Harlan Kelly being PUC employee of the year,” Baum said, calling Kelly “naïve” and “careless.” He trusted Wong too much, Baum said, because the two were longtime friends. He showed the jury messages between Kelly and Wong going back years; he said the conversations were not usually about business.
“Walter Wong knew how to bribe people,” Baum said.
Baum pointed out that Wong lost the bids for the light contracts he applied for.
“Harlan didn’t give anything of value to Walter. That’s why he didn’t win,” Baum said.
But federal prosecutor David Ward said Wong's failure to land the contract didn’t matter. Criminal activity occurred “when Kelly gave Wong the information in exchange for a benefit.”
“It’s classic quid pro quo,” Ward said.
Baum said Kelly would never bring his family, including his young children, on a trip to China if he was being bribed. He described the trip as a vacation between friends.
Baum and Brian Getz, another Kelly attorney, both reminded the jury that Wong is cooperating with the government’s case, and that he can get a lighter sentence in exchange for his testimony.
“His freedom is on the line,” Getz said.
As for the loan application, Baum and Getz said Kelly trusted “experts” like Victor Makras and did not lie on the application.
“The crime is to deliberately and intentionally lie. Did that happen?” Baum said.
Getz added: "Harlan Kelly hasn’t done anything wrong except exercise bad judgment in his relationship with Walter Wong. It isn’t a quid pro quo because Harlan didn’t get anything."
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
