More Charges and Guilty Pleas Emerge in San Francisco Corruption Scandal

San Francisco Department of Public Works director Mohammed Nuru. (SFPW photo)

SAN FRANCISCO (CN) — Two city contractors were charged with bribery and another two agreed to plead guilty Thursday to charges tied to a widening city corruption scandal that took down one of San Francisco’s highest-ranking government officials earlier this year.

Alan Varela, 59, of Napa, and Bill Gilmartin, 60, of San Mateo, were charged with bribing former San Francisco Public Works Director Mohammad Nuru with $20,000 in restaurant meals and a $40,000 tractor for his vacation home in exchange for inside information about a lucrative city contract to build and operate an asphalt recycling plant.

David Anderson, U.S. Attorney for the Northern District of California, said in a video statement Thursday that public works contracts are supposed to be awarded through a merit system to benefit San Francisco residents and taxpayers.

“Instead of competing for public works contacts on the merits, the defendants sought their contracts through bribes and backroom deals,” Anderson said.

Varela and Gilmartin serve as president and vice president, respectively, of ProVen Management, a civil engineering and construction firm. They also share ownership in other construction companies that have sought and received public contracts in San Francisco.

Both men face up to 10 years in prison and $250,000 fines for bribery charges.

The target of the alleged bribes, Nuru, was arrested and charged with honest services wire fraud and lying to FBI agents in January. Nuru resigned from his $273,000-per-year city job in February. 

Also on Thursday, two previously charged defendants in the corruption case agreed to plead guilty, and one agreed to cooperate with FBI investigators.

Balmore Hernandez, 55, of Burlingame, is the CEO of AzulWorks, which received millions of dollars in city government contracts in 2018. According to prosecutors, Hernandez supplied more than $250,000 in labor and materials for Nuru’s vacation home in Stonyford near Mendocino National Forest. 

In exchange, Nuru allegedly helped Herndandez secure a $1.9 million DPW contract. Charged with conspiracy to commit honest services wire fraud, Hernandez has agreed to plead guilty and cooperate with the FBI.

Anderson said Hernandez “may earn leniency” at sentencing in exchange for his cooperation. He faces up to 10 years in prison.

Florence Kong, 62, of Hillsborough, owns two companies that do business with San Francisco: a construction company called Kwan Wo Ironworks and a construction debris recycling company called SFR Recovery Inc.

Kong allegedly gave Nuru cash, expensive meals, a Rolex watch worth more than $35,000 and the installation of a gate at his vacation home. Prosecutors say recorded phone calls demonstrate that Nuru helped Kong win construction contracts with the city.

Kong agreed to plead guilty on Thursday, but she has not agreed to cooperate with the FBI.

Varela and Gilmarten are the sixth and seventh defendants to face federal charges in the widening corruption scandal.

Hernandez and Kong are the third and fourth defendants to plead guilty.

In June, Walter Wong, a permit expediter accused of conspiring with Nuru for 15 years to defraud the public, agreed to plead guilty and cooperate with the FBI. 

Another defendant, restauranter Nick Bovis, who Nuru allegedly helped win city contracts to provide bathroom trailers and homeless shelters, pleaded guilty in May and agreed to cooperate with investigators.

Federal prosecutors in June also charged Nuru’s longtime romantic partner and San Francisco’s former Fix-It Director and Director of the Mayor’s Office of Neighborhood Services, Sandra Zuniga, with laundering money for Nuru. She faces up to 20 years in prison and a $500,000 fine.

Siddhartha Patel, assistant special agent in charge of the FBI’s San Francisco division, said in a video statement Thursday that federal investigators will continue working aggressively to root out corruption in city government as long as the threat persists.

“San Francisco City Hall can and will function without the influence of the corruption we have seen unravel in this case,” Patel said. “The FBI will continue to prioritize investigating and disrupting corruption in the city of San Francisco.”

In July, the San Francisco Board of Supervisors rejected a proposal to create a new Office of the Public Advocate to investigate corruption and wasteful spending. But the board advanced a separate plan to break up the city’s Department of Public Works into two agencies with one focused exclusively on cleaning and maintaining streets and sidewalks.

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