SAN FRANCISCO (CN) — In the latest chapter of a corruption scandal that has rocked San Francisco for the last 10 months, federal prosecutors on Monday filed bribery charges against a public utilities chief who is married to San Francisco’s highest-ranking unelected official.
San Francisco Public Utilities Commission general manager Harlan Kelly, 58, used his position to benefit an influential city contractor and permit expediter in exchange for paid international trips, free meals and other gifts, federal prosecutors claim in a newly unsealed criminal complaint.
Kelly is married to San Francisco’s top unelected official, City Administrator Naomi Kelly. Naomi Kelly oversees 25 agencies and programs including the Department of Public Works, whose former director was first implicated in the corruption scandal in January.
“Bribery scams undermine our faith in city government,” said David Anderson, U.S. Attorney for the Northern District of California, in a statement Monday. “Our investigation into City Hall corruption will continue.”
San Francisco Mayor London Breed announced that she has accepted Kelly’s resignation.
“The allegations detailed in the federal investigation conducted by the U.S. Attorney’s Office are disturbing and unacceptable for anyone serving in our government, let alone the leader of one of our largest departments,” Breed said in a statement. “As public officials, we have to hold ourselves to the highest standard and put the public good before all else.”
Appointed general manager of the commission in 2012 by the late Mayor Ed Lee, Kelly developed a relationship with Walter Wong, a construction contractor who also owns a business that helps other contractors navigate San Francisco’s complex permitting process and speed up approvals for building projects.
In June, Wong agreed to plead guilty to conspiracy to commit bribery and money laundering charges and to cooperate with federal investigators.
According to the complaint unsealed Monday, Wong paid full or partial expenses for Kelly on multiple trips to China, most recently for a family trip to Hong Kong and China in March 2016. During that trip, Wong covered Kelly’s hotel stays, meals and jewelry purchases. Wong later reimbursed Kelly for the family’s airfare with cash deposited in the general manager’s bank account.
Prosecutors say Kelly acknowledged those gifts in a note to Wong via the encrypted WeChat messaging app, writing “Thank you for the best family vacation ever! A little something for everyone!”
At the same time Kelly received those lavish gifts, Wong was seeking a multimillion-dollar contract for the company run by his son, Green Source Trading LLC, to convert thousands of San Francisco city streetlights to smart LED technology. Kelly and Wong discussed the bid multiple times, according to text messages cited in the complaint. The general manager hand-delivered confidential, internal PUC bid documents to Wong and delayed a deadline to give him an unfair advantage in the process, though Wong eventually withdrew his bid due to multiple contract changes, prosecutors say.
Wong also did $23,236 worth of water damage repair work on Kelly’s personal residence, but Kelly only paid $11,547 for the work — the maximum his insurance company would pay.
“Wong stated that he never pressed Kelly to pay the remainder of the bill because he wished to provide Kelly with benefits in exchange for Kelly, as head of the PUC, directing business to Wong and his companies as Kelly had done in the past,” the complaint states.
In a recorded conversation between the two in May 2020, Wong told Kelly the FBI had seized his records and that his attorneys were asking about the repair work. Kelly said he was willing to pay the remainder but added, “It’s not like you were giving me money. We were friends, you were helping me, and the insurance company was telling me ‘That’s too high; he’s ripping you off,’ but I know you’re not ripping me off.”
Kelly said they should get a third-party estimate and that Wong should tell those questioning the repair work that the cost is “disputed.”
He faces one count of honest services wire fraud, which carries a maximum penalty of 20 years in prison and a $250,000 fine.
The U.S. Attorney’s Office did not say if Kelly was arrested but confirmed he is not in custody at this time. He is expected to make his initial appearance before U.S. Magistrate Judge Laurel Beeler on Dec. 8.
The San Francisco Public Utilities Commission deferred comment to Kelly’s attorney, Brian Getz, who did not immediately respond to an email requesting comment Monday.
Kelly is the 10th person charged in the corruption scandal and the highest-ranking city official to face charges after former Public Works director Mohammed Nuru, who resigned from his $273,000-per-year job after being charged with bribery in January.
FBI Special Agent in Charge Craig D. Fair said in a statement Monday that the agency is “surging” its resources to uncover more potential wrongdoing in the ongoing corruption probe.
“We urge anyone with information on this matter, or any other suspected public corruption, to come forward and contact the FBI,” Fair said.