U.S. attorney hits SFPUC with subpoena as SF City Hall corruption investigation widens | #employeefraud | #recruitment | #corporatesecurity | #businesssecurity | #

Federal officials served the San Francisco Public Utilities Commission with a sweeping subpoena last month, demanding numerous records and documents that appear to draw the agency into the widening City Hall corruption scandal touched off by the arrest of former Public Works Director Mohammed Nuru earlier this year.

The U.S. Attorney’s Office issued the subpoena on June 15, according to a copy obtained by The Chronicle on Friday.

The subpoena suggests federal investigators are interested in examining contracts the SFPUC awarded to several companies — some of them have previously been linked to alleged schemes traced back to Nuru, according to investigations being pursued by the FBI and the City Attorney’s Office.

Among them: Jaidin Consulting Group, a firm helmed by Walter Wong, a contractor and permit consultant arrested last month on charges of conspiracy to commit fraud and conspiracy to commit money laundering. Wong agreed to plead guilty to the charges and cooperate with federal investigators.

Wong is named as “Contractor 2” in the criminal complaint against Nuru, which alleges that Wong paid for trips Nuru took to China and South America in 2018 in exchange for preferential treatment on projects “when needed.”

Nuru has been charged with fraud in connection with an alleged scheme to bribe an airport commissioner for help getting restaurateur Nick Bovis a concession at SFO. Bovis, who was also arrested, agreed to plead guilty to charges of honest services wire fraud and wire fraud last month and cooperate with investigators.

The SFPUC is a sprawling city agency that oversees San Francisco’s water, power and sewer systems, and approves many construction contracts. But unlike Public Works, where Nuru was able to exert a tremendous amount of direct influence over contracting, the SFPUC is governed by a five-member commission that sets policy and approves most contracts. Public Works is under no such commission.

The subpoena also includes a demand for any communications and contracts between the SFPUC and Alternate Choice LLC, a business registered to a member of Wong’s family. The company is registered at the same San Francisco address as Wong’s Jaidin Consulting Group and secured a $5.2 million contract with the city to provide trash cans in 2018.

The federal subpoena sent specifically demands all communications “related to any LED light installation contracts” between SFPUC employees and Walter Wong, Washington Wong, the relative, and their affiliated companies. The City Attorney’s Office previously filed a subpoena directly to Alternate Choice in February.

The SFPUC must also turn over all communications between any SFPUC employee and Florence Kong, along with any documents related to contracts the agency signed with Kong’s companies, Kwan Wo Ironworks and SFR Recovery, a construction-debris recycling firm. Both companies do business with the city.

The Justice Department charged Kong last month with lying to the FBI during its investigation into Nuru’s activities. She has been accused of providing Nuru with cash, a Rolex watch worth more than $40,000 and other gifts, but denied discussing business with Nuru. But federal officials say wiretapped calls show Nuru did, in fact, help Kong with construction contracts for city projects.

Kong ended a phone call when The Chronicle requested comment and did not respond to further requests for a response.

Federal officials also demanded the complete personnel files of SFPUC General Manager Harlan Kelly and Chief Strategy Officer Juliet Ellis, along with all records from 2005 to the present day related to any trips they took, including expense reports and reimbursement records. They also ordered the agency to produce any SFPUC audit from 2010 to the present related to trips taken by Kelly and Ellis.

“We are cooperating with the investigation and will be producing the requested records,” SFPUC spokesman Tyler Gamble said.

Ellis came under scrutiny in 2013 for an alleged ethics violation after she helped steer a $200,000 contract to a nonprofit where she served as a paid board member. Kelly defended her at the time and said that while an internal probe “confirmed that there were violations” of reporting requirements and “a possible violation” of state conflict-of-interest laws, “the fact-finding also uncovered mitigating circumstances suggesting that there was no unethical intent behind any of the violations.” The contract was scuttled, but Ellis stayed on as a top deputy at the agency.

Federal officials also demanded all communications between the SFPUC and any representative or employee of Mlok Consulting, along with any contracts the agency approved with the company, which on its website provides only an ambiguous mission statement of working “as the interface of government, business and community.” Melanie Lok, the company’s president and CEO, could not be reached for comment.

The Chronicle reported in 2011 that Lok’s firm had been paid $132,000 since 2009 for work on the SFPUC’s online invoicing system. Yet she listed her occupation as a “homemaker” when she donated $500 to former Mayor Ed Lee’s mayoral campaign in 2011. The discrepancy raised questions at the time about a possible violation of the city’s ban on contributions from city contractors.

Lok was also listed as a contact for a 2011 fundraiser for an independent expenditure committee for Lee. The featured honorees at the fundraiser included former Mayor Willie Brown and former Supervisor Jane Kim. Lok could not be reached for comment.

Federal officials also ordered the agency to turn over appointment calendars, credit card records, personnel evaluations, resumés and other information for all SFPUC employees who earned at least $100,000 between January 2010 to the present.

Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa

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