City Attorney issues 14 more subpoenas in expanding public corruption investigation

Developer, permit expediter and investment group among companies that must turn over records in investigation tied to former Public Works Director Mohammed Nuru

SAN FRANCISCO (Feb. 27, 2020) — City Attorney Dennis Herrera announced today that he has issued 14 more subpoenas as part of a joint public corruption investigation with City Controller Ben Rosenfield.

The investigation is looking into a variety of possible legal or policy violations, including improper gifts to City officials or employees and whether companies with City contracts funneled money through nonprofits to fund City programs and events, like Public Works holiday parties. In coordination with the Controller’s Office, the City Attorney’s Office launched the probe upon learning of a federal criminal investigation that has led to charges against then-Public Works Director Mohammed Nuru and San Francisco restaurateur Nick Bovis.

Herrera issued 14 subpoenas today focused on the mixed-use project at 555 Fulton Street and on Walter Wong, a permit expediter and contractor. Those included six subpoenas for companies linked to Zhang Li, the developer of the mixed-use project at 555 Fulton Street, among them Z&L Properties, Inc. and FPC Builders, Inc.; one to Wong himself and four more to his affiliated businesses with ties to 555 Fulton Street or to City contracts, including Jaidin Consulting Group, LLC, W. Wong Construction Co., Inc., and Alternate Choice, LLC, which uses the same address as W. Wong Construction Co.; two subpoenas to investment firms involved with 555 Fulton Street, Synergy California Green Hospitality Regional Center, LLC and SCGHRC Holdings III, LLC; and a subpoena to an engineering firm involved with 555 Fulton Street, BKF Engineers.

“Make no mistake, we’re following the evidence wherever it leads,” Herrera said. “We’re not going to stop until we get to the bottom of this. San Francisco has always been a leader, and we’re going to make sure that we lead when it comes to clean government.”

The subpoenas seek a range of records, including documents that could show things or services of value being provided to a City employee or official, or to a City employee or official’s family member. That could include money, material goods, travel, meals and accommodations. Also sought are communications and other records related to the progress of construction at 555 Fulton Street.

This is the second round of subpoenas in the investigation after Herrera issued 10 of them on Feb. 12 to bankrupt utility PG&E; construction firms Webcor, Pankow and Clark Construction; waste management company Recology; and three nonprofits: Lefty O’Doul’s Foundation for Kids, the San Francisco Parks Alliance, and the San Francisco Clean City Coalition.

In a related aspect of the investigation, the Controller’s Office, in consultation with the City Attorney’s Office, is now reviewing contracting and procurement practices at Public Works, commission approval processes at San Francisco International Airport and the Transbay Joint Powers Authority, and the use of “friends of” organizations throughout the City. Other topics will be added as the joint investigation progresses. Interim reports on these and other topics and recommendations about best practice reforms will be released publicly as they are completed. The Controller anticipates releasing the first of these reports by the middle of March.

Federal officials have accused Nuru and Bovis of designing several corruption schemes, including allegedly trying to steer City contracts to Bovis. Nuru is also accused of lying to the FBI, having City contractors perform free or discounted work on his vacation home, and accepting luxury travel gifts from a developer.

One of the schemes that the federal government alleges is that Nuru provided Bovis with inside information on a City project involving portable bathroom toilets. The City Attorney and Controller’s investigation identified that this scheme related to a $171,000 contract that the City awarded to a Bovis-related entity named SMTM Technology LLC. On Feb. 7, 2020, the City terminated that contract for non-performance by the required deadline. The City did not pay any money under the contract. Additionally, the City did not renew a contract with Alternate Choice, LLC to provide street trash cans. The contract expired at the end of January 2020. Alternate Choice was subpoenaed today.

About the Independent City Investigation

With the support of the Controller’s Office, the City Attorney’s Public Integrity and Investigations Team is leading the investigation into alleged wrongdoing. In addition to identifying employees or officials involved in potential violations of local law, the investigation will identify contracts, grants, and other government decisions possibly tainted by conflicts of interest and other legal or policy violations.

At the same time, the Controller’s Office, in cooperation with the City Attorney’s Office, is reviewing Public Works contracts, purchase orders, and grants for red flags and process failures, in consultation with finance teams at the Department of Public Works and the Office of Contract Administration. The Controller’s Office is working with the City Attorney’s Office’s to identify whether stop payments or cancellations are justified on any open contracts and purchase orders.

Tips

To report suspected public integrity abuses regarding this investigation, please contact the Public Integrity Tip Line. You can provide information via e-mail at publicintegrity@sfgov.org or by phone at (415) 554-7657. All tips may be submitted anonymously and will remain confidential. Information regarding City payments, searchable by department and vendor, are available on the Controller’s public transparency website at openbook.sfgov.org. As always, any member of the public may file any allegation of improper or illegal public activity with the City’s Whistleblower Program at sfcontroller.org/whistleblower-program. That program, administered by the Controller’s Office, often partners with the City Attorney’s Office on investigations.

Subpoenas

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