Herrera secures $1.7M settlement from Walter Wong, the permit expediter at the center of the public integrity investigation

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Wong and his companies will repay $1.45M received under contracts with the City, plus pay $317,000 in penalties for ethics violations. The settlement also bars Wong and his companies from doing business with the City or acting as a permit expediter for five years.

SAN FRANCISCO (May 13, 2021) — City Attorney Dennis Herrera and Ethics Commission Executive Director LeeAnn Pelham today announced a civil settlement worth more than $1.7 million with Wing Lok “Walter” Wong and companies he controls. The settlement makes the City whole for $1.45 million in contracts and grants awarded to Wong and his companies through non-competitive processes by Public Works, the SFPUC, and in one instance a grant administered by the City Administrator’s Office. The settlement further requires payment of $317,650 in penalties and late fees for ethics violations.

City Attorney Dennis Herrera

This settlement is a capstone to the public integrity investigation of Wong’s role in the corruption scandal that has unfolded since January 2020. Wong was a connecting thread between separate misconduct by department heads at Public Works, the Department of Building Inspection and the SFPUC, the investigation has shown. The federal charging documents against then-Public Works Director Mohammed Nuru described an array of misconduct, including a conspiracy between Nuru, then-DBI Director Tom Hui, and Wong to influence work on a multi-use development project at 555 Fulton Street in San Francisco. Wong worked for the project developer as a permit expediter. Criminal charges filed later against Harlan Kelly, then the General Manager of the SFPUC, further alleged a conspiracy between Wong and City officials to obtain City contracts in exchange for gifts.

“San Francisco will not tolerate bribery and insider dealing,” Herrera said. “Everyone deserves clean government and a level playing field. This settlement ensures that taxpayers are made whole, maximum penalties are levied, and Mr. Wong loses the privilege of doing business with the City or acting as a permit expeditor. After 15 months of digging, our investigation has uprooted the culture of favoritism and self-dealing that existed among a clique of certain department heads. The men and women of this office are determined to prevent it from taking hold again. I want to recognize the outstanding work done by so many in our office, especially our Public Integrity, Code Enforcement, Ethics, and Labor and Employment Teams, in partnership with the Ethics Commission, the Controller’s Office, and the Department of Human Resources. These are professional civil servants who work every day — with no fanfare or public recognition — to ensure that those who violate the public’s trust are held accountable.”

“The City’s settlement agreement with Walter Wong extracts maximum administrative enforcement penalties for violations of local ethics laws,” Pelham said. “It represents our determination to hold accountable those who disregard disclosure requirements designed to provide transparency to the public and prevent corrupting influences.”

About the Investigation
The City Attorney’s public integrity investigation is being done in primary partnership with the Controller. The investigation is scrutinizing dealings and City contracts linked to Nuru and others charged criminally by the U.S. Attorney’s Office. The investigation has three priorities:

  • identifying and proving employee misconduct to support discipline or removal of unethical officials or employees
  • barring unethical contractors from City contracting
  • recovering illicit gains for the benefit of taxpayers and rate payers

After 15 months of work, this investigation is still active, although aspects regarding Public Works and the SFPUC are nearly complete. The shift in tone at the top has already been significant. Five City department heads have either resigned or been fired, bringing new leadership at the Department of Building Inspection, Mayor’s Office of Neighborhood Services, SFPUC, City Administrator and Public Works.

Herrera introduced legislation in August 2020 to allow the City to suspend suspect contractors from receiving City funds while a criminal case or other prosecution was being decided. He used that new public integrity tool to prevent these executives and companies from further receiving City contracts or grants:

  • Nick James Bovis and his company SMTM Technology, LLC
  • Alan Varela and William Gilmartin and their company ProVen Management Inc.
  • Florence Kong and her companies SFR Recovery Inc. and Kwan Wo Ironworks Inc.
  • Wing Lok “Walter” Wong and his companies W. Wong Construction Co., Inc., Green Source Trading, LLC, and Alternate Choice, LLC

Additionally, before that legislation was introduced, Herrera in July 2020 brought debarment proceedings against AzulWorks, Inc., and its Chief Financial Officer and Vice President, Balmore Hernandez, after the investigation revealed he ran a bribery scheme with Nuru. AzulWorks then agreed to not seek any City contracts or grants while the criminal charges are pending.

Herrera issued more than a dozen subpoenas on February 27, 2020, seeking records related to Wong’s dealings with the City. Overall, Herrera has issued two dozen subpoenas in the investigation. By March 10, 2020, Herrera determined that Hui had, among other things, violated the Campaign and Governmental Conduct Code by accepting meals from Wong and the developer associated with the 555 Fulton Street project. Faced with evidence uncovered by the City Attorney, Hui resigned after Mayor Breed urged the Building Inspection Committee to remove him. Documents made public in the investigations of Nuru, Hui, and Kelly revealed that Wong’s connection to all three related back to his close relationship with former Mayor Ed Lee.

Since then, the City Attorney’s Office suspended Wong and several companies he controls.

The Controller’s Office has announced that it will issue reports on DBI’s permitting and inspection processes and the SFPUC’s contracting processes later this year. The Controller has already issued reports on:

Wong Settlement
Today’s comprehensive settlement requires Wong and his companies — W. Wong Construction Co., Inc.; Alternate Choice, LLC; Jaidin Consulting Group, LLC, and Jaidin International Ventures, LLC — to make taxpayers whole for $1.45 million that Wong or his companies received from the City through 10 different non-competitive procurements, including sole source and emergency contracts, purchase orders, and grants. These contracts and purchase orders were awarded to Wong in exchange for gifts he provided to the departments’ directors, Nuru and Kelly. They include emergency contracts awarded by Public Works to combat homelessness, a Community Challenge Grant to the Clean City Coalition that involved almost $100,000 in work by W. Wong Construction at Hallidie Plaza, purchase orders from the SFPUC for holiday lights, and a $15,000 award from the SFPUC back in 2013 for a pilot LED lights project. This is the same LED lights project at the center of the criminal charges against Kelly. As described in the Controller’s September 2020 report, the Clean City Coalition provided most of the money to the special events fund that Nuru controlled at the Parks Alliance.

The agreement also requires Wong and his companies to pay $317,650 in penalties and fees for 12 violations of the Campaign and Governmental Conduct Code for failing to disclose campaign contributions and contacts as a permit expediter. These penalties are the maximum amount authorized under the law and include penalties for the unlawful meals that Wong provided to Nuru and Hui related to development of the 555 Fulton project.

The settlement prohibits Wong and companies from doing business with the City for the maximum permitted period of five years. Under the terms of the settlement, Wong also agrees that he and his companies will not apply for any permit or license from the City on behalf of any client or customer for a period of five years. In addition, the settlement requires Wong to continue cooperating with the office’s ongoing public integrity investigation.

One million dollars of the total settlement amount will be received from funds seized in the federal criminal case against Wong. These funds will be released to the City when Wong is sentenced in the federal criminal case. The total settlement amount Wong owes under the agreement will be reduced by a credit of $387,000 for trash cans and related items received by the City but not yet paid for. The City will accept these items in exchange for a credit off the settlement amount. The trash can contract was awarded through a lawful, competitive process run by the Office of Contract Administration.

The settlement agreement needs Board of Supervisors approval to become final.

The settlement is the second one in this investigation to recover illicit gains for the benefit of taxpayers and rate payers. In March, Herrera reached a $100 million settlement with Recology to refund customers and lower refuse collection rates. The Board of Supervisors approved that settlement this month.

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.

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