Developer named:
Chinese real estate executive wooed S.F. public works official, source says
Chinese firm allegedly wooed Mohammed Nuru with lavish gifts.
The billionaire Chinese real estate developer who allegedly provided San Francisco Public Works Director Mohammed Nuru with lavish hotel stays and a $2,070 bottle of wine is chief executive of R&F Properties, one of the world’s biggest luxury hotel owners, according to a source with direct knowledge of the matter.
The Chronicle is not naming the source, who wasn’t authorized to speak publicly, in accordance with its policy.
R&F Properties CEO and cochairman Zhang Li allegedly gave Nuru accommodations and gifts in exchange for help obtaining permits for a delayed San Francisco condo and retail project, the source said.
Nuru and restaurateur Nick Bovis, owner of Lefty O’Doul’s, were charged with wire fraud in connection with schemes that involved trying to exchange cash and gifts for contracts at SFO and the Transbay transit center.
Zhang isn’t identified in a federal complaint unsealed Monday, and he isn’t charged with a crime.
R&F Holdings, headquartered in Guangzhou, didn’t respond to emails seeking comment. A call to its U.S. affiliate, Z&L Properties, which is headquartered in Foster City, was not immediately returned. The FBI, which investigated Nuru, said it would not comment on anyone not identified in the complaint.
Zhang founded R&F with chairman Li Sze Lim in 1994. It has grown to become one of China’s largest developers with property worth more than $11.5 billion, according to its website. Zhang has a net worth around $3 billion, according to Forbes.
Its U.S. affiliate, Z&L Properties, went on a buying spree in 2014 and 2015. It acquired land in San Francisco, Fremont, Santa Clara, San Jose and Los Angeles, where it planned to build a total of 3,400 housing units.
It soon ran into trouble. The San Francisco condo project described in the federal complaint matches Z&L’s 555 Fulton St. in Hayes Valley. Construction has stretched over five years amid numerous delays and lawsuits. A grocery store, New Seasons Market, scrapped a plan to lease the project’s retail space, and condo buyers pulled out because of delays.
“There’s an issue with the glass ... some detail that they were concerned about that was not safe or something,” Nuru allegedly said about the project to a public works employee in October 2018, according to the complaint. Court records show that problems with 555 Fulton’s curtain wall, which includes glass, were cited in a lawsuit between glass contractors.
“The windows were made in Mexico and there’s some kind of defect,” Nuru said a month later to his unidentified girlfriend, according to the complaint. He later checked on the project’s status with city officials, according to the complaint.
Nuru told his girlfriend that the developer did not give him and his companions cash, but was “hooking us up” with hotel rooms and gifts, according to the complaint.
“They give us good rooms and good service,” he said, including stays at Conrad and Park Hyatt hotels, which match brands under which R&F operates hotels.
In October 2018, the month he allegedly stayed in the hotels, Nuru posted photos on Twitter from Guangzhou, where R&F is headquartered.
Nuru also allegedly visited hot springs owned by the developer, who gave him a tour.
“We told him we were going to this little hot spring town where they have these hot springs and stuff . ... And he’s like ‘No, you’re going to my hot spring,’ ” Nuru told his girlfriend, adding that he was surprised by the developer’s security entourage.
“It was almost a little scary,” Nuru said of the hot springs resort. “They had guards outside our hotel room.”
R&F owns a Garden Hotspring Resort in Longmen County, about a twohour drive from Guangzhou.
“They have like a whole community center and basketball courts, swimming pools, yoga . ... Yeah, he owns the whole, the whole spa and the hotel,” Nuru said.
Nuru said the developer owns 105 fivestar hotels in China. That number roughly matches with R&F’s global portfolio of 111 hotels as of 2017. That year, R&F bought 77 luxury hotels from another Chinese company, Dalian Wanda, for around $2.9 billion, a roughly 40% discount, Reuters reported at the time. The deal made R&F the world’s biggest luxury hotel owner at that time.
The wire fraud charges allege that Nuru tied the developer’s gifts to help getting the condo project completed, and that Nuru didn’t disclose any of the gifts as required by law. It isn’t clear if Nuru influenced the permitting process.
“Thank you very much for all your generosity while we were in China,” Nuru allegedly wrote to the developer in November 2018 through WeChat, a popular messaging service. “We had a great vacation and my daughter had a wonderful time. I will do my very best to see that your project gets completed. Look forward to seeing you in San Francisco when you come.”
“You’re welcome and thank you so much. Looking forward to seeing you in San Francisco,” the developer allegedly wrote back the next day.
Nuru allegedly told his girlfriend the developer is “a very nice guy. We’re helping him, I’m helping him with a project here, San Francisco. So whenever he comes, I always go to see him.”
While Nuru allegedly tried to smooth Zang’s relationships with the city’s bureaucracy, the interactions between the neighbors and Z&L over the 555 Fulton project were fraught.
Hayes Valley resident Jim Warshall said residents have “had the most frustrating relationship with Zhang” related to the 555 Fulton project.
“All we got was these underlings who always said they would have to check with the chairman before answering any of our questions,” he said. “Obviously there was a massive cultural disconnect between here and the environment he is used to. It’s not surprising that he would go to a fixer and try to spread some money around if that is how he is used to doing things.”
Still, Hayes Valley residents are eager to see the building occupied and a Trader Joe’s grocery store open in the retail space, but it’s unclear when that will happen.
Z&L, also known as Full Power Properties LLC, has also faced turmoil at its Silvery Towers project in San Jose. In 2018, the company paid $250,000 to settle labor violations after workers were forced to work without pay and live in “squalid conditions,” according to the U.S. Department of Labor.
Z&L is also trying to sell two other San Jose projects after failing to meet city development milestones, Mingtiandi reported.
Those stumbles don’t appear to have affected Zhang’s fortune.
Nuru said he dined with the developer alongside the vice president of an unidentified country in a mansion in China that resembled the White House, filled with art.
Nuru also drank 50yearold Maotai, a Chinese liquor, worth $10,000 a bottle, and a bottle of French wine worth $2,070 at the house.
“His house is just like a museum,” Nuru told his girlfriend, according to the complaint. “He gave us some stone. I don’t know how much they’re worth.”
Sam Francisco Chronicle staff writer Evan Sernoffsky contributed to this report.