High S. F. official tangled in probe
City administrator under scrutiny after spouse’s fall
The fraud case against San Francisco’s nowformer Public Utilities Commission chief Harlan Kelly may have serious implications for another highranking city official: his wife.
City Administrator Naomi Kelly, the most powerful unelected official in San Francisco government, attended a family vacation that federal investigators believe was intended as a bribe for Harlan Kelly, according to the criminal complaint against him released Monday.
But the documents also suggest Naomi Kelly may have misled FBI agents investigating the case about who paid for the trip, and how much it cost.
Naomi Kelly has not been charged with any crime in connection with the criminal complaint filed against her husband. But the allegations have raised questions about Naomi Kelly’s future with the city and have pulled her deeper into a farreaching City Hall corruption scandal that has forced the resignation of four other
department heads.
Beginning with the arrest of Public Works Director Mohammed Nuru, at least nine other people have now been charged with federal crimes for allegedly offering or receiving bribes in exchange for favorable treatment on city contracts.
Naomi Kelly was Nuru’s supervisor. The FBI arrested Nuru Jan. 21 and confronted him with corruption allegations. He agreed to cooperate with their investigation. Kelly turned him in to investigators after Nuru divulged his role in the probe to her.
Mayor London Breed said her office was “still reviewing the allegations” when asked about the Kellys during a news conference regarding the city’s response to the coronavirus pandemic.
“These are very serious charges,” Breed said.
“And while people, of course, are innocent until proven guilty in a court of law, the actions are deeply troubling. I said from the very beginning of this investigation we need to do everything we can to restore public trust,” she added. “We will continue to consult with the City Attorney’s Office about our steps forward.”
Naomi Kelly’s attorney, Martin Sabelli, did not respond to questions about the allegations Tuesday. Harlan Kelly is charged with one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison and a $ 250,000 fine. Harlan Kelly’s attorney said Monday that he intended to fight the case and believed it would end in a jury trial.
As city administrator, Naomi Kelly, who was appointed by former Mayor Ed Lee, is in charge of a sprawling city apparatus comprising more than two dozen city departments, around 2,700 city employees and a budget of $ 750 million.
The federal complaint against Harlan Kelly focuses heavily on a 2016 family vacation to China and Hong Kong, which happened at the same time permit consultant Walter Wong was bidding for a multimilliondollar contract with the SFPUC to upgrade San Francisco streetlights.
The Kellys, their two children and Harlan Kelly’s motherinlaw were on the vacation, as was Wong, according to the complaint. Investigators said Wong — who has pleaded guilty to conspiracies to commit honest services fraud and money laundering and has been cooperating with the government — told them he paid for expenses during the trip in exchange for Harlan Kelly’s help with his business ventures.
According to the complaint, Wong’s credit card charges during the trip included a $ 418 purchase from a jewelry company, a reported $ 615 meal for the Kellys and a $ 2,000 hotel bill that Wong said paid for three rooms: One for the Kellys, another for their children and Naomi Kelly’s mother, and a third for Wong.
Naomi Kelly told the agents that she paid Wong “a lot of money for the trip,” and brought additional cash to give to a political activist there, the complaint said.
However, a search of bank records revealed only one $ 500 withdrawal from the Kellys’ accounts in the weeks prior to the March 2016 trip, and a
$ 400 withdrawal from Naomi Kelly’s mother’s account, investigators said.
After reviewing bank records, investigators claim Harlan and Naomi Kelly paid just a fraction of what such an overseas trip would cost.
Federal officials also said the Kellys’ bank account included an unexplained cash deposit of $ 1,800 just weeks after the trip, an amount similar to the $ 1,706 the Kellys paid for airfare.
Wong told investigators it was common for him to have city officials buy their own airfare, and then reimburse them later to avoid a paper trail, according to the complaint.
Former federal prosecutor Tony Brass, who reviewed the complaint, said it’s possible the investigators could be eyeing Naomi Kelly for a charge of lying to the FBI or obstruction of justice.
Brass said it would be difficult for Naomi Kelly to make the case that she was unaware of her husband’s relationship with Wong, or that she trusted Harlan Kelly to reimburse him for the trip.
“She’s really not in a different position of her husband,” said Brass, who is now a criminal defense attorney.
“She’s benefiting. She understands the rules. She owes a duty to be on top of it,” Brass said. “Yeah, I see a problem.”
Naomi Kelly could also fall under the microscope of San Francisco’s Ethics Commission, whose duties include investigating allegations of impropriety among city staffers.
There are several state and local rules detailing what kinds of gifts public officials can receive and how they must disclose them.
For one, all of California’s public employees who make or influence government decisions are required to report nongovernment income, including investments or gifts, amounting to more than $ 50.
Naomi Kelly did not report the 2016 Asia trip in that year’s filing of California Form 700, a financial disclosure form. The only gift or income noted in this report was an April 2016 Women in Construction conference in Atlanta, in which Kelly either made a speech or was on a panel, and received $ 1,458.
Harlan Kelly also did not mention the trip on his Form 700 that year.
State law additionally restricts government officials from receiving gifts of more than $ 500 from a single source within a year. The city of San Francisco also prohibits public employees from receiving gifts worth $ 25 or more from any person doing business with that official’s department.
“The purposes of these rules are to make sure that city government is operating within the public’s interest, not in the interest of somebody who is paying to get special treatment,” said Pat Ford, senior policy and legislative affairs counsel at the San Francisco Ethics Commission. “By disclosing gifts, and limiting gifts, we help ensure that government officials are making decisions based on facts, not based on favors.”
Ford said commission officials could not confirm or deny the existence of any enforcement matter, and are bound by confidentiality. Documents may become public, however, when and if the matter is settled.