'This Is Money Laundering 101'; More People Charged In Widening SF Public Corruption Probe
SAN FRANCISCO (CBS SF) -- Three defendants in San Francisco's public corruption scandal -- Sandra Zuniga, Balmore Hernandez and Florence Kong -- were charged Monday with a variety of federal crimes including money laundering, bribery and making false statements to investigators all stemming from a probe of former San Francisco Public Works Chief Mohammed Nuru.
The charges were announced in a joint statement by U.S. Attorney Dave Anderson, FBI Special Agent in Charge John F. Bennett of the San Francisco Division and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Kareem Carter.
Federal officials described Zuniga as San Francisco's Fix-It Director and Director of the Mayor's Office of Neighborhood Services. Hernandez is CEO and VP San Francisco-based construction engineering firm AzulWorks, Inc. While Kong is a San Francisco-based construction company owner.
The three complaints unsealed Monday provide numerous details of the charges leveled in the complaint against Nuru as well as a description of additional crimes that allegedly were committed.
Nuru was charged by criminal complaint for an alleged scheme to bribe a San Francisco Airport commissioner. The complaint against Nuru also alleged he engaged in several additional schemes, including obtaining free and discounted labor and construction equipment from contractors to help him build a personal vacation home in Stonyford, Calif., while those contractors were also engaging in business with the city.
"The federal investigation into city hall corruption has not been sidetracked by COVID-19 or other recent traumatic events," Anderson said in a news release. "Today's criminal complaints will not be the last. To everyone with a piece of this corruption, again I urge you to help make things right for San Francisco. Run, don't walk to the FBI, before it is too late for you to cooperate."
Carter called the details unfolding during investigation as a classic case of money laundering.
"This is Money Laundering 101," Carter said in a news release. "Ms. Zuniga deposited cash and checks from Mr. Nuru into her checking account then turned around and wrote checks to him and paid the mortgage and contracting work on his vacation property. The charges filed in this case should send a clear message that those involved in these types of schemes will be held accountable for their crimes."
The complaint alleges that Zuniga both knew about and benefited from Nuru's schemes. In addition, the complaint alleges Zuniga conspired for years with Nuru to launder the proceeds of his honest services wire fraud.
It also characterizes her as Nuru's longtime romantic partner and he allegedly described to her some of the illegal actions he took in his official position.
For example, prosecutors said, Nuru allegedly described to Zuniga the actions he took to benefit a billionaire in China who was developing a large multi-million dollar mixed-use project in San Francisco, in exchange for travel and lodging, high-end liquor, and other gifts and benefits.
The complaint against Zuniga also charges that she laundered proceeds from Nuru's schemes in a variety of transactions over a period of several years. The complaint points out that from March 2014 to January 2020, Zuniga made over $135,000 in cash deposits, on top of her city paycheck.
She also deposited over $8,000 in checks from associates of Nuru. During the same period, she then engaged in a variety of transactions that benefited Nuru. For example, for more than three years, Zuniga paid the monthly mortgage on a portion of Nuru's Colusa County vacation home.
She allegedly did so by depositing approximately $1,000 in cash into her checking account almost every month, and then immediately writing a check for $1,000 to Nuru's lender.
The charging documents also detailed other alleged incidents of money laundering. The complaint against Zuniga describes how she benefited from some of Nuru's schemes.
For example, prosecutors said, Zuniga traveled with Nuru on a lavish two-week trip to South America in fall 2018, complete with business class flights and a stay at the Ritz-Carlton in Santiago, Chile, all paid for, or heavily subsidized by, a contractor doing business with the City.
The criminal complaint filed against Hernandez describes how he used his relationship with Nuru to obtain advantages with the city for his construction engineering firm.
Specifically, the complaint alleges that Hernandez established a continuing course of conduct in which tens of thousands of dollars in labor and materials were provided to Nuru in exchange for his assistance with public contracts and city approvals. In addition, the complaint alleges Hernandez sought Nuru's assistance to obtain a long term supply contract and lease agreement with the city to operate an asphalt plant on land owned by the Port of San Francisco.
According to the complaint against Hernandez, Nuru owned two adjacent 10-acre parcels of land in Stonyford on which Hernandez built a home and made other improvements.
Hernandez and Nuru referred to the property as "the ranch." Between late 2016 and the end of 2018, Hernandez allegedly supplied in excess of $250,000 in labor and materials to help Nuru build the home and make related improvements on the ranch.
For example, prosecutor said, the complaint described how Hernandez supplied Nuru with more than $50,000 worth of tile and stone for the vacation home and then asked Nuru for help saving AzulWorks' bid for a multi-million dollar project for which it had submitted an unqualified proposal.
AzulWorks ultimately won that contract and, based on publicly available data, received more than $1.9 million from the city in connection with the project.
The complaint also described how Hernandez sought help from Nuru so that he could appeal an adverse DPW order preventing Hernandez's company from removing trees at a job site on Van Ness Ave.
With respect to Kong, the complaint filed against her charges that she lied to FBI investigators during the probe of Nuru's schemes.
Kong owns two companies that do business with San Francisco: a construction company called Kwan Wo Ironworks and a construction debris recycling company called SFR Recovery Inc.
The complaint describes recorded calls in which Kong sought to obtain business for her companies from DPW. In addition, the complaint alleges that Kong provided Nuru with cash, a Rolex watch worth more than $40,000, expensive meals, and the installation of a gate for his vacation home.
Nevertheless, according to the complaint, Kong denied ever discussing business with Nuru. Kong also claimed that Nuru never helped her to obtain contracts with the city -- this despite the fact that intercepted calls demonstrate that Nuru helped her with construction contracts for city facilities.
Zuniga is charged with one count of conspiracy to launder money. If convicted, she faces a maximum statutory penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transactions, or both.
Hernandez is charged with bribery. If convicted, the maximum statutory penalty is 10 years in prison and a fine of $250,000.
Kong is charged with making false statements. If convicted, the maximum statutory penalty is five years in prison and a fine of $250,000.
Kong and Hernandez made their initial appearances in federal court Monday before U.S. Magistrate Judge Laurel Beeler.
