SAN FRANCISCO (CBS SF) -- Harlan Kelly Jr., the General Manager of the San Francisco Public Utilities Commission (SF PUC), is facing federal fraud charges following a reported raid at his home Monday.
The FBI reportedly raided Kelly's home on the same day authorities announced Monday he had been charged in a federal criminal complaint with honest services wire fraud. Following the charges, Kelly resigned from his post.
"The allegations detailed in the Federal Investigation conducted by the US Attorney's Office are disturbing and unacceptable for anyone serving in our government, let alone the leader of one of our largest departments," said San Francisco Mayor London Breed in a preparted statement. "As public officials, we have to hold ourselves to the highest standard and put the public good before all else. As I've said from the beginning, any City employee involved in issues related to this investigation needs to cooperate and come forward with any information."
According to a press release from U.S. Attorney for the Northern District of California David Anderson, the 58-year-old Kelly engaged in a long-running bribery scheme and corrupt partnership with San Francisco construction executive and permit expediting consultant Walter Wong.
Wong is among nine people charged in a corruption scandal allegedly involving the former head of the city's Department of Public Works, Mohammed Nuru. Wong and a number of other defendants have pleaded guilty and are cooperating in the case against Nuru.
The complaint against Kelly alleges that Wong provided Kelly with bribes in exchange for official acts by Kelly that benefited or attempted to benefit Wong's business ventures.
"The allegations against Harlan Kelly and the nine other individuals charged in this case are extremely troubling. The citizens of San Francisco deserve nothing less than transparency, honesty, and integrity from their city officials. However, through the course of this ongoing investigation, the FBI has uncovered a pattern of criminal activity committed by those in positions of trust," said FBI Special Agent in Charge Craig D. Fair in a prepared statement. "The FBI is surging our resources in this investigation, and we urge anyone with information on this matter, or any other suspected public corruption, to come forward and contact the FBI."
According to the complaint, Wong paid for multiple international trips for Kelly and his family members, along with expenses such as meals and jewelry purchases. One such family trip in happened in 2016, which included City Administrator Naomi Kelly, who is married to Harlan Kelly, prosecutors said.
Wong or Wong's employees also allegedly provided Kelly with free meals and personal car services, and the two developed a system of coded text messages to mask their communications.
During the same time, Wong was seeking a contract from the SF PUC for Green Source Trading, LLC - a firm controlled by Wong's son - to convert San Francisco street lights to smart LED technology, according to the complaint. Wong, who provided information to prosecutors as part of his guilty plea on fraud and money laundering charges, indicated he gave Kelly benefits with the expectation Kelly would use his official position to help Wong win the streetlights bid and help his other business ventures as well.
Kelly is alleged to have provided Wong with confidential information about the bid process, along with engineering a delay in the process to benefit Wong. Ultimately, Wong ended up withdrawing the bid because of multiple contract changes, according to the complaint.
In a statement, Kelly disputed the charges against him.
"I am not guilty of these charges," said Kelly. "I have devoted my entire career to public service. As many of my colleagues at the San Francisco Public Utilities Commission are aware, I had intended to retire in the next 18 months. Unfortunately, I need to leave my position now in order to defend myself, my legacy and my family."
Kelly, who was appointed as the SF PUC general manager by Mayor Ed Lee in 2012, was charged with one count of honest services wire fraud. He is out of custody and was scheduled for an initial appearance in federal court in San Francisco on December 8.
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