Pair accused of embezzling $1.4M in alleged San Mateo Event Center kickback scheme

Two men have been indicted on embezzlement, bribery and other charges in connection with an alleged kickback scheme involving construction at the San Mateo County Event Center, prosecutors said.

According to District Attorney Steve Wagstaffe's office, 55-year-old James Cunningham Mercurio of Vacaville and 66-year-old Michael Joseph McClennan of Los Altos appeared in court on Monday. The pair have been charged with misappropriation, embezzlement and 40 counts of commercial bribery.

In March 2024, Mercurio was hired by the Event Center as a construction project manager to oversee three construction projects. Prosecutors said each project was partially funded by $1 million each in county tax dollars.

The DA's office said Mercurio directed construction projects to McClennan, his childhood friend. McClennan allegedly gave a portion of the contract money back to Mercurio in a kickback scheme.

About $1.4 million was embezzled in the scheme, according to prosecutors.

The county found out about alleged scheme after one of the construction companies reported that it was not getting paid. Both Mercurio and McClennan were arrested after a grand jury returned an indictment following an investigation.

At Monday's hearing, attorneys for Mercurio and McClennan requested lower bail for their clients, while the prosecution argued their $750,000 bail remain the same due to the seriousness of the alleged offenses. The judge denied the defense request and both men remain in custody at the San Mateo County Jail.

A hearing to set pretrial conference and jury trial dates has been scheduled for Nov. 16.