Herrera Sues Former City Workers, Contractor in Scrap Metal Theft and Kickback Schemes

Betrayal of Public Trust by City Vendor, Employees ‘Demands Our Most Aggressive Efforts to Pursue and Punish’

SAN FRANCISCO (Nov. 24, 2008) — City Attorney Dennis Herrera today filed suit against two former employees of the San Francisco Public Utilities Commission and a onetime city contractor involved in a kickback scheme made public following the contractor’s indictment on federal charges earlier this year. Sheldon A. Morris, owner and operator of a Novato, Calif.-based plumbing business called Underground Express, in July pleaded guilty in U.S. District Court in Sacramento to making unlawful bribes to municipal employees of both Sacramento and Sonoma. At the time, Morris additionally admitted to bribing two San Francisco city employees in exchange for preferential treatment for his business.

According to the 17-page complaint filed in San Francisco Superior Court this morning, Alexander A. Deanda and Gerald T. Lyons, both formerly employed by the SFPUC’s Water Enterprise, abused their city purchasing authority to steer hundreds of thousands of dollars for supplies and services to Morris in exchange for illicit kickbacks. A separate allegation details a scheme in which Deanda sold nearly five-thousand pounds of brass plumbing parts belonging to the city to Morris in exchange for personal payment.

“Public employment is a public trust, and its betrayal demands our most aggressive efforts to pursue and punish,” Herrera said. “Corruption by city employees and vendors exacts a price larger than just tangible costs; it risks diminishing people’s faith in their civic institutions. I am very grateful to share that view with San Francisco PUC General Manager Ed Harrington and his staff, and I thank them for their unwavering assistance in our investigation and lawsuit. Together, we are working to ensure that there is no profit to be made from fraudulent practices in San Francisco.”

“These former employees have violated the public trust at the expense of our ratepayers and I’m grateful for the City Attorney’s thorough investigation,” said SFPUC General Manager Ed Harrington.

Herrera’s civil suit charges all three defendants with fraud, deceit, negligence, conversion and violations of the California Political Reform Act, Conflict of Interest Law and Unfair Competition Law, and the San Francisco Campaign and Governmental Conduct Code. Deanda and Morris are separately charged with violations of the California False Claims Act for arranging the illicit sale of brass fixtures. Morris is additionally charged as a city contractor with breach of covenant of good faith and fair dealing. The civil action, on behalf of the City and the People of California – and in Herrera’s capacity as enforcer of California’s and San Francisco’s anti-corruption laws – seeks damages, penalties, attorneys’ fees and costs in an amount to be determined at trial.

Herrera’s complaint alleges that Deanda, who headed the Water Meter Shop of the Central Distribution Division of the SFPUC’s Water Enterprise, had been receving kickbacks totaling more than $13,000 since at least 2002. In exchange, Deanda directly authorized City purchases from Morris amounting to more than $140,000. Deanda is additionally charged with influencing City purchases of supplies and services from Morris amounting to more than $93,000. The complaint describes another scheme in which Deanda secretly sold Morris 4,926 pounds of valuable brass scrap metal belonging to the City in late December 2005 in exchange for payment.

As the manager of Construction and Maintenance for the Central Distribution Division of the Water Enterprise, Lyons supervised more than 100 employees and also held city authority to purchase goods and services. The civil complaint charges Lyons with abusing that trust by steering purchases to Morris and his company in return for kickbacks totaling at least $4,575 since 2003. Lyons is alleged to have directly authorized purchases from Morris in an amount of more than $57,000, and to have influenced additional purchases from Morris totaling nearly $176,000.

City officials discovered and investigated these abuses after Morris’s plea agreement was announced on July 25, 2008 by U.S. Attorney McGregor W. Scott and FBI Special Agent-in-Charge Drew Parenti in the matter of United States of America v. Sheldon Morris, (Case No. 08-340 GEB, U.S. District Court for the Eastern District of California). The City’s case is City and County of San Francisco, et al. v. Alexander A. Deanda et al., San Francisco Superior Court No. 482-183, filed Nov. 24, 2008.

A copy of the complaint together with its accompanying news release is available online here:

http://www.sfgov.org/site/uploadedfiles/cityattorney/UNDEXPRESS.PDF

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