The suspensions are the first to be brought under new legislation that Herrera introduced
SAN FRANCISCO (March 1, 2021) — City Attorney Dennis Herrera announced today that he has issued four suspension orders that prohibit five executives and the companies they control from doing business with the City and County of San Francisco. The suspensions mark the first time the City has employed this newly created anti-corruption tool.
“Now we have another tool to keep government clean, and we’re going to use it,” Herrera said. “Corruption will not be tolerated in our city. Crooked public officials or people who seek to bribe their way into City contracts fail our residents, erode public trust and undermine the exceptional work done by thousands of San Francisco public servants every day. If there is enough evidence to charge someone with a crime, they should not be receiving City grants or contracts while their case is being decided. It’s that simple. This will help ensure that contractors have a level playing field, the public benefits from qualified companies, and those who try to cheat the system don’t profit.”
The now-suspended City contractors and their companies were implicated in the public corruption investigation of former Public Works Director Mohammed Nuru and former Public Utilities Commission General Manager Harlan Kelly. The suspension orders prevent the contractors from seeking or receiving any contracts or grants, directly or indirectly, from San Francisco while their criminal cases are being decided or as the long-term process to formally prohibit them from receiving City contracts or grants, known as debarment, is underway.
Herrera issued the suspension orders against:
- Nick James Bovis and his company SMTM Technology, LLC
- Alan Varela and William Gilmartin and their company ProVen Management Inc.
- Florence Kong and her companies SFR Recovery Inc. and Kwan Wo Ironworks Inc.
- Wing Lok “Walter” Wong and his companies W. Wong Construction Co., Inc., Green Source Trading, LLC, and Alternate Choice, LLC
The suspension orders are the first of their kind. The ability to issue suspension orders was created by legislation that Herrera introduced in August at the Board of Supervisors. The legislation, approved by the board and signed by Mayor London Breed in November, allows contractors charged criminally, civilly, or administratively to be suspended from receiving public funds while the case against them is being decided. The legislation took effect Dec. 25, 2020. Prior to that, the City did not have a tool to block contractors suspected of wrongdoing from bidding on or receiving City contracts while their case was being decided, which can take months or years.
All of the individuals Herrera issued suspension orders against today were charged criminally by the U.S. Attorney’s Office as part of the Nuru and Kelly investigations.
The ability to suspend a contractor provides the City with an additional option to the pre-existing debarment process, which is an administrative enforcement procedure that authorizes the City to ban contractors from applying for or receiving City contracts for up to five years for willful misconduct.
Debarment, though, is a lengthy process with a high legal threshold and sometimes requires a criminal conviction. Suspension allows for suspect contractors to be blocked from City contracts and grants while the debarment process unfolds.
According to federal court filings, Bovis allegedly participated in a scheme to win a bid for a restaurant lease at San Francisco International Airport by attempting to bribe and/or pay a kickback to a member of the San Francisco Airport Commission. In connection with that, Bovis allegedly participated in a scheme to offer $5,000 to an Airport Commissioner. Also, in connection with the charged scheme, Nuru assisted Bovis in successfully obtaining contracts with San Francisco for the purchase of portable bathroom trailers, and in an unsuccessful attempt to obtain contracts for homeless shelters. SMTM Technology, LLC, Nick Bovis’ company, received a contract to provide portable toilets as a result of this scheme.
Alan Varela was President of ProVen Management Inc. and William Gilmartin was Vice President of the company at the time they were charged criminally. FBI agents intercepted and/or reviewed multiple communications regarding a scheme to win contracts through the Department of Public Works to operate an asphalt plant on land owned by the Port of San Francisco — an effort that lasted years and was still ongoing until Nuru’s arrest in January 2020. The scheme involved attempts to obtain the contract for ProVen Management Inc. Gilmartin paid for extravagant dinners for Nuru and appears to have subsidized material for Nuru’s ranch. On or about February 19, 2019, as part of the bribery scheme, Varela and Gilmartin arranged to purchase and deliver to Nuru a tractor and attachments valued at approximately $40,000.
Federal court filings allege Kong was providing gifts to Nuru in exchange for Nuru helping her companies obtain and increase their business with the City. The FBI reviewed emails between Nuru and Kong relating to permitting at SFR Recovery’s solid waste and construction debris recycling facility, the volume of business DPW was giving to SFR Recovery, and Florence Kong’s efforts to win subcontracts for her company, Kwan Wo Ironworks, including a City contract for the San Francisco Animal Care and Control Facility.
During the time period in which Kong was seeking and obtaining help from Nuru in getting City contracts, she gave Nuru $3,000 to $4,000 in cash, installed a gate at Nuru’s vacation home which he did not pay for, bought thousands of dollars of meals for Nuru, and gave him a Rolex watch that cost about $41,000.
A federal affidavit charging Harlan Kelly with fraud alleges that Wong paid for multiple international trips, meals and personal car service for Kelly. Wong was at that time attempting to win a multi-million-dollar contract to provide a “smart” LED lighting system, through a contract through Green Source Trading, LLC.
If the allegations are true, Wong and Kelly engaged in an ongoing bribery scheme in which Kelly received gifts in exchange for assistance to Wong’s companies. The federal charges against Kong, Varela, and Gilmartin allege that Nuru also received gifts from these contractors in exchange for official acts in his capacity as Director of Public Works.
It was unlawful for either Nuru or Harlan Kelly to accept any gift worth more than $25 from them.
Herrera launched a public corruption investigation in January 2020 shortly before federal prosecutors announced charges against former Public Works Director Mohammed Nuru. The sweeping investigation, which the City Attorney’s Office is conducting in partnership with the Controller’s Office, is still in progress. The City Attorney and the Controller are investigating a variety of potential legal or policy violations. Areas of investigative focus include alleged improper gifts to City officials or employees and allegations that companies with City contracts funneled money through nonprofits to fund City programs and events, like Public Works holiday parties. The City Attorney’s Office has issued 24 subpoenas to various companies and nonprofits as part of the investigation.
Aside from Nuru, who was forced out after federal prosecutors filed charges against him, the investigation led then-Department of Building Inspection Director Tom Hui to resign in March. Both Nuru and Hui resigned while under investigation. Evidence uncovered by the City Attorney’s Office showed Hui had accepted improper gifts, violated City law by giving preferential treatment to a developer and to Wong, and abused his official position to help his son and his son’s girlfriend obtain City jobs. Federal prosecutors have not charged Hui with a crime.
In June, Former Fix-It Team Director Sandra Zuniga was charged with money laundering in connection with the bribery scandal. She was subsequently fired based on misconduct uncovered in the City Attorney’s administrative investigation.
In July, Herrera initiated debarment proceedings against AzulWorks, Inc., and its Chief Financial Officer and Vice President, Balmore Hernandez, after the investigation revealed the contractor was running a bribery scheme with Nuru. AzulWorks than agreed to not seek any City contracts or grants while the criminal charges are pending.
Harlan Kelly resigned in November after federal prosecutors charged him with fraud in connection with the bribery scandal. His wife, then-City Administrator Naomi Kelly, resigned in January. Naomi Kelly has not been charged with a crime.
- Suspension Order Bovis
- Suspension Order Varela and Gilmartin
- Suspension Order Kong
- Suspension Order Wong
To report suspected public integrity abuses regarding this investigation, please contact the Public Integrity Tip Line. You can provide information via e-mail at firstname.lastname@example.org or by phone at (415) 554-7657. All tips may be submitted anonymously and will remain confidential. Information regarding City payments, searchable by department and vendor, are available on the Controller’s public transparency website at openbook.sfgov.org. As always, any member of the public may file any allegation of improper or illegal public activity with the City’s Whistleblower Program at sfcontroller.org/whistleblower-program. That program, administered by the Controller’s Office, often partners with the City Attorney’s Office on investigations.
# # #