Debarment proceedings will prevent City contracts from going to executives who pled guilty to bribing former Public Works Director Nuru
SAN FRANCISCO (March 22, 2023) — City Attorney David Chiu announced today that he initiated debarment proceedings against Alan Varela, William Gilmartin, ProVen Management Inc., and affiliated companies to prohibit them from bidding on or being awarded contracts with the City and County of San Francisco. Varela and Gilmartin bribed former Public Works Director Mohammed Nuru and have both pleaded guilty to conspiracy to commit honest services wire fraud. Alan Varela, William Gilmartin, ProVen Management Inc. have been suspended since March 21, 2021.
Now City Attorney Chiu is seeking debarment orders and has issued suspension orders against four additional affiliated companies—Baylands Soil Processing, LLC, Comsa Emte USA Inc., Egbert Enterprises, LLC, and Proven Comsa JV.
“Our public integrity work has exposed a web of corrupt actors trying to cheat the system and undermine our contracting process at the expense of taxpayers,” said City Attorney David Chiu. “I want to make it clear that this behavior will not be tolerated in San Francisco. We will make sure all City contractors play by the rules or they won’t be allowed to play at all.”
Debarment is an administrative enforcement procedure that authorizes the City to ban contractors from applying for or receiving City contracts for up to five years. It can be a lengthy process that sometimes requires an administrative hearing before contractors accused of misconduct are prohibited from receiving City funds. In 2020, the Mayor and Board of Supervisors passed legislation introduced by former City Attorney Dennis Herrera to allow the City to suspend contractors accused of misconduct in a separate proceeding, such as a criminal case. Suspension immediately bars the Contractors from receiving City funds while the separate proceeding is resolved. The City Attorney’s Office used this new public integrity tool to suspend Alan Varela, William Gilmartin, and ProVen Management Inc. prior to seeking debarment.
Alan Varela and William Gilmartin were President and Vice President of ProVen Management Inc., respectively. Over the years, ProVen received a number of public contracts from the City. FBI agents reviewed multiple communications regarding a scheme by Varela and Gilmartin to win public contracts through the Department of Public Works to operate an asphalt plant on land owned by the Port of San Francisco. Varela and Gilmartin paid for expensive dinners for Nuru and arranged to purchase a tractor and other items worth $40,000 for Nuru’s ranch. In 2021, both Varela and Gilmartin pleaded guilty to conspiracy to commit honest services wire fraud. Varela was sentenced to two years in federal prison; Gilmartin has not yet been sentenced.
The debarment proceedings stem from the joint public integrity investigation launched by the City Attorney and Controller in January 2020 shortly after federal prosecutors criminally charged former Public Works Director Mohammed Nuru. The investigation has examined a variety of potential legal or policy violations, including improper gifts to City employees and allegations that companies with City contracts funneled money through nonprofits to fund City programs and events. The City Attorney’s Office issued over two dozen subpoenas to various companies and nonprofits as part of the investigation.
Nuru left City employment after federal prosecutors filed charges against him, pled guilty to honest services wire fraud, and was sentenced to seven years in federal prison. Several other high-ranking City employees have subsequently resigned, including then-Department of Building Inspection Director Tom Hui. 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 permit expediter Walter Wong, and abused his official position to help his son and his son’s girlfriend obtain City jobs. Tom Hui has not been charged with a crime.
In June 2020, 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. Former Public Utilities Commission Director Harlan Kelly resigned in November 2020 after federal prosecutors charged him with fraud. His wife, then-City Administrator Naomi Kelly, resigned in January 2021. Naomi Kelly has not been charged with a crime.
Former Director of the Department of the Environment Debbie Raphael resigned in 2022 after an investigation revealed she had solicited donations from garbage company Recology while awarding the company a lucrative contract. Debbie Raphael has not been charged with a crime. Last month, Raphael agreed to pay $4,000 in ethics penalties stemming from gifts she accepted from Recology and a nonprofit that raised money for her department.
The City Attorney’s Office uncovered overcharges by Recology and secured a settlement worth more than $100 million that reimbursed ratepayers and lowered rates. Federal prosecutors filed criminal charges against Recology and two of its executives for bribing Nuru. Former Recology executive Paul Giusti pleaded guilty to conspiring to bribe Nuru, and the former Vice President of Recology, John Porter, is expected to be tried in federal court next month.
As a part of the public integrity investigation, the City Attorney previously brought debarment proceedings against AzulWorks, Inc., and its Chief Financial Officer and Vice President, Balmore Hernandez.
Wing Lok “Walter” Wong and his companies W. Wong Construction Co., Inc., Green Source Trading, LLC, and Alternate Choice, LLC were barred from doing business with the City for five years as part of a negotiated settlement with the City worth $1.7 million.
The City Attorney also issued the suspension orders against:
- Nick James Bovis and his company SMTM Technology, LLC
- Florence Kong and her companies SFR Recovery Inc. and Kwan Wo Ironworks Inc.
The counts and allegations in the debarment request against ProVen and affiliates can be found here.