Federal Charges Against Former San Francisco PUC General Manager Expanded to Include Bank Fraud Conspiracy | USAO-NDCA
SAN FRANCISCO – A federal indictment filed today accuses Harlan Kelly, the former chief executive of the San Francisco Public Utilities Commission (PUC), and Victor Makras, a leading real estate investor in San Francisco, of bank fraud and conspiracy to commit bank fraud, said Acting United States Attorney Stephanie M. Hinds, Special Agent in Charge Craig D. Fair of the Federal Bureau of Investigation, and Special Agent in charge of Internal Revenue Service criminal investigations, Mark H. Pearson. The indictment also accuses honest services wire fraud and a conspiracy to commit honest services wire fraud as part of a bribery scheme that was first launched against Kelly in a federal complaint of November 2020. This complaint is superseded by today’s federal indictment.
Today’s indictment allege, like the November 2020 complaint, that Kelly, 59, engaged in a long-standing bribery program and a corrupt partnership with a person identified in the indictment as “entrepreneur # 1”. Kelly was appointed chief executive of the San Francisco PUC in 2012 and held that position until November 30, 2020, when he resigned after criminal charges were filed in the federal complaint. Contractor # 1 is an executive of a construction company in San Francisco and a permit shipping consultant who managed or controlled several entities doing business with the city of San Francisco. Today’s indictment alleges Kelly provided confidential internal documents and PUC information to Contractor # 1 to give him competitive advantages in public tenders. In return, Contractor # 1 provided Kelly with personal financial benefits, including discounted construction work on Kelly’s residence and international vacations for Kelly and her family which included Contractor # 1 paying the fees. hotel costs, hundreds of dollars for meals and jewelry.
The remaining allegations in the indictment, made public for the first time today, describe the conduct that led to the bank fraud and bank fraud conspiracy charges in the indictment against Kelly and Victor Makras . Makras, 63, who resides in San Francisco, is a San Francisco real estate broker and the director of Makras Real Estate. He also negotiated a consortium of individual real estate investors (referred to here as Makras Investors) who collectively made residential real estate loans secured by real estate in the San Francisco Bay area and real estate elsewhere. Makras has served on several commissions and boards of directors of public agencies in San Francisco, including the San Francisco PUC, the San Francisco Port Commission, and the San Francisco Employee Retirement System Board.
According to the indictment allegations, Kelly and Makras conspired to defraud Quicken Loans, the financial institution, in connection with a $ 1.3 million home loan to Kelly. The indictment describes that by soliciting the $ 1.3 million loan, Kelly and Makras represented to Quicken Loans a deceptively inflated amount of debt that Kelly owed on her existing home loan to Makras Investors. This deceptively inflated amount allowed Kelly to obtain an increased amount of loan funds from Quicken Loans and at a lower loan rate. The alleged plot also involved hiding Kelly’s other unpaid debts from Quicken Loans, including thousands of dollars owed to Contractor # 1 for major renovations to Kelly’s residence and a personal loan of $ 70,000. $ earlier agreed by Makras to Kelly. The scheme further included repaying Kelly’s undisclosed debts using the loan proceeds from Quicken Loans. The undisclosed debts were said to have been paid, with the help of Makras, in a method designed to disguise that the proceeds of the Quicken Loans loan were used to repay these other debts.
Kelly is out of custody and will appear on the indictment for the first time tomorrow, October 20, in federal court in San Francisco at 10:30 am before US trial judge Thomas S. Hixson.
Makras is out of custody and a date for his initial appearance on today’s indictment has yet to be set.
Kelly is charged with one count of honest service wire fraud and one count of conspiring to commit honest service wire fraud, in violation of 18 USC Â§Â§ 1343, 1346 and 1349. Upon conviction , each count carries a maximum penalty of 20 years. in jail and fined $ 250,000, or the greater of double the gross gain or gross loss. Kelly and Makras are both charged with one count of bank fraud and one count of conspiracy to commit bank fraud, in violation of 18 USC Â§Â§ 1344 (1), (2) and 1349. conviction, each count carries a maximum legal penalty. imprisonment for 30 years and a fine of $ 1,000,000, or not more than double the gross gain or gross loss. However, any sentence following a conviction would only be imposed by the court after reviewing the United States Sentencing Guidelines and Federal Sentencing Law, 18 USC Â§ 3553.
The charges contained in the indictment are mere allegations. As in any criminal case, the accused is presumed innocent unless and until his guilt has been proven by a court.
This case is part of a larger federal investigation targeting public corruption in the city and county of San Francisco. To date, twelve people have been indicted, including two senior officials from San Francisco, Mohammed Nuru and Harlan Kelly. Several entrepreneurs and city facilitators have been charged. According to the charges previously brought against Mohammed Nuru and others, Nuru allegedly took hundreds of thousands of dollars in cash bribes, meals and work in his vacation home from contractors who won government contracts. in San Francisco.
The case is being pursued by the Corporate and Securities Fraud Team of the US Attorney’s Office. The case is under investigation by the FBI and the Internal Revenue Service-Criminal Investigation (IRS-CI).