Former SFPUC chief Harlan Kelly faces new fraud charges with real estate broker Victor Makras

The intricate and long-running case has upended several top leaders at San Francisco City Hall, including Kelly and his wife, Naomi Kelly, who resigned as city administrator earlier this year but has not been charged with a crime. It all stems from the January 2020 arrest of former Public Works Director Mohammed Nuru, who was charged with fraud in connection with a failed attempt to bribe an airport commissioner.

Tuesday’s indictment lays out the bribery allegations and Kelly’s long-running “corrupt partnership” with a person identified as “Contractor #1,” an executive of a San Francisco construction company and permitting expediter, who ran or controlled multiple entities doing business with the city. According to the prosecutors, Kelly, 59, supplied this contractor with confidential internal documents from the Public Utilities Commission, in exchange for an international vacation, discounted construction work on his home and other gifts.

The allegations against Contractor #1 nearly perfectly mirror the charges previously levied against Walter Wong, a permit expediter and construction firm executive who has pleaded guilty to conspiracies to commit honest services fraud and money laundering. Wong has agreed to cooperate with federal investigators, and has told officials that he facilitated a trip to China for Kelly and his wife.

Harlan Kelly’s attorney has also confirmed previously that Wong performed construction on his home.

The new indictment supersedes a federal complaint filed in November 2020, which first detailed the alleged bribery scheme, and named Wong as the contractor.

It also describes a new set of allegations against Kelly and Makras, 63, saying they conspired to defraud the mortgage lender Quicken Loans in a $1.3 million real estate loan to Kelly. Seeking to get more funds at a lower rate, Kelly and Makras allegedly falsely inflated the amount of debt that Kelly owed to Makras’ real estate investment firm, according to the indictment.

Kelly allegedly concealed other outstanding debts, including thousands of dollars for a home remodel and a $70,000 personal loan from Makras. Federal prosecutors allege that Kelly and Makras surreptitiously repaid those debts with the funding from Quicken Loans.

Brian Getz, an attorney representing Kelly, praised the former Public Utilities Commission general manager for his “stellar career in public service,” saying that he is respected by peers and loved by his family, and that since retiring from the city, he has continued his engineering career in the private sector.

“He is a trusted consultant involved in important Bay Area projects,” Getz said. “We look forward to a public resolution of these charges, which will show that no crimes have been committed.”

Makras was not immediately available for comment Tuesday evening.

Rachel Swan is a San Francisco Chronicle staff writer. Email: Twitter: @rachelswan

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