Mayor Ed Lee knew his underlings were arranging campaign money laundering schemes, and they were caught saying as much on FBI wires, according to a newly released federal court filing from the racketeering case against Raymond “Shrimp Boy” Chow.
Details of the alleged wrongdoing were released Tuesday in filings by Chow’s lawyers, which reveal a swath of new and explosive information about a years-long FBI investigation into political corruption and organized crime in San Francisco.
“The FBI alleged in discovery that Ed Lee took substantial bribes in exchange for favors,” according to the filing, which goes on to say then-Human Rights Commissioner Nazly Mohajer and commission staff member Zula Jones facilitated the exchanges.
The filings say Jones and Mohajer said Lee “knew he was taking the money illegally.”
On Wednesday, prosecutors filed a motion to seal the documents released by Chow’s lawyers, but the details have already been made public.
The allegations were roundly criticized Wednesday by Lee’s re-election campaign treasurer, Kevin Heneghan, who wrote “nothing in Mr. Chow’s filing demonstrate that Mayor Lee or his campaign at any point did anything wrong or inappropriate.”
The campaign has asked the U.S. Attorney’s Office for any information about alleged contributions to Lee’s 2011 campaign.
“I ran a clean campaign … just last week the Ethics Commission closed out our campaign … if we did anything improperly, it would’ve shown up,” Lee said Tuesday when asked about the filings.
In March 2014, FBI raids across the Bay Area detained more than 20 people, including former state Sen. Leland Yee, former school board member Keith Jackson and Chow.
The indictment against the men alleges that Chow headed an organized gang in Chinatown, and that Yee and Jackson committed a series of crimes to further Yee’s political ambitions. Yee and Jackson have since pleaded guilty to racketeering and other charges.
Chow’s legal team, which includes attorneys Tony Serra, Curtis Briggs and Greg Bentley, have requested the case against Chow be dismissed because of alleged selective prosecution, pointing out that numerous public officials were caught up in FBI surveillance but never indicted.
In an April 17, 2012, recorded phone call between an FBI agent (UCE-4773) and Jones, she accidentally explained how to hide money over the campaign limits by using straw donors.
Jones said the agent can’t make contributions more than $500, so “you would have to put that under one of your family members names.”
“Ed knows that you gave $10,000 … he knows that you will give another $10,000. He also knows that we had to break the $10,000 up,” said Jones in a recording from 2012 with an undercover FBI agent posing as a businessman who, according to the filings, gave the mayor more money than legally allowed.
Lee allegedly met that same undercover agent on April 6, 2012, according to the filing. Mohajer introduced the agent to Lee as an “individual who had raised $10,000 to assist in retiring the campaign debt.”
The Monday after the meeting, Mohajer met with the agent and discussed breaking up an additional $10,000 contribution, according to the filing. When the agent asked about breaking up the funds into small increments, Mohajer said, “Yeah, we can do that … we have no problem with that … but the only thing is … you can never talk to anybody about this. You know?”
Even as Mohajer allegedly worked to hide the campaign contributions coming from the FBI agent to Lee, she spoke ill of Lee. In an April 25, 2013, recorded phone call with Jackson, Mohajer reportedly said “she finds San Francisco to be extremely corrupt, and Lee ‘is worse than all of them.’”
Schemes such as those described in the filing are illegal, according to a state political watchdog.
City campaign finance laws limit contributions to $500 per candidate. The use of straw donors to divvy up one person’s contribution is a violation of campaign finance law, said Jaycob Bytel, spokesperson for the Fair Political Practices Commission.
“That’s what we call campaign money laundering,” Bytel said.
The FPPC does not have an active investigation into Lee, said Bytel, but he added the FPPC is “aware of and monitoring the situation. We’ve been monitoring the situation for a long time.”
Ethics Commissioner Peter Keane confirmed his agency looked into an anonymous complaint regarding Keith Jackson, the former school board president who recently pleaded guilty to federal charges. But later, ethics backed off due to pending investigations by The City.
“We had a complaint, and the City Attorney and District Attorney wanted to proceed with it,” he told the Examiner. “They didn’t say ‘stop investigating’ but they said ‘we are investigating.’ We defer to them in that situation.”
He said ethics generally backs off when other agencies are involved, because ethics can “get in the way” and “screw up” an investigation, so ethics treads carefully to not get out in front of other agencies.
“At some point we could get back into it,” he said. “If we felt it was appropriate.”