Cole Hardware has pleaded guilty to two felony counts in connection with a scheme by crooked city employees to defraud San Francisco of hundreds of thousands of dollars between 2003 and 2007.
The plea last week was part of a settlement with the District Attorney’s Office that calls for the retailer to pay more than $51,000 in restitution to the San Francisco Public Utilities Commission.
Cole Hardware, which has four city stores, pleaded guilty to grand theft and to altering or forging requests for payment, prosecutors said.
Two former longtime employees at Cole Hardware knowingly falsified invoices for items purchased by a supervisor for the SFPUC. That allowed the supervisor and his crew to make personal purchases on The City’s dime, prosecutors said.
Last week’s plea bargain “sent a strong message that The City will not tolerate” ripping off taxpayers, District Attorney George Gascón said during a news conference Monday.
Cole Hardware owner Rick Karp said in a statement that ownership was not aware of the misconduct and that the company settled because the legal process is too expensive.
“Sadly, after more than two years of huge expenses fighting the charges in court, Cole Hardware has reluctantly accepted a plea bargain,” Karp said. “This is purely an economic decision.”
Last fall, the mastermind behind the scheme, 47-year-old electrician Donnie Alan Thomas, was convicted of four felony counts and sentenced to three years in prison. He was arrested in 2009, some two years after a whistle-blower reported the case to The City. Five SFPUC employees involved were either fired or resigned.
Thomas supervised an SFPUC crew that worked on Treasure Island.
The scheme involved using city money to make personal purchases, including for home remodeling and high-performance auto parts. The crooks lived quite the high life, prosecutors said, even holding sex parties with prostitutes.
In total, seven co-defendants have pleaded guilty and three more cases remain open.