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More ‘Shrimp Boy’ fallout: Eight men indicted for alleged bid-fixing scheme

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Eight men have been indicted for allegedly fixing construction bids on work at the Lawrence Berkeley National Laboratory and elsewhere in the state. (Courtesy Roy Kaltschmidt/Lawrence Berkeley National Lab/via Flickr)
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Eight men, including several heads of construction firms who have done business with The City, have been indicted for allegedly fixing federal and state bids, and in the case of four others, receiving bribes, according to the indictment filed Thursday in U.S. District Court.

The indictment and investigation come out of the FBI public corruption investigation that led to the conviction of Chinatown gangster Raymond “Shrimp Boy” Chow, former state Sen. Leland Yee and former school board member Keith Jackson.

Jackson and former Human Rights Commission Nazly Mohajer, as well as former commission staff member Zula Jones, are all currently facing public corruption charges in state court for their part in allegedly laundering illegal campaign contributions in order to retire Mayor Ed Lee’s 2011 campaign debt.

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Former Human Rights Commission employee Zula Jones, seen here leaving court Thursday, is facing charges in the political corruption case. (Jonah Owen Lamb/S.F. Examiner)

The new alleged crimes, detailed in the indictment, took place in 2013 and 2014 and in some cases were caught on FBI wiretaps, some of which were reported by the San Francisco Examiner in August 2015.

The latest indictment alleges, in one instance, almost all of the men who were indicted conspired to fix a bid on a construction project at Lawrence Berkeley Laboratories. The conspiracy involved some of the defendants intentionally overbidding so the company with the lowest bid would get the contract. The head of the construction company who sent in the lowest bid was actually an undercover FBI agent who bribed some of the players for their part in the scheme.

Another scheme attempted to fix a bid on a state veterans affairs project in Southern California.

One of the most prominent defendants is Derf Butler, a politically connected businessman who worked with Jackson for Yee.

The eight indicted individuals are Butler, 48, of Vallejo, Anton Kalafati, 33, of San Francisco, Taj Reid, 46, of Oakland, Eric Worth, 45, of Pleasant Hill, Clifton Burch, 49, of San Lorenzo, Peter McKean, 48, of San Mateo, Len Turner, 56, of San Leandro and Lance Turner, 57, of Oakland.

THE PLAYERS
Butler, head of Butler Enterprise Group, LLC in San Francisco, and Kalafati, president of B Side, Inc. in San Francisco, allegedly lied to the FBI and tried to fix a bid on a federal project at Lawrence Berkeley Laboratories, according to the indictment.

Butler declined to comment for this story, and Kalafati could not be reached for comment.

According to the indictment, Butler took $15,000 in bribes for his part in the bid fixing and expected to be paid another $15,000. Butler was recorded on FBI wiretaps, released in court documents in 2015, talking about allegedly paying for access to San Francisco Board of Supervisors President London Breed.

Butler, told an FBI source that he “pays Supervisor Breed with untraceable debit cards for clothing and trips in exchange for advantages on contracts in San Francisco,” according to the filing.

Breed previously denied the claim.

Derf Butler prepares to speak at a San Francisco Municipal Transportation Agency meeting on Tuesday, March 7, 2017. (Joe Fitzgerald Rodriguez/S.F. Examiner)

McKean and Burch allegedly conspired with Butler to defraud the government by fixing a bid on at Lawrence Berkeley Laboratories, according to the indictment. Burch heads Empire Engineering & Construction, Inc. in Oakland, and McKean is vice president of Townsend Management, Inc. in San Francisco.

McKean’s firm has done about $6 million in contracts with The City in recent years. He did not return calls for comment.

Burch, whose company has done about $13 million in work for The City in the past four years, said he was unaware of the indictment.

“I don’t know anything about that. I was told by Derf Butler to give [Butler] a proposal,” said Burch about the alleged bid scheme. “Next thing you know, [FBI agents] are knocking on my door.”

Burch said he has no idea about any bid-rigging scheme and thought the case was closed until he got a recent visit from the FBI.

“In fact, they came to visit me the other day, and I said, ‘I thought this thing went away,’” Burch said. “I just think it’s a bunch of B.S., and they’re coming after these small contractors. It’s not fair to me at all.”

Lance Turner, Len Turner and Reid allegedly conspired to fix a bid on the same Berkeley project, according to the indictment. None could be reached for comment Friday.

Worthen, a former Assistant Deputy Secretary of Administrative Affairs, and Reid allegedly conspired to receive bribes in connection with a state bid-fixing scheme, according to the indictment.

AUDITS BY THE CITY
Three of the defendants — Butler, Burch and McKean — had contracts with the San Francisco Public Utilities Commission, which plans to audit their bids, according to SFPUC spokesperson Charles Sheehan.

The headquarters for the SFPUC at 525 Golden Gate Ave. has not been living up to its sustainable expectations. (Jessica Christian/S.F. Examiner)

Sheehan said the SFPUC’s competitive bidding process helps prevent issues like bid-rigging, but noted they also periodically audit bids.When there is an issue, the SFPUC goes back and audits the billing and payments.

“In cases like this, when there may be an issue, and [in] this particular case, we are going to go back and review these contracts and review audits,” he said.

Burch’s firm, Empire Engineering & Construction, also did work for the Parks and Recreation Department. A spokesperson for Rec and Park said they would not be auditing any bids.

“We can confirm that from fall 2013 through early 2015, Empire Engineering and Construction installed and maintained temporary chain link fencing around Golden Gate Park’s Lily Pond for a total cost of $4,982,” spokesperson Connie Chan said in an email. “I would have to defer you to talk to City Attorney or District Attorney whether or not the City would be investigating this since we do not have jurisdiction or capacity for legal investigation.”

The City Attorney’s Office did not return calls for comment.

The Port Authority, Mayor’s Office Of Housing, San Francisco Municipal Transportation Agency, Public Works and the Office of the City Administrator did not return calls for comments regarding their contracts with Butler and Burch.

All eight defendants are scheduled to make their first court appearance April 17.

S.F. Examiner Staff Writer Michael Barba contributed to this story.

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