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Wire tapes indicate Mayor Lee was unaware of illegal campaign contribution

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Recorded conversations between an FBI agent and fundraisers for Mayor Ed Lee’s 2011 campaign heard in court Tuesday seemed to indicate the mayor knew nothing about the illegal contributions supposedly raised to retire his campaign debt.

The recordings, however, also paint a picture of Lee’s early time in office as an inexperienced former bureaucrat who had to be taught the ropes of San Francisco’s rough-and-tumble politics, because protégés of former Mayor Willie Brown were eager to return to a purportedly corrupt era.

The tapes were played during the second day of the preliminary hearing in a case in San Francisco Superior Court against three Lee-linked political operatives alleged to have taken bribes from an FBI agent in exchange for favors and access.

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Keith Jackson, who appeared in court in a jail-issued orange jumpsuit beside his Public Defender’s Office-appointed lawyer, has been charged with bribery and running a straw donor scheme to launder Lee campaign funds from an undercover FBI agent who was pretending to be a developer. Jackson was convicted alongside former state Sen. Leland Yee in the federal corruption case linked to a Chinatown gangster.

The other defendants — former Human Rights Commissioner Nazly Mohajer and Human Rights Commission staffer Zula Jones — also appeared in court but remain out of jail. They have been charged with bribery and were fundraisers for Lee’s campaign as well.

The trio allegedly laundered massive campaign contributions to clear Lee’s 2011 campaign debt.

Lee has maintained he knew nothing of the scheme, uncovered by an FBI corruption probe that sprang out of an investigation into Chinatown gangster Raymond “Shrimp Boy” Chow.

“The mayor believes the people who engaged in this alleged criminal activity should be held accountable,” said Lee’s spokesperson, Deirdre Hussey. “People in public service should be held to the highest standard and there is absolutely no place in San Francisco city government for this corruption.”

Hussey continued, “Judge [Charles] Breyer thoroughly vindicated Mayor Lee and said there ‘was no evidence whatsoever” of wrongdoing. The Ethics Commission even conducted a comprehensive audit of the campaign’s finances and determined there was full compliance.”

The recorded conversations between the three operatives were primarily with an undercover FBI agent who went by the name Michael King. Their conversations in 2012 and 2013 were mostly about how King’s illegal donations would help him do business in San Francisco.

Jones told him more than once that this city may seem small but it has a “big city” attitude and that “you have to pay-to-play,” according to court records.

But until now, little has been revealed in regard to how much Lee — who Jones described as a worker bee who was not a politician — knew about what his fundraisers were up to.

Jones told King that Lee was a bureaucrat who was “not used to this game.”

And it seems the three fundraisers gave Lee little knowledge of what they were doing in his name.

“You can never mention what we did to him,” said Mohajer in a 2013 phone conversation taped by the FBI. “What I’ve told him is that you’re bringing a lot of people in and raised a lot of money.”

“Zula has an understanding of what’s going on, just not the mayor,” Mohajer continued, adding that only Jackson, Jones and herself knew about the scheme.

King asked Mohajer in one conversation if she had people she could use to hide the fact that so much money was coming from once source: “Do you have 20 people to break it up?” Mohajer replied, “We can do that. … You can never talk to anyone about this.”

Ultimately, King sent a $10,000 cashier’s check to Mohajer and a $500 check to Lee’s campaign.

Mohajer was described by Jones, who said she and Lee had been trained by Brown, as Lee’s top fundraiser.

“If you give it to her, you will get credit for it,” Jones said to the FBI agent.

In court, FBI Special Agent Ethan Quinn testified that King sent a $10,000 check to Mohajer with the understanding that he would get a face-to-face meeting with Lee and be given special access and treatment on development deals. In order to cover up the size of the donation, Mohajer would break it up into legally allowed donations of $500 through straw donors.

All of these tactics were learned from Brown, the former mayor, Jones said.

Brown has not been charged with a crime.

In one long, taped conversation, Jones also explained to King about Lee’s disposition when he first came to office and efforts by her and others to return things to the alleged corrupt nature under Brown.

Jones noted that with the defeat of the “anti-business” progressives, Lee and his moderate, pro-business supporters had to “capture that and move very fast … We just need to pick up where we left off.”

Under Mayor Gavin Newsom, none of this had been possible, she said.

“Our previous mayor, Gavin Newsom, was a fuck-up because he was arrogant,” Jones said.

Mayor Lee, who Jones called an honest worker bee, had little political experience and had to be told to make sure people called him “Mr. Mayor” instead of just “Ed,” as he at first wanted.

“You gotta walk in front of me,” Jones said she told Lee. “You get this together, brother.”

Despite what Jones characterized as Lee’s grooming as a mayoral figure, Brown and his model of governance remained in place, as did many of the people he’d appointed. For instance, Jones mentioned how Gene Duffy, of Paradigm Asset Investment, worked with her former boss, Mayor Brown, who she called “the real mayor.”

Duffy provided “walk-around money for Willie Brown,” said Jones, adding that Duffy “works with our retirement money … That’s what we call pay-to-play.”

Duffy, who sits on the Willie L. Brown Jr. Institute board, did not return a call for comment.

Brown did not return a call for comment.

The proceedings in Judge Tracie Brown’s court continue Thursday morning.

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