The former head of the San Francisco Public Utilities Commission, Harlan Kelly, made his first appearance in federal court Tuesday morning after being charged with fraud as part of the FBI investigation into corruption at City Hall.
Kelly appeared virtually alongside his attorney, Brian Getz, but did not enter a plea to the fraud charge for allegedly trading insider information about a government contract for a paid family vacation to China.
Prosecutors revealed during the hearing that federal authorities found a substance that tested positive for cocaine while searching Kelly’s home. The FBI searched his residence in the Inner Sunset last Monday.
“During the search of Mr. Kelly’s home we found a substance that tested presumptively positive for cocaine,” Assistant U.S. Attorney Robin Harris told U.S. Magistrate Judge Laurel Beeler.
The allegation emerged when Beeler questioned whether Kelly needed to comply with drug testing as a condition of his continued release from custody pending trial.
Kelly has not been charged with a drug crime. His attorney told the San Francisco Examiner that authorities found a small amount of the substance that was left by a “visitor from earlier this year.”
“He is not being charged with that,” Getz said. “It was residue left behind by another person.”
Getz previously said the FBI found “nothing in his house that supports their case.”
Kelly’s father, Harlan Kelly Sr., appeared at the hearing Tuesday to support his son. He put up a $200,000 bond secured by his Fresno barber shop for his son to remain out of custody.
Harlan Kelly Jr. resigned last Monday after the U.S. Attorney’s Office charged him.
He is married to City Administrator Naomi Kelly, who took a leave of absence after prosecutors filed the complaint against her husband. She has not been charged with a crime.
The case is due back in court Feb. 2.