SAN FRANCISCO – Alan Varela was sentenced to 24 months in prison in federal court today and fined $ 127,000 for seven years trying to commit honest service fraud by bribing a San Francisco official, the company said Acting US Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Representative Craig D. Fair. The verdict was passed by the Honorable William H. Orrick, United States District Judge.
A federal complaint filed on September 17, 2020 accused Varela, 60, of Orinda and William Gilmartin, 61, of San Mateo of bribing a public official. In 1991, Varela founded ProVen Management, a Bay Area civil engineering and construction company engaged in major infrastructure projects. Varela and Gilmartin served as the company’s president and vice president, respectively, during the conspiracy period. According to the complaint, Varela and Gilmartin granted Mohammed Nuru, then director of the San Francisco Department of Public Works (DPW), a number of benefits in exchange for favorable treatment of their business interests, including non-public inside information.
As Varela on the 27. The aim of the bribe was to use Nuru’s fame as a powerful official in San Francisco to ensure the success of Varela and his co-conspirators. Nuru’s position as DPW director gave him great influence on public contracts, permits and construction projects in San Francisco, as well as on other city governments and private companies seeking DPW contracts. In his plea agreement, Varela admitted that for seven years, from 2013 to the day Nuru was arrested on federal charges on December 27, he cooperated with the FBI – and with others, to pay Nuru bribes consisting of cash and free meals and entertainment, equipment for Nuru’s ranch, and the prospect of a cut in future profits from anticipated city contracts.
Varela’s Settlement Agreement contained a plan in which he and his co-conspirators focused on winning a lucrative DPW contract and lease for the Port of San Francisco to operate an asphalt recycling plant and concrete factory on the port’s land. The plea agreement describes that in exchange for cash and other valuables, Nuru agreed to use his official position to select Varela and his co-conspirators’ proposals. Gilmartin arranged to compensate Nuru by asking an undisclosed company to give Hernandez a $ 100,000 contract, and Hernandez, in turn, used the proceeds of the contract on Nuru. For his part, Nuru sent the conspirators initial drafts of San Francisco’s Request for Proposals for the project and other inside information to increase their likelihood of being selected. Nuru also regularly discussed the plans and inside information with Gilmartin and Hernandez at expensive restaurant dinners, always paid for by Gilmartin, which ended up running to around $ 20,000.
The conspirators’ proposal was selected in September 2015. Under the agreement, Nuru continued to meet with the group to provide additional inside information during the expensive meals Gilmartin paid for. At one of their meetings, Nuru asked for a tractor for his ranch. Varela coordinated the delivery of the tractor to Nuru with Gilmartin and Hernandez.
Nuru was arrested on January 27, 2020 on federal bribery charges before negotiations to finalize the asphalt recycling plant agreements with DPW and the Port of San Francisco were completed.
In a submitted memorandum on Varela’s conviction, the government argued that Varela’s behavior towards Nuru was normal for Varela. The government claimed that Varela, whose business success had given him a luxurious 50-acre life in Napa, had for years fostered a casual culture of corruption, a culture that ultimately undermines public confidence in their government and the rule of law. Regarding the tractor’s kickbacks, the Judgment Memorandum indicates that the value of the new John Deere tractor, including its attachments, was approximately $ 40,000. Varela lined up the purchase of the tractor and hurried to have it delivered to Nuru at Nuru’s ranch on February 18, 2019. After outlining this and other acts of bribery, the government issued a recommendation of 30 months in prison.
This case is part of a larger state investigation targeting public corruption in the city and county of San Francisco. Eleven people have been charged so far, including two senior San Francisco officials, Mohammed Nuru and Harlan Kelly. Several city contractors and mediators were charged. According to charges against Mohammed Nuru and others, Nuru allegedly accepted hundreds of thousands of dollars in bribes in cash, meals and work on his vacation home from contractors who received public contracts in San Francisco. The lawsuit against Harlan Kelly alleges that he received thousands of dollars in airfare, meals, jewelry and travel expenses, and repairs to his home.
In addition to a term of imprisonment and a fine, US District Judge Orrick also sentenced the defendant to a three-year supervised release. Varela will serve his sentence from January 2022.
The case is being prosecuted by the US Attorney’s Corporate and Securities Fraud Department. The FBI is investigating the case.