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Corruption trial: Prosecutors accuse San Francisco’s ex-utilities chief of shady business dealings

Harlan Kelly, the former general manager of the San Francisco Public Utilities Commission, leaves court on the first day of his federal corruption trial in San Francisco on Tuesday. | Isaac Ceja/The Standard

To some, Harlan Kelly was a corrupt San Francisco official who exploited his role overseeing one of California’s largest public utilities for personal gain, including a lavish vacation to China.

To others, the former head of the city’s Public Utilities Commission was an exemplary public servant whose key mistake was trusting a shady businessman who sought to corrupt him.

Those are the two versions of Kelly that jurors heard Tuesday morning as his corruption trial began in federal court. Which version the jury chooses to believe could hinge on their trust in Walter Wong, the businessman-turned-government-witness who is expected to testify against the ex-utilities chief.

“There is much in this world that is not what it appears to be, and Walter Wong’s facade of honesty and integrity was fake. He was a manipulator,” said Brian Getz, Kelly’s defense attorney. “He was corrupting city officials.”

Kelly, who worked for the city for three decades, is facing various fraud charges over two alleged schemes. One involves his alleged attempts to help Wong secure business from his agency upgrading city streetlights, while the other stems from a loan application he filed to remodel his family’s home with the help of now-convicted real estate mogul Victor Makras.

Kelly and his wife, former City Administrator Naomi Kelly, were once a power couple in San Francisco. As the utilities chief starting in 2012, Harlan Kelly managed an agency with a more than a billion-dollar budget and some 2,300 employees. As administrator, Naomi Kelly was the highest-ranking non-elected official in San Francisco overseeing more than two dozen departments.

Former San Francisco City Administrator Naomi Kelly, center, walks with her husband, former General Manager of the San Francisco Public Utilities Commission Harlan Kelly, right, after leaving federal court on Tuesday. | Isaac Ceja/The Standard

The charges against Harlan Kelly spurred both he and his wife to resign in late 2020 and early 2021, respectively, as part of a larger scandal that began with the federal case against former Public Works head Mohammed Nuru. The scandal has embroiled more than a dozen other city officials, businesspeople and contractors.

Inside the courtroom Tuesday, Harlan Kelly sat with his attorneys, wearing a black suit and dark glasses, while the former city administrator watched from the front row of the gallery.

Central to the case is Wong’s attempts to win business from the Public Utilities Commission as the city sought to upgrade streetlights. Wong allegedly paid thousands of dollars for the Kelly family to vacation in China in March 2015, in addition to giving Harlan Kelly discounts on remodeling work for his home.

“This is a case about a corrupt public official who took bribes, who took gifts and took benefits that were intended to buy his influence,” Assistant U.S. Attorney David Ward told jurors.

Former San Francisco City Administrator Naomi Kelly, left, walks with her husband, Harlan Kelly, right, after leaving court for his federal corruption trial in San Francisco on Tuesday. | Isaac Ceja/The Standard

Harlan Kelly is also accused of concealing and misrepresenting his debts in a loan application he filed with Makras to Quicken Loans. Among those debts were the amounts he owed Makras for another loan and Wong for remodeling work.

But in his opening statement to the jury, Getz argued that Wong overcharged Harlan Kelly for “shoddy” remodeling work, and that there was nothing “nefarious” about the relationship between Harlan Kelly and Makras.

“The whole thing was wholesome,” Getz said of the loan application.

Makras separately went to trial over the loan application and was convicted of making false statements to a bank and bank fraud.

Harlan Kelly’s trial is expected to continue throughout the week with witness testimony. He and his wife, Naomi Kelly, declined to comment.

Michael Barba can be reached at mbarba@sfstandard.com