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Chinese billionaire admits to bribing top San Francisco official

Zhang Li in January 2017 | Source: Xinhua/Sovannara via Getty Images

A Chinese billionaire and real estate developer has admitted to paying off a top San Francisco official to usher along a high-profile construction project, according to new federal court filings. His company will pay a $1 million fine, the U.S. Justice Department announced.

Zhang Li, 70, paid for meals, luxury hotel stays, a hot spring trip and numerous gifts for Mohammed Nuru, who was then head of San Francisco’s Department of Public Works, according to an agreement Zhang signed with prosecutors. In exchange, Nuru personally attended to issues arising from Zhang’s development project at 555 Fulton St. in San Francisco.

The billionaire tycoon hosted Nuru on a 2018 trip to China, and called the senior official “Bro” in WeChat messages, according to the court filing.

U.S. prosecutors have charged Zhang, a famous real estate magnate, with conspiracy to commit honest services wire fraud with the alleged payments.

Zhang, co-founder and owner of Guangzhou-based R&F Properties, is personally worth about $1.5 billion while his company’s assets top $53 billion, according to Forbes.

In May 2022, federal prosecutors first charged Zhang, who was then arrested in London a year and a half later at the request of U.S. officials. Six months after his arrest, Zhang agreed to be extradited to the U.S. to face charges, according to the U.S. Attorney’s Office.

“We are very happy that the charges against Mr. Zhang will be dismissed under his agreement with the government,” Zhang’s attorney Hartley West told The Standard. “He has now returned home to China.”

R&F Properties did not reply to a request for comment by publication time.

Dinners and Luxury Hotels

Zhang first acquired the property at 555 Fulton St. in 2012 and later formed a U.S. company called Z&L Properties to manage construction at the site, according to his agreement with prosecutors. 

He hired Walter Wong, a local businessman and permit expediter who has since been exposed for allegedly playing a central role in multiple corruption schemes, to help advise on the project.

From 2016 to 2019, Zhang regularly traveled to San Francisco to meet with Wong and his employees at Z&L to get updates on the Fulton Street project. While in town, Zhang dined with Nuru and other public officials who had influence over the permits, inspections and approvals necessary for construction at 555 Fulton St. Typically, a Z&L employee would pay for those meals, Zhang admitted in the court filing.

Walter Wong leaves federal court in San Francisco, on June 30, 2023 after testifying against former San Francisco Utilities Chief Harlan Kelly. | Source: Isaac Ceja/The Standard

In October 2018, Nuru traveled to China with Wong and another person. There, he met with Zhang twice, and the billionaire paid for the public official’s luxury hotel, transportation, services at a hot spring and other expenses, Zhang admitted in the filing.

Nuru also attended a dinner party at Zhang’s home, the court documents say.

Zhang treated Nuru and his guests to $6,500 worth of benefits on the trip, according to the agreement. The real estate tycoon hoped that these benefits would help him cultivate a relationship with Nuru that would lead to favorable treatment in city approvals for permits at 555 Fulton St., the filing says.

“Thank you very much for all your generosity while we were in China,” Nuru wrote to Zhang on the messaging app WeChat after the trip, according to the agreement. “I will do my very best to see that your project gets completed.”

In July 2019, Zhang messaged Nuru explaining that he was having a hard time getting clear guidance on an aspect of the project from Public Works engineers. 

“Given 555 Fulton is a high-profile project, we really hope we can reach a reasonable solution and DPW will sign off for final inspection soon,” Zhang wrote, according to court filings.

“I will make sure we get this issue resolved this week,” Nuru replied in part.

Z&L Properties did not reply to a request for comment by publication time.

Mohammed Nuru leaves the U.S. Courthouse in San Francisco after being sentenced to 7 years in prison August 25, 2022.

Fines for Zhang and His Companies

In his agreement with prosecutors, Zhang accepted responsibility for the conduct he was accused of and commits to paying a $50,000 fine. 

In exchange, the Justice Department agreed to drop the charges against Zhang in three years. In the meantime, the billionaire has been released on bond pending further proceedings, according to the U.S. Attorney’s Office.

Meanwhile, Z&L Properties will plead guilty to federal fraud and conspiracy charges, according to prosecutors. The company will pay a $1 million fine and enter into a corporate compliance program designed to prevent future corruption.

Z&L Properties remains active in San Francisco, San Jose and Los Angeles, according to prosecutors.

Meanwhile, a decadeslong effort to bring a new Trader Joe’s to 555 Fulton St. remains unrealized. In mid-June, Z&L Properties told San Francisco Supervisor Dean Preston, who represents the neighborhood, that it is in negotiations to sell the building to a buyer who wants to finally bring a grocery store to the location, Preston’s Chief of Staff Kyle Smeallie told The Standard.

The 555 Fulton St. building in January 2020 | Source: Liz Hafalia/The San Francisco Chronicle via Getty Images

Zhang is only the latest major player to face consequences in the yearslong federal corruption probe that has ensnared more than 14 top San Francisco officials and businesspeople

Last week, a jury found the city’s disgraced former utilities chief Harlan Kelly guilty of various fraud charges connected to accepting payments from Wong, the permit expediter. Bernie Curran, who used to be a building inspector, was recently sentenced to a year in prison for accepting illegal reward payments.

Nuru pleaded guilty to criminal charges in January 2022 and is currently serving an 84-month federal prison sentence.

The steady stream of revelations about Nuru and other senior officials’ illicit schemes have demoralized thousands of city workers, Supervisor Aaron Peskin said in reaction to the news about Zhang.

“It is still a cloud that hangs over the city’s head,” Peskin said. “It’s a shame that’s going to last a long time.”