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San Francisco construction executive sentenced to prison for bribing top city official

A view of the Phillip Burton Federal Building and U.S. Courthouse at 450 Golden Gate Ave. in San Francisco.
A view of the Phillip Burton Federal Building and U.S. Courthouse in San Francisco. | Source: David Odisho/AFP/Getty Images

A former San Francisco city engineer who left the civil service to become a businessman was sentenced to six months in prison, one year of supervised release and a $100,000 fine Thursday in federal court after admitting to a yearslong scheme to funnel over $100,000 in bribes to a top public official.

Balmore Hernandez, the 58-year-old ex-CEO of construction firm Azul Works Inc. previously pleaded guilty to conspiracy to commit honest services wire fraud, a crime connected to bribing a public official.

“I accept the sentence with grace,” Hernandez told The Standard. “I’m glad it’s coming to an end.”

From 2013 to 2020, Hernandez worked with two business partners, Alan Varela and William Gilmartin III, to bribe ex-San Francisco Public Works Director Mohammed Nuru so he would use his high-ranking position to funnel lucrative contracts their way, according to court documents. Hernandez brought a box stuffed with $25,000 in cash to Nuru and helped arrange the delivery of a $40,000 John Deere tractor to the official’s vacation ranch, according to his attorney.

Varela already served a two-year prison sentence for his role in the scheme. But Assistant U.S. Attorney David Ward said Hernandez earned a lighter sentence by cooperating with the government and providing evidence against his co-conspirators.

“Hernandez engaged in egregious corruption, driven by his greed to enrich himself and his business partners,” Ward wrote in court filings ahead of the hearing. “However, once charged, Hernandez promptly accepted responsibility for his actions.”

Hernandez’s attorney, Julia Jayne, argued that her client’s extensive cooperation with law enforcement and history of community service warranted a lighter sentence without incarceration.

U.S. District Judge William Orrick asked Hernandez why he committed his crimes.

“It was not about greed,” Hernandez replied. “It was more, ‘I don’t want to rock the boat; these are important people.’” He was a conduit and he had a hard time saying no, Hernandez added.

Orrick mused that Hernandez’s crime may not have been about greed, as he claimed, “But it was about money, about getting contracts, that was a byproduct of staying quiet,” Orrick said before imposing the prison time. 

Hernandez is the latest in a series of powerful business people and influential San Francisco officials to be sentenced in a wide-ranging federal corruption probe that exposed a culture of casual corruption in the city. Nuru is currently serving a seven-year sentence in a Santa Barbara County federal prison and was the center of a bevy of corrupt schemes, receiving benefits from a billionaire real estate tycoon and the city’s garbage giant. Meanwhile, one local building inspector is slated for a one-year prison sentence, and two more were charged with crimes last week.

Gilmartin pleaded guilty to criminal charges in 2021 and is set to be sentenced early next year.

A photo shows Mohammed Nuru speaking.
Ex-San Francisco Public Works Director Mohammed Nuru speaks on the steps of City Hall in October 2019. | Source: SF Chronicle/Getty Images

The Asphalt Plant

The Nuru-Hernandez bribery scheme centered on a bid to land a Port of San Francisco contract to operate an asphalt recycling plant on public land, according to prosecutors. 

Hernandez’s involvement began in the early days of the effort, when his former colleague Gilmartin approached Hernandez and asked him to contact Nuru to see if the official would be handling the public project, according to Hernandez’s attorney. Nuru and Hernandez had been friends for more than a decade, first meeting during Hernandez’s two-decade tenure as a civil engineer for the city, according to court documents.

Nuru eventually agreed to ensure that Gilmartin and Varela’s company, ProVen Management, landed the Port asphalt contract. In exchange, he initially demanded a $50,000 cash bribe and a percentage of future profits from the venture, according to prosecutors.

For leveraging his relationship with Nuru to help ProVen get the deal, Hernandez was promised a percentage of the profits from the contract by his business partners, according to prosecutors.

The public bidding process for the asphalt plant dragged on for years. During that time, Hernandez provided tens of thousands of dollars worth of free construction work and material to Nuru’s vacation ranch in Colusa County, according to prosecutors. Meanwhile, Hernandez and Gilmartin, sometimes Varela, too, would regularly host and pay for lavish dinners for Nuru, prosecutors say. For example, in August 2015, Gilmartin picked up the tab on a nearly $400 dinner for the trio and in September 2015, the group treated Nuru to a $575 dinner.

As the bribes rolled in, Nuru sent the three businessmen internal city documents related to the asphalt project, including a Port Commission staff report in February 2015, according to prosecutors.

In September 2015, the Department of Public Works selected ProVen as the most qualified bidder for the asphalt project, and Nuru began demanding cash payments for his corrupt assistance, prosecutors say. That’s when Gilmartin dropped off a box containing $25,000 in cash at Hernandez’s home. Hernandez then personally delivered the cash to Nuru, according to court documents.

To pay for the rest of the bribes, Gilmartin arranged for Hernandez to get a $105,000 consulting deal with another company. Hernandez then used some of that money to cover the cost of sending construction crews and materials to Nuru’s vacation ranch, according to prosecutors.

A man with a thin beard, while wearing a blue sport coat laughs out loud with brown stone in the background.
Alan Varela attends an event in Napa on July 2023. | Source: Natalie Schrik for Drew Altizer Photography

Despite ProVen being selected as the most qualified bidder in 2015, negotiations between ProVen and the city stretched on for years. During that time, the three businessmen continued treating Nuru to lavish meals, and in February 2019, they sent him a $40,000 John Deere tractor.

The trio still hadn’t finalized their asphalt plant deal when Nuru was arrested on corruption charges in January 2020, and Hernandez faced criminal charges nine months later. The asphalt plant project never came to fruition.

A Soured American Success Story

Raised primarily by his mother, who ran a small juice business, Hernandez grew up in El Salvador. When civil war erupted, the then-teenager saw people shot in front of him, according to his attorney. At 13 years old, Hernandez walked to the nation’s border to escape the conflict, finally meeting up with his father, who had previously fled to San Francisco. 

He eventually got a scholarship to study civil engineering at Cogswell College in the city and kicked off a 25-year career with the city after graduating, according to court documents.

After leaving public service, Hernandez worked for A&B Construction, managed by his soon-to-be co-conspirator Varela, according to court filings. In 2014, he joined Azul Works, a construction company his wife, Sandra Hernandez, founded in 2000. In its early years, Azul Works just did small remodels. But by 2020, with Hernandez now CEO of the company his wife started, the firm employed 180 people and was taking on large municipal contracts, according to court documents.

In the original criminal complaint, prosecutors filed against Hernandez in June 2020, they alleged that the executive bribed Nuru to benefit Azul Works. That included allegedly providing $250,000 in labor and materials for Nuru’s vacation ranch. 

In return for the free construction, Hernandez allegedly asked Nuru for help with his company’s interactions with the city on multiple occasions. For example, in March 2017, Hernandez complained to Nuru that he didn’t get a city construction contract, prosecutors alleged. “I can handle them,” Nuru allegedly texted in reply.

The following month, Hernandez texted Nuru, “Bring me some blessings. I need some jobs,” according to prosecutors. At that same time, Hernandez had an Azul Works crew at Nuru’s vacation ranch doing work.

Hernandez was fined by the Department of Public Works in 2019 in connection with a project, according to prosecutors. “Can you please make this fine go away,” Hernandez allegedly texted Nuru, along with a copy of a document. Nuru allegedly promised to talk to the appeal hearing officer working on the fine on Hernandez’s behalf, according to prosecutors.

San Francisco paid Azul Works about $14 million on over a dozen city contracts between 2014 and 2019, including several with Public Works, according to data from the Office of the Controller that covers all contracts that ended after 2017. In total, Azul Works has won bids on approximately 80 projects with the city of San Francisco, according to Hernandez’s attorney.

“Balmore [Hernandez] never exploited his connection with Nuru to secure bids for Azul Works,” Hernandez’s attorney wrote in a memo earlier this month. “Although his company was actively engaged and submitted bids for various city projects for many years, every single instance where Azul Works emerged as a successful bidder was achieved fairly, free from any undue influence.”

The city has been poised to debar Hernandez and Azul Works as city contractors pending the conclusion of the federal case, disqualifying them from the public bidding process for years. That fate has already befallen his business partners.

Meanwhile, Hernandez has already begun to pay the price for his crimes, according to his attorney. He relinquished ownership of his company and voluntarily retired his civil engineer license.

“I want to emphasize how embarrassed and remorseful I am that I was a part of this scheme to deceive the public,” Hernandez wrote in a letter to the judge in his case ahead of sentencing. “Not only did I deceive the public, but I also disappointed myself, my family, and all the people that believed in me.” 

Hernandez will report to federal prison in January.