Public Contactor Sentenced To Two Years In Federal Prison For Bribing San Francisco Public Official

SAN FRANCISCO - Alan Varela was sentenced today in federal court to 24 months in prison and ordered to pay a $127,000 fine for a seven year conspiracy to commit honest services wire fraud by bribing a San Francisco public official, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable William H. Orrick, United States District Judge.

A federal complaint filed September 17, 2020, charged Varela, 60, of Orinda, and William Gilmartin, 61, of San Mateo, with bribery of a public official. In 1991, Varela founded ProVen Management, a Bay Area civil engineering and construction firm that engaged in large scale infrastructure projects. Varela and Gilmartin acted as the firm's president and vice-president, respectively, during the conspiracy time period. According to the complaint, Varela and Gilmartin provided a stream of benefits to Mohammed Nuru, then the Director of San Francisco's Department of Public Works (DPW), in exchange for favorable treatment of their business interests, including non-public inside information.

Upon entering his guilty plea to conspiring to commit honest services wire fraud on May 27, 2021, Varela described in his plea agreement his role in the bribery conspiracy of then-DPW Director Nuru. The bribery's goal was to use Nuru's prominence as a powerful San Francisco public official to ensure the success of Varela and his co-conspirators' business ventures. Nuru's position as DPW Director provided him with great influence over San Francisco public contracts, permits, and construction projects, as well as over other City departments and private companies seeking DPW contracts. In his plea agreement, Varela admitted that for seven years, from 2013 until the day of Nuru's arrest on federal charges January 27, 2020, he conspired with his co-defendant Gilmartin, with Balmore Hernandez - a construction company CEO who pled guilty earlier and is cooperating with the FBI - and with others to pay bribes to Nuru consisting of cash, free meals and entertainment, equipment for Nuru's ranch, and the prospect of a cut of future profits from expected City contracts.

Varela's plea agreement detailed a scheme in which he and his co-conspirators focused on winning a lucrative DPW contract and its related Port of San Francisco lease to operate an asphalt recycling plant and a concrete plant on the Port's land. The plea agreement describes that Nuru agreed, in exchange for cash and other valuables, to use his official position to get Varela and his co-conspirators' proposal selected. Gilmartin arranged to compensate Nuru by asking an unnamed company to award a $100,000 contract to Hernandez and, in turn, Hernandez used the contract's proceeds for Nuru. For his part, Nuru sent early drafts of San Francisco's Request for Proposals for the project and other inside information to the conspirators to improve their likelihood of being selected. Nuru also regularly discussed the plans and inside information with Gilmartin and Hernandez over expensive restaurant dinners, always paid for by Gilmartin and ultimately totaling approximately $20,000.

The conspirators' proposal was selected in September 2015. According to the plea agreement, Nuru continued to meet with the group to supply additional inside information during the expensive meals paid for by Gilmartin. At one of their meetings, Nuru requested a tractor for his ranch. Varela coordinated with Gilmartin and Hernandez to deliver the tractor to Nuru.

Nuru was arrested on federal bribery-related charges on January 27, 2020, before the negotiations to finalize the asphalt recycling plant agreements with DPW and the Port of San Francisco reached completion.

In a filed memorandum addressing Varela's sentencing, the government argued that Varela's conduct with Nuru was business as usual for Varela. The government asserted that Varela, whose busines success had gained him a life of luxury including 50 acres in Napa, for years facilitated a casual culture of corruption, a culture that ultimately undermines the public's faith in their government and the rule of law. Elaborating on the tractor bribe, the sentencing memorandum points out that the value of the new John Deere tractor, including its attachments, approximated $40,000. Varela lined up the purchase of the tractor and rushed to get it delivered to Nuru at Nuru's ranch on February 18, 2019. The delivery led to Nuru to happily text 'Work begins at the ranch' along with a photo of the tractor being unloaded at his ranch. The government, after outlining this and other acts of bribery, submitted a sentence recommendation of 30 months imprisonment.

This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, eleven individuals have been charged, including two high-ranking San Francisco public officials, Mohammed Nuru and Harlan Kelly. Multiple city contractors and facilitators have been charged. According to the charges earlier filed against Mohammed Nuru and others, Nuru allegedly took hundreds of thousands of dollars in bribes in cash, meals, and work on his vacation home from contractors who obtained San Francisco public contracts. Allegations in the complaint filed against Harlan Kelly assert he received thousands of dollars in airfare, meals, jewelry, and travel expenses, along with repair work on his house.

In addition to the prison term and fine, United States District Judge Orrick also sentenced the defendant to a three-year period of supervised release. Varela will begin serving his sentence on January 2022.

The case is being prosecuted by the Corporate and Securities Fraud section of the U.S. Attorney's Office. The case is being investigated by the FBI.

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