On Monday, a historic San Francisco small business pleaded guilty to two-dozen felony charges relating to a multi-year procurement scam and will be forced to pay the city's Public Utilities Commission just over $51,000 in restitution in addition to other fines and fees.
According to court documents, Cole Hardware employee Elizabeth Bradford worked with former SFPUC employee Donnie Alan Thomas to submit fake invoices to the commission designed to hide that Thomas was using city funds for personal benefit. Thomas then allegedly gave Bradford a large kickback for her trouble.
"Our city will not tolerate city vendors who steal taxpayers' money," San Francisco District Attorney George Gascon said in a statement. "We are pleased Cole Hardware has accepted responsibility for their role in this multi-level scheme to defraud the SFPUC."
"Today we have sent a strong message that the city will not tolerate public servants or vendors who attempt to fleece our hardworking taxpayers," added SFPUC General Manager Ed Harrington.
The officers of Cole hardware were not individually charged with any crimes and are not being held personally liable for fraud committed on their watch.
Thomas, who was charged with 41 felonies including grand theft and embezzlement, pleaded guilty to four counts last year and was sentenced to three years in prison along with paying nearly $500,000 in restitution.
Thomas supervised a rogue team of Treasure Island-based SFPUC electricians, termed the "Hetch Hetchy High Voltage Power Crew," tasked with maintaining the city's electrical network when power lines went down. Using fraudulent invoices, the group illegally used city funds for car accessories, home remodeling projects and sex parties with prostitutes as well as billing the city for time spent working Thomas's private firm, Tri-Delta Electric Inc.
By the time the crew's activities were reported by a whistleblower, they had embezzled hundreds of thousands of dollars and were spending over half the time they clocked with the SFPUC working on outside business projects.
In an email to the San Francisco Chronicle, Cole Hardware president Rick Karp claimed that the locally-owned business with five San Francisco locations had no idea the scam was taking place. "[Cole Hardware has] fully cooperated with the district attorney's investigation, adopted new internal policies to prevent future misconduct and immediately offered to reimburse the city for any losses attributable to our employees," wrote Karp. "Sadly, after more than two years of huge expenses fighting the charges in court, Cole Hardware has reluctantly accepted a plea bargain."
Bradford has pleaded not guilty and is currently awaiting trial.