As city leaders rally around those accused of election improprieties, new questions arise over how the nonprofit used public funds

By A.C. Thompson and Matthew Hirsch

In some towns public officials accused of egregious misconduct are treated like pariahs, or at least kept at arm's length. In San Francisco they're feted by other city officials.

Such was the case March 31, when Sups. Aaron Peskin and Bevan Dufty, mayoral staffer Matthew Goudeau, and a raft of political insiders and donors showed up at a Chinatown fundraiser for Mohammed Nuru, the embattled deputy director of the San Francisco Department of Public Works who makes more than $150,000 a year.

With Nuru under investigation for possible election law violations, his pals in government and business are pulling together to help him retain attorneys from Keker and Van Nest, the same powerhouse law firm that represented Enron's Andrew Fastow.

Nuru, who helmed the San Francisco League of Urban Gardeners for most of the 1990s, and current SLUG executive director Jonathan Gomwalk are accused of pressuring SLUG workers to vote and campaign for Gavin Newsom during last fall's mayoral election. No charges have been filed, but the city attorney, district attorney, and secretary of state are all investigating – and Nuru is obviously taking the matter seriously. These investigations were first reported in the San Francisco Chronicle Jan. 15.

Nuru declined to comment when approached at his fundraiser at the Four Seas Restaurant; Bay Guardian reporters weren't allowed inside.

Peskin told us he contributed $50 for Nuru's legal defense and lent his name to the cause because Nuru has served the city – and especially Peskin's district – so well. Peskin said whenever he had trouble getting attention for a problem in North Beach, all he had to do was call Nuru.

"If he did things that were wrong or inappropriate, so be it," Peskin said, adding that he thought Nuru hadn't broken the law.

"Wrong" and "inappropriate" would seem to cover plenty of SLUG's activities. New documents uncovered by the Bay Guardian indicate the nonprofit has stiffed the city for roughly $40,000, was suspected by a city auditor of keeping bogus books, and let a $95,000 publicly funded greenhouse fall into disrepair.

Despite SLUG's disastrous fiscal history, city officials continue to funnel money to the organization and late last year handed SLUG a $4.8 million job training contract (see "SLUGs and Suckers" 3/10/04).

Sowing cash, reaping questions

Under Nuru's dynamic leadership, SLUG morphed from a ragtag network of horticulturalists into a major operation with an annual budget of roughly $2 million, about 100 employees, and contracts with a wide range of city agencies. SLUG describes itself as a nonprofit "that provides employment opportunities and training to individuals who are interested in gardening and the greening of our city."

Those activities screeched to a halt last summer when the nonprofit buckled under a debt of more than $1 million, briefly shutting its doors and canning all but two or three staffers.

In the wake of the meltdown, the Office of the Controller, the city's fiscal watchdog, decided last October to audit SLUG's books. The audit hasn't been released yet, but e-mail correspondence we obtained suggests SLUG may have engaged in creative accounting.

In an e-mail sent to the Mayor's Office late last year, associate auditor Deborah Gordon wrote, "My initial findings are that the agency did not keep its financial records according to the federal guidelines" required by nonprofits receiving community development grants.

Gordon raised questions about whether SLUG's bills to the city represented the precise accounting required for the use of public funds, or dummied numbers. "You will notice," she wrote, "that the invoices that were submitted to your office included a schedule of administrative costs that never changed from month to month. This is sometimes an indication that actual costs are not being used to prepare the invoice."

SLUG also kept shoddy records that may have allowed the nonprofit to misuse funds, Gordon continued, noting the lack of strict controls to avoid the improper comingling of public and other funds.

As a cautionary note, Gordon pointed out that this "work has not been reviewed by my supervisors, so please be aware that my conclusions are my own at this point."

Reached by phone, the Controller's Office declined to comment further on the matter.

Screwing the city

The debt that nearly buried SLUG last summer included $468,000 in unpaid state and federal payroll taxes (somewhat ironic since SLUG is fueled by taxpayer dough) and $518,000 owed to private businesses, including Wells Fargo, A-1 Fence, and South City Lumber, according to a rescue plan the nonprofit submitted to the city.

SLUG also owed money to a pair of local government agencies: the Port of San Francisco, which hired the company to do wetlands restoration, and the San Francisco Public Library, which advanced SLUG roughly $36,000 to run a tool-lending center on San Bruno Avenue.

When SLUG hit the skids, the tool-lending center closed, and the library funds apparently evaporated. "We haven't received anything from SLUG in terms of remuneration," library finance director George Nichols said.

SLUG's Gomwalk tells a different story. In an e-mail to us, Gomwalk said SLUG and the library were still trying to figure out "whether SLUG owed any funds to the library."

He said, "It was likely that SLUG had not billed the library for all expenses incurred by the Tool Lending Center ... [and] there was no sign of malfeasance or misspending."

Port spokesperson Renee Dunn said SLUG still owes the port about $5,000 for plants that were purchased but never used for the wetlands project.

Gomwalk admits as much and said SLUG will pay its debt to the port. "SLUG has never at any time not intended to fulfill its obligations and looks forward to meeting its requirement with the Port Authority this spring," he said in the e-mail.

Gone to the dogs

St. Mary's Urban Youth Farm sits alongside Highway 280 on a verdant four-acre swatch of land. A SLUG project, the farm was supposed to be an oasis, a safe place for kids from the adjacent Alemany housing projects to go and stay out of trouble.

At this point, though, the place is a wreck. The land that yielded a cornucopia of herbs and produce not long ago is now overgrown and weed-ridden. Junk is strewn around it. And a greenhouse, built by SLUG in 2001 with a $95,000 grant from the Mayor's Office, sits abandoned, most likely ruined by neglect. The crumbling, debris-littered granite floor inside the greenhouse is home to stray dogs; the only plants are weeds growing out from rain gutters on the roof.

Despite such apparent failures, Gomwalk defends his organization's record. "SLUG contributes to the well being of residents and neighborhoods in every San Francisco District [by] providing environmental stewardship, supporting community gardeners, [and] providing employment to those least employable," he said via e-mail.

According to Gomwalk, "SLUG's work in urban agriculture is nationally recognized. Experts, students, and forerunners in the field come to learn from us and replicate our models."

E-mail A.C. Thompson and Matthew Hirsch


April 7, 2004