Shady financial dealings mar the "Run, Ed, Run" campaign

Behind the cute campaign posters lurk some shady characters with a financial self-interest in keeping Mayor Ed Lee in office.

Not only do the groups behind the campaign urging Mayor Ed Lee to run for mayor get lucrative city contracts, sometimes with Lee's help, but at least one of the companies has also made direct payouts to Chinatown power broker Rose Pak, who arranged to place Lee in the Mayor's Office and has been coordinating the campaign to keep him there.

This latest revelation, from documents uncovered by the Guardian, comes as other local media outlets have been exposing the financial self-interest that Pak, former Mayor Willie Brown, and their allies have in urging Lee to break his word and run for a full mayoral term, including a devastating front page article in today's Chronicle.

Reporter John Cote writes that Progress for All, the group behind the “Run, Ed, Run” campaign, “has been bankrolled almost entirely by a small group of politically connected individuals, some of whom have received millions of dollars in city contracts in recent years.” Among them is Robert Chiang, owner of Chiang CM Construction, which has received millions of dollars in city contracts despite lawsuits and rulings by regulators alleging that the company violated a variety of wage laws.

Chiang CM has also paid Pak personally at least $10,000, according to her tax return form that she filed with the city back in 2002 when she bought a Rincon Hill condominium for half-price through a city affordable housing program. The tax form listed that payment under “miscellaneous income,” along with $12,000 from Emerald Fund, the politically connected developer of the project, “an apparent violation of regulations governing the distribution of the discount housing,” according to an Examiner article at the time (“Affordable-housing flap,” 2/24/03). But the Brown Administration, which approved Pak's purchase of the condo, refused to take any action against Pak, a close ally of both Brown and Lee.

We reached Pak on her cell phone to discuss her financial ties to Chiang CM and what they paid her for, and after we explained our findings three times, she said, “I don't remember,” and hung up the phone. When we called the company for comment, we were told “nobody is available to speak on that right now.”

More recently, the Examiner has reported on the millions of dollars in city contracts that Lee has helped steer to other key Progress for All leaders, including the Chinatown Community Development Center, whose executive director, Gordon Chin, also leads Progress for All. In addition to its city contracts, documents obtained by the Guardian also show that on Dec. 10, 2010, CCDC entered into a contract with Central Subway Partners – which is building the Central Subway project long pushed by Pak and Lee, but criticized as an overly expensive boondoggle by many transit activists – to be paid up to $810,000 for unspecified services that “will be issued on an Annual Task Order basis.” Chin hasn't yet returned a Guardian call for comment.

The Chronicle also broke the story about Pak urging Recology – which just last month was awarded a lucrative city contract (with Lee's support) giving it a monopoly over all aspects of waste management in the city – to improperly have its employees work for the “Run, Ed, Run” campaign. And the Bay Citizen has also exposed the financial self-interest of Progress for All backers, which Judge Quentin Kopp and local Democratic Party chair Aaron Peskin have separately called for prosecutors and regulators to investigate.

“Unlike all other candidates who must abide by the strict $500 contribution limit and source restriction (no corporate, union or City contractor money), Progress for All has been able to raise unlimited amounts from any source, making it easy to amass large sums of money for its efforts,” Peskin wrote in a July 28 letter to Ethics Commission director John St. Croix, requesting an investigation. The Ethics Commission is scheduled to discuss Progress for All at its Aug. 8 meeting.

Despite her considerable power and influence – including arranging regular trips to China for public officials, including Lee and Board President David Chiu – Pak's 1999 tax return indicated she had an adjusted gross income of just $31,084. On her application, Pak reported a $60,000 income in 2002 as a “self employed consultant,” yet a whopping $73,414 in her checking account.

Although Maggie LaRue, the inclusionary program manager, wrote Pak a letter on June 17, 2002 challenging the “inadequate documentation” of her income in the application, the Mayor's Office ultimately approved her purchase of a swanky two-bedroom apartment at 400 Beale Street for just $300,000, although it was valued at $580,000.

Although Pak seems to have fairly steady income from the vague consulting work that she does, a request for information from the Office of the Treasurer and Tax Collector indicates that she doesn't have a business license and hasn't paid any local taxes, even though city laws require a license from any “entity engaging or about to engage in business for seven or more days a year in San Francisco.”

Lee's office has consistently denied knowledge of or connections to the Progress for All campaign, although the Chronicle has reported that Lee does plan to get into the mayor's race, probably next week. The deadline to file for a run is Aug. 12.