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Unsupervised city workers accused of brazen theft, cheating taxpayers

It was their own Treasure Island.

Bored and unsupervised, five highly paid electricians working for the city of San Francisco spent years allegedly stealing from taxpayers during a remarkable binge that involved sex parties with prostitutes, moonlighting on city time and fraudulent billing to pay for their suburban lifestyles.

Investigators say they charged the city hundreds of thousands of dollars for personal purchases, including BMW tires, lease payments on a truck and even remodeling a home in Danville’s tony Blackhawk subdivision. The men are accused of running a private contracting business on city time, collecting government paychecks while working on unauthorized jobs and billing the costs to taxpayers.

And they are accused of hiring prostitutes for sexual encounters at their remote worksite on the former Navy base in San Francisco Bay and stocking a private bedroom in their office suite with liquor, condoms, Viagra and pornographic DVDs.

They were known as the Hetch Hetchy Power Crew, an elite unit named for the reservoir in Yosemite National Park that supplies the city with hydroelectric power. Their difficult, sometimes dangerous job was to maintain the city’s high-voltage electrical system, especially during emergencies.

Prosecutors accuse Donnie Alan Thomas of masterminding the theft scheme. He is charged with 41 felonies.San Francisco Police DepartmentProsecutors accuse Donnie Alan Thomas of masterminding the theft scheme. He is charged with 41 felonies.

Five members of the power crew were arrested last year after a whistleblower complained that crew leader Donnie Alan Thomas, 46, was moonlighting on city time. Today, the men, along with two women accused of creating fake invoices to further the scheme, are awaiting trial in San Francisco Superior Court on felony charges. All have pleaded not guilty.

A never-publicized investigator’s affidavit and other documents filed since the arrests offer new insights into how the city gave the power crew extraordinary autonomy – and how, under the direction of Thomas, the workers allegedly exploited that freedom to carry out a particularly brazen theft scheme.

At a time when fiscal crisis has forced deep cuts in public services throughout California, the case of the Hetch Hetchy Power Crew is a cautionary tale about how easily taxpayer dollars can be squandered without proper oversight and auditing.

As prosecutor Ana Gonzalez told a judge last year, “During the last four years of his employment, Thomas stole from the city in every conceivable way.” Among the alleged thefts pulled off at Thomas’ direction, according to court records, the crew:

  • Spent thousands in city funds to remodel and landscape Thomas’ $1.5 million home in Blackhawk, billing the city for chandeliers, a $4,350 “classic Italian fountain” and $18,000 worth of “petrified seashore flagstone.”
  • Moonlighted for other government agencies while on city time, allegedly bribing a federal employee with envelopes stuffed with thousands of dollars in cash to get electrical contracting jobs.
  • Billed taxpayers for a dizzying array of private purchases – cell phones, bar stools, a PalmPilot, custom parts for a Ford Mustang and $880 worth of meat for a barbecue.

The theft spree went on for about four years, investigators assert. By the time it was over in 2007, the workers had billed taxpayers for more than $235,000 in personal purchases and charged the city thousands more for time they had never actually worked, court records show.

Miles Bonner has been charged with 41 felonies for his role in the alleged scheme.San Francisco Police DepartmentMiles Bonner has been charged with 41 felonies for his role in the alleged scheme.

Crew leader Thomas, whose city pay was more than $160,000 per year, is charged with 41 felonies, including theft of public funds and embezzlement. Electrician Miles Bonner, 61, whose city salary with overtime topped $130,000 per year, also faces 41 felony charges. Supervisor John Rauch, 70, who retired in 2005, and crew members Robert Mazariegos, 57, and Vincent Padilla, 28, each face one felony charge.

For accusations of falsifying city invoices, Jean Quiroz, 43, former vice president of a defunct city vendor called Centennial Distributors, was charged with 14 felonies; Elizabeth Bradford, 41, a saleswoman at Cole Hardware, another city vendor, was charged with 12 felonies. The defendants are free on bail.

Bonner, said defense lawyer Colin Cooper, is “a guy who’s never been in trouble forever.” He has been “completely cooperative and forthcoming” with the probe, Cooper said. Lawyers for the other defendants didn’t respond to requests for comment.

Records show that Mazariegos also has been cooperative: He told investigators that he frequently didn’t have to show up for work to collect his full $110,000-a-year salary and instead spent two days a week partying with a prostitute.

“Time on their hands”

Susan Leal, who was general manager of the city’s Public Utilities Commission at the time an anonymous tipster reported Thomas, said she was deeply discouraged by the scandal.

“But you have to fight those feelings and realize you’ve got to get rid of these people and they have to be prosecuted,” she said in an interview.

Robert Mazariegos told investigators that he spent two days a week partying with a prostitute. He is charged with one felony.San Francisco Police DepartmentRobert Mazariegos told investigators that he spent two days a week partying with a prostitute. He is charged with one felony.

Her successor, Ed Harrington, says the San Francisco PUC has ordered a series of reforms, starting with pulling “all the people on T.I., that isolated outpost, back in the city,” where they have regular contact with their managers. Thomas’ direct supervisor, Marla Jurosek, was reassigned, a spokesman said. Jurosek didn’t respond to an interview request.

To investigators, it was obvious that the crew’s isolation made the theft scheme possible: While the crew itself was based on the island, Thomas’ supervisors worked downtown and had “no idea what his job was,” as one official familiar with the case put it. A contributing factor was the nature of the work – waiting for calls to fix outages or downed power lines.

Thomas, the alleged ringleader, grew up in Vallejo and was trained as an electrician at the old Mare Island Naval Shipyard, court records show. After Mare Island was decommissioned, he got a job at the Oakland Army Base. In 1997, as that base, too, was closing he went to work for the city as an electrician. Eventually, two former co-workers from Oakland, Bonner and Mazariegos, joined him on the power crew.

For years, Bonner had moonlighted as an electrical contractor. Thomas allegedly saw possibilities in Bonner’s side business, Tri Delta Electric, and “decided to go for it,” the investigator said. Thomas is accused of devising a scheme to turn as much as 100 percent profit doing electrical work at decommissioned military bases.

John Rauch faces one felony charge. He was the crew's supervisor until he retired in 2005.San Francisco Police DepartmentJohn Rauch faces one felony charge. He was the crew's supervisor until he retired in 2005.

As district attorney’s investigator Matt Irvine described the scheme in an affidavit, costs and materials were billed to the city, and the crew performed the outside work while on the city payroll.

Files on Thomas’ computer suggest that as Tri Delta Electric, the crew began moonlighting on the city’s dime in 2001, with a $2,975 job at the Treasure Island Yacht Club.

In 2002, the men went to work at the old Oak Knoll Naval Hospital in Oakland, using city trucks and equipment to repair downed power lines. From 2002 to 2006, they did electrical work for the environmental cleanup at the Point Molate Naval Fuel Depot in Richmond, which also had been decommissioned. They pocketed $130,000 from those jobs, court records show.

Starting in 2006, the crew was paid about $100,000 for emergency electrical repairs at the Presidio of San Francisco. Also, in 2007, the crew did a $30,000 repair job at the U.S. Coast Guard station in Monterey. That job required weekend work, and Thomas authorized city overtime for the crew, records show.

In all, the crew was paid more than $400,000 by other government agencies, according to the records.

Thefts and bribes

Initially, “we were all nervous” about doing so much private work on city time, Bonner told investigators. Still, moonlighting took up more and more of each work day.

Vincent Padilla faces one felony charge for his role in the alleged theft. San Francisco Police DepartmentVincent Padilla faces one felony charge for his role in the alleged theft.

In his own statement to investigators, Mazariegos said that between his side jobs and days off with the prostitute, he spent less than half of his work week on city business.

Thefts and bribes were built into some projects, records show. For the Presidio job, the crew needed about $100,000 worth of wire. Investigators believe the crew bought some wire and billed it to the city and obtained more by stealing it from public agencies.

According to court documents, Thomas also is accused of taking leftover wire and selling it to an Oakland scrap dealer, pocketing $68,400. Investigators believe some of that money may have been used for payoffs to a federal employee at the Presidio who was steering contracts to the power crew.

The employee, former Presidio Trust electrician Robert Malaca, “got a kickback,” crew member Bonner told investigators: “We did a job, and we put $4,000 or $5,000 in an envelope and gave it to him.” The power crew also partied with the Presidio employee – in one e-mail, Thomas reminded him to bring money to pay the strippers at Rauch’s retirement party.

In an interview with California Watch, Malaca acknowledged receiving cash from the power crew but said the money was for the legitimate sale of wire and other items.

“Granted, they did some work for me, but I never got any kickbacks from those guys,” he said. “They never even bought me lunch, that’s how cheap they were.”

Malaca said he was interrogated by district attorney investigators about his association with the power crew, and lost his job as a result. “It is the low point in my life – I regret trying to help those guys,” he said.

Personal perks

In 2003, when he was remodeling his home in Martinez, Thomas allegedly began billing the city for expensive personal purchases.

Jean Quiroz faces 14 felony charges for allegedly falsifying invoices to help Thomas bilk the city.  San Francisco Police DepartmentJean Quiroz faces 14 felony charges for allegedly falsifying invoices to help Thomas bilk the city.

When Thomas wanted a big-ticket item, investigators say he would approach either Quiroz at Centennial Distributors or Bradford at Cole Hardware. The women are accused of writing up fake invoices to make the item look like something needed for city electrical work and taking a big markup for their trouble.

And so, in June 2003, investigators say Centennial ordered a $5,500 barbecue grill for Thomas. Quiroz is accused of splitting the purchase among 12 fake invoices for such items as an “Enerpac hydraulic machine” and a “flexible braid jumper.” The city paid Centennial $9,580 – about a 75 percent markup on the alleged scam purchase of Thomas’ grill.

In that way, investigators say, Thomas got himself cell phones, a PalmPilot, a heating and air conditioning system for the Martinez house, and, after he moved to Blackhawk, the fountain and fancy flagstone.

Thomas instructed the women on how to make up the fake invoices, they told investigators. They claimed they thought the purchases were legitimate city items, despite the false descriptions. When the city rejected an invoice, they sometimes would rebill, using a different false description recommended by Thomas, court documents show.

In addition, Thomas billed taxpayers tens of thousands more for parts, tires, custom accessories, a sound system and maintenance for his fleet of personal vehicles, which included a Ford F-350 pickup truck, a BMW M5 sedan, a BMW X5 SUV and a Ford Mustang GT, records show.

For three years, taxpayers also paid the $1,677-per-month lease for Thomas’ F-350 pickup, though the city already was providing Thomas with another truck to use for work.

Elizabeth Bradford faces 12 felony charges for allegedly falsifying city invoices.San Francisco Police DepartmentElizabeth Bradford faces 12 felony charges for allegedly falsifying city invoices.

Other power crew members took advantage of the billing scam, prosecutors say. Bonner got the city to pay $14,000 for custom shutters for his home in Pittsburg and $4,200 for repairs to his truck. Mazariegos said he billed the city for a $4,000 outboard motor for his scuba boat and outfitted his house with granite kitchen countertops at taxpayer expense.

For crew members, there was one additional perk: access to the locked bedroom that had been constructed at Treasure Island adjacent to a tool room. Upon entering the room, investigators say they discovered two beds, a refrigerator stocked with liquor, a flat-screen TV, filing cabinets with hundreds of hardcore DVDs, and a supply of condoms, lubricant and Viagra prescribed to crew member Bonner. Mazariegos said the men used the room to entertain girlfriends and prostitutes.

“I do not know what percentage of the sexual activity or viewing of pornography that occurred in that room took place during work hours,” district attorney investigator Irvine wrote.

In 2007, a San Francisco PUC official received an anonymous letter complaining about Thomas’ moonlighting, and District Attorney Kamala Harris and City Attorney Dennis Herrera began a probe.

With hidden surveillance cameras, investigators documented the comings and goings of the power crew, and it quickly became apparent that Thomas spent little time at work. Eventually, the scope of the alleged fraud became known.

Accusing the crew of “a conspiracy to defraud hardworking taxpayers,” Harris filed criminal charges in September 2009. By then, all of the crew had either quit or been fired. No trial date has been set. Thomas and Bonner face as much as 21 years in prison if convicted of all charges. 

The power crew has been reconfigured. In the first full year after Thomas’ departure, the expenses the crew billed to the city decreased by $100,000, according to court records.

Before he quit, Mazariegos filed a workers compensation claim with the city, contending he suffered injuries including “post-traumatic head syndrome” in an auto wreck in Sacramento. The city denied the claim, but Mazariegos has appealed, records show.

This story was edited by Robert Salladay and Mark Katches. It was copy edited by Nikki Werking.

Filed under: Public Safety

Comments

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charliewade's picture
You guys are to be commended. That is some AWESOME reporting. Keep it up!
Triga's picture
Terrific investigative reporting...thank you! I am not able to understand why the supervisor for this group was simply "reassigned" according to the article in the Chron...it's not like Treasure Island is across the country--it is only half way across the Bay! Why wasn't she fired?
Mark Katches's picture
Great question, Triga.
jessilu's picture
kudos to the investigator!
shannon's picture
- 'Bonner, said defense lawyer Colin Cooper, is “a guy who’s never been in trouble forever.” ' Not for long!! Great reporting. Reads like fiction.
MikeRotch's picture
Wow! How did you break this story... I never heard of this story before until I stumbled across this website doing research on California corruption for a poly-sci mid-term I have to write. I have a similar blog that is sort of a consumer advocacy/community watch dog type of contenthere, please check it out and give me your feedback. I aspire to be similar to this site... Might do some advertising here too =)
Auston's picture

Interesting post and thanks for sharing. Some things in here I have not thought about before.Thanks for making such a cool post which is really very well written.will be referring a lot of friends about this.Keep blogging

Scalloway's picture
Good article. These people should be ashamed of what they were doing. Justice prevails once again. Nice job reporting this with every detail.
Draiman for Mayor of LA's picture
Draiman – My quest to restore Leadership, Experience and Integrity to City Hall YJ Draiman Candidate for Mayor of Los Angeles (2013) I’m not a politician. You won’t get politically correct doublespeak from me, just the plain facts. The plain facts are often disturbing and as a NC Board Member I’ve never been shy from revealing the sometimes ugly truth about the way the City functions. Career politicians like the current have no interest in serving the public; rather, they use public office to serve their own interests and those of the small but wealthy cadre of greedy “special interests” who fund their campaigns in return for favors when decisions over controversial matters such as billboards and development have to be made by elected officials. All too often, the City Council’s actions support the special interests at the expense of the interests of the ordinary people like you and me. When common sense dictates that our already over-congested streets should not be further burdened by more high-density luxury condominium developments, current elected official’s side with the developers and contractors who funnel campaign contributions to further their interests. We need a Los Angeles with Financial Sustainability that is my goal. My pledge is for a “City of Los Angeles for the people” not for the politicians and special interests. ”To make our way, we must have firm resolve, persistence, tenacity. We must gear ourselves to work hard all the way. We can never let up.” YJ Draiman for Mayor of Los Angeles – 2013

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