Key figure in Oakland FBI corruption case sought $225,000 in city grants

One of many individuals who seems to be on the heart of the FBI’s ongoing investigation of public corruption in Oakland, Mario Juarez, tried, 4 years in the past, to acquire lots of of 1000’s of {dollars} from a metropolis grant program meant to assist struggling companies, The Oaklandside has realized. 

And one of many metropolis officers ready to approve the cash was Larry Gallegos, then the mission supervisor for town’s Financial and Workforce Growth Division. 

Gallegos is seemingly referenced within the FBI’s case towards former mayor Sheng Thao, her companion Andre Jones, and David and Andy Duong, who’re all accused of conspiracy and bribery associated to metropolis contracts. Based on the feds, a metropolis worker matching Gallegos’ job description was briefly promoted to a key position within the metropolis’s forms at Thao’s route to facilitate the awarding of a multi-million greenback homeless housing contract to an organization run by the Duongs and Juarez. Based on prosecutors, Thao did this after receiving bribes.

Juarez’s 2021 grant functions — solely separate from the allegations on the coronary heart of the FBI’s case — have been finally unsuccessful. However they alarmed one Oakland staffer who expressed concern that town risked being taken benefit of, in accordance with public data. Different metropolis employees didn’t seem to share these worries.

Neither Juarez nor Gallegos have been charged with any crimes or accused of violating metropolis guidelines in relation to the FBI’s corruption probe or the 2021 grant functions.

However Juarez’s try to acquire the grants reveals a historical past of the 2 males working collectively, years earlier than the FBI raided the mayor’s residence and federal prosecutors unsealed an indictment describing a fancy bribery scheme allegedly centered round Thao.

Who have been ‘Co-conspirator 1’ and ‘Metropolis worker 1’?

Juarez emerged final 12 months as a key determine in an FBI probe of alleged corruption in Oakland after he was targeted by gunmen exterior his Fruitvale residence. The taking pictures, which occurred simply days earlier than the FBI raided Thao’s home and different places, left Juarez unhurt however rattled. He told police officers who responded to the taking pictures that he might have been focused due to his involvement in an “investigation.”

Juarez later told the San Francisco Chronicle that he was nearly killed as a result of he is aware of an excessive amount of. “The folks behind this assault — those who imagine energy makes them untouchable — are mistaken,” he mentioned. “I can’t cease. I can’t be silenced. And the reality will come out.” 

By that time, the FBI was already trying right into a housing firm Juarez began with Oakland businessmen David and Andy Duong. The corporate, Evolutionary Houses, was in search of a cope with town of Oakland price hundreds of thousands of {dollars} to deal with homeless folks in modular houses. Federal prosecutors allege that the Duongs bribed Thao and her companion, Andre Jones, in pursuit of the profitable, however finally unsuccessful deal. The Duongs, who additionally personal California Waste Options, Oakland’s curbside recycling contractor, additionally sought favors for his or her recycling agency, the feds allege.

Juarez wasn’t named within the indictment unsealed in January, however the doc repeatedly refers to an individual referred to as “Co-conspirator 1,” whose description intently matches Juarez. Co-conspirator 1, prosecutors wrote, is “an energetic member of the native political group and native businessman” who co-founded a housing firm with the Duongs. 

Juarez is an area enterprise proprietor who tried his hand at a number of totally different ventures through the years, together with actual property. Based on public data, Juarez and the Duongs created Evolutionary Houses in September 2022. Quickly after, they started pitching the corporate’s product — delivery container houses to shelter the unhoused — to native authorities companies, together with Oakland. 

Juarez has additionally been energetic in metropolis politics for years and ran unsuccessfully for Oakland Metropolis Council. 

In 2022, Juarez created an unbiased expenditure committee that spent tens of thousands of dollars to print and distribute mailers attacking Thao’s principal opponent within the mayoral election, Loren Taylor. 

Of their indictment, federal prosecutors described Co-conspirator 1 as the one that “reached out to an area print store to provoke the fee of unfavourable mailers focusing on Thao’s opponents within the mayor’s race,” and so they alleged that this individual used cash from the Duong’s recycling firm to pay for the assault advertisements.

Alongside Thao, Jones, and the Duongs, Co-conspirator 1 “engaged in a bribery and corruption scheme,” prosecutors declare. And one key to the alleged corruption scheme, in accordance with prosecutors, was the appointment of an individual referred to within the indictment as “Metropolis worker 1” to a high-ranking put up — interim deputy director of town’s Housing and Group Growth Division. 

On this position, Metropolis worker 1 would be capable of affect a possible deal between Oakland and Evolutionary Houses. 

Primarily based on interviews and public data, The Oaklandside has confirmed that “Metropolis worker 1” was Larry Gallegos. 

Contacted for this story and requested if he’s Metropolis worker 1, Gallegos advised The Oaklandside, “Sadly for the reason that case remains to be pending, I’m unable to make any feedback at the moment.”

Information that town handed over to federal investigators in response to a subpoena included a 2023 Microsoft Groups chat the place Harold Duffey, who was interim metropolis administrator on the time, knowledgeable town’s new housing director Emily Weinstein that Gallegos was being appointed as the brand new deputy director of her division. 

The identical data included a WhatsApp textual content conversations between Juarez and Gallegos from September 2023 regarding an emergency shelter ordinance handed by the Oakland Metropolis Council. 

Whereas serving to run Oakland’s housing division, Gallegos additionally traveled to Vietnam as a part of a authorities junket with Thao, David Duong, and different officers. On his financial disclosure kind, Gallegos revealed that the Duong’s enterprise group, the Vietnamese American Enterprise Affiliation, paid for his ticket.

Metropolis staffer spots “purple flags” in Juarez’s grant functions

Three years earlier than Metropolis worker 1 was allegedly being moved right into a key bureaucratic place by Thao and others, Juarez was in search of lots of of 1000’s of {dollars} from a little-known Oakland grant program. And Gallegos was operating the grant-making course of for town.

In September 2021, Juarez utilized for grants from town’s façade and tenant improvement program, which helps Oakland retail companies with matching grants to pay for bodily enhancements, akin to new indicators, lighting, and landscaping. This system palms out two sorts of grants: a façade enchancment grant for property house owners seeking to repair up their buildings, and tenant enchancment grants for landlords and small companies who’re leasing property need to make enhancements like portray, adorning, and repairing electrical and plumbing techniques.

Juarez submitted three functions to the tenant enchancment program to enhance three adjoining properties on the nook of Excessive and East twelfth streets.

Elliott Grossman, then an financial analyst in Oakland’s Financial and Workforce Growth Division who was assigned to work on Juarez’s requests, flagged the functions as a result of they included solely imprecise descriptions of the three corporations Juarez had not too long ago included, which have been leasing the three properties, in accordance with metropolis data. Grossman additionally famous that the way in which Juarez described the three corporations in his functions didn’t match what was listed on the businesses’ city-issued enterprise licenses. 

On Sept. 16, 2021, Grossman wrote an e-mail to his direct supervisor, an city financial analyst named Kimani Rogers. Within the e-mail, which had the topic line “Purple Flags,” Grossman wrote that he was involved that Juarez, an actual property developer, had created the three corporations to benefit from the grant program. Juarez, Grossman speculated, might have had plans to make use of metropolis cash to extend the worth of properties he deliberate on promoting, which was not the aim of this system.

“If we push this mission via, any developer may are available, put a faux enterprise kind on a FTIP utility, develop a property utilizing Metropolis of Oakland cash, and flip it,” Grossman wrote. “From my evaluation, this seems to be Mario’s intent, multiplied by three.”

Juarez was in search of $75,000 in metropolis funds via every grant for a complete of $225,000, in accordance with copies of the grant functions The Oaklandside obtained via a California Public Information Act request.

In the identical e-mail to his supervisor, Grossman wrote that he was frightened by the ignorance Juarez provided about his three corporations. One was described as a “vogue retail + ladies + manufacturing” agency, one other as an “electrical retail retailer,” and the third a “actual property incubator for retailers.” Grossman wished extra info, together with a marketing strategy for every firm, advertising materials, retailer layouts, and different particulars.

He additionally famous a contradiction: in accordance with Grossman, the city-issued enterprise licenses for the businesses described every one as a “actual property developer.”

“That’s 100% not permissible,” Grossman wrote.

Rogers didn’t reply to a request for an interview. After we contacted Rogers, metropolis spokesperson Sean Maher advised The Oaklandside that it’s customary metropolis protocol to route all communications via town’s public info officers. “Right now we do not need something so as to add on this matter.” 

Grossman additionally raised his considerations together with his boss, Gallegos. 

Jean Walsh, a metropolis spokesperson, confirmed not too long ago that Gallegos supervised the façade and tenant enchancment program in 2021. “On this position, he finally oversaw all features of this system,” she mentioned by e-mail.

Two years later, in March 2023, Gallegos was appointed the interim deputy director of Oakland’s Housing and Group Growth Division. 

Based on the indictment, “Co-conspirator 1” later defined to Andy Duong in a textual content message why “Metropolis worker 1” needs to be promoted excessive up within the metropolis housing division: “I wished him as a result of whereas on the Metropolis he be sure that my initiatives bought performed and grants got to me.”

Gallegos abruptly left his job with town on Jan. 17 of this 12 months, the identical day federal prosecutors unsealed their indictment of Thao, Jones, and the Duongs. 

In response to questions in regards to the facade enchancment program, Gallegos wrote in an e-mail to The Oaklandside that he was in command of supervising metropolis employees for this system in East Oakland solely.

Gallegos mentioned he didn’t recall Juarez’s functions or discussions about them together with his employees. He referred to as Juarez an “acquaintance” he met via work.

“As public servants with restricted assets and staffing ranges, employees are anticipated to ship high quality service to all members of the general public,” Gallegos mentioned. “As such, employees are unable to be selective about who they select to work with or help however should present high quality service if minimal program eligibility standards and circumstances are met.”

Grossman and Juarez declined to be interviewed. 

Juarez felt he was being handled unfairly and sought Gallegos’ assist

Grossman had additionally let a few of his considerations be identified to Juarez, telling him he may solely apply for one grant per calendar 12 months, and that builders don‘t qualify for the tenant grant. 

In response, Juarez emailed Grossman and Gallegos, writing that he had labored with Gallegos “on many TIP/FIP initiatives collectively” up to now. Juarez accused Grossman of creating a “important and faulty” interpretation that actual property builders can’t apply for the tenant enchancment grant. Juarez additionally argued that he was allowed to submit functions for 3 grants as a result of he was doing so via three totally different restricted legal responsibility corporations. 

Juarez additionally wrote that he felt metropolis employees have been treating him unfairly due to his race and the placement of his companies.

“I believe there’s a nice injustice being utilized right here and I imagine it’s associated to the ethnicity of the proprietor of the businesses and the placement being within the Fruitvale District,” Juarez wrote.

After Juarez aired out these grievances, Grossman and his supervisors continued to work on the functions and transfer them ahead within the course of.

On Sept. 21, Gallegos emailed Juarez that he would both must acquire new metropolis enterprise licenses for the three companies or amend his current licenses to make it clear they weren’t actual property growth corporations. Juarez responded that he modified the descriptions of his companies on town’s web site.

On Sept. 27, after extra typically back-and-forth over e-mail, Grossman advised Juarez town was prepared to maneuver ahead with an preliminary go to of the properties. Based on emails, the pair met on Sept. 30 and Grossman adopted up asking Juarez for his mission designs to present to the city-contracted architects for evaluation. 

Over the following month, Juarez, Grossman, and different metropolis officers exchanged messages in regards to the dimensions of the façade enhancements that Juarez wished. On Nov. 1, Gallegos intervened, asking Grossman for an replace on the mission. Grossman responded that based mostly on the bodily dimensions of every parcel, Juarez’s properties wouldn’t be eligible for the utmost grant quantities. 

Juarez wasn’t happy. In a follow-up e-mail, he requested that town “present full matching funds as much as the utmost allowed by this system to all Oakland companies.” Grossman requested his boss Gallegos for recommendation on proceed.

The next day, Grossman emailed Juarez, “Upon supervisorial evaluation per your request, $30k has been allotted to every of your ongoing three façade initiatives.”

“That is fantastic information,” Juarez wrote again.

Nevertheless, in accordance with public data, Juarez didn’t advance his utility. Metropolis officers final tried to contact him in mid-2022. It’s not solely clear why Juarez withdrew.

By late 2022, Oakland’s heated mayoral election was in full swing and Juarez had turned his consideration to undermining Sheng Thao’s opponents within the mayor’s race. Based on courtroom data, Juarez was chargeable for sending out political mailers and establishing web sites that attacked Loren Taylor and others.

Thao narrowly received the election and in 2023, in accordance with courtroom data, public data, and interviews, Juarez, the Duongs, and Thao started discussing the potential deal to have Evolutionary Houses promote modular housing to Oakland. 

However Juarez had a falling out with the Duongs after an alleged fight on the Duong’s workplace constructing on Embarcadero in Could 2024. The subsequent month, the taking pictures came about exterior Juarez’s residence, and days later, the FBI raided Thao’s residence together with David and Andy Duong’s residences, and the places of work of California Waste Options, setting in movement the FBI’s ongoing probe.