SAN FRANCISCO — A political consultant has pleaded guilty of conspiracy to defraud the United States and to making false statements to federal investigators, a Justice Department spokesman said Wednesday.
In a plea accepted without any plea agreement by U.S. District Court Judge Charles Breyer, Derf Butler, 54, of Vallejo, admitted to conspiring with others to defraud the Department of Energy by rigging a bidding process for renovation of a Lawrence Berkeley Laboratory campus building in 2013.
Although contractors seeking DOE construction work are supposed to take part in a competitive process, Butler said he worked with others to participate in submission of “fraudulent and non-competitive bids to perform the renovation of LBNL Building 84,” ensuring a developer’s $5.7 million bid was the lowest.
After a series of meetings with an FBI source who posed as that developer beginning in July 2013, Butler admitted he accepted $15,000 in cash payments and worked to coordinate with other contractors to make sure their bids came in higher than the developer’s planned bid.
Butler also admitted that he did not tell the truth when Federal Bureau of Investigations agents asked him on March 26, 2014 about his dealings. Although Butler denied taking any money or having a financial relationship with the developer, he had also asked for another $15,000 and “had multiple conversations with the developer about the financial benefits he expected to receive once the DOE contract for the renovation project was awarded,” the department said.
Butler was indicted and charged with a count of conspiracy to defraud the United States and a count of making a false statement. He now faces sentencing Jan. 23, 2019, as well as a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine for the conspiracy count, and 10 years in prison, three years of supervised release and a $250,000 fine for the false statement count.
One developer who submitted a rigged bid, B Side president Anton Kalafati, 34, of San Francisco, pleaded guilty March 9. No date has been set for Kalafati’s sentencing hearing, authorities said.
The investigation that led to the charges sprang from the FBI’s public-corruption probe of former San Francisco school board member Keith Jackson and former state senator Leland Yee, and a related investigation of Raymond “Shrimp Boy” Chow. Yee and Jackson were convicted of corruption charges in 2015.
The FBI source who posed as a developer was involved in that investigation, as well as another investigation into California Department of Veterans’ Affairs contracts.
Assistant United States Attorneys Cynthia Frey, William Frentzen, and David Countryman prosecuted the case with help from Rosario Calderon and Bridget Kilkenny. The case resulted from an investigation by the FBI and DOE’s Office of Inspector General, with help from the California Department of Veteran’s Affairs.
Contact George Kelly at 408-859-5180.