Cole Hardware pleads guilty in SFPUC scam

We at the Guardian have long celebrated small businesses as more beneficial to San Francisco than large corporations, which often extract wealth from the community and use it for competitive advantage or political corruption. But a recent criminal case shows that even a beloved local business – in this case, Cole Hardware – can get caught up in shady dealings.

The District Attorney’s Office yesterday announced the settlement of a procurement scam case involving the San Francisco Public Utilities Commission (SFPUC) and employees of Cole Hardware. The company pled guilty to felony charges and has agreed to pay $51,545 in restitution to the SFPUC and $650 in court fines and fees.

“Our city will not tolerate city vendors who steal taxpayers’ money. We are pleased Cole Hardware has accepted responsibility for their role in this multi-level scheme to defraud the SFPUC,” District Attorney George Gascón said in a public statement.

Court records detail a scam that ran from April 2003 to October 2007 in which Cole Hardware and another city vendor worked with former SFPUC manager Donnie Alan Thomas – who pled guilty to his role in the scheme last year – to submit false invoices to the SFPUC for personal purchases.

Cole Hardware has issued a public statement explaining its role in the case and reasons for accepting the guilty plea: “For more than 50 years, Cole Hardware has stood for integrity, excellence and good citizenship in San Francisco. Unfortunately, a few years ago two trusted 20+ year employees submitted misleading invoices to the City, thereby facilitating a fraud by some of the City’s P.U.C. workers. At the time, Cole Hardware’s ownership was not aware of this misconduct. When we learned the details we terminated both employees, fully cooperated with the District Attorney’s investigation, adopted new internal policies to prevent future misconduct and offered to reimburse the City for any losses attributable to our employees. Sadly, after more than two years of huge expenses fighting the charges in court, Cole Hardware has reluctantly accepted a plea bargain. This is purely an economic decision. Cole remains committed to our mission of serving those living and working in San Francisco.”

SFPUC General Manager Ed Harrington noted in his public statement how important it is to take a hard line against this kind of fraud: “Today we have sent a strong message that the City will not tolerate public servants or vendors who attempt to fleece our hardworking taxpayers.”

There are six other co-defendants who have already pled guilty in this case: Donnie Thomas, Jean Quiroz, Centennial Distributors, Inc., John Rauch, Robert Mazariegos, and Vincent Padilla. There are three other co-defendants who have not yet pled guilty and who await their preliminary hearing: Miles Bonner, Tri-Delta Electric, and Elizabeth Bradford.