Fall Gal

A money-laundering scandal may have helped bring down former Secretary of State Kevin Shelley. But indicted political maven Julie Lee stands to pay the ultimate price.

In the autumn of 2000, the more than 600 people crammed into Chinatown's cavernous Meriwa Restaurant for a dinner hosted by the venerable San Francisco Neighbors Association heard community activist and political maven Julie Lee deliver some exciting news. After years of false starts, a resource center to serve the burgeoning Chinese-American community on the city's west side — something many in the audience had long agitated for — was about to be realized.

But Lee wasn't the only bearer of good news.

At her side (and the main attraction) was then-Assemblyman Kevin Shelley, who a short time earlier had helped procure for an obscure group formed by Lee and a few others a $500,000 state parks grant as seed money for the center. Lee, a Shelley ally whose fundraising proclivities were soon to play an important role in his successful bid to become California's secretary of state, made sure that her high-profile political guest basked in the glory.

A giant cardboard replica of a half-million-dollar check — which Lee personally paid to have produced — was trotted out from behind the dais, and the crowd erupted in applause as Shelley ceremoniously presented it to her.

Few could have realized that the object of the evening's fanfare would figure in one of California's most spectacular political meltdowns. Shelley, once a rising star in state politics and the son of the late former San Francisco Mayor and Congressman Jack Shelley, resigned in disgrace as secretary of state last year, in part because of a money-laundering scandal in which funds for the resource center wound up in the coffers of his successful 2002 campaign.

The center was never built. Lee's group, the San Francisco Neighbors Resource Center (SFNRC), was disbanded, its assets seized by the U.S. Attorney's office. And in what may be the final act of an unsavory political morality play, Lee goes to trial in January to face an array of felony charges that she illegally funneled money to Shelley and lied to cover it up.

Lee is on the hook for eight felony counts from a joint state and county prosecution, including grand theft and embezzlement of the grant funds. Prosecutors contend that she persuaded several people who've agreed to testify against her to make large contributions to Shelley, and reimbursed them with $125,000 from the grant.

She is also accused of persuading two home buyers for whom she was acting as a real estate agent to contribute $50,000 and $30,000, respectively, to Shelley as an off-the-books part of the purchase price of their homes. Although counted among the former secretary of state's most generous donors, each later told authorities that they didn't even know who Shelley was.

On the federal side, Lee faces mail fraud and witness tampering charges for allegedly falsifying documents sent through the mail to justify the center's expenses and telling several people through whom funds were purportedly laundered to lie to investigators.

Shelley's once-luminous political career is in tatters, nearly 21 months after resigning as the state's top election official. At the time he stepped down, he also faced embarrassing scrutiny for allegedly mistreating his staff and for his office's mishandling of millions of dollars in federal voter-outreach funds. Although a half-dozen state and federal entities were said to be investigating him when he left office, Shelley was never charged with a crime. He has proclaimed that he knew nothing of the alleged money-laundering scheme.

While declining to discuss Lee or the alleged campaign irregularities, the former secretary of state, in his first media interview since leaving office, tells SF Weekly that his life has "finally returned to some level of normalcy" after what he calls the "feeding frenzy" surrounding his departure from Sacramento. The man who at one time was often mentioned as a future governor is now practicing law out of his Glen Park home and doing political consulting for Platinum Advisors, the well-connected San Francisco-based lobbying group headed by Darius Anderson, the former chief fundraiser for ex-Governor Gray Davis.

Indeed, Shelley's friends in high places appear to have come through for him in a big way. Records show that a who's who of Democratic politicians, led by former state Sen. John Burton and Assembly Speaker Fabian Nunez, helped him raise more than a quarter-million dollars for a legal defense fund that even Shelley's lawyer, criminal defense attorney Matt Jacobs of Sacramento, says appears no longer to be needed.

Yet the zeal with which state and federal prosecutors have pursued Lee — who could face up to 44 years in prison if convicted of all the charges against her — compared to Shelley's relatively soft landing, has ruffled feathers within the city's Chinese-American community. In a milieu in which Lee had become a household name as a political mover-shaker, she is widely perceived to have been unfairly singled out for prosecution in the Shelley affair, regardless of whether people believe she is innocent or guilty.

A half-dozen people have been granted immunity in exchange for their cooperation in the case against Lee. They include Jeffrey Chen, her former business associate and legal adviser, and Bowman Leong, a former Lee crony who told a grand jury that he personally handed Shelley a $25,000 campaign check that prosecutors say was reimbursed from the same funds Shelley helped procure for the center.

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