Grand Jury Hears Shelley Contributors

After being granted immunity from prosecution, two major donors to Secretary of State Kevin Shelley testified Thursday before a federal grand jury investigating his campaign finances.

Both donors maintained that they did not know Shelley when they each contributed $25,000 to his 2002 campaign, sources said.

And neither of them did any work for a community center that allegedly reimbursed their contributions with money from a state grant that had been arranged by Shelley.

The witnesses also told federal prosecutors that they signed blank checks that were later converted into donations to Shelley’s 2002 campaign, sources said.

The attorneys for the donors portrayed their clients as politically naive.

The grand jury investigation began after the San Francisco Chronicle reported last month that several individuals and businesses donated money to Shelley after receiving payments from a $500,000 state grant he sponsored as a state assemblyman, before winning election as secretary of state. The money was start-up funding for construction of a San Francisco community center.

Shelley has said he was not aware of any impropriety in the handling of the state grant or his campaign contributions.

A San Francisco construction contractor received $30,000 in grant money from the center -- which was founded by Shelley fundraiser and community activist Julie Lee -- and later made a $25,000 donation to Shelley.

But Cabrillo Construction Co. owner Ruo Wu Chen told the grand jury he did not know Shelley and did no work on the center, said Chen attorney Chris Moscone.

Moscone said a “donation” from Chen was solicited during a conversation with Lee and Chen’s brother-in-law, James Li.

The attorney said Chen signed a check but left the payee and the amount blank.

“It was not clear it was going to the [Shelley] campaign,” Moscone said. “My client had never made a political contribution in his life. He came in 1988 from China and built his business. He did not know he was doing anything wrong.”

Moscone said that Chen was paid with state grant funds even though he did no work. He also alleged that Lee came to his client with an invoice saying he did work for the money, but Chen refused to sign it.

John Burris, an attorney for Lee, declined to comment on the grand jury testimony “until the full picture is presented.”

After receiving immunity Thursday, San Francisco produce company owner Steve Chen also testified about events surrounding a $25,000 payment he received from the state grant, and his contribution for the same amount to Shelley’s campaign two months later.

Steve Chen told prosecutors that he did not know Shelley, and that he signed a blank check for the payment and gave it to Lee through an intermediary.

His attorney, John L. Williams, declined to discuss details of the grand jury testimony but confirmed that Chen had been granted immunity.

Li, an engineering consultant who was paid more than $60,000 for work on the community center project and also donated $25,000 to Shelley, was at the federal courthouse here Thursday.

But his attorney, Ann Mooreman, declined to say whether he received immunity or testified. She also would not comment on whether he served as an intermediary for any contribution.

Shelley campaign spokesman Sam Singer had no comment on the grand jury testimony.

The state grant and Shelley’s campaign contributions are also the subject of a probe by the state attorney general’s office.

The state auditor, meanwhile, is reviewing Shelley’s handling of millions of dollars in election funds.