Shelley Friend Turns Self In

A fundraiser for former Secretary of State Kevin Shelley surrendered to authorities Friday after being charged with funneling $125,000 of taxpayer money into Shelley’s campaign account. The funds came from a state grant Shelley had helped secure to build a San Francisco neighborhood center.

The complaint against Julie Yang Lee, a prominent activist in San Francisco’s Chinese community, marks the first criminal action brought over a broad series of allegations that forced Shelley, a rising star in the Democratic Party, to resign last month.

The complaint and a 15-page affidavit from investigators filed in San Francisco Superior Court do not include any evidence that Shelley was aware of Lee’s actions. Nathan Barankin, the spokesman for Atty. Gen. Bill Lockyer, said his office “does not anticipate filing any further criminal charges at this time.”

However, a parallel federal grand jury inquiry is ongoing, and some other allegations against Shelley -- including that he accepted an unrelated campaign donation in his state office -- could lead to campaign finance violation charges, which are of a less severe nature.

Shelley was traveling out of the country Friday and not available for comment, a spokesman said. Shelley has consistently denied that he was aware of Lee’s actions.

Lee, 58, surrendered to the San Francisco district attorney and posted $250,000 bail, said her lawyer, Steven Gruel. She faces eight felony charges and one misdemeanor count. The accusations include grand theft, forgery, embezzlement and preparing false documentary evidence.

If convicted on all counts, Lee could be sentenced to 14 years and four months in prison and be fined as much as $500,000, the authorities said.

“Ms. Lee intends to fight these charges,” Gruel said. “We’re looking forward to seeing what the evidence consists of, not just what’s been in news articles.”

The prosecution documents allege an elaborate scheme in which Lee persuaded five people to write checks of $25,000 each to Shelley’s campaign account for his 2002 race for secretary of state.

The donors included a real estate agent who had worked in Lee’s real estate office, an architect who was to build the community center, and the architect’s brother.

Some were political neophytes who had never before made donations and did not understand until later what had been done in their names, authorities contend. Lee told the architect to write the check as a favor to her because she had already made all the political contributions to Shelley that she could, the complaint said.

Lee reimbursed the donors out of $492,500 she obtained in 2001 from the state grant Shelley had lined up for her nonprofit group while he was Assembly minority leader, investigators allege. The grant was supposed to pay for construction of the San Francisco Neighbors Resource Center, which was never built.

Authorities say that to obtain that money initially, Lee forged an invoice for $621,300 in architectural services and submitted it to the state’s Department of Parks and Recreation. Lee told the grant officer that “her legislator” wanted the grant to be paid out immediately, the complaint said.

The authorities say that after the FBI began making inquiries, Lee gave the architect for the project two packets of false invoices and other documents to try to back up her story. The architect turned the documents over to the FBI, which had him telephone Lee to discuss the documents while investigators recorded the call.

Lee, who sold real estate, also allegedly told two sets of property buyers, as they were about to sign final papers, that they would have to write extra checks to Shelley’s account for additional amounts: $30,000 for one and $50,000 for the other.

The authorities said both amounts were apart from the purchase prices for the sites in question. The court complaint identifies the property purchasers as Alex and Patrick Hsu, and Eliana and Abel Maldonado. The $50,000 donation was the largest single gift Shelley received in his successful campaign for secretary of state.

Shelley, himself a San Franciscan, and Lee had a close relationship during his time in politics. He hired Lee’s son, Andrew, to work in the secretary of state’s office in 2003. State auditors later determined that Andrew Lee had been promoted to a permanent civil service job in a manner that made it difficult for anyone else to apply for it.

The auditors also found that the scores on Lee’s eligibility exam had been doctored. He later left work on disability for a back injury resulting from lifting boxes.

The attorney general has taken steps to revoke the nonprofit status of Julie Yang Lee’s community center, whose board voluntarily voted to dissolve last September.

Times staff writer Tim Reiterman contributed to this report.