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Detroit business partners acted as FBI informants in Nuru corruption investigation

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Two Detroit businessmen acted as FBI informants and secretly recorded San Francisco Public Works Director Mohammed Nuru and restaurateur Nick Bovis, helping the government build a sweeping public corruption case that jolted City Hall last week, The Chronicle has learned.

Under the threat of a pending federal investigation, Samir Mashni and Noureddine “Dean” Hachem began cooperating with the FBI and recorded phone calls and in-person meetings with Bovis and Nuru for months beginning in January 2018, according to a federal complaint and sources with knowledge of the investigation.

The probe led to fraud charges against Bovis and Nuru while revealing at least five alleged schemes, including the centerpiece of the government’s case: an alleged plot to bribe an airport commissioner.

The Chronicle used an FBI affidavit and confirmed the identity of the informants with sources to piece together new information in the wide-ranging case that has prompted additional investigations and calls to reform city government. The sources spoke on the condition of anonymity, which The Chronicle granted in accordance with its anonymous sources policy.

The revelations offer a window into how federal agents investigate public corruption over months or sometimes years, flipping informants in their pursuit of bigger targets.

“You try to develop sources and some of them are not just sources — they are targets,” said Rick Smith, a retired FBI special agent who runs a private investigation firm and is not involved in the case. “You turn those people to provide more information on people higher up in the chain. If you have people that are wired and confidential sources, that’s a bad combination for a defendant.”

Customers wait for their coffee at the Roasting Plant Coffee shop at San Francisco International Airport. Two owners of Midfield Concession Enterprise Inc., an airport concession business that has 34 locations, including Roasting Plant Coffee at San Francisco International Airport, were confidential informants for the FBI.

Mashni and Hachem operate Midfield Concession Enterprise Inc., an airport concession business that, according to its website, has 34 locations in seven airports around the country, including Roasting Plant Coffee at San Francisco International Airport. It’s unclear why Mashni and Hachem are being investigated. Messages to Roasting Plant Coffee’s headquarters in New York were not returned.

While the complaint doesn’t name the men and their business, the FBI affidavit describes two “confidential human sources” who made the recordings and worked with an undercover agent to document the alleged schemes. One of the sources “was previously arrested and charged with conspiracy to transport and sell stolen motor vehicles, receipt of a stolen motor vehicle, and trafficking in a motor vehicle with altered identification number,” FBI Special Agent James Folger wrote in the affidavit.

Federal court records show Hachem was indicted in Michigan in 2001 and was later convicted on the same charges. Mashni has no criminal record and is a licensed attorney in Michigan.

The confidential human sources described by the FBI had previously worked with Bovis, who owns Lefty O’Doul’s, in a failed attempt to open a restaurant inside the airport, according to the affidavit. One man did not disclose an incident involving a prior bribe to a public official before he began working with the FBI, according to the affidavit.

The men are not charged with any crimes in the San Francisco case. The FBI said it could not comment on anyone who is not charged in the case. Mashni and Hachem did not return numerous messages and requests for comment.

The FBI may have also been trying to flip Nuru when agents arrested him on Jan. 21 and told him to keep quiet about the case that was still under seal at the time. Nuru, however, allegedly told City Administrator Naomi Kelly, his boss, about the investigation and was arrested again on Jan. 28 and hit with an additional charge of lying to the FBI.

It’s not clear if federal agents had their sights on anyone else in their investigation.

Nuru is also accused of accepting gifts from a billionaire Chinese developer and receiving free and discounted work on his Colusa County vacation home. He and Bovis face 20 years in prison if convicted.

Bovis’ attorneys, Mike Stepanian and Gil Eisenberg, said they could not comment on pending litigation.

“Nick Bovis is a very nice guy, a family guy, who has done a lot for our city through the years,” Stepanian said.

Nuru’s attorney, Ismail Ramsey, said his client “welcomes and looks forward to addressing the government’s allegations in court.”

The defendants are due back in court on Thursday for a bond hearing.

While the federal charges continue to reverberate around San Francisco, and the FBI moves forward with its investigation, including raiding the office of building permit consultant Walter Wong last week, the origins of the case were more low-key.

The investigation began to intensify on Jan. 24, 2018, during an outreach meeting for a food and beverage concession lease in Terminal 1 at San Francisco International Airport. Bovis and the two confidential sources, identified to The Chronicle as Mashni and Hachem, who were already cooperating with the FBI, left the airport and went to Bovis’ restaurant, Broadway Grill, in Burlingame, according to the affidavit.

The FBI’s sources were recording as the men discussed submitting a proposal to get Bovis’ restaurant, the Spinnerie, into lease No. 5 that was reserved for a “chicken quick serve restaurant,” according to the complaint.

Bovis brought up Nuru as one of his “resources in San Francisco city government” who works “side deals” that could potentially help them secure the lease, the FBI said. Bovis described a previous failed restaurant bid by the three men in which he tried to get the late mayor Ed Lee involved, saying “I thought I did everything right but I don’t know what happened,” according to the affidavit.

In the weeks that followed, one of the FBI’s sources recorded conversations with Bovis, including a discussion about how Nuru helped set up a meeting with an airport commissioner, later revealed to be Linda Crayton, to help “make it happen,” the FBI wrote.

Inside the newsroom

Anonymous sources:The Chronicle strives to attribute all information we report to credible, reliable, identifiable sources. Presenting information from an anonymous source occurs extremely rarely, and only when that information is considered crucially important and all other on-the-record options have been exhausted. In such cases, The Chronicle has complete knowledge of the unnamed person’s identity and of how that person is in position to know the information. The Chronicle’s detailed policy governing the use of such sources, including the use of pseudonyms, is available on sfchronicle.com.

Crayton resigned a day after the charges were unsealed last week, citing a struggle with “multiple, severe medical conditions for several years.”

During one conversation, Bovis brought up the idea of giving Crayton “$5,000 bucks cash” along with paying for a trip to the city where the businessmen were based to “take a quick airport tour” to see their operations, Folger wrote.

The plot came to a head on April 4, 2018, when the men identified as Mashni and Hachem, with Bovis, Nuru, Crayton and an undercover FBI agent, posing as a representative for potential investors, met for dinner at Broadway Grill.

The group discussed their previous failed attempts to get into the airport and prepared to hand Crayton an envelope with $5,000 cash, but Nuru at the last second canceled the plan, according to the affidavit. There’s no indication Crayton was ever aware of an alleged plot to bribe her.

“Man, you make me carry $5,000 in my pocket for nothing,” the FBI’s source allegedly said.

“Man, I did you a favor,” Nuru allegedly responded. “I’ll have Nick put it in a safe for you.”

In the days after the meeting, Bovis’ other business partners, who were apparently not working for the FBI, began looking into the undercover agent over concerns about his investors. They hired San Francisco private investigator Jack Immendorf, who ran a background check on the agent, which raised concerns.

“He’s a ghost,” Bovis was recorded saying, according to the affidavit. “There’s no, he just has a recently new number, a new domain name, a new email. Just created in March. So it’s sort of hard to, we’re going to waste our time if we go before the airport with him as our finance.”

Three months later, on July 10, 2018, the Airport Commission awarded the contract to a different company, Tastes on the Fly, which licensed local company Starbird, for Lease No. 5.

Evan Sernoffsky is a San Francisco Chronicle staff writer. Email: esernoffsky@sfchronicle.com Twitter: @EvanSernoffsky



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Treasury Says Small Business Loans Supported Over 50 Million Jobs: Live Updates

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The acquisition is Warren Buffett’s biggest in four years, putting to use some of Berkshire’s $137 billion cash pile. There has been some investor anxiety lately about Mr. Buffett’s recent drought of deal-making. Buying the Dominion assets would more than double Berkshire’s market share of natural gas movement in the U.S., to 18 percent.

On the same day as the deal was announced, however, Dominion and its partners canceled plans to build the Atlantic Coast Pipeline. Just last month, they had scored a victory when the Supreme Court ruled that the pipeline — which would have moved natural gas from West Virginia to Virginia and North Carolina — could be built under the Appalachian Trail, overruling objections from environmental groups.

In reversing course, the companies said that the six-year-old project faced more legal battles and costly delays that wouldn’t make it worthwhile. The shifting politics of fossil fuels, which may fall more out of favor if Democrats make gains in November elections, as polls currently suggest, could be another factor. In announcing the deal with Berkshire, Dominion emphasized a “narrowing” focus on becoming a more “sustainability focused” utility, reducing its reliance on fossil fuels.

Mr. Buffett appears to believe that the economic benefits of the deal overcome its political risks, argues today’s DealBook newsletter. And he hasn’t ignored the politics of pipelines in other situations. This spring, Berkshire backed away from an investment in a liquefied natural gas export terminal in Quebec amid protests by environmental activists and Indigenous groups. — Michael J. de la Merced

Here’s the business news to watch this week.

⚖️ The U.S. Supreme Court may issue rulings this week on eight cases, including the release of President Trump’s tax returns, birth control in employer-sponsored health care plans and robocalls to cellphones. The court’s extended virtual session has pushed its work into July for the first time in more than 20 years.

🇺🇸🇲🇽 In his first foreign trip as Mexico’s president, Andrés Manuel López Obrador travels to Washington — on a commercial flight — to meet Mr. Trump at the White House on Wednesday. The two plan to celebrate the new North American trade deal, which took effect last week; Prime Minister Justin Trudeau of Canada hasn’t yet decided whether he will attend.

🇬🇧🇨🇦 Speaking of Canada, on Wednesday the finance chiefs of Canada and Britain will discuss the impact of the coronavirus-driven downturn. In Ottawa, Finance Minister Bill Morneau will present the first official post-pandemic projection of Canada’s federal deficit to the country’s Parliament. In London, Britain’s chancellor, Rishi Sunak, will unveil the latest outlook for the British economy, along with potential policy changes to taxes and furlough payments.

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Canada’s film and TV industry should be getting back to business — but no insurers are willing to provide COVID-19 coverage

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It must have been music to their ears when the Toronto branch of ACTRA, the union representing Canadian performers, announced to its more than 15,000 members that “Ontario is getting ready to roll!” Anyone looking to make a film or TV production in the province is now free to do so — as long as they don’t do it in Leamington.

For content-starved Canadian viewers, this must be good news as well.

There’s only one problem: there’s currently not a single rated insurer in the world that will provide coverage to film and TV producers without a COVID-19 exclusion.

Unless government steps in, the situation won’t improve anytime soon.

Fortunately, the Canadian Media Producers Association (CMPA) has tabled a proposal that could solve the problem. Specifically, it’s asking the federal government to provide a $100-million backstop for COVID-19-related insurance claims.

The CMPA plan is not a handout. Producers would be required to pay an additional premium for the coverage. However, unlike the policies offered by large global insurance companies, whose COVID-19 exclusions are being driven by the out of control outbreak south of the border, this Made in Canada solution would be designed to address the specific risks of producing in this country.

It would allow the industry to get back to work. If the government decides to act.

Canada’s production industry is a highly fragmented web of small business owners (producers) and independent service providers (writers, directors, actors, composers, crew and others). Most producers have small full-time staffs and hire the bulk of their workers on a project-by-project basis.

This model applies equally well for a cooking show, a dramatic television series, a Telefilm-funded Canadian movie, or one of the many American films that are regularly seen shooting around Toronto, Vancouver and other Canadian locations.

In normal times, all this adds up to big business, supporting more than 180,000 direct jobs and adding an estimated $12.78 billion to the nation’s GDP.

Until there’s a safe and effective vaccine the biggest risk to any production is a COVID-19-related shutdown. That may take the form of a lead performer or director becoming seriously ill or dying, or a government reimposing lockdown in the middle of filming.

The TV networks, lenders and equity financiers who fund productions are not willing to assume that risk and require insurance coverage without any exclusions. Without such insurance, there can be no production.

Allowing this situation to continue is bad policy for several reasons.

Most obviously, a sizable industry that governments across the country have deemed safe to reopen is effectively prevented from doing so. In provinces like Nova Scotia and Newfoundland, which have active production industries and three diagnosed case of COVID-19 between them, the case for returning to work is especially compelling

Since writers, directors, performers, composers and crew are not full-time employees, the Canada Emergency Wage Subsidy provides no relief.

Some in the industry are eligible for the Canada Emergency Response Benefit, which is a direct financial cost to the government and provides a bare subsistence income in the costly urban centres where production talent is most concentrated.

The fact that little content is being produced anywhere in the world also presents an opportunity for Canadian creators. A less crowded market means their work can get an honest look on the global stage and not drowned out by American productions, as happens during normal times.

Canada has always been an attractive shooting location for large American producers and is particularly appealing right now since key jurisdictions throughout the United States, including California, face major COVID-19 outbreaks.

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Americans who come to Canada for projects are usually just a handful of key talent — lead actors and directors — everyone else is hired locally. With proper screening and quarantining, bringing American productions to Canada presents a significant economic opportunity.

Unlike traditional insurers, the federal government has an incentive to put people back to work and turn those receiving benefits into productive taxpayers. That fact provides a wide margin of error in pricing the actuarial risk of a COVID-19 insurance policy since any losses would be offset by increased tax revenues and reduced benefit payouts.

The CMPA has given the federal government an elegant solution to the industry’s current mess. The only question is whether the government has the vision to take the project up.

Ian Cooper is a Toronto-based entertainment and technology lawyer.

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Brothers launch disinfection business with the hopes of helping others reopen

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The brothers opened the business with the hope of educating other businesses about COVID-19 and the difference between things like cleaning and disinfection.

“The first thing that we noticed when we got the idea for this business is there wasn’t really any disinfectant available to the public or commercial businesses. So we took that as a standpoint of, ‘If we can’t find it, I’m sure nobody else can’, so once we finally got a good way to get the disinfectants we knew our main priority was to get the rest of Albuquerque back open,” Brandon said.

When the governor began to ease restrictions and allowed nonessential businesses to reopen their doors, the two knew they had to step up their game.

The Klewiki brothers hope to help reopen Albuquerque one business at a time.

“There’s a lot of people who try to sell something that isn’t effective or they’re not doing it the proper way and they just want to make a quick buck. For us, we wanted to make sure we were doing something right,” Alex said.



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