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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.

Wednesday, Nov 22 2006
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Since being indicted on state and federal charges, the 60-year-old Lee has resolutely avoided the press. That she agreed to an interview for this article — against the advice of her attorney — may be reflective of her predicament. After endless months of having her name dragged through the mire and with her trial only two months away, she's eager to convey a message: "I'm not the evil, corrupt person that I've been made out to be."

When Lee's world collapsed amid charges of money-laundering in connection with the Shelley campaign, it was widely anticipated that she might turn star witness in a probe of the former secretary of state. Press reports that described her as uncooperative with authorities fueled such speculation.

But the reality was different.

Neither the state nor the feds ever sought to make any deals with Lee when it came to investigating how grant money for the ill-fated center found its way into Shelley's campaign. Instead, as Ronald Smetana, the supervising deputy attorney general in the state's case against her, told grand jurors, Lee was the target.

Lee's association with Shelley dates to 1997, when she and the San Francisco Neighbors Association (SFNA), which she co-founded, took up the battle to save the Central Freeway, which was slated for demolition after being damaged by the 1989 Loma Prieta earthquake. Shelley was a newly elected assemblyman eager to harness the support of SFNA. The group had earned its political chops by turning back former Mayor Frank Jordan's plan to restrict the remodeling and expansion of small houses in the Richmond and Sunset districts known as "Richmond specials."

Although reversed by referendum in 1998, the pro-freeway campaign made Lee a political player among west-side Asian-Americans and a rival to Chinatown-based political boss Rose Pak. Lee further enhanced her clout by buying airtime on KEST radio and co-hosting a Cantonese-language talk show with SFNA co-founder Rose Tsai.

Before long, politicians flocked to her. "Julie didn't have to seek anyone out; they came to her," recalls a veteran political operative who has known Lee for years. With a huge database of newly energized supporters from the west side, Lee marshaled troops to work precincts at election time, packed hearing rooms for and against causes of her choosing, and got her people to donate money to favored politicians.

Her fundraising became a thing to behold. Once a ridiculer of former Mayor Willie Brown, Lee switched to supporting him, and in 1999 spent more than $26,000 from her political action committee to help his re-election. She funneled much larger sums to candidates for supervisor that Brown backed in 2000. Brown rewarded her with an appointment to the city's Housing Authority Commission. He gave her son, Andrew, a job in the mayor's office. Other recipients of her largess include soon-to-be House Speaker Nancy Pelosi (D-San Francisco), Mayor Gavin Newsom, and even the local Republican Party.

But sources say that no one cultivated Lee better than Kevin Shelley, whose constituency, both as a member of the Board of Supervisors and, later, as an assemblyman looking to move to higher office, was on the west side. "Kevin really spent a lot of time developing a relationship with Julie because he could see how invaluable she and her organization were," says a former Shelley aide.

Those who know them describe Lee and Shelley's past relationship as one of mutual benefit. (They haven't spoken in the two years since the scandal broke.) Shelley's assembly staffers were instructed to treat calls from Lee with deference. Lee bragged to associates and would-be contributors about her "good friend" Shelley, touting him as someone she expected to be governor someday. When his 2002 campaign for secretary of state cranked up, Lee's allies weren't surprised that she became a generous contributor.

Yet as she awaits trial on charges of illegally funneling grant money to help Shelley win, Lee portrays the relationship differently. During the entirety of his race for secretary of state, she says, they spoke privately perhaps no more than five times. In all the years she's known Shelley, she was at his home "maybe twice," including once to drop off a gift after Shelley's wife had a baby.

She credits him as "the only politician ever really interested" in her dream for the center, but says the two were never close on a personal level and that it made her "nervous" to be around him. "He either talked too fast for me to understand properly or he was sometimes angry. Mostly I just tried to avoid [interaction]."

Lee shrugs off questions about her role in the fundraising operation, and demurs when asked what, if anything, Shelley knew about the source of the alleged laundered money. Does she expect that the question may be addressed at her trial? "I'll just say that I still believe in justice and I expect to show that I'm innocent," she says.

Similarly, she doesn't reveal what she thinks of Shelley's assertion that he was "shocked and mystified" to learn that the money may have been tainted. (His remarks to a panel of Chronicle editors and reporters constitute the only public comments Shelley has been willing to make on the subject since the money-laundering allegations hit the press six months before he left office.)

But Lee doesn't hide her disdain for another utterance — by Attorney General Bill Lockyer. Barely two months after Shelley's resignation, the state's top elected law enforcement official proclaimed to a TV interviewer that Shelley was innocent of "this crime," and directly accused Lee of guilt.

"I nearly fell off my chair when I heard that," she says, declining to elaborate.


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Ron Russell

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