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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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Page 3 of 5

Amid neat rows of pastel-colored town homes that line the 2300 block of busy 19th Avenue, the abandoned building and surrounding lot (once a fire department maintenance station) where Julie Lee had hoped to see the center constructed sticks out like a sore thumb. Its gates and doors are padlocked, and behind walls that extend for half the block weeds poke through cracked pavement.

Lee's dream of an all-purpose community center to house programs for everyone from preschoolers to the elderly appeared to be on the brink of fulfillment in the summer of 2000, after SFNRC, the entity she helped establish to promote it, received some good news. With the sponsorship of then-Assemblyman Shelley, the California Department of Parks and Recreation had chosen SFNRC to receive the grant.

That few people had heard of SFNRC at the time of the grant was perhaps understandable. It had been formed only a year earlier. Its three officers were Julie Lee, her husband Shing-Kit Lee, and Jeffrey Chen. Its creation was cause for friction among Lee's supporters within the San Francisco Neighbors Association.

For years, SFNA had campaigned for a neighborhood center to serve the west side's growing Chinese-American population. But the group resisted cozying up to any particular politician to accomplish its aims, and had taken pains to ensure that no elected office holder gained leverage over it.

In 1999, when Lee proposed the grant idea, with the pitch that Shelley would help, the SFNA board rejected the idea, says Rose Tsai, who was a board member at the time.

Instead, the Lees and Chen formed SFNRC and began working with Shelley. Although the center was expected to cost $5 million, Lee expressed confidence among associates that with Shelley's backing its eventual construction was assured. With the help of Willie Brown, the group struck a sweetheart deal to lease the property on 19th Avenue for $1 per year, a deal that Gavin Newsom renewed after becoming mayor.

Tsai says that Jeffrey Chen, and not Lee, was the prime driver of the idea to link up with Shelley to gain support for the grant. "I think Julie was totally taken in by the glamour of being an insider, and people were circling like vultures to use her," Tsai says. Despite Lee's reputation as a player, she says, "there's a certain naivety about Julie. I don't think she's ever really understood the nitty-gritty of how politics here works. She certainly doesn't consider that she did anything wrong."

Indeed, no one has suggested that the wealthy Lee used the allegedly misappropriated funds for personal gain.

She and her husband, who is also her business partner, own more than $12 million worth of real estate, including office buildings, houses, and apartments, mostly on the west side, property records show. "Julie is an exceedingly smart person," says Chris Gruwell, a lobbyist and former aide to both Shelley and Newsom who has known her for years. "If she'd been born [in the United States] and gone to the Wharton School, she'd probably be the CEO of a large company by now."

The daughter of a Shanghai tailor, Lee came to San Francisco with her husband from Hong Kong in 1969 with $200 in her pocket, she says. The couple lived in a one-bedroom house in the Sunset District for years while raising four young children. Lee began selling real estate — almost exclusively to Chinese immigrants — out of an office in her basement, while her husband studied business and finance. Their company, First National Realty, housed in a building that they own, has long been a fixture on Taraval Street, across from McCoppin Square.

Friends describe her as devoted to her children, who include a son who works for a Manhattan ad agency, a daughter who is a pediatric dentist, and another daughter who's in law school. But those who know Lee say it's her affection for her son Andrew, now 32, which, along with her desire to promote the center, best explains her vigor for helping Shelley.

Lee pushed her second-eldest child toward politics even though he seemed more interested in his career as an aspiring rapper, longtime colleagues say. After Lee joined forces with Brown, the former mayor gave Andrew a low-level job in his office, and even appointed him to the Public Utilities Commission, although Andrew later withdrew after Supervisor Chris Daly moved to block him. In 2002, Andrew Lee became a candidate for the board of supervisors. Among his endorsers were a number of high-profile politicians to whom Julie Lee had been helpful, including Brown, then-supervisor Newsom, and Kevin Shelley.

Andrew Lee finished fourth in the race for the seat won by Fiona Ma. But he soon wound up working for the newly elected Shelley in the secretary of state's San Francisco field office. Shelley promoted him to a civil-service-protected position under circumstances that the California State Personnel Board later concluded smacked of favoritism.

Now living in Sacramento, Andrew Lee still works for the secretary of state's office, albeit part time, having recently returned from disability leave after a work-related back injury. He is understandably among his mother's most vociferous defenders. "My mother is an honest, hardworking, and selfless person ... who has been the victim of character assassination," he says. "I can say she has no reason to break the law, and never has."


Julie Lee's problems emerged in July 2004, when a California Parks and Recreation auditor called to ask how SFNRC was spending the grant money. The group had reported spending tens of thousands of dollars for pre-design work on the center, and Reiko Hatch, the auditor, wanted to see receipts to verify it.

Instead, as Hatch later told a grand jury, she and a colleague got the runaround from Lee.

Parks & Rec might never have bothered with the matter had it not been for a tip from a disgruntled Shelley staffer aimed at causing problems for the famously difficult-to-work-for secretary of state. What gave the story of SFNRC's alleged abuse of state funds wings, as the Chronicle reported within weeks of Hatch's phone call, were allegations that some of the money may have wound up in the Shelley campaign.

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Ron Russell

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