The Making of a Political Insider
Fund raising gave Lee access to City Hall, but she alienated some allies along the way
She was a grassroots activist in San Francisco's Chinese American community who transformed herself into a City Hall insider through her prowess as a political fund-raiser.
An immigrant who became a multimillionaire from real estate deals on the city's west side, she contributed $274,712 to the campaigns of Mayor Willie Brown, Secretary of State Kevin Shelley and many other politicians while raising tens of thousands more to benefit the causes and candidates she favored.
In response to her aggressive fund raising, critics say, the politicians provided many benefits to Julie Lee, 57, a Sunset District real estate agent and president of the city's Housing Authority Commission:
Insider access at City Hall. Fast-track approval of her zoning and building permits. Grants and contracts totaling $698,998 for a new Sunset District community center she promoted but never built. Government jobs for her son, Andrew, a former rapper whom Lee promoted as a budding political star.
Now, the aggressive fund raising that made Lee a major player in San Francisco politics is the focus of overlapping federal and state corruption investigations.
After disclosures in The Chronicle, the FBI raided Lee's office last week, probing whether $125,000 that was donated to Shelley during his 2002 campaign had been illegally diverted from a state grant to Lee's nonprofit.
The Chronicle also reported that $80,000 in donations appears to have been funneled to Shelley, a longtime ally whom Lee is said to have touted as a future governor, from two real estate deals in which Lee was involved.
Shelley has denied wrongdoing and said he had no knowledge of illegal donations. Lee has declined to be interviewed, but she told the Chinese- language newspaper Sing Tao Daily that this controversy was just a case of Westerners' gossip about the Chinese.
For some people who have encountered her at City Hall, the story of Lee's rise to political prominence -- and her current troubles -- are another example of the patronage politics that infused city government since former Assembly Speaker Brown's two terms as mayor.
"The story of Julie Lee is the story of the Brown administration," said Barbara Meskunas, a former Housing Authority commissioner and longtime Brown critic. "In exchange for the Housing Authority appointment, she started raising money for Willie." Brown didn't respond to a request for comment.
"She has raised tons of money for people. It helps her (real estate) business, and then she's always pushing Andrew on them," she said, referring to Lee's son, who has worked as an aide to both Brown and Shelley.
'We love development!'
According to people who know her, Julie Lee was born in Shanghai, the daughter of a tailor. The family moved to Hong Kong, and Lee immigrated to the United States in 1969. She is married to Shing-Kit Lee, her business partner. The couple have four grown children.
The Lees went into real estate in the Sunset District, representing Chinese American clients on home sales. Later, they bought rental units and began building what contractors call "Richmond specials": teardowns or dramatic remodelings that replace small homes with much larger units.
Lee was enthusiastic about real estate -- "We love development!" she told Asian Week in a 1997 interview -- and the couple's businesses, First National Realty and First Financial Services, have made them rich. Public records reviewed by The Chronicle show that the Lees own 37 properties in San Francisco, Daly City and Sacramento, worth more than $12 million. Since 1994, they have been involved in more than $63 million worth of real estate transactions, including properties in San Francisco and San Mateo counties, records show.
As landlady or real estate agent, Lee can be tough, court records reflect. She has been sued at least 12 times in San Francisco, accused of wrongful eviction, keeping rentals in substandard condition and improperly handling real estate deals. The cases have been settled or dismissed.
Lee has filed seven lawsuits herself, most in connection with disputed real estate deals. All but three of those have been settled or dismissed as well. In February, after the United Schneerson's Synagogue on Geary Boulevard fell $50,000 behind in lease payments, Lee sued to evict the congregation. That case is pending.
Real estate drew Lee into politics. Many Asian American homeowners were complaining that city permit restrictions made it unduly difficult to remodel and expand their homes. Lee and local activist Rose Tsai formed the San Francisco Neighbors Association in the early 1990s to fight City Hall over the issue.
Defeating Jordan on housing
In 1995, when then-Mayor Frank Jordan backed an ordinance that would have restricted the construction of new "Richmond special" projects, Lee and Tsai rallied their new organization in opposition. After a series of stormy public hearings, Jordan buckled, and the ordinance was scrapped.
In 1997, she took on a new cause: the Central Freeway, which was shut down and marked for demolition after it had been damaged in the 1989 Loma Prieta earthquake. Viewed as a vital transportation artery by west-side merchants and residents, the Central Freeway was considered an eyesore by others.
Lee and Tsai mounted a petition drive to get the freeway rebuilt. That started a bitter, expensive political fight that went on for two years.
Opposed by environmentalists and much of the city's political establishment, including Mayor Brown, Lee and Tsai nevertheless got a pro- freeway measure on the 1997 ballot and enacted by voters -- only to have it reversed by another initiative the next year.
In those days, Lee was an outsider, a bitter critic of City Hall, which she said ignored the needs of the city's growing Asian American community. She showed she could play political hardball.
She and Tsai began hosting KEST-AM's "Neighborhood Voice," a Cantonese- language radio program that became popular in the Chinese American community. Lee used the broadcasts to rally support for the freeway and to trash her foes. Sometimes, her anti-establishment rhetoric was over the top, opponents said.
Accused of airwave tirade
Rose Pak, head of the Chinese Chamber of Commerce and a Brown loyalist, said Lee singled her out in about 1998, when Pak and Brown were leading a city trade mission to China.
"She was on the air cursing us out and hoping the plane would crash, and we'd all be killed," Pak recalled. "And she called Willie Brown some awful, derogatory racist remarks. I'm embarrassed to repeat them."
The freeway campaigns also involved political money. City records show that Lee, her family business and her political committee, San Francisco Neighbors for Better Government, donated $107,000 into the pro-freeway campaign.
In addition, the freeway fight cemented Lee's friendship with Shelley. The first-term assemblyman, who had represented the Sunset on the Board of Supervisors before going to Sacramento, had been one of Lee's chief allies in the campaign.
Lee's group got Mayor Brown's attention. Although he had opposed the first measure to rebuild the freeway, he sat out the second campaign.
Then, in January 1999, Brown named Lee to the commission of the scandal- racked Housing Authority, where a midlevel executive had been indicted in a bribery scheme.
"Willie Brown was very slick, to give her a crumb, for her to be happy, to be like a big shot," said Ling-Chi Wang, professor of Asian American studies at UC Berkeley and political observer. "I have no sympathy for her because I am totally opposed to the kind of money game she plays."
Exploiting legal loopholes
By the time Brown appointed her to the housing post, Lee was a skilled and effective money-raiser. City records show that starting with the 1997 freeway campaign, Lee, her family and businesses and the political committee contributed $274,712 to San Francisco politicians and causes.
Often Lee has exploited a legal loophole in the city's $500 limit on individual political donations to help elect officials she favors.
Brown was a special beneficiary. In 1999, Lee's San Francisco Neighbors for Better Government political action committee spent more than $26,000 on an independent ad campaign on television and in the Chinese-language press to boost the mayor's re-election. Because Brown had no control over what Lee's independent committee did, the spending by law wasn't subject to the $500 donation cap. In the 2000 race for the Board of Supervisors, Lee's committee spent as much as $78,000 promoting candidates and initiatives backed by Brown, the records show.
Other beneficiaries represent a cross section of the city's political life, from House Minority Leader Nancy Pelosi, D-San Francisco, whose political committee obtained $1,000, to the local Republican Party, which got $2,800. Mayor Gavin Newsom received $4,000 for his 2003 campaign for mayor from donors and businesses associated with Lee.
In 2002, Lee and her husband donated $20,000 to Shelley's campaign for secretary of state.
Benny Yee, a real estate agent who sits on the Redevelopment Agency Commission, has worked on numerous political fund-raisers with Lee. They supported Shelley because he was "young, energetic and a good public figure," Yee said.
Lee is good at fund raising, an effective and genuine leader, Yee said.
"Once she believes certain candidates should be supported, she goes right into it," Yee said. "She's motivated."
People familiar with Lee say the political money she herself donates is only part of her fund-raising power. She also has raised uncounted thousands of dollars for favored candidates in the Chinese American community, they say. Lee raises money in several ways, says one political professional who asked not to be quoted by name because of the federal investigation.
"She will attend a (politician's) fund-raiser herself. She will collect checks (from other donors) and bundle them. And she'll maybe come (to a fund- raiser) and bring a lot of people with her. ... Her fund-raising is significant."
The fund raising has brought her access, clout and recognition: a citywide "Julie Lee Day," proclaimed by Brown on Oct. 13, 2001, and an invitation to the glitzy wedding of then-Supervisor Newsom at the Getty mansion.
Projects quickly approved
Critics said there were more substantial benefits as well.
The city's planning and zoning bureaucracy began to give quick approval to Lee's projects, even when there was substantial opposition, said land-use lawyer Stephen M. Williams, who often represents neighborhood groups in planning disputes.
Williams said he was still rankled by a 2001 case, in which the Planning Commission, despite opposition by neighbors and preservationists, gave Lee the go-ahead to demolish two "beautiful, historic" cottages built on the corner of 28th Avenue and California Street after the 1906 earthquake.
A previous applicant had been denied a permit to tear down the cottages, Williams said, but after a brief presentation Lee was given permission on the spot to put up "two very large, 40-plus-feet-high Richmond specials" in their place.
Lee also got help on her plan to build a new community center in the Sunset. In July 1999 -- before Lee had incorporated the organization that would run the center -- public records show that at Brown's direction, city officials looked into converting the Fire Department yard and offices into a community resource center. Eventually, Lee obtained $1-per-year lease on the property.
As The Chronicle has reported, Shelley, then Assembly majority leader, secured a $500,000 state grant in 2001 to build the center. Of that money, $168,750 went to associates of Lee, who then donated $125,000 to Shelley's campaign. Lee's nonprofit also obtained almost $200,000 in city grants to operate a referral hot line for immigrants and provide other services, but a Chronicle investigation showed that few services were ever provided.
Lee's connections also helped her obtain government jobs for her son.
Andrew Lee seemed more interested in music. He had set up his own company, Drew Productions. Styling himself "Drew Nasty," he performed with a rap group called C-Quence. "Rugged and Buckwild," the band's 2001 release on Kamikaze Records, included songs titled "Jailbait," "Latex Dreams" and "I Wanna F -- You," according to a promotional Web site.
But Julie Lee believed Andrew's future was in public service, people who know her say. Brown hired him as a mayoral special assistant, assigned to a neighborhood outreach effort headed by Bevan Dufty, a Brown aide and future supervisor.
Andrew eventually resigned to work as the unpaid executive director of his mother's nonprofit. He made his living as the landlord of three apartment buildings, according to an ethics report he filed. In 2002, Andrew Lee, then 28, ran for the Board of Supervisors in the Sunset, with the backing of his mother and Brown and Shelley.
Son's contentious campaign
It was a disappointing, expensive campaign.
His opponents criticized him for allegedly failing to vote in seven elections since he had first registered to vote. He also was criticized for his role in what was billed as a nonpartisan "environmental fair" and lightbulb giveaway jointly sponsored by the mayor's office and Julie Lee's nonprofit.
Mailers and posters advertising the event featured Andrew Lee's photo and a campaign-style letter with the greeting "Dear Westside Neighbors." The event itself featured speeches by both Andrew Lee and the mayor. Opponents accused him of improperly using city resources for electioneering.
Meanwhile, public records show that Andrew Lee spent $184,000 of his own money to finance the campaign. In a race eventually won by Supervisor Fiona Ma, he finished fourth, spending about $88 for each vote he received.
Struggle over son's post
The next year, Brown named Andrew Lee to the Public Utilities Commission. Supervisor Chris Daly said Lee and his mother lobbied him on the appointment.
In the course of a conversation in his office, Daly said he concluded that Andrew Lee had no interest or background in water and power issues, the Public Utility Commission's purview. As soon as the Lees left his office, "I immediately began trying to figure out how to keep this guy off the PUC," Daly said in an interview.
The chance came in October 2003, when Brown was traveling in Tibet. Daly used his power as acting mayor to void Lee's appointment to the commission, calling it "political patronage at its worst." The mayor was outraged, branding Daly's action as illegal. In the uproar that followed, the city attorney ruled Andrew Lee was entitled to serve on the PUC, but he resigned before taking office.
By then, Julie Lee had assisted her son in landing a job in the office of Shelley, the newly elected secretary of state. Initially a $55,000-per-year outreach worker, he was promoted to international business liaison, with a raise to $57, 756 annually. He often represented Shelley's office at Asian and Asian American functions.
At times, he worked as an advance man, making sure Shelley got a prominent seat on the stage at public events, said a political source. In April, Lee left work and filed a workers' compensation claim, telling colleagues he had hurt his back moving things.
Andrew Lee did not return repeated calls and e-mails for comment.
Julie Lee had long since split with most of her friends from the grassroots days. Tsai said she broke with Lee over her plan to obtain government grants to fund a cultural center in the Sunset. Tsai feared their organization would lose its political effectiveness if it were also relying on politicians for money.
"Politics has a corrupting influence, all kinds of temptation," Tsai said. "I didn't want us to be in that situation."
Sonia Ng, an activist and former Lee ally, is disappointed by what she sees as Lee's squandered leadership of the Chinese American community.
"Before, we thought we could organize the Chinese community to have power, " said Ng, 56. "After Julie Lee, everybody is afraid that somebody will use our power. No one wants to join together."
Scuffle in rest room
In 2001, according to a document filed with the Sheriff's Department, Ng's autistic son threatened to sue station KEST for invasion of privacy, saying Lee had broadcast details of his disability and mocked him for being on public assistance. The next year, Ng complained that Lee repeatedly shoved and yelled at her when the two women encountered each other in a rest room at City Hall.
"If you're still talking to the radio station, something will happen to you," Lee yelled, by Ng's account. Lee contended that Ng had started the argument. Ng told authorities that she didn't want to have her former ally arrested because "Lee is rich and powerful and could have something done to her," the report says.
The FBI probe of Lee's donations could discourage Asian Americans from voting, running for office or making campaign contributions, said David Lee of the Chinese American Voter Education Committee. Politicians, too, may become more hesitant to reach out to Asian immigrants.
"We need to pull together and put this behind us, and educate people that it's OK to give and participate -- and there are many people who do participate without getting into trouble because they follow the law."
Week in review
Since The Chronicle first reported last Sunday about questionable donations to Secretary of State Kevin Shelley's 2002 campaign, there has been a whirlwind of developments:
Sunday, Aug. 8
The Chronicle reports that San Francisco Neighbors Resource Center, a nonprofit group founded by Julie Lee in 1999, paid $108,000 from a state grant arranged by then-Assemblyman Kevin Shelley to two individuals and two companies who then made donations of nearly identical amounts to Shelley's successful 2002 campaign for California secretary of state.
Monday
The Chronicle reports that Shelley calls for an investigation and pledges to put $100,000 in questionable campaign contributions into an escrow account.
Tuesday
The Chronicle reports that the FBI is probing whether taxpayer funds from the San Francisco nonprofit were diverted to Shelley's campaign. The state attorney general's office and the state Fair Political Practices Commission plan their own investigations.
Wednesday
The Chronicle reports that the state controller's office demands that the San Francisco nonprofit prove that funds from a state grant were not diverted to the Shelley campaign -- or else return the $492,000 grant by Monday. Shelley provides state finance officials with a $125,000 check drawn from his campaign account. The money will be held in escrow pending the legality of the donations.
Thursday
The Chronicle reports that Julie Lee appears to have funneled an additional $50,000 into Shelley's political coffers through a real estate deal; the donation was the largest contribution from any individual to Shelley's campaign.
The Chronicle also reports that Lee's nonprofit received nearly $200,000 in city funds to provide services to immigrants, in addition to the state grant to build the center, but the group's office was rarely open and few services were provided.
Friday
San Francisco Mayor Gavin Newsom asks the city controller to conduct an audit to determine whether the nonprofit used its taxpayer-funded city grants inappropriately. The FBI raids Julie Lee's offices in the Sunset District.
The Chronicle on Saturday reports that Julie Lee may have diverted an additional $30,000 to the Shelley campaign as part of a three-way real estate deal.
E-mail the writers at lmwilliams@sfchronicle.com, vahua@sfchronicle.com and bwallace@sfchronicle.com.
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