FBI raid of Oakland mayor rocks city, fuels questions over family's political influence

June 22, 2024 Updated 1:27 PM PT

While it’s still unclear why FBI agents raided the home of Oakland Mayor Sheng Thao this week, the action has cast a renewed spotlight on a years-long probe into the political influence — and campaign finance machinations — of one prominent local family.

A long-running probe

For five years, the Oakland Public Ethics Commission and the state Fair Political Practices Commission have been investigating allegations that executives at California Waste Solutions, namely members of the Duong family, used “straw donors” to circumvent donation limits and fill the campaign coffers of public officials.

On Thursday, as federal agents walked out with boxes from Thao’s home, agents also executed warrants at the Oakland office of Cal Waste Solutions, which provides recycling services to the city, FBI officials confirmed. Agents also searched the homes of the company’s chief executive, David Duong; and his son, Andy Duong, a purchasing agent who is in charge of the company’s public relations.

The FBI has not formally accused Thao or members of the Duong family of wrongdoing. Thao’s attorney, Anthony J. Brass, told The Times in an email that the mayor has no information or indication that she is the subject of the federal inquiry, and that she is willing to cooperate with investigators.

“She has nothing to hide,” Brass said. “It’s unfortunate that she has had to endure the bad optics of having this search warrant executed on her home. She would have cooperated with this investigation without the need for this search.”

Cal Waste Solutions issued a statement on Saturday.

“We were very surprised by the federal law enforcement’s search of our homes and office on June 20,” the statement said. “To help facilitate the law enforcement agencies in carrying out their duties, we, as good citizens who always obey the law, have cooperated, and provided every possible condition for the law enforcement agency to perform their work effectively. We believe that we have not engaged in or committed any illegal activities and are awaiting the decision of the law enforcement agency.”

David and Andy Duong did not respond to requests for comment.

Another hit for the city

For Oakland, a city already reeling from a spate of recent reputation hits, the timing is inauspicious to say the least. Before the raid, Thao was facing a recall fueled by concerns over crime — a problem so pronounced it prompted Gov. Gavin Newsom to deploy 120 California Highway Patrol officers to Oakland as part of a new state law enforcement campaign to address violent crime.

Big chain restaurants such as In-n-Out and Denny’s have closed local locations, citing safety concerns. A recent Juneteenth celebration was marred by a shooting that left several people wounded.

While the crackdown seems to be showing some results — recent reports from the Oakland Police Department show a 33% reduction in crime in 2024, compared with the same time last year — the raids have renewed concerns about the city’s leadership.

“This is the kind of attention we don’t need,” said Brenda Harbin-Forte, who launched the Oakland United to Recall Sheng Thao effort.

The federal inquiry, she said, is another stain on the city.

“I think people who were on the fence about the recall will now understand that we need to clean house from top down,” she said. The recall measure is expected to be on the November ballot.

Ethics probe

Simon Russell, a special investigator with Oakland’s Public Ethics Commission, confirmed that the agency has an investigation into Cal Waste Solutions that started in 2019.

The commission has claimed in court documents that the alleged election finance laundering scheme spanned several cycles and involved straw donors making contributions to different candidate-controlled committees.

In an effort to identify participants of the scheme, the commission issued subpoenas, including one to Phuc Hong Tran, board member of the Oakland Vietnamese Chamber of Commerce and friend of David Duong.

When Tran failed to respond to the subpoena, the commission and the Oakland city attorney sought to enforce it in Alameda County Superior Court, detailing for the first time the scope of their investigation.

Tran did not immediately respond to a request to comment.

The January 2020 court document showed that investigators were looking at campaign contributions made to the Sheng Thao For Oakland City Council 2018 committee, which included donations from Kim Huong Vietnamese Cuisine that investigators said were laundered.

Investigators were also looking at other contributions Tran made to the committees of council members seeking reelection in 2018.

The agency has issued subpoenas to members of the Duong family and business associates — seeking emails, texts and communications regarding campaign donations between 2016 and 2018, records show.

Russell declined to provide details on the case, but said it involved allegations of campaign money laundering. He said he had no comment when asked if the agency had been in contact with officials with the FBI or the Department of Justice regarding the investigation.

The ethics commission also has an investigation into Thao that was opened in July 2022, Russell said, though he declined to offer specifics.

But subpoenas and court and public records show that watchdog groups had been looking at Cal Waste Solutions and its role in Oakland politics for years. That includes the company’s relationship with Thao, who in 2018 became the first Hmong person to be elected to office in a major U.S. city.

A family’s rise

The story of the Duong family, at first glance, seems a realization of the American dream. The family at one point owned the largest paper mill in South Vietnam, but was forced to flee during the Vietnam War, according to a biography on the Cal Waste Solutions website.

The Duongs settled in San Francisco, 16 members of the family cramming into two studio apartments. For years, family members collected cardboard until midnight — saving up until they bought a recycling warehouse in West Oakland.

That first warehouse has since grown into the self-proclaimed largest recycling company in Northern California, with more than 300 employees. It is headed by three siblings: David, the chief executive; Kristina, the chief financial officer; and Victor, the vice president.

The Public Ethics Commission opened its investigation into the alleged straw donor donations in 2019, issuing subpoenas for business associates connected to the family.

Court documents filed by the FPPC detail how, according to a former business associate of Andy Duong, the company allegedly tried to circumvent campaign contribution limits — using friends and associates to make campaign contributions to political candidates, and then reimbursing them with cash to conceal where the donations were coming from.

“CWS was the true source of at least 93 contributions to multiple local campaign committees,” the court record reads, with the goal being “to curry favor with candidates and provide more access to candidates.”

The contributions were made, according to court records, in jurisdictions where the company was doing or looking to do business.

Contributions were made to political candidates in Oakland, San José and Santa Clara County, the document alleges, suggesting the inquiry could expand beyond Oakland.

Investigators also suggested Andy Duong made sure that the company’s efforts were known to politicians.

“Duong ensured the targeted candidates were aware of his commitment to raise money for their campaign by attending candidate fundraisers, bringing individuals to campaign fundraisers, at times hosting campaign fundraisers, providing the committees and candidates with multiple checks,” the FPPC alleged.

One former business associate told investigators how Andy Duong allegedly approached him to recruit people who could make political contributions to his chosen candidates, and then reimburse the money from a drawer filled with cash at his office.

The inquiry continues. FPPC officials did not immediately respond to a request for comment.

Thao has not spoken publicly about the investigation, but her attorney said the mayor expects to continue to do her work.

But critics said they wish Thao and other city leaders would be more transparent about the ongoing inquiries.

“You need to say something to reassure your residents because they’re worried and scared about who will be swept up in this,” said Harbin-Forte, who has led the recall effort against Thao. “What’s going to happen to our city government? We have a budget deadline next week, where’s the leadership?”