OAKLAND >> Blowing open Oakland’s biggest political scandal in decades, federal prosecutors unsealed an indictment Friday charging recently recalled Mayor Sheng Thao and three others in a sprawling bribery scheme that allegedly helped elevate her to the city’s highest office in exchange for kickbacks to her romantic partner and vast political influence to a well-heeled recycling contractor.

Thao, her romantic partner, Andre Jones, and father-and-son Andy and David Duong were indicted on bribery, conspiracy and fraud charges, the most serious of which carry prison sentences of up to 20 years. The federal grand jury indictment pulls back the curtain on numerous alleged back-room dealings that allegedly benefited Jones and Thao, including $95,000 payments for “no-show jobs” and a “pay-to-play” scheme that offered or extended city contracts to the Duong family business.

“The citizens of Oakland and the larger Bay Area deserve better and demand their public officials to adhere to the highest standards of civil service and full transparency,” Linda Nguyen, an IRS assistant special agent, said at a Friday morning news conference. “The accused in this case fell short of those standards.”

The charges include conspiracy, bribery, mail fraud, wire fraud and — in the case of Andy Duong — making false statements to authorities. Many of the allegations center on 2022 election mailers benefiting Thao, which have resulted in state criminal charges against the longtime Oakland political operative allegedly behind them.

The federal investigation remains ongoing, prosecutors said.

The announcement Friday came almost seven months after agents with the FBI, the IRS and the U.S. Postal Service raided Thao and Jones’ Oakland Hills house, along with the homes of David and Andy Duong, and their recycling company, California Waste Solutions.

Prosecutors say that the fix was in before Thao even took office. The gambit allegedly began with the Duongs paying $75,000 for campaign mailers just days ahead of the November 2022 election, which attacked Thao’s political opponents. In return, Thao agreed to favor housing and recycling companies owned by the Duongs “in exchange for various benefits” to herself and Jones.

In December 2022, Thao and Jones met with Andy Duong and an unidentified “Co-Conspirator 1” at a San Leandro restaurant to request that payments to Jones begin, the indictment says. An initial agreement called for Jones to receive $300,000 as a “no-show” employee of the Duongs’ new housing venture, and the co-conspirator quickly began funneling thousands of dollars to Jones, the indictment says.

Months after taking office in January 2023, Thao allegedly asked for even more money — proposing Jones receive 10 times as much for a total of $3 million — if Oakland purchased 300 housing units from the Duongs’ company, Evolutionary Homes.

In return, Thao agreed to elevate a city employee to interim deputy director of the housing and community department, while also appointing Duong-favored candidates to the boards overseeing the Port of Oakland and other city offices, the indictment says.

Much of the alleged plan centered around “Co-Conspirator 1,” a key figure in that mailer campaign, who discussed the results of the 2022 election with Andy Duong. When it became clear that Thao — whom they supported — would emerge victorious but that ex-Alameda County District Attorney Pamela Price would also win, the indictment says the co-conspirator quipped, “So we may go to jail … but we are $100 million dollars (sic) richer.”

“Money buys everything,” Andy Duong allegedly replied, according to text messages included in the indictment.

All evidence points to that co-conspirator being Mario Juarez, a longtime Oakland political operative who has said he got into business with Andy Duong because of his longtime dream to house the homeless. He was nowhere to be found in Oakland on Friday, having posted a day earlier on social media the message “no stress, just vibes” while sitting on a large motorboat with a yellow and orange sun on the horizon behind him.

At Friday’s news conference in San Francisco, First Assistant U.S. Attorney Patrick Robbins described how the charges lay out “a corrupt scheme in which the defendants used bribes, wire fraud, mail fraud and other illegal practices to manipulate and corruptly influence the levers of local government.”

Robbins noted he was standing in for U.S. Attorney Ismail Ramsey of the state’s Northern District, who has recused himself from the federal investigation but declined to specify why.

Meanwhile, in Oakland, Thao walked into the Ronald V. Dellums Federal Building and U.S. Courthouse shortly after 8:30 a.m. Friday, accompanied by her attorney, Jeff Tsai. Wearing a dark blue pantsuit, Thao appeared in a light mood, chatting and laughing with a security guard after walking inside.

Just seven months ago, while reeling from the sight of federal agents rifling through her Oakland home, Thao forcefully proclaimed her innocence by declaring “I have done nothing wrong” and suggesting “I will not be bullied” by any forces seeking to remove her from office. But on Friday, moments before appearing before a federal judge, she deferred to her attorney.

“The indictment itself is chock-full of allegations,” Tsai said, reading from a statement outside the Oakland courthouse. “But it is not chock-full of evidence — and that’s what we’re going to prove in the course of our defense in this case.” He said the case was “built on allegations from an unknown co-conspirator that, we believe, when the case is revealed, will show that my client has committed no crimes.”

All four defendants pleaded not guilty Friday morning while personally proclaiming their innocence to a federal judge or to a gaggle of reporters through their attorneys. In a statement, the attorneys for David Duong said that he “denies wrongdoing and will vigorously defend these allegations in court” while voicing optimism he could continue “his decades of service, philanthropy and devotion to our community and the Bay Area.”

“I’m not guilty,” Jones said in court. Unlike the rest of the defendants, he asked a judge to appoint him a public defender as he fights the charges.

All four defendants were ordered to remain in Northern California, but there were a couple of notable exceptions. David Duong received permission to travel to Washington, D.C., Saturday to attend the Monday inauguration of President-elect Donald J. Trump. His son, in a white suit and blue tie, received approval to travel to Las Vegas for two previously planned trips, one to take in the Super Bowl on Feb. 9.

Andy Duong’s wife is expecting a baby in the next several weeks, and some of that travel also would be for a final trip before the child’s arrival, one of Andy Duong’s attorneys said. That attorney stressed that those trips may now not happen, given this week’s indictments.

All were ordered back to court Feb. 6. In the meantime, a federal judge released Thao and Jones on $50,000 unsecured bonds, while the Duongs were released on $100,000 bonds secured with their houses and property.

Ahead of the hearing, Andy Duong’s attorneys released a statement saying he is innocent of the charges.

“We have kept quiet despite the media frenzy of the past months in the hope that the government would correctly come to see through objective investigation that the allegations are baseless, and being fanned by nothing more than gossip and supposition stitched together by the fabrications and delusions of those who lack all fundamental credibility,” the statement said. “But disappointingly, Andy instead is today the most recent in a long line of Asian Americans who unfairly are singled out and forced to pay a price for daring to be active in the political sphere. We look forward to clearing his good name before the court and a jury of his peers.”

Since last summer’s raids, federal officials offered few clues about the investigation outside of subpoenas issued to the city, which sought documents related to the former Oakland Army Base, homelessness initiatives, the Oakland Police Department and Evolutionary Homes. The FBI also signaled an interest in Jones, along with city policies on retaining and destroying documents.

A significant revelation came in December, when the Alameda County District Attorney’s Office claimed the Duongs and another city contractor paid hundreds of thousands of dollars around the time of the November 2022 election to Mario Juarez, a political operative. By elevating Thao to office, county prosecutors alleged, each company could potentially maintain their lucrative contracts with the city.

Juarez later founded Evolutionary Homes with the Duongs. The company approached city officials across the East Bay with a proposal to help homeless women and children by turning shipping containers into living spaces. The partnership appeared to fizzle in spring 2024 after the Duongs claimed Juarez bilked them out of a $1 million investment in the company, and the two sides traded assault allegations.

Juarez ultimately is believed to have spent much of 2024 cooperating with federal authorities in their public corruption campaign. In June, Juarez’s Fruitvale District home was shot up in what authorities described as a failed assassination attempt. The FBI raids happened 11 days later.

It all marked the culmination of a disastrous seven-month fall from grace for Thao, an ambitious politician who quickly parlayed a single term on Oakland’s City Council into nearly two years as the youngest mayor in the city’s history through a wide coalition of support from labor unions. Yet the 39-year-old’s frequent feuds with the city’s institutions left her scrambling for allies ahead of a historic recall election in November, when more than 60% of voters removed her from office.

Her most steadfast ally through the years appeared to be Jones, her decade-long romantic partner. The two met while working for Councilmember Rebecca Kaplan — he as the councilmember’s chief of staff, she as an intern — and later lived together in a house in the Oakland Hills.

Prosecutors say Jones used the money to help pay their house rent, but the alleged agreement with the Duongs began to fray in the fall of 2023. When Thao appeared to dither on earlier-promised plans to work with the housing company, David Duong began complaining to the unnamed co-conspirator, the indictment said.

“The deal is the deal,” David Duong allegedly said.

Shomik Mukherjee is a reporter covering Oakland who can be reached via call or text at 510-905-5495, or via email at shomik@bayareanewsgroup.com. Jakob Rodgers is a senior breaking news reporter who can be reached via call, text or a Signal encrypted message at 510-390-2351, or via email at jrodgers@bayareanewsgroup.com.