San Leandro Lawsuit, Documents Shed Light on Company at Center of Oakland FBI Probe

It was late 2023 when Frances Robustelli found herself in the Oakland waterfront showroom of Evolutionary Homes. The company was converting shipping containers into housing for homeless people and attempting to sell them to local governments.

Robustelli, who was San Leandro’s city manager at the time, had been invited by two San Leandro city council members, Victor Aguilar and Bryan Azevedo, according to a lawsuit.

The lawsuit alleges the visit was part of an effort by members of the Duong family, who owned Evolutionary Homes, to lobby San Francisco Bay Area politicians to promote the establishment of tiny home developments in Bay Area cities.

Robustelli told Aguilar and Azevedo that the city had neither the funding nor the land for a tiny homes project.

The company, the lawsuit claims, pitched an ordinance that would allow the city to more quickly purchase homes like the ones the company aimed to sell.

Robustelli filed the lawsuit in Alameda County in June, alleging that when she opposed the proposal, Azevedo and Aguilar voiced their unhappiness. Together with another council member, they would harass and intimidate her that year and the following, the lawsuit said.

The city has denied the allegations and, on July 28, filed a motion to have the complaint in the case thrown out.

“The City will respond through the appropriate legal channels,” San Leandro Mayor Juan González said in a statement to KQED. “While we cannot comment on the specifics of pending litigation, I want to reaffirm our commitment to transparency, accountability, and the continued service to our community.”

Robustelli declined to comment, citing the advice of her attorney. Aguilar also declined to comment.

Azevedo was seen at the federal building in Oakland Thursday morning, where he said he was meeting with an attorney. But he declined to comment further.

In the months since former Oakland Mayor Sheng Thao, her partner, Andre Jones, and David and Andy Duong were indicted on bribery, conspiracy and fraud charges, questions have circulated around whether the FBI’s corruption probe extends to Azevedo, whose home was raided by federal agents in January.

Those questions only intensified after federal prosecutors notified the council member in May that he is the target of a federal investigation.

Now, the contents of Robustelli’s lawsuit, together with documents released by San Leandro in response to a federal grand jury subpoena, give clues as to what the FBI may have been looking for when they raided Azevedo’s home and shed light on where the ongoing investigation could be headed.

A Jan. 9 indictment charging Thao and the other three defendants describes an alleged pay-to-play scheme involving a housing company that is widely believed to be Evolutionary Homes.

The indictment alleges Thao promised Oakland would purchase housing units from the company, along with other favors, in exchange for payments to Jones and negative mailers targeting her opponents in the 2022 mayoral election. All four defendants have pleaded not guilty.

A week after FBI agents raided Thao’s home in June 2024, Azevedo defended himself from “rumors” tying him to the scandal in a letter to the editor of the San Leandro Times.

“I want to set the record straight. I don’t know anything about this alleged corruption nor do I believe that we should assume that corruption has happened until the facts come out,” Azevedo wrote, adding that he had received and reported a $2,000 campaign contribution from Andy Duong in support of his unsuccessful 2022 mayoral run.

Federal prosecutors in May notified Azevedo that he was the target of a federal investigation regarding criminal violations of federal laws, including conspiracy to commit bribery, bribery concerning programs receiving federal funds and false statements in a federal investigation.

“If you are interested in resolving this matter short of an indictment, please have your attorney contact the undersigned,” U.S. attorneys told Azevedo in a May 12 letter. “If no contact is made with our office prior to May 30, 2025, the matter will proceed in the ordinary course of prosecution.”

To date, Azevedo has not been charged with a crime.

According to Robustelli’s lawsuit, in October 2023, while she was out sick with COVID-19, Aguilar moved to place an urgent item on the council’s agenda to discuss the potential of obtaining an emergency homelessness declaration.

The draft emergency declaration, the lawsuit alleges, sought to expand the powers of the city manager and staff to bypass the city’s normally required purchasing procedures and more quickly procure tiny homes from the Duongs.

The suit alleges Robustelli told Aguilar and other supporters of the declaration that it was neither needed nor financially feasible for the city.

“In her role as City Manager, Ms. Robustelli was well informed of the homelessness issues in San Leandro at the time, and there simply was no state of emergency as to homelessness in San Leandro,” the complaint reads.

The city had also obtained funding through the state’s Project Homekey program to renovate a motel into permanent low-rent housing and establish a navigation center, according to the lawsuit, which would provide housing to the city’s homeless population. Aguilar and Azevedo were presumably aware of the funding, the lawsuit said.

“Ms. Robustelli later learned, in or around 2024, that Councilmembers Azevedo and Aguilar were being pressured by the Evolutionary Homes vendor,” the lawsuit said. “Representatives for Evolutionary Homes not only pitched the proposed ordinance that would accelerate the City’s ability to purchase and install the container homes, but also wrote the proposed ordinance for City officials.”

San Leandro city records released in response to a Jan. 14 federal grand jury subpoena included emails from 2023 between an Evolutionary Homes representative and city staff about an ordinance like the one described in Robustelli’s lawsuit.

“Thank you so much for chatting with me today,” Julie Wedge, a consultant working with the company, wrote to deputy city manager Eric Engelbart on Sept. 19. “Attached please find the San Leandro presentation, the Evolutionary Homes flyer, and the draft language for the ordinance based on what passed today in Alameda County and what we hope will pass in Oakland later today as well.”

“Please let me know when we can bring you and any other appropriate staff and Councilmembers to our showroom to see the two model units,” Wedge said. “Looking forward to meeting you in person and please reach out with any questions.”

Attached to the email was a template for an emergency ordinance with fill-in-the-blank spaces for statistics on homelessness. Slides showing the interiors of shipping containers converted into apartments were also included.

In an Aug. 11 phone interview, Wedge said her work with Evolutionary Homes, which is no longer in business, was unpaid. She said the company reached out to multiple California cities and counties, in addition to the California National Guard, to see if they would be interested in the homes.

There was nothing illegal or improper about the proposed ordinance, she said.

“I don’t know why everybody seems to think that trying to do an emergency shelter ordinance was some shady deal or some problem or issue. It’s actually good public policy,” Wedge said. “Everything around the shelter ordinance was a public process.”

Emails show other city employees were hesitant to approve the ordinance.

“I’m inclined to hold on passing a local emergency declaration until directed by the County to do so,” Human Services Director Jessica Lobedan responded to Engelbart and San Leandro’s Community Development Director Thomas Liao on Sept. 25. “My understanding of the County’s declaration was that it directs County staff to develop an emergency response plan. Until knowing more, it might be premature to do anything locally,” she wrote. Liao agreed.

In an interview, Liao said he didn’t think the way the ordinance was brought forward by Evolutionary Homes seemed appropriate.

“We don’t farm out the drafting of ordinances, typically. We would want to have some touch on that as staff,” he said. “We don’t take things wholesale.”

Staff ultimately recommended that the city not move forward.

“I wanted to give you a heads up that some significant changes had to be made to the resolution that you provided to us because the content was not applicable to the City,” Robustelli wrote to Aguilar on Oct. 26. “Staff does not recommend moving forward with this resolution. I did not want you to be surprised about the content of my message for the 11/6 council meeting.”

On June 17, 2024, the city council voted to take no action on the declaration.

Robustelli eventually left the job, the lawsuit alleges, citing life-threatening health issues.

In addition to the allegations surrounding Evolutionary Homes, Robustelli’s lawsuit claims Aguilar and San Leandro city council member Fred Simon repeatedly interfered with her duties as city manager and threatened her when she protested or refused to do their bidding. More often than not, they were assisted by Azevedo, the lawsuit said.

Their actions, the lawsuit alleges, were in retaliation for her refusal to condone unethical behavior or support individual demands she viewed as unethical, improper or unlawful.

Robustelli alleges Simon submitted for reimbursement for mileage to and from his home and city hall and for non-city travel. Despite having medical benefits from his public employer and one other public agency, Simon also made a claim for medical reimbursement with the city for not electing medical coverage, the lawsuit alleges, enabling him to collect health benefits from three separate public entities.

Both Simon and Aguilar made increasingly obscure and demanding requests to Robustelli to force her to resign, the lawsuit said.

In November, the city officially censured council members Simon and Aguilar for interfering with Robustelli’s duties in violation of the city charter.

Simon did not respond to KQED’s requests for comment.

Pauline Cutter, who was San Leandro’s mayor from 2015 to 2022, recalled Robustelli being frequently upset.

“There was pressure against Fran to do kind of the bidding of the three council members. And a city manager can’t do that. They can’t take sides,” she said.

In June 2024, FBI agents raided Thao’s home and several other properties associated with the Duongs, including the Oakland offices of the recycling company, California Waste Solutions, which is owned by the Duongs and has contracts with the cities of Oakland and San Jose.

In his letter to the San Leandro Times that month, Azevedo denied that he said California Waste Solutions should be awarded a city contract with San Leandro and defended his participation in a 2023 Vietnam trip that Thao and other East Bay officials also attended.

Wedge said she didn’t know Evolutionary Homes was falling apart until FBI agents showed up on her doorstep the same day as the raids in Oakland.

“They thought that I was going to be a witness,” Wedge said. “They thought I knew. They thought I was in those meetings,” she said, referring to meetings described in the indictment that allegedly took place between Thao, Jones and the Duongs about a pay-to-play scheme.

“I was not in those meetings. I didn’t know any of that.”

Around seven months later, agents raided Azevedo’s home.

Emails from that week, reviewed by KQED, show San Leandro city officials scrambling to nail down whether the city had ever done business with the Duongs.

“Can you please research the following business to see if the City has conducted business with them?” a city spokesperson wrote to the acting finance manager, adding: “Evolutionary Homes, LLC.”

A review of payments to the city, business licenses and financial records turned up nothing, according to the emails.

In an interview that was broadcast in June, Azevedo told ABC 7 that he had counted the days between when the FBI raided Thao’s home and when she was indicted. He said he was waiting to see if he would be arrested, too.

“They shouldn’t have as much stuff on me,” Azevedo said. “Because I didn’t do nothing.”

Asked whether there was an arrangement between him and the Duongs, Azevedo said, “I don’t remember nothing, no.”

He later added, “I don’t want to comment on that because no, there was no arrangement on that.”