‘Too Bad for Sheng’: New Recordings in Thao Trial Reveal Rift Between Former Mayor, Co-Conspirators
Prosecutors shed new light on Wednesday on the elusive housing startup that’s at the center of Sheng Thao’s Oakland corruption trial and its founders’ diminishing patience roughly a year into the alleged bribery scheme, as the former mayor seemed to lag on her end of the alleged deal.
Prosecutors played a series of audio recordings of Evolutionary Homes board meetings between November 2023 and February 2024 that were secretly recorded by Cecilia Mendez, who worked for the company and is the former romantic partner of government witness Mario Juarez, who’s pleaded guilty to participating in the alleged scheme.
Juarez cofounded Evolutionary Homes with two of the co-defendants in the trial — Oakland recycling executive David Duong and his son, Andy Duong. The company sought to convert shipping containers into housing for people exiting homelessness.
The tapes included conversations between Juarez and the Duongs about their efforts to acquire contracts for Evolutionary Homes with various Bay Area cities, including Oakland. In the recordings, they air frustrations with then-Mayor Thao and her longtime romantic partner Andre Jones over not delivering on that deal.
The Duongs, Thao and Jones are currently facing charges of conspiracy, bribery and fraud related to an alleged quid pro quo in which prosecutors say Thao promised to help Evolutionary Homes secure a city contract in exchange for campaign support in her 2022 mayoral election and a $300,000 no-show job for Jones at the company.
They also allege Thao agreed to appoint city staffers to director-level positions at the Duongs’ and Juarez’s request, and extend the city’s contract with another one of the Duongs’ businesses, California Waste Solutions, Oakland’s curbside recycler.
Mendez, who said she worked for Evolutionary Homes for about seven months, also told the court on Wednesday about her personal and working relationship with Juarez, as defense attorneys attempted to cast further doubt on his credibility.
Mendez testified that she and Juarez’s relationship extended back more than 25 years. The two were in a romantic relationship for about five years, have an adult daughter together and are currently “friends,” according to Mendez. They have also worked on a number of business ventures together, including multiple in real estate, she said.
Mendez said that the duo was business partners until last year, and they remain in close contact to this day, speaking to Juarez regularly since she was subpoenaed in the case.
David Duong’s attorney, Ed Swanson, pointed out that Mendez called Juarez on the day of all three of her pre-trial interviews with prosecutors, and as recently as Wednesday, when Mendez said she spoke to him “on my way to the court.”
Mendez said Juarez first told her about Evolutionary Homes in October 2023, and he asked her to begin taking notes during company board meetings because the usual notetaker was too ill to attend. Mendez said she covertly made the recordings because she didn’t have note-taking experience, and it made the process easier for her. Prosecutors on Wednesday played excerpts from five of those recordings for the jury.
In the first tape, from a board meeting on Nov. 6, 2023, Juarez can be heard recounting to David Duong a recent dinner he had with Jones. In the recording, Juarez alleges that at the dinner, Jones asked him for “more money.”
Prosecutors say that between December 2022 and November 2023, the Duongs, through Juarez, had paid Jones $95,000 as part of the alleged bribery scheme. Jones’ attorneys have argued that he was a consultant for the company, and that the payments Jones received were advances for his work as a government relations specialist.
In the recording, Juarez relays to David Duong that he told Jones at the dinner: “Last time we talked, we said that … you were not going to get any more money from us until you delivered the deal.”
Later in the tape, David Duong tells Juarez to instruct Jones “to go to Mexico,” where Evolutionary Homes was purportedly manufacturing its housing units, “to collect.”
“If he goes to Mexico, I’m going to kill him. I — he won’t come back alive,” Juarez replies, laughing.
The city of Oakland never signed a contract with Evolutionary Homes, though Thao and former City Administrator Jestin Johnson both visited the company’s showroom in 2023.
Later in the Nov. 6 meeting, Juarez said on the recording that he told Jones: “I know that we should have the city administrator assigned to us, Larry Gallegos, to do this project.”
Prosecutors have alleged that Gallegos was one of the people who Juarez and the Duongs wanted elevated to a director-level position in City Hall. When Thao became mayor, Gallegos was a project manager in the Department of Economic and Workforce Development, but in March 2023, Gallegos was named Interim Deputy Director of the Department of Housing and Community Development after Thao allegedly advocated for his appointment. Earlier in the trial, Thao’s former chief of staff testified that the appointment came as a surprise to her, because she didn’t feel Gallegos was qualified for the job.
In a later board meeting on Nov. 28, 2023, the business owners’ patience with Thao appears to be thinning. They say Thao has reportedly expressed that she wants Alameda County to purchase Evolutionary Homes units before the city does, apparently angering Juarez.
“I have a long memory, and I’m pretty vengeful,” he said on the tape. “There are consequences to not keeping your end of the bargain, but that’s her decision.”
He continues, “Just know this: I have a lot of friends, a lot more friends than her … All I’m going to say is she is not a trustworthy person, and she does not keep her word, and that’s enough for people and that’s too bad for Sheng.”
David Duong counters, saying that instead of putting pressure on Thao, they should “help her out.”
“If you make the deal with me, but now I’m sitting down and find out all kind of [sic] shit that is happening, do I want to keep my deal and then start to create all kinds of problem later on, or big liability later? No,” he said. “You just have to help them where they’re comfortable, where they do it, and without getting them in trouble.”
David Duong goes on to say that they won’t sell housing units to Oakland by forcing Thao’s hand: “It’s not because I promise you so, ‘Yeah, I’m ready, I will go [to] jail for this.’ People don’t promise and just die because they promised.”
In another recording from a Jan. 9, 2024, board meeting, David Duong and Juarez also discuss putting Jones’ name and contact information on Evolutionary Homes documents — “because that has to be on record,” David Duong said.
Juarez instructs someone who is not identified to “put Andre [Jones] and put his number” on a proposal for a future meeting with a Santa Clara County supervisor.
Prosecutors earlier this week called to the stand an FBI agent who testified that when agents raided the home Jones shared with Thao in 2024, they found no reference to Evolutionary Homes on Jones’ laptop. His defense attorney(s) have attempted to cast doubt on that assertion, pointing to company presentations that list him as an employee, as well as a note that indicates he was going to get business cards made by the company.
Under cross-examination, defense attorneys attempted to poke holes in Mendez’ claim that she recorded the meetings for her own note-taking, pointing out that Huang, purportedly too sick to attend meetings, was present for several of the ones Mendez recorded, and that Mendez never generated any notes based on her tapes.
While Mendez said she did not tell Juarez that she was recording, defense attorneys repeatedly asked her if and when he knew the tapes existed.
They also tried to cast doubt on both Juarez and Mendez’s working relationship and business practices.
While they worked together at Evolutionary Homes, Mendez said Juarez instructed her to write a fraudulent invoice and create an organizational chart for a subsidiary of the company that included names of people who did not currently work there in order to apply for certain permits.
“Is it fair to say this document was just a Mario Juarez con to get permits for Evolutionary Homes?” Mark Goldrosen, Jones’ attorney, asked her.
Mendez replied, “Yes.”
Mendez also testified that in 2019, she was convicted of identity theft, grand theft of more than $100,000 and acting as a real estate agent without a license. Juarez, she said, knew about her convictions and continued to work with her.
Mendez testified under a statutory immunity and compulsion order, which required her to answer questions on the witness stand despite planning to invoke her Fifth Amendment right against self-incrimination. In exchange, the order grants her statutory immunity, meaning that what she said during her testimony cannot be used against her in any state or federal criminal cases.
On Thursday, former Assistant City Administrator LaTonda Simmons and former City Administrator Jestin Johnson are expected to testify.