Marin County man faces federal fraud charges over San Francisco hotel project, $5M in pandemic relief funds
A federal grand jury indicted a 56-year-old Novato man, along with a San Francisco contractor, for allegedly bilking the Hilton Hotel in San Francisco as part of a kickback construction scheme worth millions of dollars over a three-year period, the U.S. Attorney’s San Francisco office announced.
Geoffrey Mark Palermo has also been accused of making false statements in 2019 on a loan application for Paycheck Protection Program funds, the U.S. Department of Justice reported on a separate matter in June. At that time, he worked for GMP Automotive.
Palermo, who worked as a manager of the San Francisco hotel at 750 Kearny Street from 2008 to 2016 is accused of embezzling funds from the Financial District hotel by arranging projects with a construction company run by Adan Roldan, then padding the invoices sent to the hospitality giant, the DOJ outlined in the Wednesday night news release. In turn, Roldan, aka George Villanuevo, would split the jacked-up proceeds from the invoices the hospitality company paid for jobs performed between 2013 and 2016 while Palermo worked there.
It’s unclear whether the work was performed or finished at the hotel.
According to the indictment, the two men allegedly used various bank accounts to carry out their scheme, prosecutors contend. Palermo signed and authorized more than 450 checks totaling $6.4 million from Palermo to Roldan to be paid by the Hilton. These inflated checks were funneled from an account controlled by Roldan under the name The Bahama Reef Living Trust, the May 4 filing adds.
As late as May 11, 2016, prosecutors said Palermo used a Redwood Credit Union account in Santa Rosa to carry out the scheme. He’d write “Hilton Guest Counter Top Support Supplies” in the memo line of the check, which would then be deposited and processed through the Federal Reserve system.
“The account holders are no longer associated with Redwood Credit Union,” a spokeperson for the credit union responded to the Business Journal.
Consequently, Roldan made out checks to pay off Palermo by labeling payments “rent balance on ’56 Packard” as one example. The checks were concealed as kickbacks and were never disclosed as such, the indictment reads.
The Hilton San Francisco has provided no comment as of Friday afternoon, including one from General Manager Chad Fife.
Palermo’s alleged legal wranglings didn’t end there, prosecutors claim.
After leaving the hotel in 2016, Palermo worked for GMP Automotive, based in North Carolina, in 2019 and part of 2020, when he misrepresented the auto company and his financials while applying for two PPP loans valued at $5 million through the U.S. Small Business Administration, the DOJ claims.
Calls to the car parts company were unreturned.
Palermo and Roldan were charged in a criminal complaint with accusations of wire fraud and making false statements on a loan application last June.
“What is particularly galling about the conduct alleged in the complaint is that while Geoffrey Palermo was wrongfully receiving PPP funds, he was not paying required payroll taxes for his employees, making it difficult or impossible for his employees to obtain the benefits to which they were rightfully entitled,” U.S. Attorney David Anderson said at the time. “PPP funds are intended to protect the many, not to enrich the few.”
The defendants are scheduled to make their initial court appearances in U.S. District Court in San Francisco on May 13 before U.S. Magistrate Judge Thomas S. Hixson.
Palermo and Roldan each face charges of conspiracy and wire fraud. If convicted, the duo could each be sentenced to up 20 years in prison and a $250,000 fine and up to 30 years behind bars and a $1 million fine.
