Jury awards whistle-blower $2 million in SF sewer-fraud case

Craig Patrick Burt of Hayward was sentenced to 10 years in prison this week after pleading guilty in U.S. District Court in San Francisco to receiving child pornography and traveling to the Philippines with the intent of engaging in sexually explicit conduct with girls ages 10 to 15. less Craig Patrick Burt of Hayward was sentenced to 10 years in prison this week after pleading guilty in U.S. District Court in San Francisco to receiving child pornography and traveling to the Philippines with the ... more Photo: Associated Press Photo: Associated Press Image 1 of / 1 Caption Close Jury awards whistle-blower $2 million in SF sewer-fraud case 1 / 1 Back to Gallery

A jury ruled Friday that San Francisco must award a former deputy city attorney more than $2 million in damages in a lawsuit that said she was fired for exposing a long-running illegal payment scheme between municipal officials and plumbing companies.

A unanimous jury decision in San Francisco Superior Court found the city violated statutes under both the California Whistleblower Protection Act and False Claims Act in the firing of Joanne Hoeper.

“I am just so grateful,” Hoeper said Friday afternoon. “The 12 jurors looked at the same thing I saw back in 2012, and they were alarmed at what was going on in the city attorney’s office. I’m grateful, and I’m humbled.”

Hoeper, tipped off to possible irregularities with the city’s sewer payment programs, began an investigation in 2011 into fraud among sewer repair claims by private property owners that were approved by city attorney staffers Michael Haase and Matthew Rothschild.

She said she suspected the staffers received kickbacks in exchange for directing about $10 million in public funds toward needless sewer repair payments.

Upon presenting the findings to City Attorney Dennis Herrera in 2012, Hoeper was transferred to the district attorney’s office before being fired in 2014.

The city had argued in a filing made to the Division of Labor Standards and Enforcement that Hoeper’s performance had been a problem for years and that the city had actively sought to hire her replacement from 2010. After a lengthy interview process, a candidate was selected in June 2012, the document states.

“We are surprised and disappointed with the jury’s verdict. We take our responsibilities to our clients and to the public seriously,” John Coté, a spokesman for the city attorney’s office, said in a statement. “We are sorry the jury did not recognize that the City Attorney had independent reasons for terminating Ms. Hoeper in 2014. We are grateful that the jury did not award her the $6 million she was seeking. Nevertheless, we are exploring all of our options.”

Herrera ordered a halt to the sewer payment program after Hoeper’s report, finding some plumbing companies had taken advantage of a city policy to pay property owners and their plumbing companies to repair the damage to sewer lines caused by the roots of city-owned trees.

Hoeper had discovered that tree roots can’t penetrate some unbroken sewer lines and determined that the city should not provide funds to fix private sewers.

But city officials said there was no evidence of kickbacks, citing a report Hoeper had made herself in July 2012.

An excerpt of her report read, “The preliminary work we have done so far has not revealed the sort of obvious patterns that could be expected if there was a scheme to steer public funds to particular plumbing contractors in return for kickbacks or other benefits.”

Hoeper’s attorneys had argued her report was preliminary, and officials stopped her before she was able to complete the investigation.

Although the jury determined Hoeper’s report was a factor in her firing, the verdict does not prove wrongdoing by city officials. Hoeper said she hoped that would be challenged.

“I pursued this for all these years because I love the city,” she said. “My fervent wish is that either the mayor or the Board of Supervisors or somebody call for a comprehensive investigation to get to the bottom of what’s going on. I hope that happens.”

Jenna Lyons is a San Francisco Chronicle staff writer. Email: jlyons@sfchronicle.com Twitter: @JennaJourno