RAID RUINS PROBE OF HOUSING STAFF

Pacifica police mistakenly uncover FBI investigation

A federal probe of suspected drug dealing by San Francisco Housing
Authority workers was derailed after Pacifica police stumbled onto a
secret FBI listening post, The Chronicle has learned.

The yearlong investigation, which federal officials say had to be
restarted after the incident, has focused on several painters and
other workers hired by the Housing Authority.

The FBI probe began after videotapes were turned over to authorities
that officials say showed Housing Authority painters engaged in drug
dealing while on the job.

Law enforcement sources have said that more than a dozen people
convicted of felony drug dealing and other major offenses had been
hired since 1997 under a Housing Authority program designed to put
residents to work painting and landscaping.

The FBI assembled a task force in late 1997 to look into the alleged
drug-dealing operation by Housing Authority workers. But the
investigation hit a major snag in July when Pacifica police raided an
apartment and stumbled into an unstaffed electronic FBI surveillance
post.

Pacifica Police Chief Ted Merritt said his officers were investigating
a ``suspicious circumstance case.''

``It ended up that the FBI was also working on this case,'' he said.
``That happens every once in a while.''

In the aftermath of the debacle, federal authorities said they had to
alter their strategy for fear that the subject of the probe had been
tipped off by the raid.

``There was and still is a pending investigation,'' said George Grotz,
spokesman for the FBI.

Pacifica police were angry that the FBI had not informed them of the
operation, Grotz said.

``We had discussions, and the investigation has taken a different
tack,'' Grotz said. ``It was a coordination issue -- these things
happen. It was unfortunate that they did it, but they did it for
legitimate reasons.''

One bone of contention was that Pacifica police did not secure a
warrant before conducting the search, authorities said.

Merritt said there were no hard feelings.

``There is no problem between the FBI and this department,'' he said.
``If someone was in town working on a case all the time, I would
expect to know. But I'm not sure that's what went on here.''

The FBI probe is just one of several investigations involving San
Francisco's Housing Authority.

Several of the workers identified in state records as ``subjects of
interest'' in a narcotics probe continue to work at the authority,
including a $31.50-an-hour foreman of a painting crew.

Since media reports of drug probes over the summer, Housing Authority
officials have imposed screenings of job candidates to determine their
criminal histories. No worker hired under the 1997 program was
screened for criminal background.

Housing Authority officials trumpeted the program, dubbed Operation
Family Sweep, as one way the agency was trying to put poor residents
to work. But of the dozen workers with criminal records identified by
The Chronicle, only four told the authority they lived in public
housing. The other eight lived near the authority's projects, agency
officials said.

The Housing Authority's goal was to hire people around, and not
necessarily in, the projects, said Ron Sonenshine, spokesman for the
agency.

In addition to the drug probes, the U.S. attorney's office is
conducting a civil rights investigation of the security firm Personal
Protective Services, which the Housing Authority hired to patrol

several crime-plagued housing projects.

1998 San Francisco Chronicle

Checked-by: Rich O'Grady