Updated: SF developer pleads guilty to poaching, tax crimes

Luke Brugnara in front of a painting titled "Christ Carrying the

A San Francisco real estate developer who was charged with
damming Little Arthur Creek and

taking

a threatened species of steelhead trout in 2007 pleaded guilty
to multiple poaching and obstruction charges Tuesday. That same
day, he pleaded guilty to tax evasion charges after he failed to
report more than $45 million in capital gains from property
sales.
A San Francisco real estate developer who was charged with damming Little Arthur Creek and “taking” a threatened species of steelhead trout in 2007 pleaded guilty to multiple poaching and obstruction charges Tuesday. That same day, he pleaded guilty to tax evasion charges after he failed to report more than $45 million in capital gains from property sales.

Luke Brugnara had faced four counts of “taking” steelhead and two counts of making a false statement in the course of an investigation after he was indicted by a federal grand jury in April 2008.

He made his plea in front of an open court Tuesday, before the jury had been selected.

This was the first federal criminal case in the country charging an individual and corporation with the poaching of steelhead by blocking an upstream habitat. The U.S. Attorney General’s office considered the matter a victory.

“The protection of steelhead and other threatened species is of paramount importance,” U.S. Attorney Joseph Russoniello said in a prepared statement. “We will utilize all available means to preserve such species for future generations.”

The maximum penalty for each false statement charge is five years imprisonment and a $250,000 fine. The maximum penalty for each Endangered Species Act violation includes six months imprisonment and a $25,000 fine. The court will determine Brugnara’s penalty during his May 5 sentencing. He will be sentenced for tax evasion offenses May 4.

Brugnara, who used his company, Brugnara Corporation, to purchase 112 acres, a cabin, four other structures and a dam in west Gilroy at 4850 Redwood Retreat Road, blocked the flow of Little Arthur Creek between January and April 2007 or longer, according to a federal indictment. The creek is an important watershed for steelhead, according to the state Department of Fish and Game and the federal National Marine Fisheries Service. Regulators say that the habitat above the dam is critical to the breeding and survival of the South-Central California Coast steelhead, which are found in Little Arthur Creek and are listed as threatened on the federal Endangered Species list.

The charges against Brugnara resulted from an investigation by the National Oceanic and Atmospheric Administration and the state Fish and Game department.

State and federal investigators said they found many trapped adult steelhead downstream of the dam that could not migrate upstream to a suitable spawning habitat. A rescue team, consisting of NOAA and Fish and Game representatives along with members of the local group Coastal Habitation Education and Environmental Restoration, noticed March 24, 2007, that fish that had been in the pool below the dam were gone. They said they found a pair of boots, footprints, a fishing line with hooks attached and two McDonald’s receipts with recent dates.

A Department of Fish and Game warden confronted Brugnara about the matter at his home, and the San Francisco developer at first denied having been to his property within the past two or three weeks, according to a federal indictment. However, he ultimately admitted that he been there and bought food in Morgan Hill along the way. He also admitted that he and a friend had been fishing there, although he said they did not catch anything and used a fishing lure that would have prevented them from catching steelhead. The attorney general’s office said Brugnara lied about his intentions to catch fish and about the type of lure he used.

Brugnara also pleaded guilty to filing false tax returns in 2000, 2001 and 2002 and to obstructing the Internal Revenue Service. A January 2010 indictment alleged that he had failed to report the sale of four properties in San Francisco and one property in Las Vegas. The indictment also alleged he had failed to report as income some personal expenses that had been paid to his corporation. Court documents also stated that Brugnara had provided a lender with invoices from a non-existent tax service as well as corporate tax returns and a statement that he owned more than $400 million of artwork – both of which had never been filed.

The maximum statutory penalty for each count of filing a false tax return is three years in prison and a fine of $250,000, plus restitution, if applicable.

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