Audit Exposes Abuse of Position in Contract Award
A major ethics investigation has concluded that a top San Francisco tax official improperly used her position to benefit a company connected to a personal friend during a multimillion-dollar contracting process, adding another chapter to the city’s growing list of government scandals.
A joint audit conducted by the San Francisco City Attorney’s Office and Controller’s Office found that former Chief Assistant Treasurer Tajel Shah repeatedly intervened in ways that favored Mechanical Orchard, a technology firm competing for a contract to modernize the city’s aging business tax system. The project was considered critical because the existing software that helps manage roughly $2.6 billion in business taxes was nearing the end of its useful life.
According to the audit, Shah’s conduct went far beyond isolated lapses in judgment.
“The instances in which Shah instructed TTX staff to act in ways that benefited Mechanical Orchard were so numerous, it appears that she intended to selectively assist the firm in violation of city law and policy,” investigators wrote.
The findings largely validate allegations first reported by the San Francisco Standard, whose investigation last year triggered multiple official reviews. Shah was subsequently placed on leave and later departed city government after 17 years of service, announcing her retirement in a farewell message to colleagues.
At the center of the controversy is Shah’s relationship with former Mechanical Orchard executive Roque Versace. Shah reportedly characterized Versace as little more than a business acquaintance, similar to other contractors she encountered through city work. But investigators uncovered evidence suggesting a much closer relationship.
One 2023 email showed Shah introducing Versace and his company to officials in another city department.
“My friend and I were chatting about the company that he just joined,” Shah wrote.
Auditors also cited a 2017 Facebook comment in which Shah responded to a family photo posted by Versace with the message, “My favorite peeps!”
The audit concluded that Shah should have disclosed those personal connections and recused herself from any decisions involving Mechanical Orchard.
Instead, investigators found extensive involvement throughout the procurement process. More than 1,100 emails and internal records documented communications between Shah, Versace, and company executives as the bidding process unfolded.
Perhaps most damaging were findings that Shah allegedly influenced changes to the evaluation process itself. According to the audit, late-stage adjustments to cost calculations increased competing bids by roughly $1.7 million while leaving Mechanical Orchard’s proposal largely unaffected. Auditors concluded that Shah understated her role and actively directed actions that helped position the company for success.
“Shah understated her role and involvement in the process TTX used to select Mechanical Orchard to replace the business tax system,” the report stated. “In fact, she directed staff to manipulate the process so Mechanical Orchard would get the $7 million contract.”
Despite ultimately winning the competition, Mechanical Orchard never received the contract. The company withdrew from the project in September 2025 after media scrutiny intensified and reporters began seeking answers about the allegations. Shah was placed on paid leave during the same period as investigations accelerated.
The fallout has left city officials back at square one on a project they viewed as essential. The contract’s collapse delayed efforts to replace a critical tax platform used to collect billions of dollars from approximately 90,000 businesses operating in San Francisco.
The scandal also raises fresh questions about oversight within Treasurer José Cisneros’ office, one of the city’s most influential departments. The office handles enormous sums of taxpayer money and plays a central role in San Francisco’s financial operations.
For many observers, the case fits into a troubling pattern. San Francisco has seen several high-profile corruption and ethics scandals in recent years, including criminal charges involving the former head of the Human Rights Commission and the conviction of a former Public Works director in a sweeping corruption scheme.
Ethics experts reviewing the allegations have noted that public confidence in government can be damaged even when officials merely create the appearance of favoritism. In this case, investigators concluded the evidence pointed to something more substantial: a senior city official improperly using her authority to steer a taxpayer-funded contract toward a company tied to a personal relationship.
With Mechanical Orchard out of the picture and Shah no longer employed by the city, San Francisco now faces the costly task of restarting the procurement process while trying to reassure taxpayers that future contracts will be awarded through a fair and transparent process.