A top San Francisco tax official “abused her position” to improperly steer a lucrative $10 million contract dealing with the city’s $2.6 billion in business taxes toward a close pal’s company, according to an explosive city audit.
The joint report by the City Attorney’s Office and the Controller‘s Office found Chief Assistant Treasurer Tajel Shah used her powerful role to benefit Mechanical Orchard, a tech firm competing for a contract to replace the city’s aging business software. The audit largely confirmed allegations first raised by the San Francisco Standard last year.
Shah, who was suspended after The Standard’s investigation triggered multiple reviews, ultimately left city government late last year and Mechanical Orchard abandoned its pursuit of the contract. In a farewell letter to colleagues, Shah announced her retirement after 17 years with the city, saying she was proud of the office’s accomplishments and grateful for her public service career.
The audit found Shah improperly participated in contracting decisions involving Mechanical Orchard despite personal relationships with company officials, including former chief revenue officer Roque Versace, whom she had described as a friend. Investigators concluded her actions created at least the appearance of favoritism and undermined the integrity of the procurement process.
“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,” auditors wrote.
In an interview with The Standard, Shah compared Versace to a friendly business acquaintance like any other city contractor, but a Facebook post from 2017 shows that Shah commented on a photo of Versace’s family by writing, “My favorite peeps!”
San Francisco has been rocked by a slew of scandals at City Hall in recent years, including the head of the Human Rights Commission being charged with crimes and the former Public Works director — who was compared to a gang murderer and drug dealer when sentenced to seven years in prison — was involved in a sprawling corruption racket.
The findings mark a dramatic fall for one of the most powerful bureaucrats in San Francisco government and raise new questions about oversight inside Treasurer José Cisneros’ office, which collects billions of dollars in taxes and fees from roughly 90,000 businesses each year.
The city’s aging business tax platform was considered a critical project because the existing system was approaching the end of its useful life. Now, city officials say they’ll need to start the process over from scratch.
A whistleblower complaint alleged Shah failed to disclose her close friendship with Versace and improperly involved herself in decisions that helped Mechanical Orchard secure an advantage over competitors. The complaint also raised concerns about Shah’s niece obtaining employment connected to the company’s corporate network during the procurement process.
More than 1,100 emails and internal records revealed extensive communications between Shah, Versace and other company executives before the contract award. One February 2023 email showed Shah attempting to connect Mechanical Orchard with another city department.
“My friend and I were chatting about the company that he just joined,” Shah wrote while introducing Versace and the company to officials in the city‘s Assessor-Recorder’s Office.
The audit concluded Shah should have disclosed those relationships and removed herself from decisions involving the company.
San Francisco Mayor Daniel Lurie has placed an emphasis on modernizing the city’s aging technology infrastructure. His office did not immediately respond to a request for comment Tuesday.
The whistleblower also alleged Shah helped alter the procurement process in ways that favored Mechanical Orchard. Internal city records showed that last-minute adjustments to cost calculations added roughly $1.7 million to competing proposals while leaving Mechanical Orchard’s bid largely unaffected.
Although Mechanical Orchard ultimately won the competition, the contract never moved forward.
The company abruptly walked away from the deal in September 2025 after The Standard began asking questions about the allegations and requesting interviews with company executives. The same week, Shah was placed on paid leave as city officials launched investigations.
At the time, Cisneros acknowledged the collapse of the contract represented a major setback for efforts to modernize the city’s business tax operations but pledged to get to the bottom of what occurred.
Investigators found evidence that Shah exercised improper influence over the contracting process and failed to uphold standards designed to ensure fair competition for taxpayer-funded contracts.
“Shah understated her role and involvement in the process TTX used to select Mechanical Orchard to replace the business tax system,” auditors wrote. “In fact, she directed staff to manipulate the process so
Mechanical Orchard would get the $7 million contract.”
Ethics experts who reviewed the original allegations described the conduct as extraordinary and warned that even the appearance of undisclosed conflicts can erode public trust in government.
