A new and embarrassing twist came in the City Hall scandal chapter involving former SF Public Utilities chief Harlan Kelly as prosecutors say that cocaine was found in the FBI's search of his home.

Federal Magistrate Judge Laurel Beeler on Tuesday ordered Kelly to surrender his passport, rid himself of all firearms, and refrain from consuming alcohol in excess as she set his bail at $200,000 as he awaits trial on a charge of wire fraud. And as the Chronicle reports, there was the added demand that he undergo drug testing.

The drug testing appeared to come at the behest of federal prosecutors, after Judge Beeler reportedly initially expressed doubt that drug testing was necessary given the risks associated with the pandemic and going to a testing facility.

Assistant U.S. Attorney Robin Harris then said that the testing was being requested after a substance found during last week's raid of the Kelly home came back "presumptive positive" for cocaine.

An attorney for Kelly told the judge that all that was found was "residue" from a party, and it had "nothing to do with Harlan."

News of the FBI raid and charges against Kelly came last week, shortly after which Kelly resigned from his role at the SFPUC. He is accused of accepting a free trip to China and Hong Kong, in addition to other gifts, in exchanged for allegedly showing SFPUC favor toward projects represented by longtime permit expeditor Walter Wong — who was charged in the unfolding federal probe back in June. Shortly after Kelly's arrest, his wife, City Administrator Naomi Kelly, announced she was taking a leave of absence from her role.

In a blistering letter to the mayor, Kelly said that the charges against her husband were baseless, and that the claims they were based on were a last-ditch effort by a "disgraced and desperate man" (Wong) to curry favor with federal investigators as he faces potential prison time himself. Ms. Kelly said that Wong was "scrambling to use his manipulative skills to buy his freedom in the last years of his life."

Naomi Kelly does not face any federal charges so far, but Harlan Kelly no faces one count of wire fraud and honest services wire fraud, which could come with a 20-year prison sentence.

Mr. Kelly was the tenth person charged in the FBI's ongoing corruption probe, which the public first learned of in January with the arrests and indictments of former Department of Public Works head Mohammed Nuru, and local businessman Nick Bovis. At least four of those charged, including Wong, have taken plea deals in exchange for their cooperation.

Previously: City Administrator Naomi Kelly Takes Leave of Absence Amid Scandal, Husband's Indictment

Photo of Mohammed Nuru with Harlan Kelly via Mohammed Nuru/Twitter