The Post printed this story on Saturday. We’re posting it now for those who might have missed it. Pick up the Post in the mornings for the latest in local news.
BY EMILY MIBACH
Daily Post Managing Editor
The San Mateo County Community College District is getting over $20 million in settlements from contractors it accused of participating in a “pay-to-play” scheme with the district’s former chancellor Ron Galatolo, who received lavish gifts and in return gave the firms expensive contracts paid for by bond measures approved by voters.
The lawsuit claims that the firms gave expensive concert and sports tickets to Galatolo, took him on lavish trips and even did work at properties he owned.
The district sued five firms in 2023 after the District Attorney’s Office filed charges against Galatolo and former district vice chancellor Jose Nunez.
The five firms are:
• Allana Buick & Bers;
• McCarthy Building Companies;
• Bunton, Clifford & Associates;
• Robert A. Bothman Inc., and
• Blach Construction Company.
Nunez took a plea deal to cooperate with the DA’s office and testify against Galatolo while the former chancellor was found guilty on Jan. 20 of eight felonies, including four counts each of perjury and tax evasion. The jury deadlocked on the remaining 18 felonies. District Attorney Steve Wagstaffe opted not to retry Galatolo due to the high cost to the taxpayers. Galatolo will be sentenced on July 31 and faces up to 10 years in prison.
The criminal and civil cases featured similar allegations — that Galatolo and the firms worked together to get the firms lucrative contracts and get kickbacks to Galatolo. Deputy District Attorney Joseph Cannon said Galatolo had a conflict of interest for being friends with Allana Buick & Bers CEO Karim Allana, who went on many trips with Galatolo, including to Dubai, Auberge in Austria, Paris and Lake Tahoe.
Galatolo’s attorney, Chuck Smith, told a jury during Galatolo’s criminal trial on Jan. 8 that it wasn’t a crime for Galatolo to have friendships with the contractors he was accused of taking bribes from.
The trips they took together did not qualify as gifts because Galatolo reciprocated gifts to Allana, Smith said. There were occasions where Galatolo would pay for his own plane tickets or pay for dinners, according to Smith.
“That’s friendship, not a crime,” Smith said during his Jan. 8 closing arguments in the case.
Allana also allegedly arranged for his firm to perform solar panel work at Galatolo’s Lahaina, Hawaii property despite the fact that the firm doesn’t regularly do work on homes.
As for the civil case, the firms and district have been working to resolve the case over the last six months, with the district’s lawyers filing notices of settlement regarding claims against Blach, McCarthy, Bunton and Allana Buick & Bers.
The district was set to go to trial with firm Robert A. Bothman Inc. this week, but the trial was canceled after attorneys emailed San Mateo County Superior Court Judge Michael Mau last week that a settlement had been reached, according to court documents.
The board met behind closed doors on Wednesday to discuss the lawsuit but board did not report any conclusion of the lawsuit.
The Post requested a copy of the district’s settlements with the contractors on Thursday, the same day the district posted its statement about the end of the litigation.
Niall McCarthy, one of the district’s attorneys, told the Post in an email that McCarthy Construction will be paying the district the most at $10.5 million.
The board at its Wednesday meeting asked Chancellor Melissa Moreno to come back with recommendations of ways to spend the settlement money.
Board member John Pimentel said yesterday in an interview it’s a “natural fit” to spend the money on construction projects at the district’s three colleges since that’s arguably where the money originally came from.
The settlement comes ahead of the board deciding whether to place a bond measure of $18 per $100,000 of assessed valuation on the November ballot.
The construction projects at issue in the lawsuit were funded by voter-approved bond measures. From 2001 to 2014, voters approved three bond measures to raise $1.06 billion for the college district.
Pimentel said there was no “self-created pressure” to end the litigation before the board decided to put the new bond on the ballot. The board has until early August to vote to place the measure on the ballot.
Pimentel, who was first elected in 2020 on a platform to make the district more transparent and accountable to taxpayers, said he wanted to find a way to claw back some of the money the district lost due to Galatolo’s alleged misdeeds.
“We took a big swing trying this civil litigation in the first place and I’m delighted with the result,” Pimentel said.
Pimentel said that since Galatolo left, the five-member elected board has hired an internal auditor who has recommended changes to the district’s internal accounting procedures to ensure the board knows where the money is going and what it’s being spent on. The board also voted to initiate a whistleblower hotline. The internal auditor investigates tips on the hotline.
Pimentel also said that the board, which has four members who never overlapped with Galatolo, has exercised more active engagement with ongoings at the district.
“We ask the extra questions instead of assuming the management recommendation is right,” Pimentel said. “While we have a lot of confidence in our team that’s changed over a lot since that era, we have closed sessions where we ask a lot of questions.”
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