The San Mateo County Community College District filed a lawsuit on Wednesday, Feb. 8, against several construction companies for "fraud, bribery, and kickbacks." The district alleges the scheme was led by disgraced former Chancellor Emeritus Ron Galatolo, who was charged with 21 felonies in April 2022 for misuse of public funds during his leadership of the district.
The 120-page document, filed in San Mateo County Superior Court by the law firm Cotchett, Pitre & McCarthy LLP, states that the district is seeking damages and relief against Allana Buick & Bers; McCarthy Building Companies; Studio W Architects (formerly Bunton, Clifford & Associates); Bothman Construction; and Blach Construction Company.
The lawsuit also names Jose Nuñez, the former vice chancellor who struck a deal with San Mateo County prosecutors and [pleaded no contest to two felonies, as participating in the scheme.
"The defendants together profited handsomely from their relationship with Galatolo and Nuñez, receiving hundreds of millions of dollars from the district," the filing states. "Defendants and their co-conspirators have inflicted significant financial harm on the district, the district's students, on their competitors, and on San Mateo's taxpayers."
District lawyers say San Mateo County taxpayers allowed the district to borrow over $1 billion, presumably to fund construction projects and improvements across its three campuses, and bids for construction projects were largely pre-determined by Galatolo, with help from Nuñez, and sought to benefit co-conspirators.
"This case represents one of the worst instances of pay-to-play stealing of public funds designated for the education of our students, residents and working adults," court documents state. "It is a story about the blatant pay-to-play of bond money that was intended for buildings, equipment, and educational infrastructure to benefit our local community here in San Mateo County. Tragically, certain individuals including Ron Galatolo, Jose Nuñez and others used their government positions to influence the flow of money to benefit themselves, their friends, contractors, and those who did business with the district."
Galatolo, over the course of several years, allegedly secured benefits, gifts and free construction projects on his various properties in return for awarding lucrative construction contracts to contractors and architects in connection with the district's various capital improvement plans, and it appears that others may be involved, according to the filing.
"Defendants knew that the benefits and gifts they gave to Galatolo and other college employees were illegal but made them anyway in order to secure massive construction contracts," the filing states.
The district alleges that Galatolo used his district email account to arrange financial and other inducements, as well as organize his personal affairs, including lavish trips and vacations, lucrative private banking, and improving his personal property, often involving bidders on district projects.
A McCarthy spokesperson provided The Almanac with the following statement:
"McCarthy is committed to conducting all business with the highest level of integrity in alignment with our code of conduct. We are not able to specifically comment on active litigation."
Other firms named in the filing did not respond to a request for comment.
Trip to Dubai, free solar panels for Galatolo's vacation home and more
Galatolo traveled from Dubai to Bali to vacation on the district's dime while purporting to be on "official" business, according to court documents. He went on the trip alongside Karim Allana of Allana Buick & Bers (ABB). Nuñez and another former district administrator, Jing Luan, also allegedly assisted with the scheme and joined Galatolo and Allana for parts of the trip.
ABB provided services for the solar panels at Galatolo's Lahaina, Hawaii vacation home for free in 2017, according to the filing. Galatolo did not disclose the free services from ABB, Allana and other ABB employees to the district.
In 2018, the pair and other ABB associates also allegedly purchased an apartment in Paris together.
Galatolo continued to reward ABB for these kickbacks and gifts, guaranteeing their receipt of further contracts with the district in 2015 ($500,000), the aforementioned 2017 contract ($1.5 million), 2018 ($250,000), March 2019 ($750,000), and July 2019 ($900,000), all of which were contracts Galatolo had financial interest in based on his prior inducements given by ABB and Allana.
The original contract price of $60.4 million for Blach Construction for a building project at Cañada College ballooned over time, according to the filing. The district paid Blach over $101 million for services relating to the Cañada B1 project.
In May 2018 Galatolo went to a San Jose Sharks game with principal Dan Rogers. The same month, the company treated Nuñez (and Galatolo) to suite concert tickets to see U2. In late 2019 and in 2019, there were significant issues with Blach's work on Building 1.
Notwithstanding serious issues with Blach's work and billing to the district, in July 2019 Galatolo attended dinner and Queen concert with Blach principals.
Cañada solar project
Galatolo exerted undue influence on the selection of the winning vendor for a solar project at Cañada College, by pressuring the committee responsible for choosing the winner to alter the scores of the bidding process to make ABB the top scorer, when another company actually scored higher, according to the filing.
Galatolo also overrode a recommendation to hire Newcomb Anderson McCormick, the professional consulting firm to assist with the solar project, the filing states.
Pushback from other staffers
Karen Powell, the district's former executive director of facilities planning and operations, told Kathy Blackwood, then executive vice chancellor, and former Vice Chancellor of Human Resources Eugene Whitlock, in an April 2016 email that she felt "very, very demoralized and discouraged" because the district was going to pay Studio W Architects for services they never performed.
"I feel increasingly like a fool trying to carry forward this message of objectivity and transparency," she wrote. "The pitying looks are really getting to me and I do not want to let things progress (or devolve?) until I become a complete laughingstock, if we aren't there already."
The architecture firm signed a contract with the district to provide initial design and consultation services regarding Cañada Building 1 for $100,000. The contract was augmented to $650,000 by January 2015, then $6 million in June 2015.
Construction companies major donors on bond measures
The construction companies, and Galatolo confidants, listed in the filing were also major donors on facilities bond measures passed by the district.
Robert A. Bothman ($50,000), Hensel Phelps Construction Company ($25,000), and McCarthy Building Companies ($25,000) gave to the 2011 Measure H campaign.
For the 2014 Yes on H campaign had garnered $167,600 in donations. Large donors included: Swinerton Management & Consulting ($25,000), McCarthy Building ($25,000), BCA Architects of San Jose ($20,000), Blach Construction in Santa Clara ($10,000), Sugimura Finney Architects ($5,000), Allana Buick and Bers ($5,000), Level 10 Construction ($5,000), and MediFit Community Services in New Jersey ($10,000).
"Once again, major donors included a who's-who from Galatolo's rolodex," the filing states.
Galatolo faced scrutiny from taxpayers before the 2014 measure was passed. An article written by then-Almanac reporter Dave Boyce weeks prior to the election called into question the district's stated mission for the bond funds, criticizing the lack of transparency and detail in the list of projects.
When Galatolo was asked why the district hadn't included descriptions of buildings with estimated costs in the voter information pamphlet, Galatolo's response was short, and telling: "Nobody does that."
Read the complete filing here: