Former San Mateo County Community College District Chancellor Ron Galatolo at center of legal action over bond money

The complaint — filed on behalf of the district by Joe Cotchett and Anne Marie Murphy with the law firm Cotchett, Pitre & McCarthy and Joe Goethals with Goethals Legal — alleges multiple development firms conspired with Galatolo and former Vice Chancellor Jose Nuñez to enrich themselves by defrauding the district.

The firms named so far are Allana, Buick & Bers; McCarthy Building Companies; Studio W Architects, formerly known as Bunton, Clifford & Associates; Bothman Construction; and Blach Construction Company.

The agencies are accused of showering Galatolo and Nuñez with lavish gifts from concert and sporting tickets to expensive international travel and even an apartment near the Eiffel Tower. They financially backed bond campaigns that would end up bringing in more than $1 billion of taxpayer money into the district and supported the races of trustee candidates Galatolo wanted on the board.

Their gifts bought them access to an exclusive “chancellors circle,” in which the firms were given special treatment when seeking development contracts from helping draft requests for applications to special information about various bidding processes, the complaint alleges.

“Galatolo deliberately surrounded himself with individuals whom he knew would be loyal to him, and only him. In doing so, Galatolo succeeded in focusing his interests not on the day-to-day governance of the district, but instead on his pet project; enriching himself to the detriment of the San Mateo [County] taxpayers and in violation of his own fiduciary duty.”

Conflicts of interest laid out

Galatolo, who has already been indicted on 21 charges of fraud and financial malfeasance by the county District Attorney’s Office, was promoted to chancellor in 2002 after being appointed to the interim position a year earlier.

During that time, Galatolo “quickly moved to consolidate power over the operation of the district,” the complaint alleges. Those who pushed back on him were labeled as difficult and shut down.

In an email sent by Karen Powell, the district’s former director of Facilities Planning and Operations, in 2016, Powell expressed feeling “demoralized and discouraged” to Kathy Blackwood, executive vice chancellor at the time, and Eugene Whitlock, the district’s general counsel and vice chancellor of Human Resources, when trying to remove Studio W Architects from a project.

The firm had been offered $100,000 to provide design and construction services for the district’s new Kinesiology Building project at Cañada College. That contract was increased to $650,000 about a year later. The method for building the gym was called into legal question and Studio W Architects was prohibited from participating in future bidding on the project.

Still, Powell was told the district would pay the firm anyway for “services they never performed and were specifically directed not to pursue.” Studio W Architects was ultimately paid $6 million in June of 2015.

“I feel certain that these firms decline to meet with [Blackwood] and Eugene because Ron has told them what he told me and Chris; [Blackwood] and Eugene don’t know anything, he’s the CEO and he’s going to ‘make it happen,’ whether or not you are on board,” Powell wrote to Blackwood. “I feel increasingly like a fool trying to carry forward this message of objectivity and transparency. The pitying looks are really getting to me and I don’t want to let things progress (or devolve?) until I become a complete laughing stock, if we aren’t already.”

Blach Construction would end up completing the actual project. The company originally won the contract with a $60.4 million bid after multiple meetings with Galatolo and Nuñez and an opportunity to submit a revised bid. The firm was ultimately paid more than $101 million for its services, according to the complaint.

Meanwhile, Mike Blach, the firm’s president and CEO, and Dan Rogers, the firm’s then vice president, dined with Galatolo on multiple occasions including one time preceding a Queen concert. Galatolo was also gifted wine, box tickets to five Golden State Warriors games and San Jose Sharks tickets, the complaint alleges.

In 2003, Bothman Construction also came out over budget on a district project to design and renovate athletic fields. They were awarded a contract not to exceed $18 million but charged more than $21 million for their work. They’ve ultimately been paid more than $55 million since 2004 for completing preconstruction work like laying concrete and working on athletic fields, according to the complaint.

Over the years, Robert and Brian Bothman have frequently invited Galatolo and Nuñez to events, the complaint alleges, including tickets to see the Oakland Raiders, multiple San Jose Sharks games and a barbecue at Brian Bothman’s home.

Allana, Buick & Bers’ CEO and senior principal Karim Allana also showered Galatolo and Nuñez with gifts and appeared to have a close relationship with the district officials, according to the complaint. The three took a trip through the Middle East together in 2017 where they lounged poolside, drank and partied, took guided tours through Dubai and traveled through Allana’s home country of Pakistan.

That trip was largely paid for with district funds as a relationship-building voyage meant to encourage new international students to transfer to the community college district. Unbeknownst to the district, Allana had also paid to upgrade Galatolo’s flight seats. Allana also provided Nuñez with tickets to attend an Eagles concert, planned a trip to a wine festival with Galatolo, provided free solar project services to Galatolo for his Hawaii home and purchased an apartment near the Eiffel Tower in Paris with Galatolo and other company principles, according to the lawsuit.

In return, the complaint alleges Allana, Buick & Bers was awarded multiple contracts amounting to $1.5 million and family favors such as a job offer to Allana’s brother and a recommendation letters for the son of a Pakistani official to the University of Southern California.

Allana, Buick & Bers was also allowed to revise a bid on a solar project in 2013. The initial bid on Nov. 21 was nearly $5.5 million but fell to just more than $4.9 million on Dec. 13, the final day of the bid. Three days later, their bid fell to about $4.5 million and they were selected as the winner. The final cost of the project rose to nearly $5 million, according to the complaint.

McCarthy Building Company received more than $200 million from the district for four projects including the Integrated Science Center and Planetarium and College Center building at the College of San Mateo and renovation work at Cañada College, according to the complaint.

Like the others, Richard Henry, the former president of McCarthy Building’s pacific division, and Frances Choun, the division vice president, offered Galatolo gifts including tickets to an All-Star baseball game, offers to host Galatolo and his friend at his country club, tickets to a sold-out World Series game in San Francisco and lodging at the firm’s luxury condos in Park City, Utah, the complaint alleges.

Representatives from the firms did not respond to requests for comment. Neither did Stephen Pahl with the Pahl & McCay law firm, who is accused of colluding with Galatolo as his lawyer to improperly direct charges for services rendered by Galatolo to the district.

Detailed in emails

Beyond shady business dealings, the complaint also cites emails detailing years of crude and sexist conversations between the district officials and their contractor friends.

In one email from 2017, the complaint alleges Galatolo was invited to an exclusive wine event by an unnamed correspondent and, in return, Galatolo asserted he knew of “a couple of super hot Russians in the city who like to drink wine, then get naked.” The pair also joked about erectile impotency while making plans to be discreet about their escapades.

Attached emails reflect that Galatolo had casual relationships with a number of district contractors. With Paul Bunton of Studio W Architects, Galatolo shared images of the pair, potentially intoxicated partying on a bus. He also referred to Brian Bothman, vice president of development at Robert A. Bothman Inc., as a “dickhead” when asking when Bothman would be free for Scotch and cigars.

Galatolo also appeared to joke with contractors about change order scams, the act of knowingly underbidding on projects to win contracts just to request additional payments later on, ballooning the cost of a project.

In an email, Galatolo sent an image of a boat named “change order” and it’s much smaller dingy, the “original contract,” to Nuñez, Henry of McCarthy Building Company, Jon Ball, former executive vice president of the general contracting firm Hensel Phelps and Keith Ulinger with Hunt Constructions, among others.

Seeking damages

The district’s lawyers assert the Board of Trustees had no idea of Galatolo’s transgressions or his close ties to contractors. He was well respected in the district and often won awards for his work, leading them to trust his judgment, they said.

Galatolo, or Nuñez, ever disclosed full extent of the gifts they received through mandatory financial forms, district lawyers said. When gifts were disclosed, district lawyers said they were always dramatically undervalued. The value of gifts an official was allowed to receive from one entity in a calendar year was capped at less than $500 most of their time in office.

Had they known of the conflicts of interests, district lawyers say the body would not have approved the contract agreements. Now, they’re seeking to recover the funds allegedly mismanaged by Galatolo, Nuñez and the various firms with whom lawyers say they colluded.

Board Vice President John Pimentel said the district has a “dream team” of lawyers fighting to recover lost funds, asserting the effort “accelerates” the district’s work to do so after firing Galatolo in 2021.

“County taxpayers deserve complete transparency and accountability for their investments in our beloved community college district,” Pimentel said. “This action will help get to the bottom of the alleged mismanagement of the former district administrators and vendors.”

Attorneys will be looking into all contractors who were tapped to assist the district in developing the $1 billion worth of projects and additional individuals and firms could be implicated as the lawsuit moves forward, Goethals and Murphy said.

“The full extent of the scheme is still being uncovered — the filing of the complaint today is the first step. As alleged, there are yet to be identified and named co-conspirators,” Murphy said in a statement. “The district will be making sure no stone is unturned and light is shed on the improper relationships that developed between district contractors, the chancellor and his cronies.”