Two construction companies will pay $8.2 million to the Sweetwater Union High School District as part of a legal settlement for their involvement in a pay-to-play scandal that plagued three South County school districts nearly four years ago.
The Sweetwater board of trustees unanimously approved the settlement earlier this month, closing out the final chapter of a corruption scandal that saw former board members, district administrators and contractors plead guilty to corruption charges.
Originally the school district sought $26 million from both Gilbane Building Company out of Rhode Island and The Seville Group Inc. from California, but in the end settled on $8.2 million.
Sweetwater District Attorney John Moot, the lead attorney on the case, said it was discovered through financial documents that the district would not recover the $26 million it was seeking because one of the companies could not afford the cost.
“When we got into the case, we realized that SGI had no money outside of insurance,” Moot said. “And if we were to get a big judgment against them in the case they would simply file bankruptcy.”
Gilbane will pay the district $7.5 million through its insurance, while SGI will pay $750,000, bringing the settlement total to $8.2 million, Moot said.
In exchange for the monetary payment, the Sweetwater district agreed to drop its lawsuits against both Gilbane and SGI.
Additionally the settlement also dismisses cross complaints that both Gilbane and SGI had filed against each other.
Gilbane and SGI were awarded construction contracts in a joint venture in 2007 under former Sweetwater High School District Superintendent Jesus Gandara after district officials received lavish dinners, sports tickets and posh hotel stays in favor for construction contracts. The two companies were hired to manage Prop O funds and oversee construction projects associated with Prop. O.
Neither contractor fulfilled the contract as contractor officials along with former Sweetwater board members were entangled in a highly publicized pay-to-play scheme in 2014 that also included the San Ysidro School District and Southwestern College.
A California appeals court agreed with a previous decision to order Gilbane and SGI to void the district’s contract and repay the district. The two companies had argued in court that their gift giving was constitutionally protected under the First Amendment. Moot disagrees with the argument.
“Even if they were exercising their first amendment rights, it would still not prevail in trial because you can’t exercise your first amendment rights in conflict with committing a criminal act,” he said.
The case is pending in the California Supreme Court to decide whether Gilbane and SGI’s argument that the gifts given to board members were constitutionally protected.
Moot said he hopes the lawsuit can serve as a lesson to future contractors looking to do business with the district.
“Don’t give gifts to public officials,” he said. “It may come back to bite you.”