Contractors who presented former Sweetwater Union High School District officials with lavish dinners, sports tickets and posh hotel stays must repay the district millions of dollars after a San Diego appeals court agreed with an earlier decision to void the district’s contract with two contractors.
John Moot, an attorney for the school district, estimates that the secondary school district will recoup $16 million of a $26 million contract that was entered into as part of a joint venture with Gilbane and the Seville Group Inc. to manage Prop. O funds and oversee the construction projects associated with Prop. O.
But neither contractor fulfilled the contract as contractor officials and former school district board members became entangled in a highly publicized pay-to-play scheme in 2013 that included two other South County school districts. The corruption scandal was labeled the “largest public corruption scandal in San Diego County history.”
Four of five board former Sweetwater board members and an ex-superintendent admitted to illegally taking gifts above the state’s limit. Gifts included tickets to the musical “Jersey Boys,” a lobster dinner and tickets to several sporting events. Board members, in exchange for the gifts, awarded construction contracts to Gilbane and The Seville Group Inc.
“When the contractors did that, it ended the trust we had in this contract that’s forbidden by this anti-corruption statute,” Moot said. “As a result the contract is void and Gilbane should have to return all the money.”
Once the corruption scandal concluded, an entirely new board was elected in November 2014. One of their first orders of business included filing a lawsuit against the construction contractors, saying the contracts should be voided because district officials had violated state conflict of interest laws by accepting the gifts.
The two companies argued in court papers that the lawsuit should be thrown out because the gift giving was political expression and protected under the first amendment.
San Diego Superior Court Judge Eddie C. Sturgeon denied the companies’ claims in December 2014. The Fourth District Court of Appeals reaffirmed Sturgeon’s ruling on Feb. 24.
Moot said the decision is unprecedented.
“I think it sends a message to all contractors who are dealing with governmental entities that this kind of gift giving and lavish entertainment and free sporting and theater tickets and hotel rooms comes within an anti-corruption statute and you are liable to have your contracts voided.”
Attorneys for Gilbane and the Seville Group could not be reached for comment.
