The Sweetwater Union High School District approved two legal settlements at a special board meeting Thursday that will bring the District $8.5 million and end the last remaining lawsuits stemming from a 2012 corruption scandal that led to 15 indictments.
The settlements resolve a series of lawsuits and cross complaints involving contractors that participated in what prosecutors called a “pay-to-play” scheme that led to the prosecution of several school board members, contractors, and then-Superintendent Jesus Gandara.
The District sued several contractors in 2014 to invalidate their contracts and demanded more than $14 million in refunds, claiming the contracts were illegal because they were awarded through the contractors’ use of campaign contributions and illegal gifts to school board members which violated state law.
The largest settlement came from the insurance company representing Gilbane, a global construction company with annual revenues of over $4 billion, who agreed to pay the District $7.5 million. The District had sued Gilbane and its joint venture partner, Seville Group Inc. (SGI), for their part in the corruption scandal. The companies had provided construction management services to the District.
In a second settlement, the insurance company representing SGI agreed to pay the District $750,000, and a third settlement approved last week with LPA Architects totaled $250,000.
“It’s a good win for the District, and we see this as a close to a dark chapter in the District’s history,” school board President Arturo Solis said in an exclusive interview with La Prensa San Diego after the board vote. “It shows the Board is working hard for the interests of our students and our District, and the best interest of the community,” Solis added.
The first of the lawsuits was filed in 2012 by San Diegans for Open Government, known as SanDOG, a non-profit that has sued several local public agencies in cases that included misuse of public funds, as well as the tax funding formula for the San Diego Convention Center that was untimely ruled to be illegal.
SanDOG sued Gilbane, SGI, and HAR Construction to invalidate a total of over $40 million in contracts it claimed were tainted by the “pay-to-play” scheme. In 2014, the District filed its lawsuit to invalidate the contracts. SanDOG’s case was later merging into the District’s case, and SanDOG continued as a party to the case on behalf of taxpayers.
“SanDOG is pleased that the net amount that will be returned to taxpayers is the same if not more than what they’d get back if we had to litigate several more years,” said SanDOG attorney Cory Briggs. “Taxpayers should be very pleased with the District’s efforts in joining SanDOG to right many serious wrongs by past board members and administrators,” Briggs concluded.
In the Gilbane settlement reached this week, the District agreed to reimburse SanDOG’s legal fees in the amount of $425,000 from the proceeds of the settlement.
The history of legal cases trace back to 2011 when the first allegations of corruption surfaced.
In 2011, HAR Construction sued the District claiming its contracts to build schools were cancelled because the company and its principal, Hector Romero, refused to donate campaign funds to a school board member, Pearl Quiñones. HAR’s lawsuit led the District Attorney to investigate and, in 2012, 15 people were indicted on various charges involving illegal gifts to officials.
In 2014, all the indicted defendants plead guilty to a variety of charges. The most serious penalties went to then-Board member Greg Sandoval and then-Superintendent Jesus Gandara.
Sandoval was sentenced to six months in jail, but served 45 days in custody and 135 days of home detention. Gandara was sentenced to seven months in jail, but served only 60 days in custody and remained on house arrest for the remainder, wearing an electronic bracelet and reported to his probation officer twice a week.
After nearly five years of litigation, the District reached a settlement with HAR and Romero in June 2016 where the District agreed to pay a $7.35 million settlement.
The settlements this week resolve the remaining cases stemming from the same set of contracts, and recovered enough money to make the District whole in the Romero case. Its estimated the District also spent approximately $2 million in its own legal fees in the cases.
“It’s a good thing to move forward,” board President Solis added. “I hope this shows this Board does its work in public and we’re going to continue to do that with future contracts.
In 2014, all five board seats were up for election. All of the current board members were first elected that year after the resignation and defeat of board members accused in the corruption scandal. Board members Kevin Pike and Nicholas Segura were then re-elected in 2016.