Former Oakmont Senior Living lawyer accuses William Gallaher of reimbursing employees’ campaign donations

The former general counsel of Oakmont Senior Living accused the company’s founder, Bill Gallaher, of approaching key employees and offering to reimburse them for political contributions made at his direction.

Jeffrey Breithaupt, who served as chief counsel from 1997 to 2015, made the claim this week in a declaration filed in Gallaher’s ongoing defamation lawsuit against The Press Democrat.

Gallaher and his son-in-law, Scott Flater, sued the newspaper last year, alleging they were defamed in a series of stories about unprecedented campaign spending in the 2016 Santa Rosa City Council election. The stories documented questions in the community about $195,000 in independent expenditures reported by Flater, who, unlike his father-in-law, had never before been a major donor to local political campaigns.

The suit claims the stories falsely suggested Gallaher was the true source of the spending reported by Flater. In addition to the newspaper, it names staff writer Kevin McCallum and David McCuan, a Sonoma State University political science professor quoted in the stories, as defendants.

In a declaration filed Monday, Breithaupt said it was “common” for Gallaher to approach key employees and offer to reimburse them for contributions made “at his direction” to candidates running for city council and the county Board of Supervisors. Gallaher told him he would collect the checks and personally deliver them, Breithaupt said in the document filed in Sonoma County Superior Court on Monday by McCuan’s lawyer.

Gallaher and his attorney, Michael Miller, did not respond to repeated requests for comment Tuesday and Wednesday.

Breithaupt said he made contributions at Gallaher’s request on several occasions. Each time, he said Gallaher reimbursed him with a check from his personal account.

In one instance, Breithaupt said Gallaher asked him to contribute to former City Councilman Lee Pierce’s 2004 campaign. Gallaher, who was seated at his desk, accepted his check and wrote one back to him in the exact amount, Breithaupt said.

According to campaign finance documents, Breithaupt gave $500 to Pierce on Nov. 3, 2004. Gallaher, family members and other employees are also listed as making similar contributions.

Breithaupt did not respond to requests for comment.

McCuan’s lawyer, Karl Olson, said Breithaupt’s declaration validates his client’s opinion and called on Gallaher to drop his complaint.

“There are too many far more important things going on in Sonoma County for Mr. Gallaher to continue this lawsuit,” Olson said Tuesday. “I would certainly hope that he would do the right thing and dismiss the case.”

Gallaher’s lawsuit, which seeks unspecified damages from the newspaper’s owner, Sonoma Media Investments, asserts Gallaher “has never used anyone, including family members to make political contributions on his behalf.”

It is before the First Appellate District court in San Francisco following pretrial rulings from Sonoma County Judge Peter Ottenweller. At issue is whether Gallaher and Flater are public figures and if the case should be thrown out under a state law protecting free speech.

Ottenweller ruled that Flater is a public figure - which must clear a higher bar to prove defamation - because his name and telephone number were printed on campaign mailers purchased with his money. However, the judge classified Gallaher as a private figure, concluding that his well-publicized political and business dealings did not meet the legal threshold necessary to subject him to a higher standard in defamation cases.

Gallaher, a Santa Rosa developer and chairman of First Community Bank, has built hundreds of homes in Oakmont and Fountaingrove and operates a chain of 25 senior living facilities in California, including four in Sonoma County.

He is seeking city approval to build the two largest developments in Santa Rosa. One, off Chanate Road, is the target of a lawsuit by neighbors alleging the county sold it to Gallaher far below its market value. In the aftermath of last month’s fires, Gallaher and his bank are proposing to rebuild Coffey Park, where 1,300 homes were destroyed, and offering to buy fire-ravaged lots of property owners who don’t want to return.

Gallaher is the subject of an ongoing Fair Political Practices Commission investigation into allegations made a year ago by Santa Rosa contractor Chris Grabill that spending by Flater was financed by others. Gallaher was previously cleared by the FPPC of money-laundering allegations in March 2016.

FPPC spokesman Phillip Ung said Tuesday the watchdog agency was not aware of the 2004 allegations made this week by Breithaupt. The type of activity alleged by Breithaupt is illegal - punishable by fines up to $5,000 per count - but is outside the five-year statute of limitations on such matters and would not be investigated, he said.

“When the true source of a contribution isn’t disclosed, the public is deprived of information they are entitled to under the law and the expectation of campaign transparency,” Ung said.

The fall 2016 race for six council seats was marked by historic spending. More than a quarter-million dollars poured in from outside groups and individuals that spent money independently to influence local races - more money than was raised by all six candidates combined.

Flater, who listed his occupation as homemaker in campaign filings, reported making $195,000 in independent expenditures to support Ernesto Olivares and Jack Tibbetts, who won, and Don Taylor, who did not.

Starting in October, the newspaper reported on questions raised in the community about the source and motives behind the unprecedented outlay of cash for mailers and materials.

Gallaher’s lawsuit contends four stories published by the newspaper contained statements falsely suggesting that Gallaher may have provided the money to Flater. The statements caused “upset, embarrassment, humiliation and anguish,” according to the lawsuit, which accused the newspaper of acting with malice in a deliberate and intentional manner to injure the two men.

Thomas Burke, an attorney for The Press Democrat, said the newspaper accurately reported on record-breaking campaign spending by Flater, and repeatedly offered both him and Gallaher opportunities to address questions in the community about the independent expenditures.

“People deserve to know who is trying to influence voters and politicians with money. It is the reason transparency is at the core of campaign finance laws,” Burke said.

You can reach Staff Writer Paul Payne at 707-568-5312 or paul.payne@pressdemocrat.com. On Twitter @ppayne.