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Gallagher raises eyebrows again

The candidate for governor owned shares in a company he voted on as a member of the Cabinet, he disclosed Friday.

By STEVE BOUSQUET, KRIS HUNDLEY, and ALEX LEARY
Published July 1, 2006


TALLAHASSEE - Republican candidate for governor Tom Gallagher owned stock in St. Joe Co. last year when he voted to rank some of the company's vast land holdings as a priority for state acquisition.

Gallagher, the state's chief financial officer and elected member of the Cabinet, didn't disclose his 4,000-share stake in St. Joe when the Cabinet voted on the land rankings Feb. 16, 2005. The $270,000 investment was Gallagher's biggest gamble by far since he began playing the market using an online brokerage account four years ago.

"He's disclosing it now," Gallagher's campaign manager, Brett Doster, said Friday.

Gallagher's brief ownership stake in a company with significant political clout and the largest private land holdings in Florida was reported in his 2005 federal tax return. Gallagher gave the St. Petersburg Times a copy of the return, which the paper requested as part of its review of the finances of the four major candidates for governor.

Gallagher declined to answer questions about the St. Joe matter.

Doster said Gallagher's holdings were well below the 1 percent threshold considered necessary to raise conflict of interest questions under state ethics law. At the time Gallagher was trading in the stock, a 1 percent share in the company would have cost more than $50-million.

St. Joe is a company whose financial health is so reliant on government approvals that the land developer mentioned the Florida Cabinet among the potential "risk factors" to growth in the firm's annual report to investors in 2005.

Ben Wilcox of the watchdog group Common Cause Florida said Gallagher should have disclosed his stock or abstained from voting on matters affecting a business in which he had a financial stake.

"I think the public probably would have some concern over that," he said. "There's the appearance that he either had inside knowledge or is acting in his own personal best interest."

This is the second time Gallagher's personal investments have overlapped with his public duties, and it comes at a time when he is trailing Charlie Crist in the polls ahead of the Republican primary.

Gallagher is the subject of an investigation by the Commission on Ethics because he owned insurance stocks in 2002 while he was the state's insurance regulator, and he owned stock in an energy company in 2004 when he voted in favor of the company's project as a Cabinet member.

Gallagher did not own his St. Joe shares for long. He began buying them on Jan. 10, 2005, and sold all of them by March 21, 2005, netting a profit of $3,716.

He could have made more money had he held the stock longer. His highest sale price was about $70.25 a share; three months later, it traded at about $80.

The stock closed Friday at $46.54 a share.

At the 2005 Cabinet meeting, Gallagher made the motion to approve an annual list that ranks projects for purchase under a program known as Florida Forever.

The nearly 16,000-acre St. Joe tract, one of 45 projects on the list, is in Leon, Jefferson and Wakulla counties and is known as the Upper St. Marks River Corridor. It had been on the state's "A" list for priority purchase since 2003, long before Gallagher bought the stock.

The 2005 vote reaffirmed the St. Joe land as a high-priority acquisition. The Cabinet unanimously approved the list of 45 projects, ratifying a recommendation made by the state's Acquisition and Restoration Council.

At the meeting, the St. Joe site was not mentioned. Gallagher questioned Colleen Castille, the state's chief environmental regulator, about the process of ranking projects and spoke in favor of giving state land acquisition experts more discretion in negotiations with landowners.

After the vote, Gov. Jeb Bush referred to lobbyists in the audience: "We do have a lot of our friends in here that are apparently interested in the government purchasing land for people they represent or people they know," he said.

The Nature Conservancy, and others who supported the St. Joe acquisition, consider the site a vital buffer against development and degrading water quality. Black bears, a threatened species, and gopher tortoises have used the area, and it has historical and archaeological value.

The Cabinet voted in May to spend $10.8-million to purchase the first portion of the corridor, about 2,600 acres. That portion had an appraised value of $11-million. The deal was completed Thursday, with the state paying $10.6-million.

The St. Joe Co. is building an array of residential and commercial developments through North and Central Florida. Much of the company's land is pine forests, purchased for timber farming.

Crist voted for the same St. Joe Co. land acquisition parcels as Gallagher. But a review of Crist's tax returns shows he owns no stock in individual companies. He transferred his stock holdings to a mutual fund after he was elected attorney general in 2002.

Gallagher last January proposed releasing his past tax returns, and he challenged the other candidates to do the same. All the candidates have followed Gallagher's lead.

Doster, Gallagher's campaign manager, said the 2005 tax return has been given to the ethics commission as part of its review of his stock trades.

"We wanted to make sure that they had all the information about his portfolio," Doster said.

Times staff writer Craig Pittman and researcher Deirdre Morrow contributed to this report. Reporter Steve Bousquet can be reached at bousquet@sptimes.com or 850 224-7263.