11:49 PM PDT on Wednesday, April 27, 2011

By IMRAN GHORI and DUG BEGLEY
The Press-Enterprise

Special Section S.B. County Probe

In his first public statement since he was accused of trying to disguise a campaign contribution, San Bernardino County Supervisor Neil Derry said Wednesday that he’s always tried to comply with campaign reporting laws.

“If I made a mistake I will correct it,” he said in a statement. “I was not informed of this supposed error before I received the complaint, however, and have not been given the opportunity to voluntarily correct any mistake.”

The California attorney general charged Derry on Tuesday with two felonies — perjury and filing a false report — and a misdemeanor violation of failure to report a campaign contribution.

Derry said he would review the facts with his attorney and campaign manager and take whatever action they advise. Until then, he said he would have no further comment.

Derry, a former San Bernardino city councilman who was elected supervisor in 2008, did not directly address the allegation in the complaint that he attempted to launder a campaign contribution from a San Bernardino developer through a political action committee controlled by former Assessor Bill Postmus.

Postmus has been the focus of a corruption investigation in the county for the last few years. Last month, he pleaded guilty to 14 felonies including bribery. As part of a plea deal, the charges against him could be reduced in exchange for his cooperation with prosecutors.

Meanwhile, the attorney general’s office referred the charges against Derry to the California Fair Political Practices Commission for a possible administrative action, a spokesman for the attorney general’s office said.

The attorney general’s office declined to comment further on the case and the decision to file criminal charges against Derry.

FUNDS AT RISK

The charges against Derry could effect federal funding to local boards and agencies, if recent indictments of local officials are any indication.

Federal transportation and community development money can be withheld from agencies when members of their governing boards are accused of money laundering, bribery and other corruption-related charges.

Federal highway officials warned the Riverside County Transportation Commission when four San Jacinto councilmen were indicted that their presence on the board jeopardized federal funds.

In addition to the county Board of Supervisors, Derry also serves on the governing boards of San Bernardino Associated Governments and Omnitrans, and as an alternate on the Inland Valley Development Association and San Bernardino International Airport Authority boards. All receive federal funds.

COUNTY TO REVIEW

County spokesman David Wert said the county was not aware of any statute or code that could affect federal funding but would have its counsel review the issue if it is raised.

SANBAG, the countywide planning and transportation agency, is still examining what the complaint against Derry means to federal funding availability, said spokeswoman Jane Dreher.

“We’re just really unsure now,” Dreher said.

The court documents accuse Derry of directing a contribution from San Bernardino developer Arnold Stubblefield to the Inland Empire Political Action Committee with the knowledge that the money would eventually be donated to his campaign account.

Derry told investigators that in May 2007 Stubblefield wanted to contribute to him but did not want it to show up on campaign reports, according to a court declaration by an investigator. Derry suggested the Inland Empire PAC to Stubblefield, according to the declaration.

The committee was controlled by Postmus, who recently pleaded guilty to 14 felonies and is cooperating with prosecutors as part of a plea deal.

He is cited as a source by investigators in describing a meeting where Derry hand-delivered Stubblefield’s check to Postmus.

According to the documents, Stubblefield wrote a check to the Inland Empire PAC in May 2007. A month later, the committee donated $10,000 to Derry’s campaign account.

Stubblefield did not return calls Tuesday and Wednesday.

DEVELOPER’S HOLDINGS

He owns property in Highland and a small ranch in Fontana near Interstate 15, according to county property records. His companies developed both the Mountain Shadows mobile home park near Highland and Highland Town Shops, a shopping center near the corner of Highland Avenue and Eucalyptus Drive.

For more than a decade, Stubblefield was one of the principal owners of Business Bank of California, later named Business Bancorp. The bank was acquired in 2004 by Union Bank in a $135 million deal.

In the 1980s he sued the city of San Bernardino after the City Council denied his request to build hundreds of low-income apartments in the foothills of northeast San Bernardino. He initially won $13.4 million but the judgment was overturned on appeal and he was forced to pay the city’s costs of $20,000.

Bob Stern, president of the Los Angeles-based Center for Governmental Studies, said it is unusual for criminal charges to be filed over a campaign contribution violation. Usually, the FPPC will handle violations as a civil matter, said Stern, who was involved in the formation of the agency.

“The attorney general usually does not get involved in cases like this,” he said.

The FPPC, which normally deals with campaign contribution violations, will often contact candidates and provide them an opportunity to correct a mistake and pay a fine.

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