Honorable Edward A. Panelli

10:38 PM PDT on Saturday, July 23, 2011

The Press-Enterprise

Former San Bernardino County Supervisor Bill Postmus testified to a grand jury that a high-profile mediator was brought in to help hammer out a final agreement in a lawsuit between the county and developer Colonies Partners primarily as a way to provide political cover for a deal rife with subterfuge.

Other county officials testified they were concerned when that mediator, Edward A. Panelli, a former California Supreme Court justice, left one session in an SUV driven by Jeff Burum, co-managing partner for Colonies. Later that day, Panelli flew back to his Bay Area home on a private jet provided by Burum.

Panelli said there was nothing improper, either in his use of Burum’s plane or in the way in which he handled the negotiations.

Panelli’s name surfaces frequently in the 2,700 pages of transcripts detailing the testimony before the grand jury.

Postmus stated that Burum hand-picked Panelli to serve as mediator. Under the judge’s guidance, the two sides agreed to a deal in which the county paid Colonies $102 million over a dispute involving flood control improvements in Upland.

“Jeff wanted to bring in a heavy-hitter, somebody that would bring credibility to a settlement, I believe somebody that would get them the dollar amount they wanted in terms of a settlement,” Postmus said. That person was Panelli.

Assistant county counsel Mitch Norton said he and the rest of the county’s legal team opposed the choice.

“We didn’t think he was a great candidate for this case,” Norton told the grand jury. “That was the consensus of the legal team … because of various concerns we had of his skill as a mediator.”

But Postmus and Supervisor Paul Biane pushed Burum’s choice through anyway.

Supervisor Josie Gonzales testified that she accepted the choice of Panelli based on his credentials. She said she was told Panelli “had an impeccable reputation.”

“Who told you that?” Deputy District Attorney Lewis Cope asked Gonzales.

“The subcommittee,” Gonzales said.

“Mr. Postmus and Mr. Biane?”

“Yes,” Gonzales said.

Speaking Saturday from his Bay Area home in Saratoga, Panelli said he was unaware of the machinations involved in his hiring and that he had never had any previous contact with Burum.

“I never had any conversation with him,” Panelli said. “It was the lawyers with his firm that spoke to my assistant.”

Panelli recalled the negotiations as long and hard-fought.

“It was a strange dynamic to see how the county operated,” he said. “It seemed to me the county didn’t have their act together. They weren’t getting along, as I recall. They couldn’t agree among themselves as to what they wanted to do. I said, ‘Hey, you’ve got attorneys, talk to the lawyers.’ ”

According to grand jury testimony, Postmus, Biane and Supervisor Gary Ovitt were rejecting their own county counsel’s advice, which was not to pay Colonies anything, or very little.

Panelli said he believed the county was exposed to a possible court judgment well beyond the $102 million it ended up paying in the settlement.

“As I recall, the plaintiff had an expert who said the damages were in the $300 million range,” he said. “They had already lost the liability phase (in a court trial). The only issue that remained was an issue of damages.”

The signed final settlement includes a mediator’s statement, which bears Panelli’s signature. In part, the statement said, “the settlement was a fair and reasonable compromise based on consideration of the risks of further litigation to all parties.”

Numerous witnesses testified to the grand jury that Panelli never wanted to deal with the facts of the case during mediation.

Former Supervisor Dennis Hansberger said that when the facts were raised, Panelli “took the position that said, ‘That is for a trial court to deal with. This is a mediation.’ ”

Panelli said his job is to get the two parties involved to reach an agreement, not to rehash the case. He also said the statement he signed was written by county staff.

Since the settlement was reached in November 2006, he has kept up with news coverage of the Colonies investigation and corruption allegations.

“If I knew then what I know today,” he said. “I wouldn’t have signed it.”

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