10:33 PM PDT on Wednesday, July 27, 2011

By JIM MILLER
The Press-Enterprise

PDF: PACs that prosecutors say were manipulated by corruption suspects

Special Section: San Bernardino Co. Corruption Probe

Lorene “Kitty” Stennett was a loyal foot soldier in San Bernardino County Republican politics. When a fellow activist asked her to become an officer in a new campaign committee, she readily agreed.

That was the last she heard of the matter — until authorities told her that she was listed as the vice chairman on the paperwork of the Alliance for Ethical Government, one of five political action committees implicated in the ongoing San Bernardino County corruption scandal.

On paper, authorities said, a mix of political activists, business owners and others oversaw the committees’ affairs. In reality, prosecutors said, the committees were controlled by people at the center of a conspiracy to defraud taxpayers of $102 million in the Colonies Partners lawsuit settlement

The committees funneled payoffs for the settlement from Colonies Partners to people involved in the scheme, authorities allege. Much of the money went to support other candidates or, prosecutors contend, into people’s pockets.

All the while, the committees’ legally required boards of directors said they were in the dark, according to recently released testimony to a grand jury that handed down indictments in May. In some cases, they said, their signatures on committee paperwork had been forged.

“We didn’t have any meetings. Maybe they did, but I wasn’t invited,” Stennett told the grand jury, adding that her signature was forged on the paperwork forming the committee.

Bill Postmus, former assessor and county supervisor, said Colonies co-managing partner Jeff Burum told him and others to create the committees, according to testimony. The others were county Supervisor Paul Biane; Mark Kirk, former chief of staff to Supervisor Gary Ovitt; and Jim Erwin, a former assistant assessor and Colonies consultant, according to the grand jury transcripts released Friday.

THE ALLEGED STRATEGY

“Mr. Postmus specifically told me that Mr. Burum did not want to give directly to the supervisors this soon after the settlement, so we had to create political action committees to give the money to,” said Adam Aleman, a former Postmus aide who is cooperating with investigators. Postmus also is cooperating.

The committees, Aleman said, became a “slush fund” and a source of “play money.” Witnesses testified that the money was spent on meals, drinks and ball games.

Representatives of Burum, Kirk, Biane and Erwin were unavailable for comment Wednesday. All have previously denied wrongdoing, and their attorneys have said the evidence prosecutors presented to the grand jury was one-sided.

There is nothing illegal about contributing to a political action committee. Filings with the state reflected the Colonies Partners’ contributions.

A former chairman of the state’s campaign finance watchdog said there is no question, however, that political action committees make it more difficult for the public to follow political money from donor to recipient.

“If you give money directly to a candidate from your checking account, your name is there for all the world to see,” said Dan Schnur, the former chairman of the state Fair Political Practices Commission, who said he was speaking generally. “Once you start moving money through intermediaries, it makes it more difficult for outside observers to keep track.”

Before he left the FPPC earlier this year, Schnur proposed several changes to campaign finance rules, such as improving disclosure. “If you’re really determined to break the law, you’re going to do it no matter what,” he said.

Political committees

The Board of Supervisors approved the Colonies settlement in November 2006. Ovitt, Biane and Postmus voted for the pact. Postmus was charged in 2009 as part of a wide-ranging corruption investigation.

In May, a criminal grand jury returned a 29-count indictment against Burum, Kirk, Biane and Erwin, alleging that the settlement was the result of conspiracy and bribes.

A judge released 2,700 pages of grand jury testimony Friday. The Press-Enterprise had filed a motion to have the transcripts unsealed.

Prosecutors allege that, from late March 2007 until mid-July 2007, Colonies Partners donated a total of $400,000 to five political action committees to reward Postmus, Biane, Kirk and Erwin for the Colonies settlement.

According to prosecutors and grand jury testimony, Kirk controlled the Alliance for Ethical Government; Erwin, the Committee for Effective Government; Biane, the San Bernardino County Young Republicans; and Postmus, the Inland Empire PAC and Conservatives for a Republican Majority.

Three of the five committees received their Colonies money in $100,000 chunks. Postmus testified that his $100,000 — donated on July 5 and 12 — was split between the Inland Empire PAC and Conservatives for a Republican Majority as a way to try to hide the flow of Burum money.

The Committee for Effective Government collected $100,000 on March 28, and the Alliance for Ethical Government received $100,000 on May 25. The San Bernardino County Young Republicans got a $100,000 donation on June 15.

Matthew Brown, a Biane aide and an official with the Young Republicans PAC, said he spoke to Biane after learning that the committee had received $100,000 from Colonies in June 2007. He testified he thought it was a big shot in the arm for the PAC.

“I remember walking into his office, and he was sitting at his desk, and I told him, and, you know, I was excited about it,” Brown testified. “And he was — he didn’t really react.”

spending

The Colonies’ money, in turn, went to other Inland campaign committees and paid for items such as campaign mail. Kirk and Erwin also received consulting payments from the committees they controlled — $20,000 for Kirk and $5,000 for Erwin.

Other spending by the committees seemingly lacked an obvious government, legislative or political purpose, as required.

According to transcripts and documents, Aleman had numerous charges for Pinkberry frozen yogurt, as well as a floral delivery and Angels tickets. Postmus had charges at Angel Stadium and Ticketmaster.

Other expenses puzzled those involved. Republican political consultant Mike Richman testified that he was surprised to hear that Postmus, the former chairman of the San Bernardino County GOP, wanted him to give money to Assemblywoman Fiona Ma, D-San Francisco.

“A Democrat, yeah, and in San Francisco, which, you know, obviously has nothing to do with what the mission of the PAC is as I understood it was,” Richman testified. “And Bill said we partied with her…”

The Inland Empire PAC gave $3,200 to Ma in September 2007. A spokesman for Ma said Wednesday that Ma was traveling and had no comment.

The committee that prosecutors say Kirk oversaw, the Alliance for Ethical Government, reported a $5,078 credit-card purchase at the Apple Store in Rancho Cucamonga.

The expense sent up a red flag for Betty Presley, a prominent bookkeeper for Republican campaign committees. She was the treasurer for all five of the committees.

“In view of the recent articles regarding credit card expenses, travel and meals, I feel we all need to be extremely careful saving ALL receipts with correct information on each,” Presley wrote in an Oct. 12 email to Kirk.

bylaws

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