Joe Nelson, Staff Writer
Created: 09/17/2011 08:45:23 PM PDT
Special Section: SB County Watch
FBI and IRS involvement in the biggest county corruption scandal in history is serious, far-reaching and unusual, say two legal experts and a former San Bernardino County District Attorney.
The two federal agencies served nine search warrants Thursday at homes and offices in San Bernardino and Riverside counties in connection with their investigation into the $102 million legal settlement between Rancho Cucamonga developer Colonies Partners LP and San Bernardino County in 2006.
Judging from the number of resources pulled to serve the search warrants, the federal case appears to be a top priority for the FBI and IRS, said Laurie Levenson, a Loyola Law School professor and former federal prosecutor.
“I expect there will be an extensive (federal) grand jury investigation,” she said.
She said federal officials also could be using possible tax charges to follow the money and put together a fraud case. Tax charges, she said, give federal officials a longer statute of limitations.
“Also, it is fairly clear that the feds feel like the state didn’t have the right statutes to deal with the case,” Levenson said. “Instead of arguing bribery and conflict of interest, the feds can investigate tax charges, conspiracies and schemes to defraud. The state case can still lumber on, but the feds are going to do their own investigation.”
For federal officials to bring a tax case, there has to be an exhaustive search for records, especially if they are using “net worth” theories that look at sources of all income for the suspects, Levenson said.
The San Bernardino District Attorney’s and state Attorney General’s offices, in a joint prosecution, have charged Colonies co-managing partner Jeff Burum and three former county officials in a sweeping conspiracy and bribery case related to the settlement.
The FBI and U.S. Attorney’s Office will participate in the state’s case as part of the San Bernardino County Joint Corruption Task Force despite the separate federal probe now under way, said Christopher Lee, spokesman for the District Attorney’s Office.
“We can say that the Task Force is active and ongoing, and that we enjoy a strong relationship with our partners,” Lee said.
He said he could not disclose the federal agencies’ role in the state’s case and how it differs from the separate federal investigation.
“Such conversations would lead to the investigative structure of our team, and we feel that such law enforcement information should be closely held,” Lee said.
Assistant U.S. Attorney Joseph Widman, who co-authored affidavits for the search warrants served by roughly 100 FBI and IRS agents throughout San Bernardino and Riverside counties on Thursday, also declined Friday to discuss the nature of the federal investigation.
“It’s certainly unusual. Whenever there’s an ongoing state prosecution, the U.S. Attorney and the FBI normally don’t get involved,” says former San Bernardino County District Attorney Dennis Stout.
In the broadest sense, the FBI could be building a Racketeer Influenced and Corrupt Organizations Act case against their targets, said Levenson. In order to do that, they would need to prove a continuing pattern of conspiracy.
“It would be a RICO case if you had multiple cases of bribery, extortion and conspiracy. If this wasn’t a one-time shot – if there was continuing racketeering activity – then they would consider a RICO charge,” she said.
Jessica Levinson, a professor of law at Loyola Law School and no relation to Levenson, said that the federal government anteing up in the Colonies case means something even more far-reaching and serious is at play.
She couldn’t say whether the targets of the federal probe could face charges with greater penalties than those in the state’s case.
“That totally depends on what they’re charged under, and what and if they’re convicted of, and which judge sentences them,” Levinson said.
She said RICO cases typically apply to organized crime and criminal street gangs, and she isn’t aware of any RICO cases that involved government corruption.
“But that doesn’t mean it’s never happened,” she said.
Former Board of Supervisors Chairman Bill Postmus and former Rancho Cucamonga City Councilman Rex Gutierrez already have been convicted of conspiracy charges in the Colonies case and a scandal at the Assessor’s Office, cases in which Burum is alleged to have played an instrumental role.
To read entire story, click here.