Accused of lying about ties to ex-assessor Bill Postmus, John DeFazio says no to a plea and may now face trial

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 07 February 2012 08:15 PM

An Apple Valley businessman accused of lying about his ties to former San Bernardino County assessor Bill Postmus turned down a plea deal Tuesday that would have spared him prison time.

As a result, John Dino DeFazio, 52, will return to court Thursday for a preliminary hearing to determine whether he will face trial on six felony charges of perjury.

In an unusual but not unprecedented move, Superior Court Judge Michael Dest put the terms of the proposed deal on the record.

If convicted, DeFazio faces up to nine years in state prison, Dest told him. The deal would have reduced the charges to one misdemeanor in which he would be sentenced to 90 days in county jail.

“That would be the end of the case,” Dest said.

DeFazio responded that he was rejecting the deal.

The offer was disclosed after lengthy backroom conferences between his attorney Richard Ewaniszyk and Deputy District Attorney John Goritz and Dest.

Outside the courtroom, DeFazio maintained his innocence and said he could not agree to any deal.

“If I was guilty, I’d have pled,” he said.

To read entire story, click here.

By Mark Gutglueck
Friday, January 6, 2012

Questions continue to dog the second highest ranking member of the county auditor-controller/treasurer-tax collector’s office with regard to the role he and a political action committee he controlled played in illegally passing through and laundering money for those convicted of or charged with participation in a bribery and extortion conspiracy.

At issue is how Matt Brown, a former member of the Republican Central Committee and the one-time chief of staff to former Second District San Bernardino County supervisor Paul Biane, has been able to avoid being criminally charged after he became entangled in a set of circumstances that led to the indictment of Biane, as well as another former member of the board of supervisors, Bill Postmus, together with the chief of staff to another supervisor, a one-time county employee union president and the businessman accused of bribing them.

Brown was moved into the position of assistant county auditor-controller in 2010 by county treasurer/auditor-controller Larry Walker. Brown is also the founder/principal of two political action committees, the San Bernardino County Young Republicans and the San Bernardino County Taxpayers Association.

In 2006, Brown, who was then supervisor Biane’s senior staff member, founded a political action committee (PAC) to assist Biane and other members of Biane’s political circle in distributing money to politicians they supported. That PAC, known as the San Bernardino County Young Republicans, has been alleged by the California Attorney General’s Office and the San Bernardino County District Attorney’s office to have been used as a vehicle to launder bribes and kickbacks to Biane.

During the first year of its existence, the San Bernardino County Young Republicans PAC had raised $7,500. In November 2006, Biane joined with his then-colleagues on the board of supervisors, Bill Postmus and Gary Ovitt, to approve a $102 million payout to Rancho Cucamonga-based Colonies Partners to settle a lawsuit that company had brought against the county over flood control issues at the Colonies at San Antonio residential subdivision and Colonies Crossroads commercial subdivision projects in northeast Upland. Supervisors Josie Gonzales and Dennis Hansberger opposed that settlement.

Campaign finance records show that the San Bernardino County Young Republicans PAC, received a $100,000 check from Colonies Partners, L.P. on June 17, 2007. In two separate indictments, one returned by a criminal grand jury in February 2010 against Postmus and his one time political associate Jim Erwin and in another indictment returned in May 2011 against Biane, Erwin, Colonies Partners managing principal Jeff Burum and the former chief of staff to supervisor Ovitt, Mark Kirk, it was alleged that Biane actually controlled the San Bernardino County Young Republicans PAC through Brown and that the $100,000 donation was a quid pro quo paid in exchange for Biane’s vote to approve the settlement. Also delineated in the February 2010 indictment were five unindicted co-conspirators identified as John Does 1 through 5, who are identifiable through information contained elsewhere in the public record including the superseding May 2011 indictment as Colonies Partners managing principals Burum and Dan Richards; Colonies Partners public relations consultant Patrick O’Reilly; Kirk; and Biane. According to prosecutors, Postmus controlled two political action committees, the Inland Empire PAC and the Conservatives For A Republican Majority PAC, which each received separate $50,000 donations from the Colonies Partners principals which were also bribes. Erwin’s Committee For Effective Government PAC likewise received a $100,000 donation from Burum and Richards that was a bribe, according to prosecutors; and Kirk’s Alliance For Ethical Government PAC received a $100,000 contribution from Burum and Richards that was also a bribe, per the indictment.

Postmus last March pleaded guilty to the five felonies alleged against him in the February 2010 indictment, including conspiracy, one count of accepting a bribe, one count of conflict of interest, and one count of misappropriation of funds.

Postmus in April was the star witness before the second grand jury which indicted Burum, Biane and Kirk and reindicted Erwin. Erwin, who served as assistant assessor under Postmus after the latter was elected to that post in 2006 and took office in 2007, continues to maintain his innocence on the charges stemming from that case, including conspiracy, two counts of corrupt influencing, two counts of offering a bribe, two counts of extortion, one count of misappropriation of public funds and one count of forgery. Biane, Kirk and Burum maintain their innocence. As of yet, no charges have been filed against Richards or O’Reilly.

The indictments allege that Burum in 2006, with the assistance of Erwin and O’Reilly, had brochures prepared which purported that Postmus, who was then the chairman of the board of supervisors as well as chairman of the San Bernardino County Republican Central Committee and was running for county assessor, was a homosexual who was addicted to methamphetamine, and that Biane, who was then the vice chair of both the board of supervisors and the Republican Central Committee and at that time engaged in an election campaign, was teetering on the brink of bankruptcy. Burum’s company, the Colonies Partners, had filed a lawsuit against the county in 2002 over flood control issues at the companies Colonies at San Antonio development in northeast Upland. Ultimately, Burum withheld the mailing of those brochures. It was three weeks after the November 2006 election, in which Postmus and Biane were elected and reelected, that the board of supervisors voted 3-2 to confer the $102 million settlement on the Colonies Partners. The indictments allege that the series of $100,000 donations to the political action committees founded and controlled by Postmus, Brown, Kirk and Erwin were in fact quid pro quos — bribes — paid in exchange for the approval of the settlement. Prosecutors allege that Biane, through Brown, secretly controlled the San Bernardino County Young Republicans PAC.

The Sentinel is informed that a complaint has been filed with the state Fair Political Practices Commission citing a PAC founded by Brown in 2008, the San Bernardino County Taxpayers Association, which is separate from the San Bernardino County Young Republicans PAC alluded to in the indictments. According to well placed sources, both the San Bernardino County Taxpayers Association and the San Bernardino County Young Republicans PAC were involved in the activity now under further investigation.

On March 17, 2008, Brown formed the San Bernardino County Taxpayers Association PAC and named J.M. Olchawa as the PAC’s treasurer. Both Brown and Olchawa are residents of Grand Terrace. Olchawa endowed the PAC with its first operating capital in the form of a $100 contribution. Less than a month later, on April 9, the San Bernardino County Young Republicans PAC contributed $40,000, which had apparently originated with the $100,000 contribution from the Colonies Partners the previous year, to the San Bernardino County Taxpayers Association PAC. The following month, on May 29, 2008, one of the political action committees controlled by Postmus, the Inland Empire PAC, infused the San Bernardino County Taxpayers PAC with $3,000 and the month after that, on June 2, 2008, with another $2,000. That $5,000, too, had apparently been originally provided by the Colonies Partners.

In the less than two month period between the $40,000 contribution from Brown’s own Young Republicans PAC on April 9 and Postmus’ Inland Empire PAC’s $2,000 donation on June 2, the San Bernardino County Taxpayers Association PAC received a substantial amount of money in the form of both contributions and loans, all from other political figures. On April 25, 2008, the Committee to Elect Paul Biane gave the San Bernardino County Taxpayers Association PAC a $15,000 contribution. On April 29, 2008 the Committee to Elect Dick Larsen provided the San Bernardino County Taxpayers Association PAC with a $10,000 loan. Larsen was then the county treasurer. On May 5, 2008 the Committee to Elect Gary C. Ovitt made a $15,000 contribution to Brown’s San Bernardino County Taxpayers Association PAC. That money may have originated with the Colonies Partners before being provided to Kirk’s Alliance For Ethical Government PAC and then being provided to Ovitt. On May 9, 2008, the Josie Gonzales for Supervisor campaign provided a $15,000 contribution to the San Bernardino County Taxpayers PAC. On May 16, 2008, Bill Emmerson for Assembly 2008 made a $5,000 contribution to Brown’s recently formed PAC. The same day, the San Bernardino Public Employees Association PAC provided Brown’s PAC with a $10,000 contribution. On May 23, 2008, the Committee to Elect Gary C. Ovitt provided Brown’s PAC with a $10,000 loan. On May 27, 2008, the Hansberger for Supervisor Committee made a $25,000 contribution to the San Bernardino County Taxpayers Association PAC. The next day, May 28, the Paul Cook for Assembly 2008 Committee provided Brown’s PAC with a $5,000 loan. The same day, the Committee to Elect Paul Biane

made a $10,000 loan to Brown’s PAC. On May 29, Bill Emmerson for Assembly 2008 made a $5,000 contribution to the PAC and on June 2, 2008, the Hansberger for Supervisor Committee made a $15,000 contribution to the San Bernardino County Taxpayers Association PAC.

The lion’s share of the money Brown’s PAC took in was used to fund Hansberger’s effort to be reelected as county Third District supervisor that year. According to campaign disclosure documents, the San Bernardino County Taxpayers Association PAC on May 18 provided the Hansberger for Supervisor Committee with $57,030.70 and on June 30, 2008, more than three weeks after Hansberger had lost the election to Neil Derry on June 3, Brown’s PAC gave the Hansberger for Supervisor Committee $100,920.29.

The Fair Political Practices Commission is now investigating the lack of any subsequent accounting for the $35, 000.00 in loans made to the San Bernardino County Taxpayers Association PAC by the Larsen, Ovitt, Cook and Biane campaign committees. All references to those loans disappeared from subsequent campaign filing statements made on behalf of the PAC by Olchawa. The loans in question appear to be outstanding. No explicit reference to repayments to any of the lending parties can be found in any of the San Bernardino County Taxpayers Association PAC’s financial disclosure statements. While the online filing made by the Committee to Elect Gary Ovitt shows an outstanding loan of $10,000 to the San Bernardino County Taxpayers Association PAC committee as of 12/31/2010, online filings for the other lending parties were not immediately available. There is no indication in any available documentation showing any of the loans were repaid.

The lack of repayment, and lack of accounting of the still existent outstanding loans or failure to note the loans were forgiven is alleged to be multiple violations of the Political Reform Act. Moreover, the lack of notation of the loans might suggest that the funds received by the committee during the 2008 electioneering season from the Larsen, Cook and Biane campaigns were being laundered for Hansberger, according to the complaint received by the FPPC.

Another issue in the complaint and the follow-up FPPC investigation is the connection between the PAC and the Hansberger Campaign, which contributed money to the PAC and was also the major beneficiary of the PAC’s expenditures. In this way, money provided to Brown’s PAC is suspected of having been used to attack Derry without adequate disclosure of the origin of that money. Those mailers sent out attacking Derry did not disclose that Hansberger’s campaign was involved in funding them.

Many familiar with Brown’s role in the Colonies matter have questioned why prosecutors did not seek and obtain from the grand jury an indictment of Brown. The indictment itself describes how the political action committee he founded and controlled served as a laundering vehicle through which bribes allegedly provided by Burum were passed, action virtually indistinguishable from that engaged in by the indicted Kirk, another chief of staff to a board member who voted to approve the Colonies settlement.

Brown was one of 45 witnesses who testified before the grand jury this spring before it handed down the indictment naming Burum, Biane, Kirk and Erwin. In that testimony Brown said SEBA, the sheriff’s deputies union that Erwin once headed, had promised to provide, but then failed to come through with, backing for a countywide measure Biane was sponsoring in 2006 to boost the pay for county supervisors. An examination of campaign reporting documents and other material, however, indicates that SEBA in fact did support the Biane-backed proposal, known as Measure P, which passed, resulting in an immediate $22,000 annual increase to supervisors’ salaries. Prosecutors declined to say whether Brown’s misstatement of fact before the grand jury constituted perjury. No charges have been filed against him.

A possible explanation of how it is that Brown has avoided prosecution on several counts is that he has been working as an informant for the district attorney’s office. It is known that beginning in 2009, Brown began wearing a “wire,” that is, a hidden electronic audio device at work while he was serving in the capacity of Biane’s chief of staff. Reportedly, the target of this effort was Biane himself. To date, no incriminating statements by Biane on any of those tapes have surfaced or been produced by the prosecution, despite requests by defense attorneys for their production. Transcripts of some of those conversations have been turned over to defense attorneys.

At some point in the spring of 2010, Biane became aware that his chief-of-staff was seeking to entrap him. There ensued strained relations between the two and Brown was put on paid leave after he filed a claim in which he alleged he was being harassed. Brown was then transferred to the county treasurer/auditor-controller office under Larry Walker.

Walker installed Brown as his second-in-command, i.e. as the assistant auditor-controller. In so doing, Walker ousted his longtime assistant and close associate Betsy Starbuck, who was ignominiously sacked after having served more than twenty years as Walker’s right hand woman, both when Walker was Fourth District supervisor, the position he held before he ran for auditor-controller, and as auditor controller.

The displacement of Starbuck, who after more than eight years in the position of assistant auditor-controller practically ran the division, to accommodate the inexperienced Brown has sparked a widespread belief in the halls of the county that the move was imposed on Walker by county chief executive officer Greg Devereaux and district attorney Mike Ramos as part of an effort to protect a witness seen as crucial to the prosecution of the Colonies settlement criminal case. Collectively and individually, Walker, Brown, Devereaux and Ramos were unwilling to comment on the matter.

By Mark Gutgleuck
Friday, January 6, 2012
Originally Published: Friday, December 30, 2011

As of earlier this week, former state assemblyman Brett Granlund had actively avoided several attempts to serve him with a subpoena relating to the Colonies Settlement case.

Well informed sources have told the Sentinel that lawyers for the defendants in the Colonies case want to question Granlund with regard to his knowledge about several aspects of the criminal prosecution of former county supervisor Paul Biane, former Fourth Supervisorial District chief-of-staff Mark Kirk, former sheriff’s deputy union president Jim Erwin and Rancho Cucamonga-based developer Jeff Burum.

In May, Biane, Erwin, Kirk and Burum were named in a 29-count indictment charging them with conspiracy, bribery and extortion related to what prosecutors allege was an effort to improperly settle for a $102 million payout a lawsuit Burum’s company, Colonies Partners, had brought against the county over flood control issues at its development project in northeast Upland. In November 2006, Biane, who was then the county’s Second District supervisor, Fourth District supervisor Gary Ovitt and then-First District supervisor Bill Postmus voted to approve that settlement in a 3-2 vote opposed by then-supervisor Dennis Hansberger and supervisor Josie Gonzales.

Postmus, who along with Erwin was previously charged with conspiracy and bribery in conjunction with his vote on the $102 million settlement, in March pleaded guilty to soliciting and receiving bribes, conspiracy and conflict of interest, and agreed to turn state’s evidence. In April, he was the star witness before the grand jury that indicted Biane, Burum and Kirk and reindicted Erwin.

Prosecutors’ allege Burum, together with Erwin, who was once the president of the county’s sheriff’s deputies’ union and was then working as a consultant to the Colonies Partners, prior to the November 2006 vote threatened to carry out an informational campaign involving mailers revealing Postmus’ homosexuality and use of illegal drugs and Biane’s insolvency, but ultimately refrained from the distribution of the information. These “threatening, menacing, commanding or coercing” acts, constituted extortion, the prosecution alleges. After the vote, Burum provided two political action committees controlled by former supervisor Bill Postmus with separate $50,000 checks, a political action committee controlled by Erwin with a $100,000 check, a political action committee created by Kirk with a $100,000 check, and a political action committee founded by Biane’s chief-of-staff Matt Brown, but which prosecutors claim was secretly controlled by Biane, with a check for $100,000. Those checks constituted bribes, prosecutors maintain. Prosecutors allege that Kirk influenced Ovitt’s vote. Kirk at that time was Ovitt’s chief of staff.

Defense attorneys, who are now seeking to obtain information to compromise the credibility of Postmus, are interested in obtaining from Granlund documents related to his communication with individuals close to the district attorney as well as the district attorney directly or indirectly and information bearing upon the motivation driving the prosecution. Granlund was once a powerful player in Republican politics in San Bernardino County, as was Postmus. Granlund has close ties to former supervisor Dennis Hansberger, Hansberger’s one-time chief of staff Jim Rissmiller, district attorney Mike Ramos and others within Ramos’s political circle. Reportedly, Granlund served as a go-between in discussions involving the district attorney’s office and Postmus in the months leading up to Postmus’ decision to turn state’s evidence. Both Hansberger and Rissmiller testified before the grand jury that indicted Biane, Burum, Erwin and Kirk.

Sources tell the Sentinel that a private investigator and process server working for one defendant’s legal team has sought to make contact with Granlund to serve him with a subpoena. As of early this week, that effort has not succeeded and in recent days, Granlund has gone to ever more extreme effort to avoid being served, refusing to answer knocks upon his door and using other tactics to evade the process server. Efforts to locate him at Platinum Advisors, the Sacramento-based lobbying firm that employs him, were thwarted when employees claimed that Granlund does not work out of that office.

In conversations he assumed to be confidential with friends and associates in San Bernardino County and the state capitol, Granlund has expressed anger with the defense’s efforts to “drag” him into the matter and he expressed concern that the questions he might be subjected to could raise issues problematic to him personally and professionally.

From left to right: Colonies scandal defendants Jeff Burum, Mark Kirk, Jim Erwin, and Paul Biane stand during a motion to delay their arraignment hearing in a San Bernardino Superior Courtroom

Joe Nelson, Staff Writer
Created: 12/30/2011 11:37:49 AM PST

Investigations into corruption in San Bernardino County advanced in fits and starts over the past year.

Prosecutors gained ground when former Supvervisor-turned-Assessor Bill Postmus agreed in March to plead guilty to bribery, conflict of interest and misappropriation of public funds and to cooperate with the ongoing investigation.

His testimony bolstered the case and resulted in charges against Rancho Cucamonga developer Jeff Burum and three other former county officials – former county Supervisor Paul Biane and former supervisorial chiefs of staff Mark Kirk and Jim Erwin – related to the county’s $102 million legal settlement with Colonies Partners LP in 2006.

A few months later, in August, Judge Brian McCarville dealt investigators a major blow when he dismissed five of the seven felony charges filed against Burum, citing insufficient evidence or prosecutorial error.

McCarville also dropped one charge of misappropriation of public funds against each of the other defendants.

Prosecutors have appealed McCarville’s August dismissal of the charges, while Burum’s attorney, Stephen Larson, has appealed McCarville’s upholding of the two remaining charges against Burum.

“Frankly, the last seven months have been very difficult for Jeff Burum and his family,” Larson said. “Jeff’s been accused of crimes he did not commit. We’ve known that from the start, and now it’s becoming increasingly clear to the community as the evidence and prosecution’s tactics come to light.”

State and local prosecutors maintain their case is on solid ground.

“We continue to be confident in the facts of this case, and in order to protect the integrity of the case and each defendant’s right to a fair trial, it would be inappropriate to comment any further,” District Attorney’s officials said in a statement earlier this month.

Just weeks after McCarville dismissed the charges against Burum and the other defendants in the Colonies’ case, FBI and IRS agents served search warrants at the homes and businesses of the four Colonies’ defendants and other figures tied to the investigation, including the Fontana home and business of former state Sen. Jim Brulte and the Riverside office of publicist Patrick O’Reilly.

O’Reilly’s attorney, Bill Lehman, said he was told by the FBI that O’Reilly is a witness, not a suspect, in the investigation.

Federal agents sought evidence of bribery, extortion or fraud, including “cash in an amount or concealed in such a manner as to indicate it is proceeds of criminal activity” according to one of the search warrants.

The momentum of the investigation this year seems to stem from information provided to investigators by Postmus, who pleaded guilty in March to 15 felonies tied to scandals at the Assessor’s Office and the county’s 2006 settlement with Colonies.

The settlement ended nearly five years of heated legal battle over who was responsible for paying for flood control improvements at the developer’s 434-acre Colonies at San Antonio residential and Colonies Crossroads retail center in Upland.

To read entire story, click here.

Former Rancho Cucamonga City Councilman Rex Gutierrez, at left, received a 2 year, 8 month prison sentence, while Former Assessor taxpayer Advocate Greg Advocate, on the right, received 4 months of home detention. Both men were accused of virtually the same offenses.

Saturday, December 10, 2011 – 09:00 a.m.

Speaking of no  justice.

Friday’s plea deal between the  San Bernardino County District Attorney’s office and defendant Gregory Eyler depicts a stark reality when prosecutions turn political in nature.

The move avoids a jury trial originally set for January 30, 2012.

Two cases originating out of misconduct under former Assessor Bill Postmus end with wildly different outcomes.

A testament to abuse of the system.

Eyler, was allowed to plead guilty to one misdemeanor county of filing a false claim. He will serve 120-days in monitored home detention and also serve 1-year probation.

Another former Assessor employee, Rex Gutierrez, was convicted at a jury trial and sentenced to a prison term of 2-years and 8-months.

Both men were charged with essentially the same offenses. Those being grand theft and filing a false claim.

Gutierrez, who is still in state prison, resigned from the Rancho Cucamonga City Council upon his conviction.

The settlement with Eyler alleviates the necessity of Postmus having to testify as a witness for the prosecution  at trial.

The only remaining cases where Postmus’ testimony is needed are that of High-Desert developer John Defazio and the Colonies conspiracy case.

Defazio, who has refused all plea offers, has a preliminary hearing scheduled for January 26, 2012 to cross-examine witnesses.

Eyler

Mike Cruz and Joe Nelson, Staff Writers
Posted: 12/09/2011 12:50:39 PM PST

Greg Eyler
SAN BERNARDINO – Gregory Eyler, a former taxpayer advocate for the San Bernardino County Assessor’s Office, pleaded no contest Friday to an allegation that he drew pay from the county for work he never performed.

Under a plea bargain with prosecutors, Eyler, 35, pleaded no contest to one misdemeanor count of presenting a fraudulent claim. He was initially charged in July 2009 with felony grand theft and public officer crimes.

Prosecutors alleged Eyler was given the job, which paid $130,000 annually, by his boyfriend and then newly elected Assessor Bill Postmus. But Eyler seldom showed up for work and when he did, his work product was minimal, they said.

Under the conditions of his plea agreement, Eyler will serve 120 days on a home-monitoring program, to be completed by July, and serve one year of felony probation.

“(Plea) discussions have always been a part of the process as this case has gone on, but it hadn’t gotten to the point of being resolved until today,” prosecutor Lewis Cope said.

Eyler initially faced a maximum of three years in prison.

He was charged in 2009 along with Postmus, who faced greater culpability in the crimes. Postmus faced additional charges of misappropriation of public funds, perjury and drug possession.

Postmus pleaded guilty in March to the charges in the Assessor’s Office case and a separate scandal relating to the county’s $102 million legal settlement with Rancho Cucamonga investor consortium Colonies Partners LP in November 2006. Postmus served as chairman of the Board of Supervisors at the time of the settlement.

Prosecutors allege the county’s settlement with Colonies was tainted by bribery and extortion, and that Colonies’ co-managing partner Jeff Burum offered Postmus $100,000 in exchange for Postmus’ vote in favor of the settlement.

Burum and the other three defendants in the Colonies’ case – former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, deny any wrongdoing and are fighting the charges.

To read entire story, click here.

Joe Nelson, Staff Writer
Created: 12/08/2011 08:04:06 PM PST

San Bernardino County prosecutors have filed four additional perjury charges against an Apple Valley businessman accused of lying to the Grand Jury in a sweeping county corruption probe.

A preliminary hearing scheduled for Thursday in San Bernardino Superior Court for John Dino DeFazio, 51, was continued until Jan. 26 due to the additional felony charges that were filed Monday, prosecutor John Goritz said.

Goritz said a reassessment of the evidence prompted him to file the additional charges and rethink how the case is presented in court.

Prosecutors allege DeFazio, who is the former business partner of former county Assessor Bill Postmus, lied to the Grand Jury in October 2009 about his control over a political action committee, Inland Empire PAC, which prosecutors say was actually controlled by Postmus and used to conceal a $100,000 bribe from a Rancho Cucamonga developer.

DeFazio was arrested in February 2010 and initially charged with two felony counts of perjury. Prosecutors allege he lied to the Grand Jury when he said he made all decisions regarding the PAC’s activities, and that he recruited businessmen Jeff Bentow and Mike Gallagher to serve as officers of the PAC.

DeFazio also told the Grand Jury he spoke frequently with Bentow and Gallagher regarding the PAC’s activity and donations. But Gallagher and Bentow both told district attorney investigators during interviews they had no knowledge of or affiliation with the PAC.

Postmus, who in March pleaded guilty to more than a dozen felonies in connection with county corruption probes, admitted he controlled the PAC and and took a bribe from developer Jeff Burum.

According to a criminal complaint against county Supervisor Neil Derry, filed in April by the state Attorney General’s Office, Postmus directed the PAC’s treasurer, via e-mail, to cut a $10,000 check to Derry’s supervisorial campaign in June 2007.

To read entire story, click here.

“There really is no such thing as insider trading for real estate,” said Milsap. “It goes on in real estate all the time. That’s the benefit of local knowledge.”

Ryan Milsap, Adjunct Professor at USC School of Real Estate and Broker

Joe Nelson, Staff Writer
Posted: 11/14/2011 08:19:46 PM PST

Authorities looked hard at several land deals involving former San Bernardino County Assessor Bill Postmus during their investigation of the county’s $102 million legal settlement with Rancho Cucamonga developer Colonies Partners LP, according to recently released search warrants.

The District Attorney’s Office, however, was unable to provide sufficient evidence to charge Postmus or his business partner, John Dino DeFazio, with any crimes. Postmus was the assessor at the time he and DeFazio acquired the six parcels through their company, Tri-Land Inc. between August and December 2007.

“I think the DA made the decision that there was no case and did not file in that regard,” said Postmus’ attorney, Stephen Levine. “And I tend to agree with them that there was no case.”

Prosecutor John Goritz with the district attorney’s Public Integrity Unit declined to comment due to the ongoing criminal cases.

Postmus has pleaded guilty to felony charges stemming from corruption cases in the Assessor’s Office and the Colonies settlement. He admitted to voting in favor of the settlement in exchange for a $100,000 bribe while chairman of the Board of Supervisors and has agreed to testify against a Rancho Cucamonga developer and three former county officials in exchange for reduced charges. All four defendants have denied any wrongdoing.

DeFazio is facing two felony counts of perjury for allegedly lying to the Grand Jury about control of a political action committee that received one of the alleged bribes in the Colonies case. He denies any wrongdoing and is fighting the charges.

Several things about the land acquisitions raised an eyebrow with district attorney’s investigators, mainly Postmus’ failure to disclose certain information about the acquisitions on public financial disclosure forms known as statements of economic interest, or form 700s.

Postmus and DeFazio formed Tri-Land Inc. in May 2007, and though Postmus disclosed on his Form 700 that he was a partner in the company, he was not listed as a principal officer on incorporation papers filed with the state, according to a March 2009 search warrant.

Former Assistant Assessor Adam Aleman, a key witness in the corruption cases involving the Colonies settlement and the Assessor’s Office, told investigators that Tri-Land acquired the Adelanto parcels because Postmus had inside knowledge that the Upland-based Lewis Group of Companies was going to install large-scale infrastructure in the area, according to the search warrant.

Randall Lewis, executive vice president for the Lewis Group of Companies, said his family’s company purchased more than 1,000 acres of land in Adelanto in 2005 and 2006 for residential and commercial development. He said the High Desert was a mecca for real estate investors at the time, and it was no secret what his family’s company was doing, as well as other developers.

To read entire story, click here.

Joe Nelson, Staff Writer
Posted: 11/12/2011 06:12:51 AM PST

The ways money flowed to candidates and political action committees and alleged acts of blackmail are detailed in search warrants in San Bernardino County’s $102 million legal settlement with Rancho Cucamonga developer Colonies Partners LP in November 2006.

The warrants, released last week, also describe what led authorities to suspect a county supervisor’s former chief of staff of criminal activity before he became a witness for the prosecution.

The settlement ended nearly five years of legal battle over flood-control easements at Colonies’ 434-acre residential and commercial development in Upland.

In May, state and local prosecutors charged Colonies co-managing partner Jeff Burum, former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, with criminal conspiracy, conflict of interest and other charges in a corruption case they are calling the biggest in county history.

The four are accused of conspiring to facilitate the historic settlement, in the developer’s favor, in exchange for bribes and political favors. All four deny any wrongdoing.

PAC contributions

Within a year of the settlement, Colonies Partners contributed a total of $400,000 to five political action committees prosecutors say were controlled by the three supervisors who voted in favor of the settlement – Bill Postmus, Biane and Ovitt – or members of their staff.

Three of the political action committees – Alliance for Ethical Government, San Bernardino County Young Republicans and the Committee for Effective Government – each received $100,000 contributions from Colonies. Kirk controlled the Alliance for Ethical Government PAC, Biane’s chief of staff Matt Brown, the San Bernardino County Young Republicans PAC, and Erwin, the Committee for Effective Government PAC, prosecutors allege.

Postmus controlled the Inland Empire PAC and Conservatives for a Republican Majority PAC, each of which received $50,000 contributions from Colonies following the settlement.

In March, Postmus, who is also the former county assessor, pleaded guilty to charges stemming from the Colonies case and a separate case in which he admitted to running a political operation out of the Assessor’s Office at taxpayer expense. As part of a plea bargain, he has agreed to turn state’s evidence in exchange for reduced charges.

Postmus’ longtime aide and protege, Adam Aleman, pleaded no contest in June 2008 to felony charges related to the Assessor’s Office scandal, including falsifying minutes to executive meetings for the Grand Jury and destroying evidence in the investigation, i.e. the hard drive of a county-owned laptop computer.

Aleman has also agreed to testify against defendants in the Colonies’ and Assessor’s Office cases as part of a plea bargain. He approached investigators five months after his arrest saying he had information about the controversial Colonies settlement.

Money trail

Within a year of receiving the contributions from Colonies Partners, money flowed from the PACs to political campaigns and activities directly related to those who controlled the PACs, according to the search warrants.

Brown’s PAC doled out more than $11,000 to Biane’s campaign for supervisor. More than $11,000 was doled out to Brown’s campaign for the Republican Central Committee, and more than $2,600 in expenditures were taken from the PAC for fundraising events and travel and lodging expenses for Brown and his wife, according to the warrants.

Kirk’s Alliance for Ethical Government contributed $10,000 to Gary Ovitt’s campaign for supervisor and $3,200 to Ovitt’s campaign for Republican Central Committee. In addition, five contributions totaling more than $1,700 were made to the campaign of Ovitt’s wife, Sue Ovitt, for a spot on the Republican Central Committee, and 11 contributions totaling more than $7,000 were made to Kirk’s campaign for the Central Committee.

To read entire story, click here.

Joe Nelson, Staff Writer
Posted: 11/09/2011 05:33:36 PM PST

An attorney for Rancho Cucamonga developer Jeff Burum said federal officials on Wednesday returned all materials seized from Burum’s home and office during an FBI raid on Sept. 15.

“I can confirm that, pursuant to the stipulation between the parties and the subsequent order by the federal judge, the FBI has returned all materials that it seized at Mr. Burum’s residence and business offices,” Burum’s attorney Stephen Larson said.

Larson argued in federal court in the days following the raid that agents violated Burum’s civil rights when they erroneously declared in a search warrant affidavit they did a walk-through of Larson’s office, in Larson’s presence and with his consent, during the search.

In response, federal agents admitted to the error, chalking it up to an oversight, but stood by the integrity of their search.

To read entire story, click here.

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 08 November 2011 10:05 AM

Search warrants released as part of a San Bernardino County corruption case detail how the four-year investigation grew from reports of political gifts to allegations of a far-reaching conspiracy involving several top county officials and a prominent developer.

The warrants were ordered unsealed by Judge Michael Smith on Friday as part of the criminal proceedings against Rancho Cucamonga developer Jeff Burum, former county Supervisor Paul Biane, former assistant assessor Jim Erwin and Mark Kirk, former chief of staff to Supervisor Gary Ovitt. They face bribery and conspiracy-related charges for their alleged roles in a November 2006 legal settlement between Colonies Partners, Burum’s firm, and the county.

The 11 search warrants, covering the period from December 2008 to October 2010, were provided by prosecutors to defense attorneys last month. Six of the warrants were made available Friday with four more provided Tuesday.

One of the search warrants, from Aug. 4, 2009, remained unavailable. A court clerk said court officials were unable to locate the document as of Tuesday and are continuing to search for it.

The documents provide a glimpse into how the case began as an investigation into political dealings by former Assessor Bill Postmus and gifts Erwin received from Burum. They also describe the crucial role played by Adam Aleman, a longtime confidante of Postmus, as a confidential informant and the different tangents explored by district attorney’s investigators as the case grew.

Aleman, a former assistant assessor, pleaded guilty in July 2009 to vandalism, theft, destroying public documents and filing a false claim as part of a deal with prosecutors. In exchange for his cooperation, those felony charges could be reduced to misdemeanors when he is sentenced.

The first search warrant — from Dec. 2, 2008 — shows that Aleman cooperated with prosecutors as early as November 2008 when he met with Hollis Randles, a senior district attorney’s investigator, three times and told him about gifts Erwin received from Burum.

Erwin faces multiple perjury charges over allegations he failed to report a $12,750 Rolex watch, a private jet trip to New York and Washington, DC, plus dining, lodging and entertainment expenses paid for by Burum during the January 2007 trip.

Aleman told Randles that Burum took Erwin on the trip and gave him the watch as a gift for his help in facilitating the $102million settlement with Colonies, reached after a five-year legal battle over flood control easements at the firm’s Upland housing and commercial development.

Prosecutors contend that that the settlement was a result of bribery and extortion and that Colonies funneled $400,000 to political action committees controlled by Biane, Erwin, Postmus and Kirk as payment for yes votes on the settlement.

A January 2009 search warrant is the first indication that investigators were looking into the settlement and the contributions made to the political action committees. A subsequent search warrant, from March 2009, goes into more detail and is the first to raise the allegations that the contributions were bribes and recommend criminal charges against Burum, Biane, Erwin, Kirk and Postmus.

That March, Erwin was arrested on charges related to the gifts he received. Postmus had been arrested on drug charges in January 2009. It wasn’t until February 2010 that prosecutors charged them with bribery and conspiracy charges related to the settlement.

Aleman is the source of many of the allegations in the search warrants but the criminal charges against him are not mentioned in the first warrant, an omission that Erwin’s attorney, Rajan Maline, called troubling.

“What’s significant to me about the search warrant is the lack of information given to the magistrate,” Maline said.

He said it raises questions about the legality of the search warrants and may be the subject of a future court motion by him and other defense attorneys.

District attorney’s spokesman Chris Lee declined to comment on the issue.

To read entire story, click here.

Joe Nelson, The (San Bernardino County) Sun
Created: 11/07/2011 06:53:01 PM PST

The remaining search warrants served in a sweeping corruption probe involving a legal settlement between the county and a Rancho Cucamonga developer were released Monday.

The warrants were served between Dec. 2, 2008 and Oct. 22, 2010, in an investigation into the county’s landmark $102 million settlement with Rancho Cucamonga developer Colonies Partners LP in November 2006. They detail contributions made by the developer to political action committees following the settlement, as well as land deals involving former Board of Supervisors Chairman Bill Postmus and his business partner, John “Dino” DeFazio, who faces separate criminal charges for allegedly lying to a grand jury.

Former County Assistant Assessor of Support Adam Aleman provided the information to district attorney investigators as part of a plea bargain with prosecutors.

Aleman told investigators that Postmus, while serving as chairman of the Board of Supervisors, conspired with Colonies’ co-managing partners Jeff Burum to steer the settlement the developer’s way in exchange for bribes and political favors.

The settlement ended nearly five years of heated legal battle over flood-control easements at the developer’s 434-acre Colonies at San Antonio residential and Colonies Crossroads commercial development in Upland.

Burum, former county Supervisor Paul Biane; former Assistant Assessor Jim Erwin; and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, are charged with conspiracy to commit a crime and conflict of interest, among other charges. They deny any wrongdoing.

A judge has dismissed five of seven counts against Burum, including bribery.

To read entire story, click here.

Bill Postmus and Jim Erwin

BY IMRAN GHORI AND DUG BEGLEY
STAFF WRITERS
ighori@pe.com | dbegley@pe.com

Published: 04 November 2011 09:59 AM

Search warrants released Friday provide more details of former San Bernardino County assessor and Supervisor Bill Postmus’ struggles with hiding his homosexuality and drug addiction as he was under scrutiny by authorities who suspected him of abusing his public office.

The documents also show that Jim Erwin, former assistant assessor for Postmus, used political action committees to help pay legal bills while he was under investigation. While not illegal, the practice caught the attention of investigators because of potential links to suspected bribery involving a Rancho Cucamonga developer.

Judge Michael A. Smith ordered 11 search warrants from the investigation unsealed Friday, about two weeks after they were provided to defense attorneys in the Colonies Partners corruption case by the district attorney’s office. The documents cover the period from December 2008 to October 2010.

The 264 page of documents include descriptions of what investigators sought and what they found, copies of checks, cell phone and computer records and investigative reports. Only six of the warrants were available Friday from the court clerk’s office; the rest are expected to be available Tuesday.

The district attorney’s office first began investigating Postmus in November 2007, looking into allegations he was using the assessor’s office for political purposes. He was arrested in January 2009 on drug charges and subsequently resigned. He initially faced charges of misuse of public office, but a year later the case was broadened to include charges of bribery related to the county’s $102 million lawsuit settlement in November 2006 with Colonies Partners. Postmus voted for the settlement while he was a county supervisor.

In May, a grand jury indicted Erwin, Colonies co-managing partner Jeff Burum, former county Supervisor Paul Biane, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt, on bribery and conspiracy-related charges for their alleged role in the Colonies case. Among other allegations, prosecutors contend Colonies Partners funneled $400,000 to political action committees controlled by Biane, Erwin, Postmus and Kirk as payment for yes votes on the settlement.

The search warrants released Friday focus mainly on Postmus and Erwin during the early stages of the corruption investigation.

Postmus was among 45 witnesses who appeared before the grand jury, testifying that as chairman of the Board of Supervisors, he voted for the settlement because of promises from Burum to support him financially for the rest of his life and threats to expose him if he didn’t back the deal. He said he feared that Erwin, acting on behalf of Burum, would reveal that he was battling a methamphetamine addiction and was secretly gay.

The court documents include several pages of text messages and Internet chat records from a cell phone, Blackberry and computers seized from Postmus by investigators.

The night before his arrest at the court hearing, Postmus anticipated he could face further conspiracy charges, according to text messages. In the exchange with someone identified as “Jim,” Postmus speculates over recent developments in the criminal case.

“If they charge me, they better charge Jeff,” Postmus wrote the night before the hearing, alluding to Burum.

Other text messages and Internet chat records show numerous discussions – often explicit – of apparent attempts to arrange sexual trysts in exchange for money and to purchase drugs.

Postmus’ attorney, Stephen Levine, said prosecutors included those details to “malign his character,” noting that Smith ruled the evidence was inadmissible during Postmus’ preliminary hearing.

PACS Pay

The search warrants relating to Erwin focus primarily on financial records and a trip to New York he took with Burum in January 2007. As a result of that trip, prosecutors indicted Erwin on several felony perjury charges, accusing him of failing to report a $12,750 gold Rolex watch and other gifts on statement of economic interest forms government employees are required to fill out.

Patrick O’Reilly, who served as a consultant to Burum during the Colonies litigation and accompanied Burum and Erwin on the New York trip, has been named by prosecutors as an unindicted co-conspirator in the case.

To read entire story, click here.

Joe Nelson and Mike Cruz, The (San Bernardino County) Sun
Created: 11/04/2011 10:56:54 AM PDT

SAN BERNARDINO – Eleven search warrants served over a two-year period in a sweeping corruption probe tied to a legal settlement between the county and a Rancho Cucamonga developer were ordered released Friday by a Superior Court judge.

Read the documents: 1 | 2

(Disclaimers: Document #1 contains explicit language; pages containing private information have been removed from Document #2)

Judge Michael A. Smith ordered the search warrants released Friday after defense attorneys did not appear in court to object to their release or request redactions be made to the documents.

Six of the 11 warrants, which span from Dec. 2, 2008, to Oct. 22, 2010, were released. The remaining five are expected to be released early next week.

The documents provide a glimpse into the private life of former county assessor and former Board of Supervisors Chairman Bill Postmus.

A laptop computer, mobile phone and Blackberry seized from Postmus during searches by district attorney investigators turned up explicit communications between Postmus and men he met online, where Postmus solicited drugs and sex, according to the search warrants. On one occasion, Postmus, on the gay dating website Adam4Adam, allegedly offered a man $500 to spend the night with him.

Prosecutors have alleged that Rancho Cucamonga developer Jeff Burum was on the verge of using lurid details about Postmus’ private life against him in order to win a favorable settlement.

Investigators also turned up information showing that former Assistant Assessor Jim Erwin allegedly used at least three
political action committees to pay for legal expenses to Temecula-based attorney Alan Mohill.

One of the political action committees Erwin allegedly used to pay his legal expenses included the Committee for Effective Government, which prosecutors allege was used to funnel a $100,000 bribe to Erwin from Burum.

Erwin, Burum, former county Supervisor Paul Biane and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, have been charged with conspiracy and conflict of interest, among other charges, in connection with the county’s Nov. 28, 2006, legal settlement with Rancho Cucamonga-based investor group Colonies Partners, LP, of which Burum is a co-managing partner.

State and local prosecutors allege the settlement was tainted by bribery and conspiracy. The FBI has since launched a separate investigation into the settlement.

In August, a Superior Court judge dismissed five of seven charges against Burum, including all bribery counts.

In March, Postmus struck a plea bargain with prosecutors and pleaded guilty to accepting a $100,000 bribe from Burum, in the form of two $50,000 contributions to political action committees he secretly controlled, in exchange for reduced charges.

To read entire story, click here.

Friday, October 21, 2011

The California Attorney General’s Office’s filing of charges against Third District San Bernardino County supervisor Neil Derry six months ago has opened up a can of legal and political worms that is likely to complicate the future political landscape for not only Attorney General Kamala Harris, but San Bernardino County District Attorney Mike Ramos and at least two of Derry’s colleagues on the board of supervisors.

At issue is the discrepancy in the standard applied toward Derry and supervisors Brad Mitzelfelt and Janice Rutherford, who, like Derry, solicited political campaign contributions from individuals or companies reluctant to be identified as donors who then provided money through a third party to launder the political money. While Derry was prosecuted for having gotten caught up in this circumstance, Mitzelfelt and Rutherford so far have avoided being criminally charged. Nevertheless, the apparent double standard being applied to them by state and local prosecutors and the publicity attending this disparity has come to be widely perceived as a matter of political favoritism and selective prosecution that implicates all involved in the corruption that in recent years has become synonymous with San Bernardino County governance.

This spring, San Bernardino County District Attorney Mike Ramos detailed one of his office’s investigators, Hollis Randles, to look into the circumstances pertaining to a $5,000 donation to Derry’s successful 2008 election campaign for supervisor that originated with Arnold Stubblefield, the owner and developer of the Highland Town Shop. Randles interviewed Derry, Stubblefield and several others involved in or knowledgeable about Derry’s receipt of that money. The district attorney’s office did not file a case against Derry and instead turned the matter over to the California attorney general’s office.

According to a report Randles passed along to Shannon Williams, a special agent with the California Department of Justice’s bureau of investigation and intelligence who doubles as an investigator for the California attorney general’s office, Stubblefield told investigators that on May 31, 2007, he wrote a check on a business account of Highland Town Shops for $5,000 payable to the Inland Empire Political Action Committee, a political action committee (PAC) controlled by then-county assessor and former chairman of the board of supervisors, Bill Postmus. Stubblefield indicated it was his actual intent to make a contribution to Derry’s campaign but that he was reluctant to do so directly because at that time the incumbent Third District supervisor was Dennis Hansberger, whom Derry was challenging. Stubblefield said he understood that by providing the check to Postmus’ PAC, the money would be passed along to Derry. According to Randles, Stubblefield did not recall who told him to make the check payable to the Inland Empire PAC and he did not know that it was Postmus who controlled the Inland Empire PAC, but he remembered either mailing or handing the check to Derry.

The Sentinel has learned that at least some of the communication between Derry and Stubblefield did not occur directly but was relayed though Tom Parrish, the business manager at Highland Town Shop.

According to an affidavit by Williams completed at the behest of the state attorney general’s office, when Derry was interviewed about the matter, he told Randles “that he contacted Stubblefield during the campaign seeking a contribution. Derry related that Stubblefield told him that for ‘political reasons’ he did not want to show up on campaign reports as supporting Derry, and asked if there was a PAC he could donate to (which was supporting Derry). Derry said he told Stubblefield it was his understanding the Inland Empire PAC was ‘probably’ going to support his campaign. Derry did not remember how he received the Stubblefield check. However, Derry admitted he gave the check to Postmus, who he knew controlled the Inland Empire PAC. Derry admitted his campaign later received contributions from the Inland Empire PAC. Derry admitted that it was ‘understood’ that the Stubblefield funds were to support his campaign.”

Further, according to Williams’ affidavit, “In June, 2007, Derry was at a lunch meeting at a San Bernardino Coco’s restaurant, with Jim Erwin, Mike Richman, Bill Postmus, and Postmus’ associates Dino DeFazio and Adam Aleman.” Erwin was a former sheriff’s deputy union president who had worked with Postmus on his political campaigns and had been hired by him as one of two assistant assessors and was also managing Derry’s campaign and would subsequently be hired as his chief of staff upon Derry’s election as supervisor. Richman was a political consultant. DeFazio was one of Postmus’ business partners on real estate ventures. Aleman had been a member of Postmus’ staff when he was supervisor, his campaign manager when he ran for assessor and was, like Erwin, hired by Postmus as one of his assistant assessors. According to Williams, “Richman, Aleman and Postmus told investigators that on that occasion Derry gave Postmus a number of checks made out to the Inland Empire PAC, including the Stubblefield-Highland Town Shop check for $5,000.

Postmus indicated he believed Derry provided checks totaling $10,000. Postmus did not recall the names of the donors for the additional $5,000. Postmus told investigators that at the behest of Jim Erwin, who was working on Derry’s campaign, he agreed with Erwin and Derry to ‘launder’ $5,000 of contributions intended for Derry’s campaign through the Inland Empire PAC. Postmus understood that Derry did not want to receive (and be required to report) these contributions directly to his campaign, and so Postmus agreed with Derry to accept the contributions into the Inland Empire PAC and then to pay out that amount to Derry’s campaign. Political Reform Act (PRA) reports and bank records of the Inland Empire PAC reflect that on June 25, 2007, the PAC deposited into its account the May 31, 2007, $5,000 Stubblefield-Highland Town Shops check. E-mails reflect that Postmus directed the Inland Empire PAC treasurer to draft a check in the amount of $10,000 to Derry’s campaign on June 28, 2007. Bank records and the Inland Empire PAC PRA reports reflect that the PAC issued a check (#1011) in that amount to Derry’s campaign on June 29, 2007. Bank records reflect that the check (#1011) was deposited into the Derry campaign account on July 11, 2007.”

According to Williams, Derry completed and compounded the crime of political money laundering by completing and filing a campaign finance disclosure statement that omitted that Stubblefield was the origin of the money brought into his campaign through Postmus’s political action committee.

“On July 25, 2007, Derry signed a recipient committee campaign statement (Gov, Code, §§ 84200-84216.5) Fair Political Practices Commission (“FPPC”) Form 460 under penalty of perjury,” Williams wrote. “On July 31, 2007, the report was filed with the San Bernardino County registrar of voters. The report reflected that the campaign received $10,000 from the Inland Empire PAC on June 30, 2007. The report failed to reflect that the campaign received any amount from Stubblefield-Highland Town Shops.”

In April of this year, the California Attorney General’s office filed three charges against Derry, which consisted of one felony count of perjury, a second felony count of filing a false report and a misdemeanor violation of failure to report a campaign contribution. Conviction of either or both felony counts would have resulted in Derry’s removal from office.

In July, Derry, under an agreement with prosecutors accepted by the court, entered a single guilty plea to one misdemeanor count of failing to report a campaign contribution. The two felony charges were dismissed. Derry was ordered to pay a total of $10,000 in fines and fees to the Fair Political Practices Commission and the court. He was given three years probation and permitted to remain in elected office with no restriction on his ability to run for reelection.

Derry’s very public ordeal instigated wider and critical scrutiny of the fundraising efforts of other local politicians, in particular, other members of the board of supervisors. Looming into focus of a sudden was Brad Mitzelfelt’s receipt of money from Young Homes, a major developer in San Bernardino County.

In the run up to the 2008 election, Young Homes would provide Mitzelfelt with a whopping $110,000, of which $50,000 was laundered.

Campaign finance disclosure documents show that Young Homes provided Mitzelfelt with $60,000 used toward his 2008 reelection campaign. But the company also provided him with another $50,000 through entities that were set up by Young Homes vice president Reggie King. Those entities appear to have existed for no other purpose but to obscure the true source of the money given to Mitzelfelt.

Mitzelfelt held the power of incumbency in that he had been appointed to fill out the two years remaining on the supervisorial term of Postmus, who had resigned the First District post in January 2007 to become assessor. On December 17, 2007, Mitzelfelt received $60,000 from Young Homes for his electioneering effort in 2008.

On December 31, 2007, Rancho Cucamonga-based Neoteric Entertainment, Inc. cut a $40,000 check to Mitzelfelt’s campaign. On the same day, Avenal Finance, LLC, also based in Rancho Cucamonga, gave him $10,000.

Neoteric Entertainment was not transacting business in Rancho Cucamonga and did not have a business license. Avenal Finance, which ostensibly existed to arrange loans for the purchasers of housing sold by Young Homes, did obtain a Rancho Cucamonga business license.

The California Secretary of State’s business portal shows that Neoteric was incorporated in Nevada. Listed as agent for service of process for the company was Laurie Larue of Fontana, who functions out of a single family residence in that city. Neoteric has no business license in Fontana, either. Two addresses are given for Neoteric Entertainment, 7083 Hollywood Blvd. Suite 180 Los Angeles, Ca 90028 and 10407 Trademark Street in Rancho Cucamonga. The 7083 Hollywood Blvd. location is the address for Legalzoom.com, which apparently handled Neoteric’s corporation filings. The 10407 Trademark address in Rancho Cucamonga is actually the corporate headquarters for Young Homes. Nevada Secretary of State business records shows that Neoteric Entertainment Inc filed for corporate status on November 28, 2007 in Las Vegas, with $100 claimed as the company’s total stock holdings. All corporate officers in Neoteric Entertainment are listed as Reggie King who is an executive vice president with Young Homes LLC.

In May 2008, Sharon Gilbert, whose blog, iepolitics.com, operates as a local political watchdog, filed a complaint with the California Fair Political Practices Commission in Sacramento, citing the contributions to Mitzelfelt from Neoteric Entertainment and Avenal Finance as having originated with Young Homes.

“It appears that Young Homes has set up phony corporations to make campaign contributions so that it does not appear that those contributions are coming from a developer,” Gilbert told the FPPC in her complaint.

In July 2008, the FPPC, which does have the authority to lodge criminal charges, sent Mitzelfelt an advisory letter, informing him that under the requirements of the Political Reform Act he needed to amend his campaign statements to show the actual source of the money represented as coming from Neoteric and Avenal.

David Zook, Mitzelfelt’s chief-of-staff, told the Sentinel “I do not handle political affairs for the supervisor, but as to the donations Brad received, I think Neil’s situation is different. I think the difference is that the practice is to report whichever name is on the check. The supervisor does not write the check. What is put on the reports is the information available. The supervisor just reports whoever it was that gave it to him. It sounds to me like a completely different situation from Mr. Derry’s.”

In 2010, Rutherford, who was then a member of the Fontana city council, was challenging incumbent Second District supervisor Paul Biane. In the course of her campaign, she approached Upland-based developer Raul Madrid, who had completed a handful of residential home projects in Fontana during her tenure there. Rutherford asked Madrid for a contribution to her campaign. Madrid, who had projects elsewhere in the county and the Second District, was reluctant to show up on Rutherford’s campaign finance forms, given that Biane was still in office and as such carried influence over projects in the county.

To avoid being publicly identified as supporting Rutherford, Madrid provided a $1,000 cashier’s check to Hank Beffre, a Rancho Cucamonga-based hair stylist, whose salon had both Madrid and Rutherford as clients. Madrid told Beffre to give the check to Rutherford so that it would officially come to her from the hair stylist, but to do so in such a way that Rutherford would know that the money originated with Madrid. In reporting the $1,000 donation, Rutherford indicated in her campaign finance disclosure filing, in documents known as California Form 460s signed under the penalty of perjury, that Beffre had provided her with $1,000 on July 29, 2010.

That contribution was illegal on two grounds. Such donation pass-throughs are considered campaign money laundering. And political donations over $100 cannot be done by cashier’s check.

Rutherford had not responded to a request for an interview by press time.

Supervising deputy attorney general James Dutton, who oversaw the prosecution of Derry, told the Sentinel this week that it did not appear that the San Bernardino County district attorney’s office had referred the Mitzelfelt or Rutherford matters to his office.

“I am not aware of either of those matters,” Dutton said. “That doesn’t mean our office has not been contacted or involved, but I have not heard about that.”

He added, “Generally speaking, we handle prosecutions where there is a conflict within the district attorney’s office.” Dutton was not specific as to what conflict had materialized in the Derry case and did not say how it would have been differentiated from possible prosecutions of Mitzelfelt or Rutherford. “In the vast majority of cases we handle, there is a conflict where the DA would have to hand it over. Unless there is a conflict identified, we are not going to see the case. I’m not aware if there is a conflict in those cases. Just because we prosecuted the Derry case, it doesn’t mean we would be the first in line to prosecute the other supervisors. You shouldn’t make the assumption that just because we prosecuted one case we would be first to prosecute a case of a similar nature.”

Dutton said there were similarities between Derry’s, Mitzelfelt’s and Rutherford’s actions, but that he did “not necessarily agree that there are political ramifications to our prosecution of Mr. Derry. In this case the person we prosecuted is a politician, but we look at each case, no matter who it is, to see if a crime happened and if it is a prosecutable case.”

Dutton did acknowledge that a different standard had perhaps been applied to Mitzelfelt and Rutherford than was applied to Derry in that the state attorney general’s office might have been more aggressive in pursuing campaign finance reporting violations and related misrepresentations by public officials than the district attorney’s office. He said his office is open to examining whether Mitzelfelt and Rutherford were able to fly under the legal radar by virtue of their having a more cordial relationship with district attorney Mike Ramos than Derry, who as supervisor had opposed providing Ramos with a paying post on the county ethics commission and refused to spare the prosecutor’s office from budget cuts being applied to all county departments in general.

“If there are people in the community who think there is inappropriate conduct in the DA’s office, they have the option of sending a letter to our office to look into it. They can write to the attorney general herself or to the San Diego office and include whatever documents they want us to look at.”

Attorney general Kamala Harris’ predecessor, current governor Jerry Brown, appeared with Ramos in San Bernardino in February 2010 to announce the filing of criminal charges pertaining to bribery, conspiracy and extortion against former supervisor/assessor Postmus and his one-time assistant assessor, Jim Erwin. Since Harris took office, the state attorney general’s office has obtained a superseding indictment in that case, in which another former supervisor, Paul Biane, was charged, as well as Mark Kirk, the former chief of staff to another supervisor, along with Rancho Cucamonga businessman Jeff Burum, who was charged with bribing his co-defendants. Brown characterized the case, which involved a $102 million payout to Burum’s company to settle a lawsuit it had brought against the county, as one of the most extensive corruptions of local government in California history. The state attorney general’s office’s reluctance to involve itself in prosecuting Mitzelfelt and Rutherford has provoked charges of bias vectored at both Harris and Ramos in political blogs. Ramos and Harris will not need to stand for reelection until 2014, but opponents have already publicly declared that the juggling of the cases to the detriment of Derry, who remains on the outs with Ramos, and the benefit of Mitzelfelt and Rutherford, who maintain a tenuous alliance with the district attorney, amounts to selective prosecution.

In a statement to the Sentinel, Derry maintained that he had neither violated the Political Reform Act nor falsified his campaign reports, insisting he had agreed to the plea “because it relieved the hardship on my family, especially my wife” and because “mounting a defense to the charges would have cost close to $100,000.” He said he had never been interviewed by Shannon Williams, the investigator with the state attorney general’s office who completed the affidavit upon which the original charges against him were based. That affidavit was “unfounded and untrue hearsay,” Derry asserted, and said that he had tape recorded his interview with Randles and that recording demonstrated, “I did not make the statements they said I made.” He had not spoken directly with Stubblefield, he said. “I actually spoke with his manager, Tom Parrish, and I told him the Inland Empire PAC might be supporting me. I did not arrange for Mr. Stubblefield, who I had not met, to make that contribution.” Stubblefield provided the money to the Inland Empire PAC without any coaching from him, Derry said. Furthermore, there was no meeting at Coco’s as described in Williams’ affidavit. “No such meeting ever took place,” he said. The prosecution’s reliance on Postmus, who has since pleaded guilty to 14 felonies, and Aleman, who has pleaded guilty to three felonies, to establish the meeting took place undercuts the prosecution, he said. “They [Postmus and Aleman] are admitted criminals and perjurers who are willing to testify to anything to get lighter sentences,” he said. Stubblefield’s $5,000 contribution was properly reported by the Inland Empire PAC, Derry said, “and Inland Empire’s payment to my campaign was reported.”

The case brought against him has set a standard that needs to be applied across the board, he said.

“The attorney general’s filing against me set a precedent,” he said. “If this was not politically motivated, if it was not some kind of selective prosecution, then they need to file charges against everyone like me who received a donation after money exchanged hands.”

The spokesman for the San Bernardino County district attorney’s office, Christopher Lee, declined comment on whether an investigation into Mitzelfelt or Rutherford was being undertaken or whether his office would contemplate filing charges against them. “We just don’t have any comment for you at this time,” Lee said.

Joe Nelson, Staff Writer
Posted: 10/20/2011 03:12:49 PM PDT

The attorney representing Rancho Cucamonga developer Jeff Burum is asking a state appeals court to dismiss the remaining criminal charges against his client, who prosecutors charged in a sweeping county corruption probe.

In a petition filed with the Fourth District Court of Appeal in Riverside Tuesday, attorney Stephen Larson argued that San Bernardino Superior Court Judge Brian McCarville should have dismissed conspiracy and conflict-of-interest charges against Burum, in addition to five other charges that he did dismiss, during an Aug. 19 hearing.

McCarville also dismissed one felony count of misappropriation of public funds against three former county officials in a sweeping corruption case in which prosecutors allege the county’s $102 million legal settlement in November 2006 with Burum’s development consortium, Colonies Partners LLP., was tainted by bribery and blackmail.

On May 9, a criminal Grand Jury indicted Burum; former county Supervisor Paul Biane; former Assistant Assessor Jim Erwin; and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, on charges of conspiracy and conflict of interest, among other charges.

Attorneys for Erwin and Kirk also filed petitions for writs of mandate Tuesday in the Riverside appellate court seeking dismissal of some of the charges against their clients. They did not return phone calls seeking comment.

Biane’s attorney did not file a petition, according to online court records.

Larson declined to comment Thursday.

The defense attorneys’ actions come amid an appeal by state and local prosecutors of McCarville’s Aug. 19 rulings.

Prosecutors are seeking the reinstatement of the dismissed charges, while defense attorneys are seeking more dismissals.

On Thursday, prosecutors filed an opening brief on their appeal, court records show.

To read entire story, click here.

The Riverside City Council is discussing whether to name City Hall after Mayor Ron Loveridge.

FROM STAFF REPORTS
Published: 16 October 2011 05:58 PM

A campaign alliance between San Bernardino City Attorney Jim Penman and city clerk candidate Amelia Sanchez Lopez is raising eyebrows among longtime election watchers and concern among those who would like to see the pair defeated.

Not only has Penman contributed almost $3,000 this year to Sanchez Lopez for signs and mailers, Penman and Sanchez Lopez also have placed their names on the same signs posted around the city in advance of the Nov. 8 election.

Rachel Clark, retiring after 20 years as city clerk and who is not endorsing any candidates, said she has never seen candidates for unrelated offices on the same signs.

Sanchez Lopez said that as a first-time candidate she lacked name recognition and money. She said she discussed alliances with several candidates, including Penman, before joining him. They have known each other for 35 years, said Penman, who has held the office 24 years.

Sanchez Lopez is a city planning commissioner and works for the San Bernardino County Department of Public Health.

Those who oppose Penman consider him a power-grabber and empire-builder, and they worry that he would try to gain influence in the city clerk’s office if both win. The city clerk runs local elections and is the keeper of public records, among other duties.

“You would have an alliance that certainly would create the perception in the public that both offices are not independent, that they are working in conjunction with each other,” said David McKenna, Penman’s challenger for city attorney.

Penman responded that Sanchez Lopez — “one of the most honest people I have ever met,” he said — told him from the beginning that she would not do him any favors.

“Miss Lopez and I are the only two being open in public about our support for one another,” Penman said. “The mayor (Pat Morris) is out putting up signs for Mr. McKenna. Jim Smith and other strong supporters of the mayor have been escorting (city clerk candidate) Esther Jimenez around town, introducing her.”

LOVERIDGE CITY HALL?

What a difference a week makes. After enthusiastically supporting a proposal to rename Riverside City Hall for Mayor Ron Loveridge when it came up Oct. 4, Councilman Steve Adams now says it’s “not the time” to consider the change.

The proposal, which the council will take up again Oct. 25, would honor the mayor’s 32 years of service by dubbing the seat of city government the Ronald O. Loveridge Riverside City Hall when he retires in 2012. The idea came from a private committee of citizens and officials, which ruffled the feathers of some residents.

Several council members, including Adams, initially were in support, but when two members wanted more time to vet it with the public, the others agreed to a delay. Adams’ position has apparently evolved since then.

Here’s what Adams said on the dais Oct. 4: “There is no person more deserving of this honor than Ron Loveridge. … If two weeks is what it takes I’ll wait two weeks, but I guarantee you in two weeks my vote’s going to be absolutely yes.”

And here’s his response at a Wednesday forum: “Now is not the time to ask that question. He’s still in office. … The people need to decide, ‘How do we say thank you to Ron Loveridge (for) your 30 years,’ and I don’t think a committee has that authority to do it. It needs to go to the people.”

FINDING BILL POSTMUS

Former San Bernardino County supervisor and assessor Bill Postmus may be a hard man to track down. Except when he must appear at a scheduled court hearing.

As a result, it’s where process servers come to hand him. Friday was no different.

Postmus was sitting in the front row of a San Bernardino County courtroom waiting for a routine hearing — his sentencing got delayed until March — when a man in light-colored blazer approached him and handed over an envelop of paperwork.

Postmus had been served again. In this case, Postmus said, a subpoena from the attorney representing former County Administrative Officer Mark Uffer, who is suing the county for wrongful termination.

LEAL FACES POSSIBLE FINE

To read entire story, click here.

Former San Bernardino County supervisor and assessor Bill Postmus.

BY DUANE W. GANG
STAFF WRITER
dgang@pe.com

Published: 14 October 2011 09:49 PM

An attorney for a former San Bernardino County assessor’s employee requested Friday that prosecutors compel Bill Postmus to submit to an interview with a defense team investigator.

But attorneys for Postmus, a former county supervisor and assessor, told a judge that they have advised their client not to agree to the interview.

“I have advised my client to keep his interviews to a minimum with any third party,” Postmus’ attorney Steven Levine said.

Postmus pleaded guilty in March to taking part in a conspiracy involving bribery and extortion that resulted in his vote for the county’s controversial $102 million legal settlement with developer Colonies Partners. He is cooperating with authorities and was in court Friday for sentencing, which was delayed until March 29.

At the hearing, Deputy Public Defender Eric Teti, an attorney for Greg Eyler, a former taxpayer advocate in the assessor’s office, said Postmus has information that could help Eyler’s defense.

To read entire story, click here.

Joe Nelson, Staff Writer
Created: 10/08/2011 08:36:40 PM PDT

Grand Jury testimony given by Rancho Cucamonga developer Jeff Burum in 2009 could prove beneficial to his defense and should have been provided to a criminal grand jury in April, according to Burum’s attorney.

The transcripts, released last week, detail Burum’s March 2009 testimony before the county’s civil Grand Jury in which he described how attorneys for his firm, Colonies Partners LP, impeached nearly every witness called by San Bernardino County’s lawyers in the months leading up to the county’s decision to settle with Colonies.

In testimony, Burum said attorneys representing the county were giving the Board of Supervisors bad advice and telling them they were winning in court despite evidence to the contrary, according to the 130-page transcript.

“It is fundamentally unfair and, in our view, contrary to the law, that the grand jury was not provided with copies of Mr. Burum’s testimony prior to being asked to return the indictment,” Burum’s attorney, Stephen Larson, said in a telephone interview.

None of Burum’s 2009 testimony was provided to a special criminal grand jury, which indicted Burum and three former county officials, including former Colonies consultant Jim Erwin, in May on charges of conspiracy, bribery and conflict of interest, among other charges. Prosecutors allege the county’s landmark $102 million settlement with Colonies Partners in November 2006 was tainted by bribery and extortion. A federal investigation is under way as well.

Five of the seven charges against Burum, including all bribery-related charges, were subsequently dismissed after a judge determined the criminal statutes used to charge Burum were either erroneously applied or the statute of limitations had lapsed for charging Burum with such crimes. Judge Brian McCarville also dismissed one felony count of misappropriation of public funds against the other three defendants – former county Supervisor Paul Biane, former assistant assessor and union boss Erwin and Mark Kirk, former chief of staff for Supervisor Gary Ovitt.

During his 2009 testimony, Burum laid out his interpretation of the nearly five-year legal battle over who was responsible for flood-control improvements at Colonies’ Upland development, which resulted in two Superior Court rulings in the developer’s favor.

“I’m going, `Are they in the same courtroom I’m in, because they’re getting killed every day?”‘ Burum said during his testimony.

He said Colonies made strong headway during the 2006 trial, and the county resorted to having a witness go on the stand and attack his character.

Burum said what made him angriest – when he broke off communication with county supervisors – was when the county forced him to build a flood control basin on Colonies’ property with enough storage capacity to protect residents from a 100-year flood, then reversed its position after the trial court ruled the basin’s construction was the county’s responsibility.

On appeal, the county unsuccessfully argued that the basin was not needed, and that its existing earthen berm easement was sufficient. The county requested construction on Colonies’ property be halted until the conclusion of litigation, a move Burum said was an attempt to bankrupt Colonies and force and end to the lawsuit.

The judge denied the county’s motion for a stay on the construction of the basin, allowing Colonies to proceed with the second phase of its residential development, Colonies at San Antonio.

Settlement encouraged

As the trial moved forward, so did settlement talks between the county and Colonies’ attorneys. Burum said during his testimony that he pushed to settle the lawsuit for a discounted value, despite what he said could have been upwards of a $750 million judgment that could have bankrupted the county had it lost to in court.

Though initial damage estimates by Burum’s camp ranged between $250 million to more than $300 million, efforts were under way in 2006 to change state law so that when the government abused a private property owner the government was held to the same standards as the private sector. As to damages, that would mean three times the amount of whatever the jury awarded.

“So … if we continued down the road at ($250 million), the verdict against the county could be a $750 million verdict against the county, which would bankrupt the county,” Burum said during his testimony. “Everyone in political circles also knew this. This was a hotly contested issue.”

Holiday in New York

Much of Burum’s testimony was spent justifying his relationship with Erwin and a January 2007 trip to New York City, where Burum treated Erwin and Riverside publicist Patrick O’Reilly, whom Burum also referred to as his best friend, to a night on the town. Prosecutor Lewis Cope referred to the trip as a “holiday in New York.”

To read entire story, click here.

The Colonies figure says agents crippled his firms and took attorney documents. Feds say no privileged papers were
BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 07 October 2011 10:19 PM

An attorney for Rancho Cucamonga developer Jeff Burum urged federal officials to return material seized during a raid last month and accused them of taking documents that are protected by attorney-client privilege.

Stephen Larson, Burum’s attorney, filed motions with the U.S. District Court in Riverside. They were made available this week.

The confiscation of computers from the Rancho Cucamonga office of Burum’s firm, Diversified Pacific, has “paralyzed and devastated the day-to-day operations of more than two dozen business entities,” he said in court documents. Most of the businesses are spin-off companies for different Burum projects.

Larson said he maintains a “war room” at Burum’s office and alleged that federal agents violated Burum’s civil rights by searching the attorney’s office there and removing documents that are privileged.

In court documents, officials with the U.S. Attorney’s office said they took precautions to ensure that no privileged material was taken.

Federal Bureau of Investigation and Internal Revenue Service agents served search warrants on nine locations with ties to the Colonies Partners corruption probe on Sept. 15 including Burum’s home, office and a nonprofit company he founded.

Investigators also searched the homes of former San Bernardino County Supervisor Paul Biane, former assistant assessor Jim Erwin, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt. They also searched the Riverside office of public relations consultant Patrick O’Reilly and the Fontana home and business of former state Sen. Jim Brulte.

Officials have declined to comment on the investigation, but search warrants included as part of Larson’s motion show that federal agents sought information related to San Bernardino County’s $102 million settlement with Burum’s company, Colonies Partners.

The November 2006 agreement, reached following a four-year legal battle over the firm’s Upland housing and commercial development, is the subject of a state and local corruption investigation in which Burum, Erwin, Kirk and Biane are facing conspiracy and bribery-related charges. All four have pleaded not guilty. The state attorney general and county district attorney’s office have declined to comment on the federal investigation.

According to the warrants for Burum’s office and home, federal official sought all records and documents related to the Colonies litigation and involving Biane, Erwin, Kirk, Brulte and O’Reilly. Brulte and O’Reilly, who served as consultants for Burum during the legal battle, have not been charged with any crimes.

Investigators also sought records involving former supervisor and assessor Bill Postmus and former assessor’s employee Rex Gutierrez.

Postmus pleaded guilty in February to 15 felonies, including accepting a bribe. He is cooperating with local officials. Gutierrez, a former Rancho Cucamonga councilman, was convicted last year on charges of conspiracy, grand theft and filing a false document and is serving a two-year, eight-month sentence in state prison. In his trial, prosecutors said Postmus gave Gutierrez a job at the assessor’s office with few duties at Burum’s request.

To read entire story, click here

Joe Nelson, Staff Writer
Posted: 10/06/2011 07:11:55 PM PDT

Senior state Assistant Attorney General Gary Schons will retire at the end of the month and will begin a new job at the San Diego County District Attorney’s Office, officials from both offices said.

San Bernardino County Assistant District Attorney Jim Hackleman also is retiring. His last day is Friday.

Schons and Hackleman oversaw the prosecution of Rancho Cucamonga developer Jeff Burum and three former county officials in a sweeping corruption scandal tied to a $102 million legal settlement between the county and Burum’s development consortium, Colonies Partners LP. In a joint prosecution, the District Attorney’s and state Attorney General’s offices allege the settlement was tainted by bribery and extortion.

Burum and the other three defendants – former county Supervisor Paul Biane, former assistant assessor Jim Erwin and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, deny any wrongdoing.

On Nov. 18, Schons will begin his new job as Senior Advisor of Law and Policy in the appellate division of the San Diego County District Attorney’s Office.

“Gary will be an incredible asset to the office of the District Attorney and will greatly contribute to the outstanding statewide reputation of our Appellate Division,” San Diego County District Attorney Bonnie Dumanis said in an e-mail to her staff on Sept. 15.

Dumanis noted in her e-mail that Schons is one of the premiere experts in the area of appellate law, having headed the appeals, writs and trials section of the Attorney General’s criminal division in San Diego.

During his 35-year career at the Attorney General’s Office, Schons tried felony cases in the state and federal courts and argued cases in the state Supreme Court, Ninth Circuit Court of Appeals and in appellate courts throughout the state.

Schons’ replacement has yet to be announced.

At the San Bernardino County District Attorney’s Office, Supervising Deputy District Attorney Michael Fermin will replace Hackleman as Assistant District Attorney, but the supervisory function of the office’s Public Integrity Unit, which Hackleman oversaw, will be taken over by Assistant District Attorney Dennis Christy, said Chris Lee, office spokesman.

To read entire story, click here.

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 05 October 2011 10:00 PM

During a bitter four-year legal battle with San Bernardino County, Rancho Cucamonga developer Jeff Burum was frustrated that county supervisors weren’t getting the real truth as he saw it, so he had his friend Jim Erwin act as an unofficial liaison who could bypass attorneys and deliver messages directly to them, according to testimony Burum provided to a grand jury.

The Board of Supervisors agreed in November 2006 to pay Burum’s company, Colonies Partners, a $102 million settlement over a dispute involving Burum’s commercial and housing development, Colonies Crossroads in Upland.

Two months later, Burum rewarded Erwin and Riverside public relations consultant Patrick O’Reilly for their help in obtaining the settlement, by providing them with a lavish trip to New York City, expensive watches and the services of Asian masseuses, Burum said during two days of testimony in March 2009.

“It’s a thank you compensation for all you guys have done,” he said, referring to Erwin and O’Reilly. “I just — my partner just got a hundred million dollars.”

The 129-page transcript, unsealed recently by a Superior Court judge and obtained Wednesday by The Press-Enterprise, offers the first extended comments by Burum on the case in which he and three former county officials are facing criminal charges.

The district attorney and state attorney general allege that the settlement was obtained through a conspiracy involving $400,000 in bribes and extortion. Prosecutors and witnesses in a separate criminal grand jury proceeding earlier this year described Erwin’s role in more menacing terms, as that of an enforcer for Burum who cajoled and threatened supervisors to vote in favor of the deal.

Erwin, a former assistant assessor and former chief of staff to Supervisor Neil Derry, was then head of the influential Safety Employees Benefit Association, which represents sheriff’s deputies.

That grand jury returned a 29-count indictment in May against Burum, Erwin, former Supervisor Paul Biane, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt. They face conspiracy and bribery-related charges.

All four have pleaded not guilty. A judge has since dismissed five of the seven counts against Burum and one count each against the other three.

At the time Burum testified, Erwin was facing charges over allegations he failed to report gifts from Burum that included the trip and a $12,675 Rolex Daytona watch. Prosecutors did not raise criminal allegations over the Colonies settlement until February 2010 when Erwin and Bill Postmus, a former supervisor and assessor, were indicted on conspiracy and bribery charges.

Postmus has since pleaded guilty to 15 felonies including accepting a bribe; he is cooperating with prosecutors.

Burum’s testimony — under questioning by Deputy District Attorney Lewis Cope — focuses mainly on the New York trip and what the nature of Erwin’s role was during the litigation of the Colonies dispute, an issue on which he and Cope go back and forth at length.

Burum said Erwin got involved as a friend who agreed to communicate directly to supervisors. Burum said he wanted supervisors to get information he felt their attorneys weren’t sharing with them.

“I was feeling very abused through this process and didn’t understand why, frankly, people that had been my political friends weren’t solving this,” Burum said. “Why were they listening to their attorneys and staff when it was, in my opinion, a black-and-white issue.”

Burum said Erwin spoke regularly to four of the supervisors — Biane, Postmus, Ovitt and Josie Gonzales — but not then-Supervisor Dennis Hansberger, who opposed the deal. The board eventually voted 3-2 for the settlement with Biane, Postmus and Ovitt in favor.

County attorneys, including three law firms that resigned rather than OK the settlement, testified during the criminal grand jury that they repeatedly advised supervisors against a deal even as Postmus and Biane pushed for a settlement.

Burum said Erwin’s involvement began in 2004 or 2005 and involved sitting through part of the civil trial in 2006, spending hundreds of hours on the case. But the two never made any formal arrangement for Erwin to be compensated for his help.

To read entire story, click here.

Joe Nelson, The (San Bernardino County) Sun
Posted: 10/04/2011 01:59:35 PM PDT

FBI agents violated Rancho Cucamonga developer Jeff Burum’s civil rights and lied when they said they did not search his attorney’s office, according to a motion filed Monday in U.S. District Court in Riverside.

Burum’s attorney, Stephen G. Larson, is demanding that all of Burum’s property seized during the Sept. 15 raid by FBI and IRS agents immediately be returned to him.

The warrants were served at nine locations in San Bernardino and Riverside counties in connection with a county corruption scandal involving allegations of bribery, extortion and fraud, according to the federal search warrant.

During a search of offices at Diversified Pacific, Burum’s development company in Rancho Cucamonga, where several other business offices are located, federal agents repeatedly searched Larson’s office, according to Larson’s motion.

But FBI Agent Jonathan Zeitlin, in a written declaration to the court, said agents never searched Larson’s office, an assertion Larson calls “absolutely false.”

“Security videotape from Diversified Pacific shows agents entering Mr. Larson’s office 12 times, opening cabinets, and apparently examining file cabinets,” according to the motion.

Zeitlin also stated in his declaration that special agents Anthony Montero and Kristin Almeda did a walkthrough of Larson’s office, in Larson’s presence and with Larson’s consent.

Larson alleges that, too, is a lie.

“Mr. Larson was never asked to give, and never gave, consent . . .to enter and/or to search his law office at Diversified,” the motion states.

When Larson arrived at his office the day of the search, Montero falsely told him that FBI agents had conducted only a security sweep of his office and placed a “do not search” sign on the door, according to the motion.

Zeitlin and Montero are both attorneys, and Zeitlin is a former Georgia prosecutor.

FBI spokeswoman Laura Eimiller declined comment Tuesday, saying the investigation is ongoing and the warrants remain under seal.

The allegations against Burum stem from a $102 million legal settlement between the county and Burum’s development consortium, Colonies Partners LP, in November 2006. Burum and three former county officials are already facing criminal charges at the state level, in which prosecutors allege the landmark Colonies settlement, which ended nearly five years of heated legal battle over flood control easements at the developer’s 434-acre residential and commercial development in Upland, was tainted by bribery and conspiracy.

During the Sept. 15 raid, federal agents also served warrants at the homes of former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin, and Mark Kirk, former chief of staff for Supervisor Gary Ovitt.

To read entire story, click here.

Postmus

Joe Nelson, Staff Writer
Posted: 09/29/2011 09:38:47 PM PDT

The attorney for Bill Postmus is concerned that his client, who is cooperating with state and local prosecutors in their investigation of San Bernardino County’s $102 million legal settlement with a Rancho Cucamonga developer, could be in legal jeopardy from a federal investigation into the deal.

The former county supervisor’s name appears in a federal search warrant served Sept. 15 by roughly 100 FBI and IRS agents in San Bernardino and Riverside counties.

The FBI and IRS are investigating allegations of bribery, extortion and fraud in connection with the record settlement with Rancho Cucamonga developer Colonies Partners LP, according to the warrant.

Stephen Levine, Postmus’ attorney, said he contacted prosecutor Lewis Cope, who heads the District Attorney’s Public Integrity Unit, last week to discuss the federal investigation and whether state and local prosecutors have some kind of agreement with the FBI in which Postmus would be immune from federal prosecution. The two have yet to discuss the matter.

“If there is an agreement between the three agencies, they haven’t informed me as of yet,” Levine said. “We don’t know the length and breadth of the federal investigation, and obviously I’m concerned it’s going to continue to add to Mr. Postmus’s legal troubles.”

He said the federal investigation puts him and Postmus in an awkward position.

“At this point in time, we’re still in a cooperative mode with Mr. Cope and the A.G. (attorney general),” Levine said. “We intend to honor our contract, but of course we have concerns that if the federal investigation comes to fruition, is Mr. Postmus a person of interest?”

District attorney’s spokesman Chris Lee declined to comment.

FBI and IRS agent served warrants at the homes and businesses of former state Sen. Jim Brulte, Rancho Cucamonga developer Jeff Burum, former assistant assessor Jim Erwin, Riverside publicist Patrick O’Reilly, and Mark Kirk, the former chief of staff for Supervisor Gary Ovitt.

Federal agents sought various documents and electronic media to show financial transactions for evidence of payment of money or other things of value to public officials in exchange for performance of official acts. They also sought evidence of bribery, extortion or fraud, including “cash in an amount or concealed in such a manner as to indicate it is proceeds of criminal activity,” according to the search warrant.

To read entire story, click here.

Cook

Thursday, September 29, 2011 – 10:30 a.m.

State Assemblyman Paul Cook (R-Yucca Valley) has thrown his hat into the ring for San Bernardino County Supervisor.

Cook joins incumbent supervisor Neil Derry and San Manuel Band of Mission Indians Chairman James Ramos to make a current field of three.

Ramos has grown increasingly quiet over the past few weeks and rumors have surfaced that he’s being pushed to run for Congress.

However, the partisan breakdown of the local congressional districts aren’t as favorable for him being a registered democrat.

In Cook’s press release he touts his passage of legislation requested by San Bernardino County supervisors, former supervisor Paul Biane in particular, to allow for the creation of a second grand jury panel to handle all of the corruption bogging down the single grand jury system.

Cook also says it’s time San Bernardino County had a clean break from corruption.

That’s it!

Obviously a jab at Derry who earlier this year pleaded guilty to a misdemeanor campaign finance violation.

What Cook didn’t bother saying is that his touted grand jury legislation was never implemented and has been deemed costly and burdensome by many, including judges and prosecutors.

Other than the aforementioned bill, Cook has accomplished very little in his nearly five years in Sacramento and is now looking for a new paycheck.

Expect strong backing for Cook from Second District Supervisor Janice Rutherford.

Rutherford, who has become nothing more than a press queen with a series of non-sensical press gathering proposals, can’t stand Derry.

But, in actuality, Rutherford has been pretty successful in garnering positive press, while accomplishing very little in her first year in office.

A mark of a well-trained politician.

Back to Cook.

He has roughly $35,000 in his Assembly committee, enough for the filing fee and ballot statement, and has struggled to garner support from his local community due to Derry’s hard working and high visibility. Ramos and Derry have cornered several endorsements leaving Cook to collect the scraps.

What’s troubling for Cook is the chorus of people not wanting him to run against Derry.

Sources tell InlandPolitics that Cook has been privately frustrated over the issue.

Also, the recent events at San Bernardino International Airport involving the FBI, will likely play heavily into weakened political activity in the East Valley as certain players likely to be questioned run for cover.

One point Cook can’t run from? His crediting of former County Supervisor and Assessor Bill Postmus for his election to the Assembly in 2006.

Developing…..

San Bernardino County District Attorney Michael Ramos announces the indictment of Paul Biane, former of the Board of supervisors, Mark Kirk, former Chief of Staff for Board member Gary Ovitt, James Erwin, former Chief of Staff for Board member Neil Derry and Jeffrey Burum, General Partner of Colonies Partners, L.P., by the criminal Grand Jury during a press conference at the District Attorneys office on Tuesday, May 10, 2011. Al Cuizon/Staff Photographer (Sun file photo)

Mike Cruz, Staff Writer
Posted: 09/27/2011 12:07:51 PM PDT

REPORTS FROM COURT: Get updates as they happen. Follow @SBcourts to keep up with the latest developments

Alleging a conflict of interest exists, the attorney for Rancho Cucamonga developer Jeff Burum wants the district attorney recused from prosecuting his client.

The alleged conflict stems from conversations the pair had before conspiracy charges were filed against Burum, said attorney Stephen Larson.

Larson also said Tuesday in San Bernardino Superior Court that District Attorney Michael A. Ramos had appointed Burum to his advisory committee.

The relationship between the pair, says Larson, results in a conflict for Ramos in the prosecution of Burum.

“It’s a very serious issue that we want to explore,” Larson told Judge Michael A. Smith during proceedings in San Bernardino Superior Court.

Many conversations occurred between the developer and district attorney, some of them about this case, according to the defense.

Prosecutors were ordered to turn over some of the documents Larson has sought in his bid to show that such a conflict exists.

“The judge granted our motion to compel District Attorney Mike Ramos to produce information showing potential conflicts of interest by Ramos in his prosecution of Jeff Burum,” the developer’s spokesman, Ric Grenell, said later, by telephone.

Larson told Judge Smith he’s prepared to file a motion of conflict of interest.

This is not the first time the issue has been raised in this case. But prosecutors say no conflict exists.

“I don’t expect them to drop this issue,” Deputy District Attorney Lewis Cope told the court. “Nor do I want them to drop this issue.”

Burum and three county figures – former Supervisor Paul Biane; Mark Kirk, former chief of staff for Supervisor Gary Ovitt; and former Assistant Assessor Jim Erwin – face conspiracy and fraud charges in connection with the county’s landmark $102 million settlement with Colonies Partners LP in 2006.

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Special Section: San Bernardino Co. Probe

A San Bernardino County Superior Court judge on Tuesday ordered prosecutors to turn over additional evidence to defendants in a corruption investigation, including information their attorneys claim will show that the district attorney has a conflict of interest.

Judge Michael Smith made the ruling during a court appearance by Rancho Cucamonga developer Jeff Burum, former Supervisor Paul Biane, former Assistant Assessor Jim Erwin and Mark Kirk, former chief of staff to Supervisor Gary Ovitt.

The four face conspiracy and bribery-related charges over a $102 million settlement the county approved in November 2006 with Burum’s company, Colonies Partners, which prosecutors allege was a result of bribery and extortion.

The four defendants have pleaded not guilty.

Burum’s attorney, Stephen Larson, said while prosecutors have turned over some evidence to defense attorneys, they still have yet to receive many relevant documents.

Among them are some of the interviews with several figures including Bill Postmus, the former supervisor and assessor, and former Assistant Assessor Adam Aleman. Both have pleaded guilty to criminal charges and are cooperating with prosecutors.

Deputy District Attorney Lewis Cope said he believes prosecutors have turned over everything requested but will go back over the evidence to ensure that they have done so.

Larson also is seeking information to support his contention that District Attorney Mike Ramos has a conflict of interest in the case because he had appointed Burum to an advisory council in the past and received campaign contributions from him.

Larson said Ramos advised Burum to testify before a grand jury proceeding in 2009, telling him he was only a witness and not a target.

Smith denied some of the requests, describing them as overly broad or vague, but agreed to others, including one seeking any statements by Ramos to Burum regarding his grand jury testimony.

Cope called the request “an irrelevant fishing expedition” but Smith said he believed any such assurances made by prosecutors could be relevant.

To read entire story, click here.

Uffer

10:00 PM PDT on Thursday, September 22, 2011

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

A San Bernardino County Superior Court judge is allowing former county administrator Mark Uffer to go forward with his wrongful termination lawsuit, finding that he has enough cause to argue that he was dismissed for cooperating with law enforcement.

Judge Donald Alvarez rejected the county’s request to dismiss the lawsuit in a Tuesday ruling.

County spokesman David Wert said the county had not seen the ruling, but “such rulings would be routine and expected and would have no impact on the county’s case. The county has strong defenses to Mr. Uffer’s claims.”

Uffer, who was county administrative officer for five years, was fired in November 2009 on a 3-2 vote. In a lawsuit filed in May 2010, he claims he was fired in retaliation for cooperating with corruption investigations.

Supervisors said at the time that the dismissal was made for no single cause but because they were seeking different leadership.

Bill Postmus, the former assessor and supervisor, and Jim Erwin, former assistant assessor and former chief of staff to Supervisor Neil Derry, are among the officials who Uffer said he provided information on to law enforcement officials.

In March, Postmus pleaded guilty to 14 felonies including bribery and conspiracy after facing charges for almost two years. Erwin is also among several former county officials facing corruption charges. He has pleaded not guilty.

To read entire story, click here.

By Mike Cruz Staff Writer
Posted: 09/21/2011 12:38:23 PM PDT

Former taxpayer advocate Gregory Eyler, one of several people suspected of political malfeasance and fraud in the San Bernardino County Assessor’s Office, has been scheduled for a jury trial in January.

Eyler appeared for a pretrial hearing on Wednesday before Judge Michael Smith in San Bernardino Superior Court.

The trial was set to start Jan.30. Smith said he was “treating this as a firm date.” An assignment calendar date, to ensure the case is ready for trial, was set for Jan.27.

Eyler, 35, returns to court Oct.21 for another pretrial hearing.

Smith announced that the January trial date was firm if the case hadn’t been resolved – for example, by a plea bargain – in October. Neither side has publicly discussed whether any settlement is in the works.

Eyler’s lawyer, Deputy Public Defender Eric Teti, said a motion to dismiss the charges likely will be filed between the October and January court dates.

Eyler faces two felony charges stemming from county investigations at the Assessor’s Office in 2008 while former Assessor Bill Postmus was at the helm.

Eyler was charged with one count of conspiracy and one count of presenting a false claim, according to court records.

To read entire story, click here.

BY DUANE W. GANG and IMRAN GHORI
STAFF WRITERS
dgang@pe.com | ighori@pe.com

Federal agents descended upon Riverside and San Bernardino counties on Thursday, serving search warrants on nine locations with ties to the Colonies Partners corruption probe.

Federal Bureau of Investigation and Internal Revenue Service agents carted away computers, dozens of boxes of documents and other evidence from homes and businesses in five cities. Locations included the home and office of a former state senator and the offices of a Riverside public relations firm.

It is unclear exactly what the FBI and IRS agents sought, since the affidavits in support of the search warrants remain under seal.

But the locations searched all have ties to people involved in the state and local investigation of San Bernardino County’s $102 million settlement with developer Colonies Partners. Local prosecutors say the settlement was obtained through a conspiracy of bribery and extortion. The defendants face more than 20 charges in total.

The federal investigation is separate, and state and local authorities were not involved in Thursday’s searches, according to officials with knowledge of the investigations.

Federal agents searched Diversified Pacific in Rancho Cucamonga. Jeff Burum, co-managing member of Colonies Partners, helped start the company.

Defense attorneys who have seen the warrants said Thursday that federal agents are seeking information similar to that used by local and state prosecutors in building their case.

A host of reasons could have prompted the FBI and IRS to get involved, said Loyola law professor Laurie Levenson, a former federal prosecutor.

Local authorities could have referred the matter to them, or federal officials may also see a bigger case or felt the current prosecution has not been sufficient, Levenson said.

“The feds have more resources and experience in pursuing these types of cases,” she said.

San Bernardino County District Attorney Mike Ramos declined to comment.

The federal agents searched:

The home of Jeff Burum, co-managing member of Colonies Partners, and his office at Diversified Pacific, a development company he helped start. National Community Renaissance, a nonprofit housing company he founded, also was searched. All three are in Rancho Cucamonga. Burum faces charges of conspiracy and aiding and abetting conflict of interest in the state case. He has denied wrongdoing and pleaded not guilty.

The Fontana home and business of former state Sen. Jim Brulte. Brulte is a partner with California Strategies, a Sacramento-based government and public affairs firm.

Brulte served in the Legislature from 1990 through 2004 and led Republican caucuses in both houses. He worked for Colonies during the settlement talks in 2004 and 2005. He has not been charged with a crime.

The Riverside business of Patrick O’Reilly. O’Reilly owns O’Reilly Public Relations and worked with Burum during the settlement negotiations. O’Reilly has not been charged with a crime but was an unnamed, uncharged co-conspirator in a February 2010 case related to the Colonies case.

The Rancho Cucamonga home of Paul Biane, a former two-term San Bernardino County supervisor. Biane voted for the $102 million settlement in November 2006. In the state case, he faces seven felony charges including bribery and perjury and has pleaded not guilty.

The Highland home of Jim Erwin, a former assistant assessor and former chief of staff to Supervisor Neil Derry. Erwin was a consultant for Colonies Partners at the time of the settlement. He faces 16 felony state charges and has pleaded not guilty.

The Hesperia home of Mark Kirk, the former chief of staff to Supervisor Gary Ovitt. Ovitt voted for the settlement. Local prosecutors say Kirk secretly controlled a political action committee that received $100,000 from Colonies. Kirk faces seven state charges and has pleaded not guilty.

‘No Wrongdoing’

In May, a San Bernardino County grand jury returned a 29-count indictment against Burum, Biane, Erwin and Kirk. Since then, the four have pleaded not guilty and were successful in getting a number of charges dismissed.

Burum’s attorney, Stephen Larson, said it’s difficult to know the exact nature of the investigation until they see the affidavit, but the warrant appears to indicate that “it’s certainly related in large measure to the allegations raised in the state case.”

“We actually welcome the involvement of the FBI and federal authorities in this case,” Larson said. “We believe that once they thoroughly investigate this case they will find there was absolutely no wrongdoing by any of the subjects of the investigation, including Mr. Burum.”

Paul Grech, an attorney for Kirk, said his client has done nothing wrong.

“The subject matter of the search warrant is the same subject matter that we have been litigating in court, in which we have been getting charges thrown out of court,” Grech said.

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