Congressman Joe Baca left. County Supervisor Josie Gonzales right.

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 04 May 2012 06:48 PM

Rep. Joe Baca, D-Rialto, is backing San Bernardino County Supervisor Josie Gonzales’ opponent in the June 5 election in a sign of increased tensions between the one-time allies.

In a campaign news release Friday, May 4, Baca took aim at Gonzales, accusing her of failing to “live up to Democratic principles by supporting candidates that were part of the county corruption scandal.” He also described her as having “lost touch with the everyday needs of families.”

Baca cited his dissatisfaction with Gonzales as his reason for endorsing Silvia Marroquin, a Fontana community organizer and one of two candidates running against Gonzales in the 5th supervisorial district. Marroquin did not return a call for comment Friday.

Gonzales, who endorsed state Sen. Gloria Negrete McLeod, D-Chino, in the 35th Congressional District where Baca is also running, said she was not surprised that Baca isn’t supporting her.

“It’s a bit amusing how much attention he pays to what I do,” she said. “While it’s wonderful that the congressman is taking such an interest in local elections, what the county and the cities really need is his help in Washington.”

Baca’s statement came a week after the county Democratic Central Committee narrowly defeated a resolution urging Democrats not to support Gonzales and declined to endorse her. Both he and some committee members said she had failed to live up to Democratic principles.

Baca supported Gonzales when she first ran for supervisor in 2004 and in her races for Fontana City Council prior to that.

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A San Bernardino Superior Court judge on Friday rejected a motion to dismiss a case against a High Desert developer accused of lying to the Grand Jury about his role in a political action committee.

Judge J. David Mazurek denied the motion filed on behalf of John Dino DeFazio, 52, of Apple Valley, who stands charged with six felony counts of perjury. A pretrial hearing is now scheduled for June 22.

In his motion filed last month, DeFazio’s attorney, Richard Ewanisyk argued prosecutors are relying on uncorroborated witness information and therefore cannot charge his client with the crimes.

DeFazio, however, has been able to corroborate his assertion that he controlled all activities associated with the Inland Empire PAC. The PAC’s bylaws showed DeFazio as chairman and High Desert developers Mike Gallagher and Jeff Bentow as board members. Bentow and Gallagher, however, denied having any knowledge they were listed as members of the PAC, according to the motion.

State and local prosecutors allege former county Assessor Bill Postmus secretly controlled the PAC. Postmus, a Rancho Cucamonga developer and three former county officials have been linked to a sweeping county corruption probe in which prosecutors allege a land rights lawsuit settled in November 2006 for $102 million was tainted by bribery and blackmail.

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Document: Read the amended complaint (.pdf file)

An attorney who filed a lawsuit seeking reimbursement for taxpayers of the $102 million settlement made by the San Bernardino County Board of Supervisors in 2006 with Rancho Cucamonga-based developer Colonies Partners LP has made slight amendments to his complaint.

Cory Briggs said he added some language to the complaint, which he filed in February in San Bernardino County Court, in order to fill in information that attorneys for the Colonies said was needed.

“We added some allegations to fill in some alleged gaps and even though we don’t think we needed to do that we did it just in an abundance of caution,” he said.

The suit alleges that because former Board of Supervisors Chairman Bill Postmus pleaded guilty in March to taking bribes while attempting to reach the settlement with the Colonies, he violated California Government Code Section 1090.

Code 1090 said public officials “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”

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Published: 20 April 2012 11:42 AM

A San Bernardino County Superior Court judge agreed Friday to lift bail for three former county officials and a developer facing corruption charges.

Judge Michael Smith agreed to allow the four men to remain free on their own recognizance as the case continues to remain in the pre-trial stage almost a year after the defendants were indicted.

Last May, a grand jury charged Colonies Partners co-managing partner Jeff Burum, former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt, with conspiracy and bribery-related charges.

They are accused of taking part in a conspiracy that led to a $102 million settlement paid by the county to Burum’s company in November 2006.

Burum’s defense attorney Stephen Larson argued that the defendants have proven they are not a flight risk with their regular appearances in court over the past year.

“These defendants have demonstrated they are very vigorously dedicated to staying here and proving their innocence,” he said.

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The lawyer for Apple Valley businessman John Dino DeFazio, a figure in a county corruption case, is seeking dismissal of the case, alleging lack of evidence. (Joe Nelson/Staff)

Joe Nelson, Staff Writer
Posted: 04/06/2012 01:20:31 PM PDT

SAN BERNARDINO – The attorney for an Apple Valley businessman linked to a sweeping San Bernardino County corruption case filed a motion Friday in Superior Court seeking dismissal of the case.

John Dino DeFazio, 52, is charged with six felony counts of perjury for allegedly lying to the county’s civil Grand Jury in 2009 about his involvement with a political action committee prosecutors allege was used to conceal a $100,000 bribe to former county Assessor Bill Postmus.

DeFazio was listed as chairman of the Inland Empire PAC established in February 2007. He told the Grand Jury in October 2009 that he controlled all activities associated with the PAC.

Prosecutors, however, allege Postmus had DeFazio and former Assistant Assessor Adam Aleman create the PAC and another, Conservatives for a Republican Majority, to conceal the alleged bribe from Rancho Cucamonga developer Jeff Burum.

Two checks, each totaling $50,000 and listing Colonies Partners LP as the payee, were deposited into the two PAC accounts in 2007. Burum is a co-managing partner of Colonies Partners.

Burum, a defendant in the corruption case, has denied any wrongdoing and maintains the contributions were an act of good faith – an attempt to rebuild bridges with county elected officials following a contentious legal battle over who was responsible for paying for flood control improvements at Colonies’ 434-acre residential and commercial development in Upland.

Postmus testified before a criminal grand jury last April that he was unaware that Colonies wanted to contribute money to the PACs until January 2007 – more than a month after the settlement was finalized. He told an FBI agent and federal prosecutors in October the same thing during an interview.

In November 2006, the county entered into a settlement agreement with Burum and Colonies Partners, agreeing to pay $102 million. Prosecutors allege the settlement was tainted by bribery.

In his motion filed Friday, DeFazio’s attorney, Richard Ewaniszyk, said DeFazio cannot be charged with the crimes because prosecutors are relying on uncorroborated witness information.

DeFazio, however, has been able to corroborate his assertion that he controlled all activities associated with the Inland Empire PAC. The PAC’s bylaws showed DeFazio as chairman and High Desert developers Mike Gallagher and Jeff Bentow as board members. Bentow and Gallagher, however, denied having any knowledge they were listed as members of the PAC, according to the motion.

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Sentencing was delayed today for former San Bernardino County assessor Bill Postmus./FILE PHOTO

IMRAN GHORI
ighori@pe.com
Published: 29 March 2012 10:36 AM

A San Bernardino County Superior Court judge Thursday delayed sentencing for former Assessor Bill Postmus on corruption charges until July 19.

Postmus pleaded guilty last year to taking part in a conspiracy involving bribery and extortion in exchange for his vote for the county’s controversial $102 million legal settlement with developer Colonies Partners.

As part of his plea deal he is cooperating with authorities and was a key witness in criminal grand jury proceedings that resulted in bribery and conspiracy related charges against Jeff Burum, co-managing partner of Colonies, former Supervisor Paul Biane, Jim Erwin, former assistant assessor, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt.

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Ryan Carter, Staff Writer
Created: 03/28/2012 07:23:04 PM PDT

Attorneys for developer Colonies Partners LP are seeking dismissal of a civil lawsuit that would force the developer to pay back a $102 million legal settlement to taxpayers.

Two citizens groups filed the lawsuit in February, arguing that an ongoing investigation into the settlement – which has resulted in four indictments and a guilty plea by a former county supervisor – voids the settlement and that the money should be returned to taxpayers.

In his reply to the lawsuit filed Wednesday, Colonies attorney Stephen Larson contended the citizens groups – the Inland Oversight Committee and Citizens for Responsible Equitable Environmental Development – do not have standing to file the lawsuit, that their legal argument is flawed and that the statute of limitations has lapsed.

“Plaintiff’s complaint fails because it is legally unsupported and untimely on its face,” Larson wrote in the reply.

The citizens groups’ lawsuit argues, essentially, that because the settlement was tainted by corruption, its proceeds should be returned to taxpayers.

Last May, a grand jury indicted Colonies co-managing partner Jeff Burum, former county Supervisor Paul Biane and former supervisorial chiefs of staff Mark Kirk and Jim Erwin. State and local prosecutors allege the four conspired to secure the settlement and that campaign contributions to political action committees secretly controlled the three supervisors who approved the settlement were, in fact, bribes.

Former Board of Supervisors Chairman Bill Postmus, who voted with Biane and Supervisor Gary Ovitt to approve the settlement, has pled guilty to bribery and conspiracy charges and is cooperating with prosecutors in return for a lighter sentence.

In a December interview with federal investigators, Postmus said that there was no specific agreement with Colonies for campaign contributions prior to settling the land-use lawsuit, though he acknowledged that Burum had promised future political support in the event the case was settled.

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BY RICHARD K. De ATLEY
STAFF WRITER
rdeatley@pe.com

Published: 16 March 2012 08:03 PM

Attorneys for Colonies case figure Jeffrey Burum have filed a motion that seeks to force prosecutors to hand over all material that could include evidence helpful to Burum in his defense.

The motion is necessary, defense attorney Stephen G. Larson said in the document, because he believes there is evidence that the San Bernardino County District Attorney’s office has not been handing over all such material in a timely way to the defense, despite several requests to do so.

He said prosecutors have “engaged in what appears to the defense as a game of ‘cat and mouse.’“

The Colonies case focuses on a $102-million settlement the county paid Rancho Cucamonga developer Colonies Partners in November 2006. Prosecutors contend the deal was a result of bribery and extortion.

Colonies co-managing partner Burum, former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt, face conspiracy and bribery-related charges.

In his motion, Larson pointed out the defense’s receipt in early January of the transcript of an Oct. 14, 2011 FBI interview with key prosecution witness, former County Supervisor Bill Postmus. In the transcript, Postmus described his continued addiction to methamphetamine during his settlement negotiations over his role in the case; it also revealed that Postmus doubted the truthfulness of another prosecution witness, Adam Aleman.

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By Joe Nelson
Created: 03/16/2012 10:56:10 AM PDT

Defense attorneys in a far-reaching San Bernardino County corruption case are seeking a court order to compel prosecutors to provide information on communications they have had with two key defendants in the case.

Attorney Stephen Larson, attorney for Rancho Cucamonga developer Jeff Burum, filed a motion Thursday in San Bernardino Superior Court alleging prosecutors have been nonresponsive and holding out.

During a brief hearing this morning in San Bernardino Superior Court, Judge Michael A. Smith set a new date of April 20 to hear Larson’s motion. Attorneys for the other three defendants joined in Larson’s motion.

It’s a dramatic turn of events since last month, when attorneys on both sides, i.e. Larson and prosecutor Lewis Cope, said the discovery process has been “very productive” and was wrapping up. The discovery process is when attorneys for both sides share with one another information they have gathered and plan to use at trial.

Burum, former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin, and Mark Kirk, former chief of staff for Supervisor Gary Ovitt, have all been charged in the case, which alleges they conspired with former Board of Supervisors Chairman Bill Postmus in 2006 to secure a $102 million settlement for Rancho Cucamonga investor consortium Colonies Partners LP in exchange for bribes. All four defendants deny any wrongdoing. Burum is a co-managing partner for Colonies Partners.

The Colonies settlement ended nearly five years of heated legal battle over who was responsible for building and paying for a 67-acre flood control basin at Colonies’ 434-acre residential and commercial development, Colonies Crossroads and Colonies at San Antonio, respectively, in Upland.

Postmus and former Assistant Assessor Adam Aleman, as part of their plea agreements with prosecutors, agreed to testify against the four defendants truthfully at trial in exchange for reduced charges. Postmus is also former county Assessor, and pleaded guilty in March 2011 to multiple charges in a companion corruption case alleging he abused his position as Assessor, using his office to bolster his political career. Aleman was also convicted in that case.

Following his arrest in June 2008, Aleman came forward with information he said he had on the Colonies’ settlement, which launched the criminal investigation into the settlement.

Postmus, a self-admitted methamphetamine addict, entered into a plea agreement with prosecutors in march 2011, agreeing to violate no laws. His plea agreement also stipulated he would be subject to commitment to a state Department of Corrections drug rehabilitation program if he was found to be abusing drugs.

In his motion, Larson argues the prosecution’s case turns on the testimony of Postmus and Aleman. But during an October interview with federal prosecutors and an FBI agent, Postmus admitted he was heavily addicted to methamphetamine during the Colonies settlement negotiations in 2006, and that he used the drug almost daily, characterizing the period as the peak of his addiction. He also said he had used methamphetamine a “couple dozen times” in 2011.

“He continued using methamphetamine after his arrest and conviction – during the entire period he has been cooperating with authorities in the Colonies investigation and prosecution,” Larson said in his motion.

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Postmus

By Joe Nelson, Staff Writer
Posted: 03/10/2012 03:03:31 PM PST

An admission by former San Bernardino County Assessor Bill Postmus to federal authorities that he used methamphetamine dozens of times in 2011 has a defense attorney in a far-reaching county corruption case questioning the tactics of prosecutors.

The admission came during an Oct. 14 interview with assistant U.S. attorneys Jerry Behnke and Joseph Widman and FBI agent Jonathan Zeitlin, when Postmus told the trio what he knew about an alleged corruption scandal state and local prosecutors are calling the biggest in county history.

It raises the question of whether Postmus may have violated a plea agreement he struck with state and local prosecutors in March 2011, which stipulated he was to violate no laws and could be committed to a state corrections drug rehabilitation program if he were found to be abusing drugs.

“Mr. Postmus’ admitted, extensive use of drugs both during and after the settlement negotiations, as well as during the period that he has been cooperating with and supervised by the prosecutors in this case, raises disturbing questions about his reliability and the conduct of the prosecution,” said Stephen Larson, attorney for Rancho Cucamonga developer Jeff Burum, a defendant in the corruption case.

Prosecutors allege a $102 million settlement between the county and Burum’s Rancho Cucamonga investor consortium Colonies Partners LP was tainted by bribery and extortion. The settlement, approved by the Board of Supervisors on a 3-2 vote on Nov. 28, 2006, ended a contentious land-rights lawsuit over who was responsible for building and paying for a flood-control basin at the Colonies’ 434-acre residential and commercial development, Colonies at San Antonio and Colonies Crossroads, respectively, in Upland.

In May, four people were indicted on multiple charges of criminal conspiracy, bribery and conflict of interest, among other charges, in connection with the Colonies case: Burum, former county Supervisor Paul Biane, former Assistant Assessor Jim Erwin, and Mark Kirk, former chief of staff for county Supervisor Gary Ovitt. All four deny any wrongdoing.

Under a proffer agreement, Postmus, who said he has struggled with methamphetamine addiction since the end of his first term as a county supervisor in 2004, told Behnke, Widman and Zeitlin what he knew about the alleged bribery case.

A proffer agreement, also referred to as a “queen for a day” letter, is a written agreement between federal prosecutors and individuals under criminal investigation that allows them to tell the government about their knowledge of crimes, with the supposed assurance that what they say will not be used against them in any later criminal proceedings.

When Behnke asked Postmus if he could recall the last time he used drugs, Postmus said it was the early part of 2011, when he purchased some methamphetamines to use by himself at home, according to the interview transcript.

During his testimony before a criminal grand jury in April, Postmus told Deputy District Attorney Lewis Cope he had been drug free for more than nine months. Zeitlin noted in a cover letter included in the October interview transcript that Postmus, in the six months prior to the interview, admitted to using methamphetamine roughly a “couple dozen times.”

Originally a defendant and faced with multiple felony charges in the Colonies case and a companion corruption case alleging he abused his elected position as county assessor, Postmus in March 2011 entered into a plea agreement with state and local prosecutors. He agreed to cooperate in the Colonies investigation and prosecution and to testify against the four defendants at trial in exchange for reduced charges.

At the time of his plea agreement, Postmus was facing three separate felony drug charges and multiple felony charges in the Colonies and Assessor’s Office criminal cases.

Postmus remains out of custody on his own recognizance.

Prosecutors decline to comment on the case, but believe their evidence is solid.

“In order to protect the integrity of the case and each defendant’s right to a fair trial, we are required to continue to reserve our comments for the courtroom,” said Christopher Lee, spokesman for the District Attorney’s Office.

In his cover letter included in the October interview transcript, Zeitlin also noted that during the first half of the interview, Postmus appeared “nervous and reserved,” doodling shapes on a notepad. After returning from a break, Postmus appeared visibly more animated and relaxed,” and his answers to questions provided significant detail and was far more conversational in tone.

Larson declined to comment on why Zeitlin may have felt that information was important to note.

“The significance of that information will be presented in the courtroom,” Larson said.

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Former San Bernardino County Assessor Bill Postmus

Published: 14 February 2012 06:04 PM

A look at crime in the Inland region, from a Rialto shooting to a cockfighting raid to the theft of the Storm mascot’s quad.

To view video, click here.

February 14, 2012 11:31 AM
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Natasha Lindstrom

SAN BERNARDINO • A judge ruled Tuesday that Apple Valley developer John Dino DeFazio will stand trial for allegedly lying to the grand jury, marking the latest legal development in the far-reaching Colonies corruption investigation.

DeFazio, 52, faces up to nine years in prison if convicted of six felony perjury counts for allegedly lying in 2009 about the administration of the Inland Empire Political Action Committee.

Though DeFazio was listed as chair of that PAC, prosecutors with the District Attorney’s office claim former San Bernardino County Assessor Bill Postmus was secretly controlling the PAC’s expenditures.

According to the prosecution, the Inland Empire PAC was used to funnel two $50,000 bribes from Rancho Cucamonga developer Colonies Partners LP to Postmus, in exchange for Postmus voting to help Colonies win a $102 million settlement from San Bernardino County over a flood control dispute. In the DA’s larger investigation, Colonies developers are accused of offering $400,000 in bribes to former county officials.

Judge Glenn Yabuno found there was enough evidence to hold DeFazio for trial on the second day of his preliminary hearing in San Bernardino court.

Deputy District Attorney John Goritz argued that Adam Aleman, former aide to Postmus, set up an email account in DeFazio’s name for the purpose of directing PAC expenditures on Postmus’ behalf.

Through copies of email exchanges and testimony by investigator Hollis Randles, Goritz tried to show it was well known that Postmus was running the PAC and that DeFazio lied to the grand jury to cover for him. Goritz brought up handwritten notations found in Postmus’ home and the Assessor’s office with “intimate details” about the PAC. He cited Randles’ testimony that often times Postmus would make a call about PAC business and hand the phone over to DeFazio, or Postmus would be on a conference call while DeFazio directed PAC actions.

Postmus told investigators he believed he had control of the PAC’s money after the roughly $93,000 in Colonies contributions were in the account, Randles testified. The PAC, which eventually had more than $300,000, made a $50,000 contribution toward Postmus’ personal campaign committee.

In DeFazio’s defense, Victorville attorney Richard Ewaniszyk argued that all contributions and expenditures were fully disclosed by the PAC. He pointed out DeFazio, at one point a close friend and real estate partner to Postmus, freely admitted to having many talks with Postmus and Aleman about candidates they liked or didn’t like. Ewaniszyk had called Betty Presley, treasurer of the Inland Empire PAC, to testify that it’s legal — and a common practice — for candidates to suggest other candidates for PACs to endorse.

Presley, who cut every check for the PAC, testified she wouldn’t have authorized a payment “without understanding that it was authorized by Dino.” There was no evidence to show DeFazio knew about some of the email exchanges presented by the prosecution, Ewaniszyk said.

One of DeFazio’s alleged lies was that two High Desert businessmen, Mike Gallagher and Jeff Bentow, were involved in the PAC as board members. The two men told investigators they knew nothing about the PAC’s administration.

“(DeFazio) lied about some very specific things, not about very general concepts,” Goritz said.

Ewaniszyk countered that Gallagher and Bentow, who made large contributions to the PAC, could be tempted to distance themselves from the corruption investigation. He called attention to an exhibit showing a $25,000 contribution with the denotation “care of” Gallagher.

“It’s easy to see why somebody wouldn’t want to be involved in this case, why there’s plenty of motivation here for people to not fess up to their true involvement,” Ewaniszyk said.

The defense attorney also attacked the credibility of Postmus and Aleman as key witnesses for the prosecution. Both men have taken plea deals after being charged with perjury, and Postmus has admitted to a methamphetamine addiction.

DeFazio, first arrested in February 2010, has denied all allegations. Last week he rejected a plea deal that could have left him serving 90 days in jail of a 180-day sentence. He’s set to return to court Feb. 23

Natasha Lindstrom may be reached at (760) 951-6232 or at NLindstrom@VVDailyPress.com.

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.

Bill Postmus

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 13 February 2012 09:50 PM

In an FBI interview former San Bernardino County Assessor Bill Postmus said he did not view a $100,000 campaign contribution from Colonies Partners as a bribe even though he expected to receive funds following a lawsuit settlement.

Defense attorneys are expected to use the interview, in which Postmus also admits to extensive drug use and a relapse last year, to undermine his credibility in the corruption case surrounding the $102 million settlement with the Rancho Cucamonga developer.

Postmus, who entered into a plea deal with prosecutors last March, was a key witness in criminal grand jury proceedings that resulted in bribery and conspiracy related charges against Jeff Burum, co-managing partner of Colonies, former Supervisor Paul Biane, Jim Erwin, former assistant assessor, and Mark Kirk, former chief of staff to Supervisor Gary Ovitt.

Prosecutors allege that the November 2006 settlement was a result of bribes, paid by Burum in the form of $400,000 in campaign contributions to committees controlled by Postmus, Biane, Erwin and Kirk. The county approved the settlement following a four-year legal battle with Colonies over flood-control easements on the company’s 434-acre residential and commercial development in Upland.

Burum, Biane, Erwin and Kirk have pleaded not guilty.

Postmus was questioned by Assistant U.S. Attorney Jerry Behnke, Assistant U.S. Attorney Joseph Widman and FBI Special Agent Jonathan Zeitlin at the FBI’s Riverside office in October. Postmus was accompanied by his attorney, Stephen Levine. A 24-page transcript of the interview was recently obtained by The Press-Enterprise.

As part of his deal with the district attorney and state attorney general’s offices, Postmus pleaded guilty to 15 felonies but in exchange for his testimony he will be sentenced on only three counts — conspiring to accept a bribe, conflict of interest and misappropriation of public funds.

‘DID NOT HAPPEN’

In the FBI interview, Postmus said prior to the settlement there was no discussion of Burum contributing the specific amount of $100,000 to two political action committees Postmus says he controlled and he didn’t learn of them until a couple of months after the agreement.

Postmus said he did not see it as a bribe, in terms of “discussing it ahead of time and saying if you do this, you know, if you vote for this I will give you this. With respect to the $100,000, that did not happen.”

But Postmus also said that Burum pressed him on several occasions to get the lawsuit settled and he expected “Jeff would take care of me” when it came to support for future political races or a job with a nonprofit housing company Burum was involved with.

Burum, who was a regular donor to political campaigns in the county, had stopped providing contributions in 2006 when negotiations over the settlement were at their height, and would tell him “we need to get this behind us,” Postmus said.

“I never felt it as a quid pro quo per se but it was very clear that afterwards there would be campaign contributions,” Postmus said.

In his grand jury testimony, the alleged deal is described in stronger terms. Deputy District Attorney Lewis Cope asked Postmus if Burum essentially promised to “set you up for life.” Postmus replies yes, saying “that was the motivation.”

However, in his grand jury testimony, Postmus also stated that he had no discussions of the contribution with Burum beforehand. He was not questioned as to whether he considered the money a bribe.

Rajan Maline, an attorney for Erwin, said Postmus’ comments cast doubt on the heart of the prosecution case, that the contributions from Burum were bribes.

“It’s becoming very clear that at this point there was never any bribe and that’s the foundation of their case and that foundation is crumbling,” Maline said.

Stephen Larson, an attorney for Burum, declined to comment on the Postmus interview but offered a brief statement defending his client.

“As the evidence continues to unfold it becomes increasingly clear that Jeff Burum is innocent of all charges that have been brought but that the charges themselves should not have been filed to begin with,” he said.

District attorney’s spokesman Chris Lee said he could not comment.

To read entire story, click here.

Prosecutors say A.V. developer lied about PAC; defense rejects charge
February 10, 2012 8:36 AM
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Natasha Lindstrom, Staff Writer

SAN BERNARDINO • Prosecutors attempted to show Thursday that Apple Valley developer John Dino DeFazio lied about a political action committee that former county Assessor Bill Postmus secretly used to funnel bribes.

At the preliminary hearing in San Bernardino court, DeFazio’s defense worked to demonstrate DeFazio — not Postmus — controlled the PAC in question, and attacked the credibility of the district attorney’s key witnesses.

DeFazio, 52, faces up to nine years in prison if convicted on six perjury counts for allegedly lying to the grand jury about the administration of the Inland Empire PAC.

According to the prosecution, that PAC was used to funnel two $50,000 bribes from Rancho Cucamonga developer Colonies Partners LP to Postmus in exchange for Postmus voting to help Colonies win a $102 million settlement from San Bernardino County over a flood control dispute. In the larger investigation, Colonies developers are accused of offering $400,000 bribes to former county officials.

Deputy District Attorney John Goritz first called to the stand investigator Hollis Randles, who testified Postmus and Adam Aleman, former assistant assessor, initially created two PACs to funnel the Colonies bribe, the Conservatives for a Republican Majority and the Inland Empire. Mike Richman, who worked with Postmus on the county Republican Committee and as an Assessor’s office consultant, was hired as executive director of the Conservatives PAC. Colonies made a $50,000 contribution in June 2007 — the only contribution the PAC ever had, Randles said. Another $50,000 contribution from Colonies was made to the Inland Empire PAC.

Then under Aleman’s and Postmus’ direction, Randles said, Richman closed the Conservatives PAC for two key reasons: Keeping two PACs open was costing too much in administrative fees, and they were about to have to name Colonies along with the PAC in any fundraising activities since the Colonies donation made up more than 80 percent of the PAC’s funds. The PAC’s balance, about $43,000, was then transferred into the Inland Empire PAC.

Though DeFazio was listed as chairman of the Inland Empire PAC, Randles said his investigation found Postmus was secretly controlling its expenditures once the roughly $90,000 in Colonies contributions was in the account.

Alongside DeFazio and Postmus at DeFazio’s Victorville office, Aleman created an email address in DeFazio’s name so Aleman could act as DeFazio and direct expenditures at the behest of Postmus, Randles testified.

Referring to strings of email exchanges as evidence, Goritz tried to show Postmus would direct committee funds to political candidates he favored. Among the candidates named in emails: 1st District Supervisor Brad Mitzelfelt, Victorville Mayor Ryan McEachron, Hesperia Mayor Russ Blewett, state Sen. Tony Strickland, Assemblyman Curt Hagman, 3rd District Supervisor Neil Derry, Hesperia Unified Trustee Eric Swanson and former Adelanto Mayor Jim Nehmens. Postmus directed some money toward helping Nehmens defend himself against grand theft charges for embezzling Little League funds, Randles testified.

Richard Ewaniszyk, DeFazio’s attorney, called to the stand Betty Presley, who was treasurer of both the Conservatives and Inland Empire PACs. Presley confirmed that candidates have the right to suggest other candidates they’d like a PAC to endorse, and that they frequently do.

She said she wouldn’t authorize an Inland Empire PAC payment “without understanding that it was authorized by Dino” — though because she primarily communicates with clients via email she can’t be “100 percent” sure.

The prosecution also claimed that two High Desert businessmen listed on the Inland Empire PAC board, Mike Gallagher and Jeff Bentow, had nothing to do with its administration and were merely contributors.

Ewaniszyk called Hesperia Mayor Russ Blewett and Apple Valley real estate consultant Randy Coleman to testify about meetings they had with Bentow and Gallagher related to the PAC.

Blewett recalled a meeting with DeFazio, Bentow and Gallagher at the Green Tree Inn in Victorville — a meeting place he described as a “politicians’ waterhole.”

The defense took aim at the reliability of two key witnesses for the prosecution, Aleman and Postmus. Ewaniszyk pointed out that both Postmus and Aleman had taken plea deals after being charged with perjury, and he had Randles acknowledge Postmus’ addiction to methamphetamine.

DeFazio turned down a plea deal Feb. 7 that would have sentenced him to 180 days in jail.

The hearing is set to resume Tuesday.

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Postmus

Joe Nelson, Staff Writer
Posted: 02/08/2012 06:05:39 PM PST

In an October interview with federal authorities, former San Bernardino County Assessor Bill Postmus said he did not consider a $100,000 campaign contribution from Colonies Partners LP a bribe.

Postmus’ statement, from an interview transcript obtained by The Sun, appears to contradict his guilty plea to charges of conspiracy and bribery in state court, where prosecutors contend campaign contributions to political action committees were part of a conspiracy by Colonies to secure a huge settlement to a land-rights dispute with the county.

In an interview with FBI Agent Jonathan Zeitlin and Assistant U.S. Attorneys Jerry Behnke and Joseph Widman, Postmus admitted that he continues to struggle with his methamphetamine addiction and had taken the drug a “couple dozen times” in 2011. In addition, Postmus said the peak of his drug use was in 2006 and 2007, roughly the time of the Colonies’ $102 million settlement and Postmus’s transition into the Assessor’s Office, according to the interview transcript.

Defense attorneys have made it clear that Postmus’s drug abuse will be a key issue in arguing his credibility as a witness for the prosecution.

Postmus’s testimony before a criminal Grand Jury in April helped state and local prosecutors indict 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.

The four are accused of conspiring, along with Postmus, to secure the settlement, in Colonies’ favor, in exchange for bribes and political favors. All four deny any wrongdoing.

At the time of the county’s landmark settlement with Colonies investor group, which ended more than four years of litigation over flood control easements at Colonies’ 434-acre residential and commercial development in Upland, Postmus was chairman of the Board of Supervisors, and was preparing to enter his newly elected post as county Assessor.

In March, Postmus pleaded guilty to conspiring to receive bribes and for asking for and receiving bribes. He has agreed to cooperate with authorities and testify against the four defendants at trial in exchange for reduced charges. His plea bargain, however, does not apply to the federal investigation, which remains pending.

“There’s no quid pro quo for talking to the federal government,” said Postmus’s attorney Stephen Levine. “It’s not covered by his plea bargain, although it goes towards his plea bargain because it’s cooperation.”

Though prosecutors allege Burum bribed Postmus and the other defendants with $100,000 contributions to political action committees the defendants allegedly controlled, Postmus told federal officials he wasn’t made aware of the $100,000 contribution until after the settlement. He said either Jim Erwin or former Assistant Assessor Adam Aleman, through Erwin, informed him that Colonies wanted to contribute the money in January or February of 2007, two and three months after the settlement.

To read entire story, click here.

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.