Jeff Burum

The prosecution and the defense this week gave diametrically opposite descriptions of the developer at the center of the ongoing Colonies Lawsuit Settlement Public Corruption Prosecution. According to Deputy District Attorney Lewis Cope, Jeff Burum is a mendacious businessman who would stop at nothing to enrich himself, including extorting and then bribing several of the county’s top ranking elected and appointed officials. Burum’s lawyer, former assistant U.S. Attorney and Federal District Judge Stephen Larson, conversely maintains Burum is a bighearted humanitarian who overcame poverty and familial disadvantage as a youth to transform himself into a successful real estate developer who never lost his feel for the downtrodden. Through a politically motivated prosecution brought by a corrupt band of public officials, Burum has been hounded out of operating a semi-charitable construction concern he founded dedicated to reclaiming blighted property in economically challenged communities to provide moderate-income and transitional housing to those more unfortunate than himself, Larson asserted.

By Ruth Musser-Lopez and Mark Gutglueck
The Colonies Lawsuit Settlement Public Corruption Prosecution headed into its second week of trial on Monday January 9.
Following last week’s opening statements by both the prosecution and the defense with regard to that portion of the case involving Jim Erwin, the matter this week turned to opening statements against the three remaining defendants whose fate is to be determined by a different jury.
Those charged in the criminal case are Rancho Cucamonga-based developer Jeff Burum, former San Bernardino Second District Supervisor Paul Biane, former sheriff’s deputy union president and assistant assessor Jim Erwin and Mark Kirk, who was the chief of staff to former Fourth District Supervisor Gary Ovitt.
Prosecutors allege those four along with former San Bernardino County First District Supervisor and one-time San Bernardino County Assessor Bill Postmus were caught up in an extortion and bribery plot relating to the 2006 settlement of a lawsuit brought by the Colonies Partners LLC against San Bernardino County and its flood control district over drainage issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland.
Erwin is being tried separately because the prosecution wants to use certain statements he made as evidence against him but are illegally inadmissible against his codefendents.
On Monday, January 9, 2017, Deputy District Attorney Lewis Cope reiterated in large measure the assertions he made last week in his opening statement regarding Erwin. His presentation this week focused more on the prosecution team’s theory of guilt relating to Burum, Biane and Kirk. Based on the responding opening statement made by Erwin’s attorney, Raj Maline, last week, Cope refined his approach, spelling out with great specificity and detail the elements of the criminal enterprise he claims Burum engaged in to induce a majority of the board of supervisors in November 2006 to confer upon his company, the Colonies Partners, LLC, a $102 million payout to settle the lawsuit his company had lodged against the county.
To a certain extent, Cope’s presentation this week benefited by his gauging of Maline’s response last week in the latter’s opening statement on behalf of Erwin. The 63-year-old prosecutor, with his soft spoken voice and even-keeled and methodical manner, endeavored to fill in the gaps and provide greater context to his narrative. Maline last week had attempted to exploit the elements of Cope’s narrative that were not given explicit contexting and background, perhaps successfully it seemed based upon the body language of the jurors, who had appeared to react positively to the more energetic and boyish-mannered, 51-year-old defense attorney.
A key player in the matter, though he is not a defendant, is one who has previously pled guilty and turned state evidence against the others in a plea bargain, former San Bernardino County First District Supervisor Bill Postmus. Last week, Cope traced out how Burum, intent on achieving the settlement, with Erwin’s assistance utilized elements of Postmus’ lifestyle to threaten and extort him to settle the lawsuit on terms favorable to Burum’s company and then reward him with two separate fifty thousand dollar donations to two political action committees (PACs) Postmus controlled.
Cope last week also laid out how Burum utilized similar blackmail and bribery tactics to gain Biane’s support for the settlement. The third vote to approve the settlement, Cope last week said, came from Gary Ovitt, whose vote Cope said was delivered by Mark Kirk, his chief of staff. Like Biane, according to Cope, Kirk received a $100,000 donation to a political action committee (PAC) he had set up and controlled.
Last week Maline sought to counter Cope’s version of events and blunt his assertion that extortion and graft were central components driving the $102 million settlement, offering a more benign interpretation of Burum’s provision of political donations to Postmus, Biane and Kirk. He downplayed the suggestion that both Burum and Erwin had engaged in threats and veiled blackmail in the weeks and months prior to the vote, and strongly asserted that the settlement relieved the county of escalating costs resulting from damages caused by a flood control district manager, Ken Miller, who the defense asserted had attempted through deceit to defraud the Colonies Partners of their property and rightful income by draining excessive amounts of flood water onto their otherwise developable land.
This week, Cope marshaled his most convincing display yet when he told the jurors that just prior to the November 28, 2006 vote to confer the $102 million settlement on the Colonies Partners, Postmus confided to his board colleague, Fifth District Supervisor Josie Gonzales, that he was being blackmailed in the period prior to the settlement being reached.
An agitated, disheveled, distraught and nervous Postmus came to Gonzales, Cope said, and “threw himself into a chair in her office and said to her, ‘They’re bastards. Don’t let them do anything to you.’”
Cope emphasized, “Mr. Postmus was going to cast his vote in favor of this settlement. He knew this deal was wrong. He knew that his vote was cast in favor of a deal that he should not vote for. He also knew that because the developer involved in this case, Mr. Burum, told him that if this settlement were done, Mr. Postmus would be taken care of by him and he would be supported in office, and if he would leave office he would be taken care of in business and given a job. Mr. Postmus was under a lot of pressure because he knew that the vote he was going to cast was wrong.”
Ultimately, Gonzales, along with Supervisor Dennis Hansberger, voted against the settlement, but the provision of the $102 million to the Colonies Partners was approved on a 3-2 vote with Postmus, Biane and Supervisor Gary Ovitt prevailing.
By providing the backdrop to the scene just before this critical event, Cope was attempting to offer jurors an illustration of the hardball tactics that were being employed by both Erwin and Burum to exact from the supervisors a settlement, tactics which Cope said concluded with bribes in the form of payoffs into the defendants’ political action committees but which were preceded by threats, extortion and blackmail. Cope asked the jury to listen to the witnesses who would stand before them to learn how each of these methods were used to pressure the three supervisors to vote in favor of the settlement.
In addition to recounting the November 2006 encounter between Postmus and Gonzales, Cope told the jury, “The settlement was so wrong that none of the county’s attorneys were willing to endorse or sign the settlement. What you will be asked to decide is whether or not there was bribery involved and an unlawful taking of county funds that was eventually taken into the pockets of some of the defendants that we have here. You will learn of the efforts to conceal the things [done] to get this vote. You will learn how the efforts to conceal these activities were revealed by an investigation done by the district attorney and the FBI. You will learn how politics as usual turned into a quid pro quo. You will learn many things about our county and its politics that will surprise you and you will not like, but what you need to pay attention to is the effort to extract the settlement and how that money was wrongfully diverted into the pockets of some of the defendants.”
Cope then sized up the defendants for the jury. He said “Mr. Burum is a developer, an extremely successful developer and an extremely smart man. He is one of two managing partners of a group of investors called the Colonies Partners. He is sought after by politicians in the county. Many politicians seek him out for contributions, endorsements, advice. Politicians fear him because if they cross him he has the ability and resources to ensure that they will not be able to remain in office after the next election.”
Cope continued, “Paul Biane is also a real estate person. He knew Mr. Burum for a very long time. Mr. Burum identified him as a talent. He colluded with him in an election many years ago after Mr. Burum had begun the Colonies development and wanted the county to pay for the work that he was doing on the development. There was a member of the board of supervisors by the name of Jon Mikels who was adamantly against any kind of settlement. Mr. Burum recruited Mr. Biane to run against Mr. Mikels. Mr. Burum and the Colonies Partners put up a lot of money to assist Mr. Biane in that election. Mr. Biane was successful.”
The board of supervisors is at the very apex of power and authority in county government, Cope said, with each of its five members representing and overseeing a different geographical jurisdiction. He identified Biane as being the supervisor for the Second District, in which the Colonies development took place. Using the Latin term “quid pro quo,” which means “this for that,” and which in a legal context implies an illegal arrangement by which a public official agrees to do something in exchange for money or favors, Cope said a quid pro quo arrangement between the Colonies Partners began very early.
“Mr. Biane prior to his election met with Mr. Burum and Mr. [Dan] Richards [the other managing principal in the Colonies Partners] and talked about the Colonies and need for settlement. And it was made known to him that he was going to be elected to that position with the help of the Colonies for the purpose of finding a solution that would result in a settlement of the Colonies lawsuit. As I indicated, Mr. Biane was successful. This case will also tell you Mr. Biane’s involvement began very early on. Money was given to him through entities that he controlled, campaign funds, PACs [political action committees]. You will learn about the pressure that was put on him to ultimately arrive at the settlement.”
Cope said, “Mr. Burum is an individual who likes to win. So during the course of this Colonies lawsuit, you will learn that he has many assets that he brought to bear. Many would be what you would expect, attorneys, overtures to the media, advisors telling him how to deal with the media, how to get his message out to the public. As he perceived progress or non-progress, he changed his approach, so after the course of this case you will see how he went about influencing the members of the board of supervisors to get this settlement. Many things were not out in the public. Some were intended to be private, secret, as he would have people approach the supervisors and more than encourage them to arrive at the settlement. He would threaten them, raise things that were personal to them so that this settlement could be arrived at.”
Cope said, “Mr. Kirk happens to be very close, very knowledgeable about the board of supervisors. He was chief of staff to Gary Ovitt. Mr. Ovitt was a member of the board of supervisors, an important member, one of the three votes that eventually accomplished this settlement. Mr. Kirk is known to be a very strong-willed person, very capable. He had great influence over Mr. Ovitt. He was the person, you will learn, who managed just about everything that Mr. Ovitt did. You will learn that you had to go through Mr. Kirk to get to Mr. Ovitt. Mr. Ovitt will come in and tell you that from the very beginning he thought that the settlement was right, and he planned to vote on it. But Mr. Kirk said that he would deliver a settlement, and he knew that there was a reward in it.”
Cope then moved on to Jim Erwin, who, he said, “for many years had been the president of a police union of this county, the San Bernardino County Safety Officers Association. It is known by everyone as SEBA. When I refer to SEBA, I am speaking of the members of all county law enforcement who belong to this union. Mr. Erwin was the president of that union for many, many years, and as the president held a position that was important politically and in a way that yielded influence.”
Cope said SEBA was used to launder money originating with the Colonies Partners which went to politicians, including Postmus, Biane and Ovitt. “Money was donated to this organization, SEBA, that he was president of and went to important politicians, including Mr. Ovitt, Mr. Biane and Mr. Postmus, and this was a way to get money to important people on the board of supervisors from Mr. Burum, but in a way where he wouldn’t be identified as being directly connected and directly contributing to them,” Cope said, “because they were getting large sums of money at this time, more than ever before, through this police union. Mr. Erwin had great ability to get money to the politicians that were favorable to the Colonies. Mr. Erwin enjoyed the power that this money gave to him.”
Erwin ceased being SEBA president in “about 2005,” Cope said, but remained in substantial control of the police union in the role as its chief administrator from “2005 to a point in time when he joined the assessor’s office.”
Cope said Erwin subsequently left the assessor’s office and used the money Burum had donated to his political action committee to help former San Bernardino City Councilman Neil Derry in the 2008 Third District supervisorial race run against and defeat Dennis Hansberger, who had voted against the Colonies settlement. Derry then hired Erwin as his chief of staff, Cope said. “The position of chief of staff is significant,” Cope said. “It allows you to do a lot behind the scene. Both Mr. Kirk and Mr. Erwin used those positions of chief of staff and both used their positions in ways that enhanced their power.”
Following the prosecution’s opening statement, the legal counsel for each of the defendants had the opportunity to offer opening statements or wait until after the conclusion of the prosecution’s case. While Mark McDonald, the attorney for Biane, and Michael Scaffidi, the attorney for Mark Kirk, elected to defer making their statements until later, Stephen Larson, representing Burum, offered his opening statements beginning Tuesday morning, January 10.
Cope, Larson told the jury, had put “blinders” on them so that they were able to see only what he wanted them to see. He invited them to remove those blinders and see the entirety of the picture and come to understand “the rest of the story.”
The remainder of the story, Larson said, the jury would find disturbing because it does not implicate his client or the remainder of the defendants, but rather the county government itself and particularly the county’s flood control district and its lawyers.
The 52-year-old Larson was obliquely critical of Cope to the jury, saying that Cope had told them about the evidence but that he would show them the evidence, which vindicates his client. “He told you what the evidence is going to show,” Larson said. “I am actually going to show it to you.”
Referring to all of the criminal defendants, Larson said, “These men believe in the system and that this criminal justice system will vindicate them. You are going to hear what they have gone through. After hearing the entire story and all of the exhibits, we will prove and you will find that they are not just not guilty, these men are innocent. This is not going to be one of those criminal cases where there is a question as to whether the prosecutor proved guilt beyond a reasonable doubt. This is going to prove that they are innocent.”
Intimating the likelihood that Burum and the others would take the stand in their own defense and brave whatever Cope or other members of the prosecution team would throw at them, Larson said, “These four men are not thrilled to be here but are relieved that they will now have the opportunity to tell their side of the story.”
“At the end, you will not just know what our theory or speculations are, but what the evidence is,” Larson said.
Larson proceeded with a biographical sketch of his client, saying that “the only adjective Mr. Cope used that I agree with was that he is brilliant.” Burum persisted through, Larson said, “a tough childhood” living apart from his father “with his mom in Maryland,” an existence steeped, Larson said, “in poverty.” During this time he was very close with his brother, Phil, Larson said. “Phil Burum works with Jeff to this day,” Larson said. As a teenager, Larson said, “Jeff moved to live with his father in Phoneix,” but, Larson said, Burum’s “father died a couple years later.”
At that point, Larson said, young Burum was listless and idling but was reclaimed through the efforts of a mentor, Michael McLean, the stepson of the actor James Stewart. Thanks to McLean’s intervention, Larson said, Burum “went from being an average to an ‘A’ student. He graduated with honors. He proved to be a talented athlete and was on the tennis team. He lived with his tennis coach and received emancipation.”
It was during this time that Burum gave an early demonstration of his character and determination, Larson said. When the local school district sought to close down his high school, Burum, Larson said, “staged a peaceful sit-in. Some students were violent. Jeff was instrumental in making the protest peaceful and organized. Jeff always followed the rules. He obtained a scholarship and went to college at Claremont McKenna in Claremont. There he studied Mandarin.” Larson said Burum’s senior thesis pertained to “the reunification of China and Taiwan.”
Burum had developed an interest in politics and after professionally committing himself to a career in real estate, got his license “and became a successful real estate developer.”
Despite that success, Larson said, Burum “never forgot where he came from” and, drawing from the rough go of it he and his family had when he was a youth, concluded one of “the important things truly was affordable housing.”
Consequently, Larson said, Burum began a company that was dedicated to providing housing for moderate and low income buyers. “Eventually that company went national and is known as CORE, National Community Renaissance. This is not just about housing, but about community services, so to provide an integrated, approachable solution to housing, not just social services, but to give people a real chance to own their own home.”
National Core was changing people’s lives positively, Larson said, “in hundreds of communities across the country.” But because of the indictment, Burum “resigned from being the chairman of this non-profit that he had become the chairman of,” Larson said. “You will hear about the impact on him and his wife, and his ability to be in politics and do what he has done. The one thing that you should take away from all of this is that Jeff has been a fighter, whether for his family, or his partners in business. But he is honest, and he has followed the rules. He is kind and generous. He is always law abiding.”
As for the prosecution’s theory of his clients guilt, Larson said “The truth is often more complicated than that. No one will dispute that bribery is wrong and is criminal. Anyone who commits such a crime should be put in prison. None of these men would have been involved in any bribe. Jeff Burum has been actively involved in politics and elections. He has gone out of his way to know the law and comply with the law. He has been involved in city races and national campaigns. He has been a co-chair for presidential campaigns. He knows what is legal and what is not legal. He never crosses that line.”
Bypassing the elements of extortion contained in Cope’s theory of criminality, Larson addressed the issue of bribery, asserting, “There has to be a bribe in all of this for any of this to be true, any of the prosecution to be true,” going on to point out that the prosecution was using tortured language to leave the jury with the impression that bribery had occurred without actually saying so directly. He said there were “legal problems with the odd way in which these charges were brought. Jeff Burum was not charged with bribery. Instead, prosecutors are alleging he engaged in helping them [Postmus, Biane and Kirk] receive a bribe, which is the bribe that he is said to have made. Mr. Cope has already said that the critical issue is all of the five charges, not whether they had authority to approve the settlement or whether it was compromised. He has to prove that the settlement agreement was somehow corrupted. There are two big problems that the prosecution is not going to be able to overcome. The reason for these problems belies the rest of the story. There is no reliable or believable evidence that any of the supervisors were promised any kind of bribe in exchange for their vote. Mr. Postmus [denied there was] a quid pro quo. Only one person – Adam Aleman – the tipster or snitch, said it. You are going to find out that Adam Aleman is a liar and a crook, not someone you can believe. By the time this trial is over you are going to know all about Adam Aleman.”
Larson continued, “The question is ‘Where is the reliable evidence that any of the supervisors received a bribe?’ You have heard about the charges, contributions, meetings with and without lawyers, a whole lot of stuff, but if you strip it all way, you will find out that it is all legal. This is not evidence of a bribe. The prosecution will say that this is the evidence, that you heard about the tips and that bribery negotiations were going on for a three year period, but you are not going to hear anywhere where there was a bribe. The evidence is they voted for the settlement agreement because they knew it was best for the county, a good idea. Mr. Biane and Mr. Ovitt thought it was a good idea.”
Trying to determine what Postmus thought at that point will prove futile and is irrelevant, Larson said, because his reasoning at the time was so severely impacted by his drug use, and his recollection at this point has been compromised by the same.
“Bill Postmus used meth and not just once in awhile,” Larson said. “He signed, he would have done, anything. He was at the height of his addiction. He was not off meth until 2012, a year after the indictment. He was on meth when he was interviewed, when he testified to the grand jury. We do not know what Bill Postmus was thinking. But we do know what Paul Biane and Gary Ovitt were thinking. Together they are the ones who voted for it.”
Of that deal, Larson told the jury, “The prosecutor said it was rotten and wrong. You are going to find that they had to settle.” Larson said the law firms Munger, Tolles & Olsen and then Jones Day were taking the county on a very expensive ride.
“This was malpractice, what these lawyers were doing,” he said.
Larson said his client’s company was in the strong position legally, such that the prosecutions theory of a motive was utterly disprovable.
“There was no need for a bribe,” Larson said. “We will show you all of the reasons why there was no bribe, no motive. This was a good deal. The county knows it now. The county has come around on the issue. It turns out what the supervisors did was right.”
As for the political action committee contributions, Larson pointed out that, technically, what the prosecution refers to as PACs are “not PACs. Federal committees are PACs. These are recipient committees.”
Larson said that donors of all stripes are free to donate money to politicians and that those donations are not bribes unless there is some agreement ahead of time that the contribution is being made to influence a vote.
“The line that cannot be crossed is quid pro quo,” Larson said. Burum, he said, “gave them money with no strings attached. There is not a single shred of evidence that those contributions were made with strings attached.” That Postmus and Biane and Ovitt supported the settlement is incidental, Larson implied, citing as proof that $40,000 of the money given to the committee allegedly controlled by Biane, the “Young Republicans, went to support Dennis Hansberger, the guy who voted no on the settlement. The money was given no matter what, not quid pro quo, with no strings attached,” he said.
Larson took issue with labeling the donations bribes, given that they came after the vote rather than before it.
“Keep in mind that what Judge [Michael] Smith [before whom the case is being tried] said, in order to prove this bribery occurred that you will need to find that when the public official agreed to take a bribe, he represented that he would vote that way,” Larson said. “You will hear from the prosecution that those contributions in 2007 would influence a vote in 2006. The politicians that received the money did not know about the contributions until after they settled.”
Larson acknowledged that money has made its way into the political process and that his client and the Colonies Partners were participating in the political process. But that participation is entirely legal, he said, and singling his client out because of that participation is a perversion of the law. Moreover, he said, there were other issues involving county government and land use issues Burum was involved with at the time for which he had reason to be seeking political goodwill through providing political donations.
“There was the stuff going on in 2007 that had nothing to do with the settlement that was all over by then,” Larson said. “Mr. Burum came together with others to form the Rancho Alliance in 2007. They were going to purchase land for development in Rancho Cucamonga. That did not work out. That was a huge focus in 2007.” Larson said Burum and his associates had to create goodwill for that undertaking and others, including one to build an NFL stadium in Ontario “in order to go forward.”
By the time the contributions were made, the settlement was a done deal, Larson insisted, pointing out that $102 million payout had been submitted for validation through the courts and that the court signed off on the validation in March of 2007, prior to the provision of the first of the contributions to the PACs.
“It was submitted to a validation process where notice is given to the world,” Larson said. “It went to a judge. If there are no proper challenges and it is accepted, that prevents it from being challenged or overturned in any way. After that nothing could have been done to break the settlement. There were no strings attached by the Colonies to these contributions. No one but Adam Aleman said they were made as part of a quid pro quo. Those contributions were made for legitimate purposes. Take the blinders off,” Larson told the jury, “so that you will see all.”
Larson said the county flood control district had constructed the 20th Street Storm Drain, an appurtenance that collected water from the below ground level Foothill Freeway and a three square mile area above the freeway which was constructed during the same time frame and deposited that water on the Colonies property. The Colonies property formerly had on it a roughly 31 acre basin used for water retention purposes and the county had easements recorded in 1933, 1934 and 1939 which related to using the Colonies property for drainage, but that there were limitations to that use, Larson insisted. The U.S. Army Corps of Engineers in the 1970s constructed a flood control channel designed to take storm water southward to the Prado Dam, he said, rendering the basin on the Colonies property and any other flood control facilities on the Colonies land obsolete. He said the county’s insistence on vectoring the water onto the Colonies property was an unjustifiable act on the county flood control district’s part that the court had determined damaged the Colonies Partners by interfering with their development plans and ability to complete and market the homes being built there. This was the gist of the lawsuit against the county, Larson said, which the Colonies Partners had prevailed upon during a trial in the courtroom of Judge Christopher Warner. Judge Warner ruled against the county in that lawsuit and a judgment against it was pending that could have reached more than $300 million, Larson said. Thus, Burum had no motive to bribe Postmus, Biane and Kirk, he asserted.
After Larson concluded, Cope called as the first prosecution witness former San Bernardino County Third District Supervisor Dennis Hansberger. Hansberger served on the board of supervisors in two temporal installments. His first two four-year terms on the board ran from 1972 until 1980, at the beginning of which he had been the youngest man before Postmus to serve on the board of supervisors in county history. He returned to the board in 1996, serving three consecutive terms until 2008.
Cope led off with Hansberger for a multitude of reasons. He has a historical comprehension of the county, operations within its governmental structure, the function of the board of supervisors, specific knowledge about what occurred in the time frame in question under focus in the prosecution, and he was the strongest voice on the board of supervisors in favor of the county’s position in the lawsuit brought by the Colonies Partners and he was the board member most opposed to a settlement of the lawsuit. Additionally, Hansberger, because of his professional affiliations, has expertise with regard to sand and gravel mining operations and properties associated with them. A major historic use of the Colonies property was a similar mining operation.
Hansberger voted with Supervisor Josie Gonzales in opposition to the settling of the lawsuit for $102 million in November 2006.
In response to Cope’s questions, Hansberger said he had voted against every settlement proposal during the nearly five years of civil litigation that preceded the final settlement, and he offered his rational for doing so.
He said it seemed to him the Colonies Partners “just had a desire to get money out of the property.”
He said his familiarity with sand and gravel operations and their attendant property drove him to the conclusion that the Colonies property was of minimal value, and that the Colonies Partners’ claim of damages, which steadily rose from several million dollars to eventually reach in excess of $300 million was not supportable. Hansberger, in his testimony which began on Wednesday January 11 and continued on Thursday morning, included statements that he consistently voted against settlement because there was no foundation based upon real estate value that justified payment to the Colonies Partners. Hansberger testified that in his opinion the property the county was using for flood control purposes was worthless for development purposes of the kind the Colonies Partners envisaged for a number of reasons, one of which was the cost of filling in a deep pit that had been a gravel quarry. Redressing the property would have been prohibitively expensive, he said, because of the large amount of fill that would be required. He cited the land’s zoning as open space and the flood control easements existing on the property as the grounds for his conclusion that the land was undevelopable as it then existed. Further, he said, the homeowners who purchased the sites surrounding the large excavated area believed that it would continue to be used for flood control and open space and would likely have protested and objected to the developers using it for anything but a natural wash area.
Hansberger testified that the back and forth between the Colonies and the county during settlement negotiations pertaining to monetary value of settlement would have ended if the matter had gone up on appeal and the court would have made a decision based upon a reasonable value.
In response to Hansberger’s first reference to the Colonies property being at that time “zoned as open space,” Larson raised an objection. Signaling, perhaps, that acknowledgement of the property being limited by open space zoning might prove problematic for his client during trial or on appeal, Larson objected a second time when the open space zoning was referenced and he appeared purposed to prevent references to the Colonies property as being so zoned. A side bar, that is a private conference involving the attorneys out of the earshot of the jurors or others in the courtroom, ensued, at Larson’s request. Nevertheless, further references to the property being zoned as open space made it into Hansberger’s testimony and onto the record.
Hansberger said the law firms of Munger, Tolles & Olsen and Jones Day had “strong reputations” and were “competent counsel.” He said that he valued the opinion of those firms and their lawyers, who shared his view that the Colonies Partners were seeking from the county, by both litigation and other means, something to which they were not entitled.
Hansberger said that Biane and later Postmus had inserted themselves into trying to negotiate one their own the terms of a settlement with the Colonies Partners and that this was not from his viewpoint desirable because their interaction did not include the counsel or supervision of lawyers who would “protect the integrity of the process.”
Biane early on was stampeding the board toward settling the case, Hansberger said, including having outside communications with Burum on potential settlement figures. At first he attributed this to the Colonies property lying within Biane’s Second District, but he soon recognized that there was more to it than that. Hansberger said he told Biane that it was “not proper to be doing this, particularly with constituents with whom you are so close.”
He said negotiating with the Colonies Partners was best left to county counsel or the county’s retained attorneys.
“It became his cause to get this done, and it was ever present in our discussions,” Hansberger said of Biane. Hansberger said he felt the county should not have paid the Colonies Partners anything but that at one point he was resolved to settle the matter if it could be done for no more than $7 million or $8 million, just to put an end to the suit. But the Colonies Partners continually escalated their asking price, he said. “I think in every case when the numbers came in higher, it was him (Biane) who was presenting them to us,” said Hansberger.
Initially, Postmus was also in favor of a settlement and occasionally “scolded legal counsel and other staff if they did not move forward,” but was less intense in his demands than Biane. But by late 2006, Postmus transitioned into being the board member making the hardest push toward a settlement with the Colonies, Hansberger said.
“He began to show some real emotion about this case,” Hansberger testified. “I did see a general change in him. It became an urgent matter with him after he was elected assessor. He was more aggressive in his approach toward a settlement. It built up over the weeks until we finally voted on a settlement.”
Hansberger testified that Kirk had a degree of sway over Ovitt. “Mr. Kirk had a role, it seemed to us, in the decision-making process with Mr. Ovitt,” Hansberger said. “Mr. Ovitt was very reserved. He (Kirk) became the surrogate for his boss on many subjects.”
Cope asked Hansberger about a settlement discussion involving Postmus, Biane, former state senator Jim Brulte, Jeff Burum, Dan Richards and the attorneys for both the Colonies Partners and the county in March 2005.
Hansberger said that Brulte participated as “an unexpected third party” who later turned out to not be an uninterested mediator but actually an agent of the Colonies Partners. At some point, Postmus ordered all of the attorneys to leave the room and a tentative settlement was reached with the five remaining individuals in the room to close out the litigation with a $77.5 million payout by the county. Hansberger said he had objected to the meeting in general and that he was never informed ahead of time it would take place outside the presence of the attorneys.
Nor was he informed, Hansberger said, that Brulte was employed by the Colonies Partners. “I didn’t know Mr. Brulte would be at the meeting,” he said, and did not learn the Colonies Partners employed him “until sometime later.”
Hansberger said, “In-house counsel strongly objected” to the deal on the grounds that “they had laid no foundation for it. No one had documented what that property was worth. They just wanted to settle it for money. Mr. [Paul] Watford [an attorney with Munger, Tolles & Olsen] was particularly vocal on the subject. He felt we were way off base in trying to settle it in that manner. They [Munger, Tolles & Olsen] were committed to the notion that we already had a favorable ruling from the appellate court and we would act upon that and if we lost in the Superior Court we would go back to the appellate court. He pointed out that the flood control district had done this work [the 20th Street Storm Drain] at the behest of the city of Upland, Caltrans and SANBAG [the county’s transportation agency], and indeed, if there was liability, it rested with them because they were the ones that funded and planned the activities that were ongoing.”
Munger, Tolles & Olsen resigned as the county’s attorneys after this incident. Negative publicity about the backroom deal resulted in the $77.5 million settlement worked out among Postmus, Biane, Brulet, Burum and Richards being rejected at that point.
Hansberger said that in the months just prior to the November 2006 $102 million settlement, Postmus, as the board chairman, on his own initiative hired an attorney, Dennis Wagner, as interim county counsel, the county’s top in-house attorney. Hansberger said he did not consider Wagner to be qualified for the position. Wagner had been Postmus’ personal attorney and through a series of questions by Cope which invited continual defense objections Hansberger suggested that Wagner’s hiring was a ploy to push the county into a settlement. “We were just told Mr. Wagner was going to represent us,” Hansberger said. “I knew Mr. Wagner well enough to tell him I didn’t think he should be representing us.”
Nonetheless, Wagner remained in the post. Yet even Wagner would not countenance the $102 million deal, Hansberger said. As the county was moving toward the settlement a few weeks later, Hansberger said, the board spoke with Wagner about the proposed settlement.
“He told us what he thought of it,” Hansberger said. “He didn’t agree with it. He said, ‘Having studied this and looked at the case, I don’t think you can settle this. I don’t want to be present for this settlement nor put my name on it. I would be risking my license.”
There was no county lawyer in-house or outside attorney representing the county who supported the settlement and none signed the documentation memorializing it, Hansberger said. He is set to return to the witness stand on Tuesday January 17.