Judge Sustains Nearly Two-Thirds Of Criminal Charges In Colonies Case

(August 7) Prosecutors this week made a major stride in their efforts to send a developer and three former public officials he is accused of bribing to prison when after an exhaustive round of motions for dismissal by the defense the Superior Court judge hearing the case left standing eighteen of the original 29 counts contained in the May 2011 indictment of the four defendants.
Wednesday, August 6 was the seventh day of hearings since July 23 on five motions brought by the defense on a comprehensive set of motions seeking dismissal of all of the charges in the indictment and a single motion by the prosecution seeking to disqualify the law firm representing the central defendant in the case.
While over the course of the previous six days of hearings the indications of and rulings by Superior Court Judge Michael A. Smith augured well for the defense and kindled hope in the defendants that the case in its entirety might be thrown out, the tenor of Smith’s rulings sharply changed this week and he left standing key components of the prosecution’s case intact. In his statements from the bench explaining the rationale for his decisions, Smith, who was a prosecutor before he was elevated to a judgeship, countered many of the defense’s assertions of innocence in ruling that the grand jury that indicted the quartet had been provided with adequate and even abundant evidence indicating their guilt on the 18 surviving charges in the indictment.
In that indictment, Rancho Cucamonga-based developer Jeff Burum stands accused of employing one-time sheriff’s deputies union president Jim Erwin and Mark Kirk, the former chief of staff to San Bernardino County Fourth District Supervisor Gary Ovitt as his agents in persuading former supervisors Bill Postmus and Paul Biane to accept bribes and improperly influence Ovitt.
According to the prosecution, Burum proffered bribes to Postmus, Biane and Kirk as part of an effort to obtain a favorable settlement of a lawsuit brought by one of Burum’s companies, the Colonies Partners, against the county and its flood control division over drainage issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland.
Burum and Dan Richards were the two managing principals in the Colonies Partners, a consortium of 21 investors who had successfully completed the Colonies projects on 440 acres of property formerly owned by the San Antonio Water Company.
Burum hired public relations consultant/communications professional Patrick O’Reilly to prepare in 2006 mailers which revealed that Bill Postmus, who was then the chairman of the county board of supervisors and the chairman of the San Bernardino County Republican Central Committee, was a homosexual and drug addict and that Biane was insolvent and on the brink of bankruptcy. That year Postmus was running for county assessor. Biane was sponsoring a countywide initiative, Measure P, which called for increasing the annual salary of each county supervisor from $99,000 to $151,000.
Ultimately, Burum never posted those mailers to county voters, and Postmus in November 2006 was elected assessor and Measure P passed. Three weeks after that election, with Postmus, Biane and Ovitt in the majority and supervisor Josie Gonzales and then-supervisor Dennis Hansberger dissenting, the board of supervisors voted 3-2 to settle the Colonies lawsuit with a $102 million payout to the Colonies Partners.
Between February 2007 and the end of  June 2007, Burum and Richards made separate $100,000 donations to political action committees set up and controlled by Erwin, Biane and Kirk and two $50,000 donations to each of two political action committees set up and controlled by Postmus.
In January 2010, a secret grand jury was impaneled. After prosecutors with the San Bernardino County District Attorney’s Office and the California Attorney General’s Office presented evidence to it, that grand jury handed down an indictment naming Postmus and Erwin on extortion and bribery charges and describing, though not naming, Burum, Richards, Biane, Kirk and O’Reilly as unindicted coconspirators.
Both Postmus and Erwin entered not guilty pleas to the charges in that indictment. In March  2011, however, Postmus pleaded guilty to all 14 charges against him in that indictment and agreed to turn state’s evidence. He was then called before a newly impaneled grand jury as the star witness among more than 40 witnesses who testified in April 2011. In May 2011 that grand jury handed down a superseding indictment, consisting of 29 charges naming Burum, Erwin, Biane and Kirk.
In short order, defense attorneys  filed demurrer motions challenging the case against their clients on the sufficiency of the evidence and applicability of the law. In August 2011, Judge Brian McCarville granted several of the defendants’ demurrers, ruling that prosecutors erred in simultaneously charging Burum with conspiracy to engage in a bribing scheme while also charging him with aiding and abetting the receipt of bribes. McCarville also ruled that Burum could not be charged with misappropriation of public funds since he was not a public official, leaving only two of the original seven charges against Burum, the figure at the center of the case, intact. McCarville further dismissed one felony count of misappropriation of public funds for each of the other defendants. The prosecution appealed McCarville’s ruling to the Fourth District Court of Appeal in Riverside, which in October 2012 upheld McCarville with regard to the four bribery counts against Burum that had been tossed, and also threw out a conflict-of-interest count McCarville had let stand. The appeals court did, however, reinstate the misappropriation of public funds charge against Burum that McCarville had dismissed.
Prosecutors then made a last-minute appeal of the Fourth District’s ruling to the California Supreme Court on December 10, 2012.  More than a year later, on December 23, 2013, the California Supreme Court reestablished the essential elements of the case, granting the gist of the prosecution’s appeal more than a year and two months after the Fourth District Court of Appeal in Riverside dismissed the most crucial charges lodged against Burum.
Last year and earlier this year, Burum’s attorney, Stephen Larson, a former federal judge, filed a total of five motions to dismiss the case, including ones based on statute of limitations grounds, lack of probable cause, prosecutors’ misinstruction of the grand jury, withholding of exculpatory evidence, prosecutorial misconduct, misconduct on the part of investigators in their filings to obtain search warrants and an illegal effort by both prosecutors and investigators to seize privileged materials in the possession of the defense team. The defense attorneys for the other defendants piggybacked on those motions.
Beginning on July 23, Smith began hearing oral arguments on those motions before a near-capacity crowd in one of the largest courtrooms in the newly opened San Bernardino Justice Center.  In one of his first rulings, he severely weakened the prosecution’s case by dismissing conspiracy charges against the defendants  on statute of limitations grounds. That dismissal also erased the 43 overt acts alleged as part of the conspiracy in the indictment.
Smith then moved on to throw out 12 other charges in the case, likewise on statute of limitations grounds, pending his own determination of whether he would give the prosecution the opportunity to amend the complaint.
At that point, with the hearing on the five motions to dismiss having progressed only half way through the first motion, the prosecution’s case appeared to have been severely compromised and there were confident pronouncements from some in the defense camp that the case would be completely dismissed before all of the motions were heard.
When the second week of hearings began on July 25, a subtle shift in favor of the prosecution manifested in the courtroom. Smith had at that point yet to fully rule with regard to the defense’s challenge of the prosecution’s assertion that  law enforcement officers did not learn of the alleged bribery scheme until November 2008. Smith entertained defense arguments that the victim, i.e., the county and its officials, knew of or had strong grounds to suspect as early as 2006 that the illegal activity described in the indictment had taken place, thus making the May 2011 indictment too late given the three-year statute of limitations.
Ultimately, however, Smith made a finding that though there were numerous suspicions with regard to, and even unsubstantiated allegations of, wrongdoing being batted about while a negotiated settlement was being sought in 2006, the circulation of such rumors did not meet the legal standard for initiating a criminal investigation. Smith called the suspicions no more than “a gut feeling something wasn’t right” and said “There were no facts or information to support a reasonable suspicion that there were offers or payments to defendants” or that Postmus and Biane had “agreed to accept payment in exchange for their votes” at that time. Thus, Smith gave the prosecution leave to amend the indictment with regard to 12 of the counts he had earlier thrown out by stating more clearly that both law enforcement and county officials, other than the accused, were unaware of the alleged bribery scheme until November 2008.
The motion to dismiss the charges based on statute of limitations grounds completed, Smith then moved on to the remaining motions to dismiss, the grounds for which included lack of probable cause, jury misinstruction, prosecutorial misconduct in having raided the defense camp and seizing privileged materials crucial to the defense, along with prosecutorial and investigator misconduct in having made misrepresentations to obtain search warrants and hiding information about a witness from the grand jury. During the hearings on July 28, 29 and 30, the defense, led by Stephen Larson and Mary Andrues, representing Burum; David Goldstein, representing Biane; Raj Maline, representing Erwin; and Paul Grech, representing Kirk; remained aggressive, overshadowing if not entirely overwhelming the prosecution team of supervising deputy California Attorney General Melissa Mandel and San Bernardino County deputy district attorneys Michael Abney, Lewis Cope and Reza Sadeghi.
When the hearings resumed on Wednesday, August 6, however, the complexion of the case dramatically changed, as the bulk of rulings Smith made, with a few exceptions, strongly favored the prosecution.
In what was the most significant victory for the prosecution, Smith ruled that the grand jury’s indictment of Burum for aiding and abetting in Postmus’ and Biane’s and Kirk’s receipt of bribes was indeed based on sufficient evidence.
Smith said that there was evidence Burum used “threats and intimidation to get them to accept” the bribes he provided. “Threatening to expose someone has a drug problem is not a crime,” Smith said. “Threatening to expose someone’s sexual orientation or life style is not a crime.” But there was evidence Burum, working in concert with Erwin, had gone beyond that, the judge said. The damaging information about Postmus and Biane was withheld, Smith said, to induce them to take the bribes and vote for the settlement. And there was evidence, Smith said, that “Mr. Burum is the one who suggested a sophisticated plan to hide the evidence by creating PACS [political action committees] the board members would secretly control.” Noting that the money provided to the PACS was “declared as a contribution by Mr. Burum and appropriately declared as a contribution received by the PAC [so] there would be no trace of any of that going to the board members,” Smith said, “the court finds that kind of plan to hide the bribes after they were received… is additional action beyond providing the bribe that aids and abets the receiving of the bribe.” Burum, Smith said was involved in “devising a plan” so the money could be delivered to those being bribed “without it being discovered. That is additional conduct that aids and abets the person in receiving the bribe. The court concludes that for those reasons the evidence before the grand jury is sufficient to support the finding of probable cause that Mr. Burum aided Mr. Postmus, Mr. Biane and Mr. Kirk in accepting the bribes.”
Likewise, Smith ruled, the evidence showed Erwin was involved in aiding and abetting Postmus and Biane receiving bribes.
Smith did rule that contributions to the political action committees cannot be considered income to the founders of the PACS or those in control of them, even if the contributions are intended as or are in fact bribes. Consequently, Smith dismissed perjury and tax fraud charges against Erwin, Biane and Kirk.
Smith, as he gave previous indication, on August 6 also dismissed conflict-of-interest charges against Burum and Erwin, reasoning that Burum was never a public official and Erwin was not a public official at the time of the alleged crimes.
Smith. however, deviated from the direction he appeared to be leaning during the closing days of July with regard to charges of misappropriation of public funds against all four defendants. He previously appeared to be persuaded by defense arguments that those charges should be dropped. On August 6, Smith acknowledged that the actions of the defendants did not in any fashion fall under two theories of how the statute relating to misappropriation of public funds – Penal Code Section 424 – applies. In a somewhat tortuous exposition, however, he said the defendants’ actions fit under a third theory of what constitutes misappropriation of public funds. Smith said  that though the grand jury had not been instructed directly with regard to this, the instructions on other charges relating to the action that constituted the misappropriation of public funds sufficed in giving the grand jurors an understanding of the issue to allow them to issue the indictment including the 424 charge.
Essentially, Smith said, the quid pro quo arrangement involving the payments into the political action committees in exchange for the vote to approve the $102 million settlement extended into being a misappropriation of public funds. “The bribe was a misappropriation of public funds because a portion of the appropriation was coming back to the board. It cannot be argued that they did not know the money coming back to them was not a violation of the law.”
Smith responded to the slightly different circumstances pertaining to Kirk with regard to the misappropriation of public funds charges, saying,  “Mr. Kirk used his influence. He did have a financial interest in the outcome of the vote. Supervisor Ovitt  testified before the grand jury that Mr. Kirk did not influence his vote, but there was evidence considered by the grand jury that Mr. Kirk did take steps to influence Mr. Ovitt and took steps to ensure the settlement occurred.”
Smith denied the defense motion to dismiss the misappropriation of public funds charges against all four defendants.
Smith also ruled on the defense motion to dismiss the case based on prosecutorial and investigative misconduct as pertained to what Burum’s attorneys, Stephen Larson and Mary Andrues, termed an “unconstitutional” raid on the defense camp. In question was the manner in which a search warrant prosecutors had obtained for files at the office of the Thomas Dale & Associates private investigation firm was executed.
Larson, in an effort to obtain information about continuing drug use on the part of Bill Postmus, hired Thomas Dale & Associates to carry out surveillance of Postmus. Thomas Dale & Associates contracted with another investigator, Theresa Speer at Alabama-based Lookout Resources in 2011, to assist in tracking Postmus. Subsequently, Postmus learned that someone had “hacked,” i.e. electronically accessed, his cell phone. He informed investigators with the district attorney’s office and they traced the hacking to Speer. Investigators approached Speer at her residence in Fairhope, Alabama and learned from her that she had been commissioned to surveil Postmus by Thomas Dale & Associates,
On January 31, 2013 investigators served a search warrant at the Thomas Dale & Associates office in El Segundo after having obtained a warrant. Because of the possibility that in the course of the search the investigators would come across confidential and privileged information relating to Burum’s legal defense, a special master was appointed to conduct the review of the files to be seized. On July 30, Andrues in court had played for Smith a portion of the security video taken on January 31, 2013 at the Thomas Dale & Associates office, depicting investigators and deputy district attorney Reza Sadeghi  rifling through files without the oversight of the special master, Brian Collins, who was in another room. This contradicted assertions by Sadeghi that neither prosecutors nor their investigators had examined the defense team’s potentially privileged material.
In his ruling on that matter, Smith said that “The search  at the TDA office was serving a legitimate government interest and it was lawful in its execution. They were investigating a crime of the cell phone being hacked. It is absolutely clear to me all those investigators were screening that information so they could see who hired Theresa Speers. Their only interest was billing documents as to who had hired TVA and Lookout Resources, Theresa Speers’ business. Once they determined it went to that issue, they sealed it and it went to the special master. There is no indication they took notes or looked at the contents of the files. There was no intent to harm the defendants or to gain any unfair advantage to gain any privileged information.”
He rejected the defense motion to dismiss the charges, finding there had been “no harm or prejudice to the defendant.”
Smith also rejected a second defense motion for dismissal based upon assertions that in obtaining a search warrant based upon statements from Adam Aleman, an assistant county assessor who had previously worked as a field representative in Postmus’ supervisorial office, investigators did not disclose on the affidavit for the search warrant that Aleman had entered into a plea arrangement on criminal charges relating to corrupt practices in his official capacity, along with allegations that  prosecutors did not properly instruct the Grand Jury on the extent of witness Postmus’ drug addiction.
Andrues told the court that during the course of his interviews with investigators, Postmus indicated he could not remember or otherwise was having trouble with his recollection  205 times. “His memory was shaped and manipulated by drug use and suggestive questioning and the passage of time,” Andrues told Smith.
Andrues presented testimony provided by district attorney’s office investigator Hollis Randles, who interrogated Postmus, culled from another court case in which Randles acknowledged Postmus’ drug addiction and steady use of methamphetamine.  In that testimony, Randles said users of methamphetamine tend to be “erratic and paranoid” and the use of the drug “can make them delusional.” Randles admitted during questioning in that case that an individual’s “credibility under the influence of drugs is questionable” and a factor that he considers in weighing the value of the evidence provided by that witness.
Larson and Andrues maintained Postmus was continuing to use drugs during his cooperation with the prosecution, during his grand jury testimony and thereafter. This left him in a highly suggestive state wherein he was  coached and coerced by investigators into telling them what they wanted to hear. Andrues suggested he was tailoring his statements to be able to get leniency when he is sentenced for the crimes he has entered guilty pleas to.
Deputy Attorney General Melissa Mandel said the defense’s contention that the district attorney’s office had dropped drug related charges against Postmus in return for his testimony “didn’t happen.”
Smith said the omission with regard to Aleman’s legal status on the affidavit did not rise to the level of misconduct by investigators or prosecutors that would justify dropping the charges against the defendants and that the defense could move to suppress at trial whatever information or evidence was obtained as a result of the search.
Smith rejected the motion to dismiss the case based on the grounds that Postmus’ drug use made him an unreliable witness and that the grand jury was given incomplete information about his drug use.  The judge said the prosecution had erred in some regards but there was no evidence of misconduct or the  withholding from the Grand Jury of any exculpatory evidence that would have resulted in the defendants not being indicted.
Smith also refused to throw out tax and perjury charges against Erwin that were based upon his not having properly reported having received gifts from Burum, including a Rolex watch and airfare and accommodations during a trip to New York and Washington, D.C., as well as a forgery count based on his having allegedly forged a check to himself from his own PAC.
“It’s a  little ironic the district attorney is alleging he controlled the PAC and yet committed forgery to get money out of the PAC,” Smith said. Despite that contradiction, Smith said the theory Erwin was legally charged under was “technically” correct because there was “testimony before the  grand jury that at the time he was not a director [of the PAC] and did not have signatory authority over that particular account so he could not have written a check on that account and signed it himself.”
The court did not bring to a conclusion a motion by the prosecution to disqualify Larson, Andrues and their entire law firm, Arent Fox, from continuing to represent Burum, based on Arent Fox’s recent hiring of former assistant U.S. Attorney Jerry Behnke, who previously oversaw the federal investigation of the Colonies case.  Behnke supervised the FBI’s Riverside office and was part of a task force that included the San Bernardino County District Attorney’s Office and the state Attorney General’s Office during the federal investigation into the Colonies matter. Ultimately, the U.S. Attorney’s Office decided against pursuing a case against any of the Colonies defendants.
Arent Fox hired Behnke in May. Larson is Behnke’s supervisor in the Los Angeles office of Arent Fox. Larson said in court papers that a fire wall has been constructed between Behnke and the Colonies case.
The matter was discussed between the judge, prosecutors and defense attorneys and the defendants in chambers on August 6, after which point Smith went on the record to state that an effort was ongoing to have the attorneys  resolve the matter without an evidentiary hearing.
Smith gave prosecutors until today, Friday August 8, to amend the indictment. He set the next court date for August. 25, when the defendants are to be arraigned on that amended indictment.

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