Contentious Colonies Case Sent Once Again To Fourth Court Of Appeal

(September 26)  As was anticipated, prosecutors and the defense in the Colonies Lawsuit Settlement Public Corruption Prosecution are appealing San Bernardino Superior Court Judge Michael A. Smith’s rulings this summer that variously dismissed some of the charges filed in the case and upheld others.
After defense attorneys earlier this year filed a series of five motions that together sought the dismissal of the entirety of the case against the four defendants, Smith during seven days of hearings in late July and early August made rulings that were favorable to both sides on various issues.
In the case, Rancho Cucamonga-based developer Jeff Burum, former Second District county supervisor Paul Biane, former assistant county assessor and one-time county sheriff’s deputy union president Jim Erwin, and Mark Kirk, former chief of staff for supervisor Gary Ovitt, are charged with having conspired in a bribery and extortion plot that effectuated a $102 million settlement for Burum’s company, Colonies Partners, LP, in November 2006. The payout of that money brought to an end a four-year duration lawsuit filed by the Colonies Partners over flood control issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland.
Prosecutors allege Burum, using Erwin as a consultant, threatened and coerced former supervisors Bill Postmus and Paul Biane to settle the lawsuit and bribed Kirk to influence Ovitt to support the settlement. After the $102 million changed hands, prosecutors maintain, Burum rewarded Postmus, Biane and Kirk with $100,000 donations to political action committees they controlled.
Postmus pleaded guilty to all 14 counts contained in an earlier indictment that was based on what was basically the same recitation of facts and alleged overt acts as contained in the indictment of Erwin, Burum, Kirk and Biane. After his guilty pleas were entered, Postmus served as a star witness before the grand jury that indicted the other four.
The case has been sharply contested since its inception. After the 29-count indictment was handed down on May 9, 2011, defense attorneys filed demurrers challenging the sufficiency of the case on a host of legal, factual and technical grounds. In August 2011, Judge Brian McCarville granted several of those demurrers, throwing out a number of the charges. The prosecution appealed McCarville’s ruling to the Fourth District Court of Appeal, a move which was matched by defense attorneys, who asserted that McCarville should have dispensed with even more of the charges than he actually did. The Fourth District Court upheld McCarville on all but one of his rulings favoring the defense and, in addition, threw out even more of the charges. Prosecutors then filed a last-minute appeal of the Fourth District Court’s ruling with the California Supreme Court.
After a year-long delay, the Supreme Court reinstated the charges and sent the matter back to the trial court. It was at that point that the several motions for dismissal were put before Smith.
At the heart of the case was a single conspiracy charge against each of the defendants, upon which the primary narrative of the case was hinged, including 43 overt acts. Defense attorneys, led by Burum’s primary counsel, former federal judge Stephen Larson, sought to derail the case by having the conspiracy element dismissed, based upon statute of limitations grounds. Larson in his court papers asserted that conspiracy charges are subject to a strict three-year statute of limitations rather than the four years alleged by the prosecution. Because the last overt act of the conspiracy, that is, the final delivery of the alleged bribe money in the form of the contributions to the political action committees, occurred in June 2007 and the indictment did not come until May 2011, Larson posited that the statute of limitations had been exceeded.
Prosecutors countered that because one of the acts alleged in the conspiracy involved government fraud, the statute for which is four years, the criminal case did not fall outside the statute of limitations. Smith sided with the defense on that question. Smith made another ruling favorable to the defense, dismissing twelve other charges in the case, likewise on statute of limitations grounds based on 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. Smith did, however, give the prosecution the opportunity to amend the complaint to clarify that both law enforcement officers and county officials had no substantial indication that the alleged crimes had occurred until November 2008. Prosecutors in August availed themselves of that option by filing an amended indictment with that clarification, preserving those charges.
Smith then heard several of the other motions for dismissal, 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. Smith denied those motions, allowing that portion of the case relating to  misappropriation of public funds – Penal Code Section 424 – to proceed,  as well as sustaining the charges of  tax and perjury against Erwin that were based upon his not having properly reported having received gifts from Burum. Smith did dismiss another set of perjury and tax fraud charges against Erwin, Biane and Kirk relating to the contributions to the political action committees they controlled, ruling such political donations cannot be considered income to the founders of the political action committees (PACS) or those in control of them. Smith  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.
In all, Smith left standing 18 of the original 29 charges in the indictment.  This created a delicate stand-off between the prosecution and defense.  Larson and the other defense attorneys – David Goldstein, representing Biane; Raj Maline, representing Erwin; and Paul Grech, representing Kirk – simultaneously succeeded and failed. They had achieved victory by getting the most serious charge – that pertaining to conspiracy – thrown out. But nearly two thirds of the case against their clients remained intact. At the other side of the table, Supervising Deputy California Attorney General Melissa Mandel and San Bernardino County deputy district attorneys Michael Abney, Lewis Cope and Reza Sadeghi were acutely aware that the dismissal of the conspiracy charge severely complicated their efforts, in that the dismissal erased a multitude of overt acts from the indictment upon which much of the case is based. The dismissal of the conspiracy charges and the narrative attached thereto rendered the job of convincing a jury of the guilt of the defendants on the remaining charges very difficult.
The question that ensued was whether the prosecution team would satisfy itself with proceeding with the eighteen charges Smith indicated had some order of merit or whether it should dig in even further and seek to revive the conspiracy count by means of an appeal. A consideration in this decision was that there simultaneously exists for the defense what in legal parlance is referred to as “writable” issues with regard to Smith’s sustaining of some of the other charges. By appealing Smith’s ruling on the big charge on which it had lost – the conspiracy charge – the prosecution would invite the defense to appeal Smith’s decision on the charges on which the prosecution had prevailed.
Recognizing the prosecution was leaning toward just such an appeal, Larson, working in conjunction with Dennis A. Fischer, who is considered one of the leading appeals attorneys in the state of California, began authoring a writ of prohibition and a writ of mandate on Burum’s behalf. On September 16 the writ of prohibition was filed with the Fourth Court of Appeal in Riverside.  On September 19, prosecutors filed notice of an appeal with regard to Smith’s July 23 ruling dismissing the conspiracy element of the case.  This week, Larson and Fischer were preparing to double down, putting the final touches on the writ of mandate.
The precise substance of the prosecution’s appeal has not been disclosed, as only the notice of the appeal has been filed. According to the court record,  it is Smith’s “7/23/2014 order sustaining defendant’s demurrers to Count 1 [i.e., the conspiracy charge] of the indictment without leave to amend and the 8/25/2014 order sustaining defendants demurrers to Count 1 of the first amended indictment without leave to amend” that is the subject of the appeal.
Because the defense had filed the writ of prohibition, the language in it is publicly available.
In the writ of prohibition, Larson and Fischer asserted “All criminal charges against Mr. Burum should have been dismissed for lack of probable cause. The trial court agreed with [the appellate court in one of its previous rulings] that the alleged bribery could not alone render the settlement ‘without authority of law.’”
In particular, according to Larson and Fischer, “The trial court should have dismissed misappropriation of public funds charges against Mr. Burum” because, they argued, the prosecution failed to properly lay the foundation for crimes of that nature, which are prohibited under section 424 of the penal code, and because such crimes must necessarily involve intent, an element of the crime the defense attorneys say was not present. “The trial court mistakenly held that the People’s admitted failure to instruct the grand jury on the intent element of Section 424 was harmless error,” Larson and Fischer maintain. “The factual record did not support a finding of probable cause as to the Section 424 charge.”
Furthermore, the writ resurrected the defense’s contention, which was rejected by Smith, that the prosecution failed to establish probable cause with regard to the charges that Burum facilitated Postmus, Biane and Kirk in the reception of bribes. In legal parlance, a so-called 995 motion is a request that the court dismiss criminal charges based upon the contention that there was insufficient probable cause to obtain an indictment.
“The trial court erred in denying Mr. Burum’s 995 motion to dismiss aiding and abetting bribery,” the writ of prohibition states. “The trial court erred in finding sufficient evidence to establish probable cause of Mr. Burum’s intent to aid and abet the receipt of a bribe.  The trial court erred in failing to dismiss all charges against  Mr. Burum based on the People’s failure to properly instruct [the grand jury] on the alleged tolling of the statute of limitations. This material instructional error should have resulted in dismissal of all counts against Mr. Burum.”
The writ of prohibition disputes the prosecution theory that Postmus and Biane, by voting to approve the settlement, were in effect diverting money from the settlement to themselves.
“In denying Petitioner Jeffrey Burum’s motion to dismiss the indictment pursuant to Penal Code section 995, the trial court disregarded California case law,” Larson and Fischer maintained. “The grand jury needed to find probable cause that the officeholders – supervisors William Postmus and Paul Biane in this case – not only knew they were receiving a bribe, but that they knew at the time of their votes that they  were allocating funds to themselves. Although the trial court correctly recognized this requisite knowledge element, it ultimately ignored the fact that the People did not instruct the grand jury on this legal requirement, did not argue this theory and did not submit any evidence supporting this factual proposition.
“If one thing is clear from the record,”  the writ of prohibition states, “it is that the People repeatedly failed to properly instruct the grand jury on crucial elements needed to make a factual probable cause finding. Any single one of the People’s incorrect instructions should have raised great doubts about the propriety of the grand jury’s findings, and those errors were only compounded by the lack of evidence to support the People’s case.”
Larson and Fischer  assert that “the trial court acknowledged the California Supreme Court’s ruling that the People had the express burden of presenting evidence that Mr. Burum engaged in ‘additional conduct’ independent of offering or giving a bribe – with the intent to aid and abet supervisors Postmus and Biane in receiving bribes. Again, however, the trial court ultimately disregarded the law of the case. It incorrectly held that the grand jury need not be instructed on this ‘additional conduct’ element, a conclusion that strips the Supreme Court’s ruling of any meaning at the grand jury stage.  It then ignored the People’s critical concession that they could not show that Mr. Burum acted with the intent for supervisors Postmus or Biane to receive bribes – a concession the People had no choice but to make given that all the evidence and all the argument before the grand jury was that Mr. Burum’s intent was to obtain the settlement agreement. Nevertheless, the trial court held there was sufficient evidence to support the conclusion that Mr. Burum could have held ‘dual’ intents to both give the alleged bribes to obtain the settlement and to have supervisors Postmus and Biane receive bribes. Although it is true that a person can theoretically act with dual intents (a point recognized by the Supreme Court), in this case the grand jury heard no evidence, nor even any argument, of any ‘dual’ intent. Absent this requisite probable cause, the bribery counts also must be set aside. The People’s multiple instructional errors, combined with the lack of admissible evidence supporting their theories of the case on these counts, caused Mr. Burum to be indicted on less than probable cause. Given the materiality of the People’ errors, the trial court should have granted Mr. Burum’s Section 995 motion. A writ of prohibition is warranted to reverse the trial court’s error and restrain trial on those charges.”
Larson and Fischer maintain that the indictment was based on the prosecution’s unsupported theory rather than the marshalling of fact. The lawyers said  the prosecution relied on “guesswork, speculation or conjecture” in instructing the grand jury that “that supervisors Postmus or Biane knew before the vote that they were appropriating the settlement funds to themselves. Supervisor Postumus testified that prior to his vote he had no knowledge of any specific thing he would receive.  In fact, he was emphatic that he did not find out he might receive a PAC contribution (or any payment of money) until several months after the settlement vote.  Nor did anyone else testify that supervisor Postmus or supervisor Biane knew that the supposed bribes would take the form of PAC contributions – or that they were even going to receive PAC contributions – until months after the settlement votes. Bare speculation does not satisfy the probable cause standard of Section 995.”
The most significant element of the writ for prohibition is buried deep within the document, contained in a passage by which  Larson and Fischer marshal what may prove out as the central piece of evidence supporting Burum’s innocence if the case actually goes to trial, consisting of a court finding that Colonies Partners LP was due the $102 million.
“There is another fact that reinforces the lack of probable cause here: The fact that the payment of $102 million was actually made pursuant to the inverse-condemnation judgment entered against the county on March 29, 2007, not pursuant  to the settlement vote of November 28, 2006,” Larson and Fischer state in the writ. “Specifically, Judge [Christopher] Warner ordered that the sum of $102 million be paid by the county to Colonies Partners LP as follows: (a) The sum of twenty-two million and 00/100ths dollars ($22,000,000.00), which sum was advanced by the [county] and paid to [Colonies] on November 29, 2006. (b) The sum of eighty million and 00/100ths dollars ($80,000,000.00) to be paid in full on or before May 29, 2007. Given this order, the board of supervisors had no choice but to appropriate the $102 million in order to satisfy the judgment against the county.”
Prior to the vote by the board of supervisors in November 2006 to confer the $102 settlement on the Colonies Partners, the civil case had gone to a bench trail, that is, one without a jury in which Warner was empowered by the mutual consent of the plaintiff and the defendant to decide both questions of fact and questions of law. Warner found in the Colonies Partner’s favor but had not, at the time of the settlement, ruled with regard to the amount of damages.
Thus, the prosecution’s contention that Burum had bribed Postmus, Biane and Kirk would be subject to contradiction were the criminal case to go before a jury, as it could be demonstrated that Burum and his company were already assured of a positive outcome on the civil suit against the county.
The defense’s writ of mandate was filed on September 25. By press time the Sentinel had not fully examined nor assimilated that document.
Phone calls to the prosecution team seeking comment on the writ for prohibition did not elicit any response.

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