Defense Marshals Documents In Alleging Colonies Prosecution Misconduct

The defense team for the central defendant in the Colonies Lawsuit Settlement Public Corruption Case this month, some four-and-a-half-years after the four defendants were indicted, turned the tables on the prosecution team, marshaling at last evidence recently gleaned from the discovery process to show that prosecutors engaged in what defense attorneys have characterized as a fraud upon the court to obtains and sustain that indictment.
The question that has descended over the San Bernardino Justice Center, where the case is set to go to trial on February 1, is the degree to which the judge hearing the case, himself a former prosecutor, is inclined to perceive as deliberate material wrongdoing the action by prosecutors in obscuring, hiding or misrepresenting what the defense team, which is headed by a former federal judge, claims is exculpatory evidence.
On November 5, lawyers Stephen Larson, Jennifer L. Keller, Mary Carter Andrues and Jonathan E. Phillips filed a supplemental brief with Judge Michael A. Smith in which they sought to persuade him that Penal Code Section 939.71 requires that the indictment against Jeff Burum, Paul Biane, Jim Erwin and Mark Kirk be dismissed.
The Colonies Lawsuit Settlement Public Corruption Prosecution arose from the 3-2 decision of the county board of supervisors nearly nine years ago to confer a $102 million payout on the Colonies Partners development consortium to put to rest a lawsuit that company had brought against the county over flood control issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in Upland. In that lawsuit, the Colonies Partners claimed that the county’s flood control district, in constructing for the City of Upland a floodwater channeling system known as the 20th Street Storm Drain, created a massive drainage problem on its property, rendering it undevelopable and delaying the sale of other property within the subdivision such that the Colonies Partners suffered a substantial monetary loss. In response to the lawsuit, the county asserted it had the right, based upon flood control easements granted to the county by the former owner of the property, the San Antonio Water Company, in 1933, 1934 and 1939, to channel water onto the property. From 2002 until 2006, the office of county counsel, the county’s in-house lawyers, including deputy county counsel Mitch Norton, had worked with two outside law firms – Munger, Tolles and Olson and Jones Day – in spiritedly denying the Colonies Partners’ contention that the county had done anything inappropriate in using quarries that had been converted to catch basins on the Colonies property, which was shown on regional maps as an undevelopable flood zone, as a repository for the storm drain water.
The prosecution maintains that settlement was tainted by extortion, bribery, kickbacks, fraud and graft.
Jeff Burum, who with Dan Richards was one of the two managing principals in the 19-member Colonies Partners, was accused by prosecutors in a 29-count indictment handed down in May 2011 of having worked with former San Bernardino County sheriff’s deputy union president Jim Erwin to first extort and then bribe former county supervisors Bill Postmus and Paul Biane to get them to vote in favor of the settlement in November 2006. Prosecutors further alleged that Burum then provided a kickback to Mark Kirk, the chief of staff to another former supervisor, Gary Ovitt, whose third vote for the settlement was crucial to its passage.
The indictment was built around the theory that Burum and Erwin, with the assistance of public relations consultant Patrick O’Reilly, conspired to threaten Postmus and Biane with exposure pertaining to their respective homosexuality/drug use and financial insolvency during the 2006 campaign season when Postmus was vying for county assessor and Biane was stumping for a measure to increase the pay of county supervisors. Additionally, the indictment charges that the conspiracy broadened and intensified with the provision of four separate $100,000 kickbacks provided to Postmus, Biane, Kirk and Erwin in the form of contributions to political action committees each of those parties set up or arranged to have set up after Postmus and Biane acceded to the threats and voted to approve the $102 million settlement. Kirk, according to the indictment, was rewarded with the $100,000 donation to his political action committee for having persuaded Ovitt to vote for the settlement.
Central to the defense’s theory of Burum’s, Biane’s, Erwin’s and Kirk’s innocence is that the $102 million settlement was a reasonable one.
After Postmus, Biane and Ovitt approved the settlement in November 2006, the board of supervisors gave direction to county counsel to seek, through the insurance polices the county had with the California State Association of Counties Excess Insurance Authority and Travelers Insurance, a portion of the money paid out in the settlement. The same month that the board voted to confer the $102 million settlement on the Colonies Partners, it also elevated Ruth Stringer to the position of interim county counsel. The board bestowed upon her the title of county counsel the following year. During her tenure, the county soft-pedaled its previous representations that the Colonies Partners were due nothing in return for the county’s use of the flood control easements on that company’s property, and instead pressed the case that the county was entitled to reimbursement from its insurance providers. In making that case, the county contradicted several elements in its position in the civil suit against the Colonies Partners.
Relatively early on, in 2007, Travelers Insurance provided the county flood control district $9.5 million to satisfy its indemnification responsibility with regard to the Colonies Partners’ lawsuit settlement. But the California State Association of Counties Excess Insurance Authority dragged its feet, seeing extenuating circumstances with regard to the settlement that potentially mitigated or obviated its indemnification of the county. Finally, in January 2009, the California State Association of Counties Excess Insurance Authority officially rejected the county’s claim, essentially making assertions that paralleled those later alleged by prosecutors, i.e., that the settlement was tainted by untoward acts, corruption on the part of some of the members of the board of supervisors, as well as extortion, bribery, graft and kickbacks.
In October 2010, the county, represented by Norton and an outside attorney, Costa Mesa-based Todd Theodora and his law firm, filed a lawsuit alleging the California State Association of Counties Excess Insurance Authority skipped out on its coverage obligation. “The California Association of Counties never adjudicated this claim in good faith because it did not want to have to provide coverage for a loss of this magnitude,” that suit stated.
The matter went before the Orange County Superior Court and ultimately, on November 10, 2014, Orange County Superior Court Judge Franz Miller ruled in favor of the county and against the California State Association of Counties Excess Insurance Authority, finding the county damaged the Colonies Partners, and as such the county was entitled to an arbitration award against the California State Association of Counties Excess Insurance Authority for the $10 million it was owed as part of the insurance coverage plus legal costs and interest. In a document signed on April 15 and filed on April 16, 2015, the California State Association of Counties Excess Insurance Authority agreed to the payment of $14,502,465.43 to the county as a final settlement of the claim.
In making the county’s case for recovering the $10 million from the California State Association of Counties Excess Insurance Authority, Norton and Theodora and members of Theodora’s law firm repeatedly posited an argument before a panel of arbitrators with the Judicial Arbitration and Mediation Services based in Ontario and the Orange County Superior Court that San Bernardino County had engaged in actions or “offenses or wrongful acts” against the Colonies Partners which resulted in “physical damage” to the Colonies Partners’ property and/or assets, such that the $102 million settlement was a reasonable one given that the value of one of the basins constructed on the Colonies Partners’ property to hold the storm water was $85 million, the Colonies Partners’ had estimated the cost of managing the basin over time at $75 million, the Colonies Partners valued at $43 million the lots the company claimed were devalued due to the cloud on their title which came about because of the county flood control district’s interpretation of its easements, the three-year delay the construction of Phase II of the project cost the Colonies Partners $36 million, and that the Colonies Partners sustained an $11 million loss because of higher infrastructure development costs as a result of the county’s action.
The county was involved in another civil suit growing out of the Colonies development. In that suit, the county was seeking money from the City of Upland, the California Department of Transportation and the county’s transportation agency, San Bernardino Associated Governments, known by its acronym, SANBAG. That suit was referred to as the SANBAG suit and in it, the county maintained that the damage inflicted on the Colonies Partners was at least partially due to actions by Upland, Caltrans and SANBAG.
The lead attorney on Burum’s defense team, Stephen Larson, has seized upon the assertions made by Norton and Theodora in the court papers in the indemnification suit against The California State Association of Counties Excess Insurance Authority to posit the argument that prosecutors, when questioning Norton before the grand jury that indicted his client and the other defendants in 2011, failed to elicit from Norton testimony that would have potentially demonstrated to the jurors that the $102 million settlement was not unreasonable and Burum therefore had no reason to unduly influence, either by extortion or bribery, Postmus, Biane and Ovitt through Kirk. To buttress his argument, Larson subpoenaed Norton, along with Stringer, who has since retired, Theodora, and the county’s chief executive officer, Greg Devereux, as well as former assistant district attorney Jim Hackleman, who was a part of the prosecution team that obtained the indictment against Burum, Biane, Erwin and Kirk. Hackleman is now retired but is, according to the district attorney’s office, a “volunteer” member of the prosecution team.
By cross examining Norton, Stringer, Theodora, Devereaux and Hackleman, Larson intended to demonstrate to Smith that the district attorney’s office not only had knowledge of the exculpatory information that Norton and Stringer, who also testified before the grand jury, possessed, but that prosecutors also intentionally hid that information from the grand jury. Additionally, defense attorneys have obtained information to the effect that Stringer, while serving in the capacity of county counsel, was secretly reporting to the district attorney’s office privileged information gleaned from closed door sessions of the board of supervisors, and that she was doing so without the consent of the members of the board. This was, Larson asserts, a violation of attorney-client privilege, and a violation of Biane’s constitutional rights against self incrimination.
Less than two weeks prior to the filing of the brief, the county of San Bernardino in an effort to quash the subpoenas for Devereaux, Stringer, Norton and Theodora, agreed to turn over hundreds of documents the defense had been seeking through the discovery process, but which the county and the prosecution had heretofore successfully resisted. Those documents, en masse, came into the possession of the defense on October 30. It was many of those just-obtained documents around which the brief was constructed and filed with the court on November 5. Those documents, the defense maintains, provide evidence that runs contrary to the prosecution’s central theory of the case, which holds that the $102 million payout to the Colonies Partners was not justified and was, as such, a gift of public funds and the result of corruption.
According to Larson, Keller, Andrues and Phillips “The exculpatory evidence at issue is the county’s recognition that its pre-settlement analysis of the settlement agreement was wrong, both legally and factually, and that the $102 million settlement amount was not only objectively reasonable, but in fact a bargain for the county. Every time Mr. Burum has raised this issue, however, the People have argued (1) they did not know about this exculpatory evidence (or at least that Mr. Burum could not prove their knowledge), and (2) the evidence is not exculpatory, but instead irrelevant to the defendants’ criminal intent. The county’s recent production confirms that both of these arguments are false. First, the county has produced records conclusively establishing that prosecutors from both the district attorney’s office and the attorney general’s office – the very same prosecutors handling this case – had extensive pre-grand jury communications and meetings with county attorneys regarding the reasonableness of the settlement. The only reason Mr. Burum has not previously been able to ‘establish’ or ‘show prosecutors were aware’ of the county’s changed position, as the People have deridingly stated, is because the People withheld these communications from Mr. Burum and the Court. Indeed, the documents produced by the county last Friday reveal the existence of additional evidence the prosecution is still withholding – including lengthy interviews of county attorneys by prosecutors and their investigators. While Mr. Burum cannot know the specifics of those discussions until the People finally divulge them, the contents of the communications already produced by the county – not to mention the fact that prosecutors have kept these interviews hidden for almost five years – strongly suggests they involved the disclosure of substantial exculpatory information relating to the settlement.”
According to Larson, Keller, Andrues and Phillips, the county had “confidence that Mr. Burum could not disprove their denials“ based on “their steadfast refusal to produce any discovery regarding their pre-grand jury communications with county attorneys concerning the county’s post-settlement position on the reasonableness of the settlement agreement. Despite numerous requests for such discovery dating back to June 30, 2011 – barely a month after the indictment – the People have avoided producing these communications at all costs. Moreover, the People misled the Court and Mr. Burum into believing no such communications existed. In a March 15, 2012 motion to compel, Mr. Burum noted that ‘[t]here have been several instances where Mr. Burum has learned from independent sources or happenstance that the People are in possession of significant evidence that undermines the charges levied at Mr. Burum and undermines the credibility of its key witness.’ The People’s response foreshadowed the denials listed above: ‘If Burum has independent sources showing the People are not producing “significant evidence,” why hasn’t Burum identified the sources or the evidence? Unless and until Burum does so, the People cannot address the secret claims other than to state, unequivocally, that the People have never intentionally withheld material evidence and the People have diligently met their discovery obligations and the People will continue to diligently produce discovery.’”
But after the county turned over the documents the defense sought in exchange for a stipulated agreement not to force the issue with regard to subpoenaing Devereaux, Stringer, Mitchell and Theodora, it is now demonstrable that the prosecution perpetrated a fraud upon the court, according to Larson, Keller, Andrues and Phillips. “The county’s production has proven the People’s denials to be false,” the brief states. “In reality, both the district attorney’s office and the attorney general’s office had extensive communications and meetings with county counsel and the county’s current outside counsel, Todd Theodora, prior to the grand jury proceedings. In fact, Mr. Norton’s billing records include over 29 entries for communications with prosecutors, including four lengthy interviews on May 28,2010 (3.75 hours), January 21, 2011 (4.25 hours), January 27, 2011 (4 hours), and January 28, 2011 (3 hours). More importantly, those communications and meetings (1) clearly involved the county’s position that the settlement agreement was objectively reasonable, and (2) confirm that prosecutors were well aware of the county’s indemnity action and arbitration proceeding, as well as the positions taken therein. For example, in a March 2010 letter to the board of supervisors, Senior Assistant [California] Attorney General Gary Schons asked the Board to waive the attorney-client and mediation privilege ‘as to any and all litigation with, or connected with, the Colonies Partners lawsuit’ – specifically including ‘the indemnity action filed by the county against SANBAG, CalTrans, and the City of Upland.’”
The prosecution team is composed of prosecutors with both the California Attorney General’s Office and the San Bernardino County District Attorney’s Office, including Schons, Deputy California Attorney General Melissa Mandel, San Bernardino County Deputy District Attorney Lewis Cope, San Bernardino County Deputy District Attorney Michael Abney, San Bernardino County Deputy District Attorney Reza Sedeghi, and Hackleman, who was assistant district attorney prior to his retirement.
The supplemental brief continues, “In fact, Mr. Burum can now prove that county counsel was providing pleadings from the SANBAG case to prosecutors – which, as discussed above, the People denied during the hearing on the original Johnson motion. While Mr. Burum has no way of knowing for sure how much of the pleadings were provided (because the People have refused to provide that discovery), at the very least the prosecutors received the second amended complaint in the SANBAG case from Mr. Norton on March 15, 2010.”
A Johnson motion is a request of the court to dismiss an indictment based on the precedent-setting case Johnson v. Superior Court and the principle it established that prosecutors have a duty to provide to the grand jury any exculpatory evidence they possess relating to a potential defendant while they are simultaneously presenting incriminating evidence pertaining to that prospective defendant while seeking an indictment from the grand jury. Failure to provide that exculpatory evidence to the grand jury or withholding it from the grand jury can be deemed as grounds to vacate the indictment. The defense previously presented a Johnson motion to Judge Smith and is again doing so.
According to Larson, Keller, Andrues and Phillips, a smoking gun exists in the form of an email from Hackleman to Stringer in which he provides with his own words evidence that he was engaged in an effort to hide evidence and make misrepresentations to the grand jury.
“If there remains any doubt regarding the prosecution’s pre-grand jury knowledge of this exculpatory evidence,” Larson, Keller, Andrues and Phillips state, “it evaporates based on an April 22, 2010 email from Assistant District Attorney James Hackleman to Ms. Stringer (cc’d to Mr. Schons): ‘You express two fears for such a waiver as it relates to the county’s ongoing indemnity action. Although the above is limited to only the DA and AG, SANBAG, Cal Trans and Upland may argue that a waiver as to any is a waiver as to all. ….I fear this, that this waiver issue is only complicated if we make it so. In many ways this is pretty simple. In the indemnity action you seek to show that the settlement was reasonable. On the other hand, in our criminal action we seek to be prepared to show that it was unreasonable. We are simply not on the same path. To attempt to reconcile those two very different paths is, to me, an epic challenge – one that is certainly complicated. If matters were different and the indemnity action were stayed and an 1092 action filed, we might find this a very easy issue with there being a unity of interest. But that is not the case and I understand why.’ In short, the People can no longer deny that they were aware well before the grand jury proceedings that the county had recognized the settlement agreement was objectively reasonable and fully justified. Nor can they continue to feign pre-grand jury ignorance of the county’s various indemnity actions, or of the fact the county was• aggressively advocating a position in those proceedings that was diametrically opposed to the position being taken by prosecutors before the grand jury.”
Larson, Keller, Andrues and Phillips maintain that Hackleman’s “recognition of the fundamentally divergent positions being taken by the county and the prosecution… contradict[s] the over-simplified and circular argument regarding criminal intent that the People have advocated in opposing Mr. Burum’s motions.” Larson, Keller, Andrues and Phillips note that the prosecution has asserted that “[t]he later-expressed views of county lawyers that the settlement was objectively reasonable is wholly irrelevant to the pre-crime belief of the defendants that the settlement was unreasonable.” However, according to Larson, Keller, Andrues and Phillips, the defendants in general and Burum in particular never believed the settlement was unreasonable and thus, the emergence of evidence showing that the county after November 2006 took the position that the Colonies Partners were due compensation from the county is “rather than evidence of corrupt intent… evidence of the three supervisors’ [Postmus, Biane and Ovitt] intent to protect the County of San Bernardino and its citizens from hundreds of millions in additional damages. Mr. Cope and Ms. Mandel told the Grand Jury that there was only one answer to the question of why three supervisors voted in favor of the settlement agreement against the advice of all county lawyers: corruption. As discussed above, this exculpatory evidence provides the real answer: Supervisors Ovitt, Postmus, and Biane went against the advice of counsel because that advice was wrong. The settlement was properly vetted, not by the county’s attorneys but by the supervisors themselves. In fact, this is precisely what Mr. Biane told the civil grand jury in December 2006 – just months after the settlement agreement – when asked why he voted to approve the settlement against the advice of the county’s lawyers. Mr. Biane told that grand jury that ‘ultimately, in my heart, I believed that, that the [C]olonies was damaged and I still believe that today and that’s what I base[d] my vote on.’”
Larson, Keller, Andrues and Phillips continue, “Indeed, prosecutors knew that if they allowed the county’s attorneys to tell the grand jury the entire story, they would contradict the prosecution’s central theory of the case. In its opening statement, the prosecution promised the grand jury the evidence would show that the county’s attorneys told the board of supervisors ‘there’s no way in the world that you’ll be able to demonstrate that this was reasonable, that this settlement is reasonable’ and thus the supervisors must have ‘voted to settle this lawsuit for $102 million as a result of a conspiracy to commit extortion and bribery.’ But in fact, by the time they testified to the grand jury, the county’s attorneys had already said the opposite in the SANBAG litigation. And although the prosecution repeatedly belittled the Colonies’ damages claims, the prosecution knew the opposite was true – that the county’s attorneys had already concluded that “the 20th Street Drain … caused damage to Colonies’ property, required Colonies to expend funds to make improvements to its property, reduced the property available for development by Colonies, delayed development of Colonies’ adjacent property, subjected Colonies to additional regulation by state agencies, and imposed directly and/or indirectly other burdens, costs, duties, and obligations on Colonies.”
According to Larson, Keller, Andrues and Phillips “facts directly contradicted what the Grand Jury was told by prosecutors and witnesses.” Further, the prosecutors framing of the information presented to the grand jury “dissuaded” the grand jury’s members from examining a compendium of documentation in which the exculpatory evidence was buried. “The prosecution’s one-sided presentation of evidence – which included more than 15 witnesses answering at least 585 questions designed to elicit how unreasonable and unsupported the settlement was,” contained “not one question designed to elicit evidence to the contrary. In short, in addition to failing to inform the grand jury of the existence and nature of this exculpatory evidence, the prosecution purposefully and manipulatively dissuaded the grand jury from calling for that exculpatory evidence themselves. As this Court has previously recognized, such conduct is improper and grounds for dismissal.”
Previously, Judge Smith appeared unreceptive to defense arguments that the rectitude or justification of the $102 million settlement had any bearing on the criminal matter, going so far as remarking, during hearings for previous defense motions in the Summer of 2014, that the Colonies Partners might have been entitled to the $102 million but that extortion and bribery may still have taken place. On November 6, during the extension of a hearing that began on October 30 to consider defense motions to dismiss the indictment in whole, Smith, in the afternoon session, undertook pointed questioning of Mandel, achieving from her an on-the-record acknowledgment that she and other members of the prosecution team were aware the county had adopted the position that the $102 settlement was a justifiable one. Mandel admitted the prosecution was aware of the county’s position in both the SANBAG indemnity lawsuit as well as the insurance carrier indemnity arbitration proceeding.
At one point in the hearing, Mandel complained the defense was filing lengthy motions to delay the February trial date. Larson took issue with this characterization, it being his contention that the motions are now being belatedly filed because prosecutors had previously withheld evidence in the case.
Smith again continued the hearing until December 18 on several of the dismissal motions, with instructions that further documents sought by the defense will be provided to them by December 1.
Smith on November 6 denied one of the five defense motions that called for the suppression of records from Burum’s American Express account. The defense maintained, and Smith largely concurred, that a December 2, 2008 search warrant affidavit prepared by district attorney investigator Hollis “Bud” Randles failed to disclose that the informant upon whose statements most of the information in the affidavit was based, former county assistant assessor Adam Aleman, had six pending felony charges against him and was seeking leniency by cooperating with the district attorney’s office in its investigation of the Colonies matter. While Smith made a finding that Randles, an experienced investigator, had been at best reckless in omitting that information and perhaps had even intentionally sought to prevent the judge who issued the warrant, Cara Hutson, from knowing of Aleman’s history, he turned down the request to suppress the credit card account information, saying the defense did not have standing to make that limitation on evidence.
It is the defense team’s hope that Smith is now and by December 18 will remain sufficiently sensitized to what the defendants claim are issues of prosecutorial misconduct relating to the hiding of exonerating information from the grand jury and that he will, rather than pursuing remedies that would include facilitating complaints about the various prosecutors’ action to the California State Bar, simply dismiss the indictment.
Prosecutors nevertheless continue to propound their theory that the $102 million settlement was tainted by conspiracy, bribery, extortion, graft, fraud, perjury and public corruption, and they are pressing Smith to allow the case to go to trial in February so that Mssrs. Burum, Biane, Erwin and Kirk and their actions can be assessed by a jury of their peers.

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