Walker Departs As County Auditor/Treasurer As Blackmail Probe Hits

By Mark Gutglueck
Unexpectedly, San Bernardino County Auditor-Controller Larry Walker has announced he is retiring in March.
Walker’s decision has thrown the auditor-controller’s division into turmoil, as there are suggestions that there is more to his exodus than meets the eye.
At issue is who will be chosen to replace Walker, as reports drift in suggesting his exodus is being forced as a consequence of his grooming of his logical heir apparent, Matt Brown, the office’s second-in-command.
Rumors abound that Walker is leaving because federal and state investigators are closely scrutinizing his decision six years ago to cashier his longtime loyal assistant, Betsy Starbuck, who had been with Walker through thick and thin in his many years with the county, both as Fourth District county supervisor and in his role as auditor-controller, and instead promote Brown, whose role in laundering campaign contributions on behalf of, to, from and between a whole host of political figures, some of whom have been convicted or indicted on political corruption charges, was widely recognized in county political services at that time. Dual federal and state probes now have Brown’s activity under a microscope.
Walker, whose father had been a high ranking official with the Chino Valley Unified School District, embarked on what would prove to be a highly successful political career in 1978, when at the age of 27 he was elected to the Chino City Council. Two years later, due in part to the strength of his family name and his performance as a councilman, he was elected Chino mayor. In 1986 he vied against Fourth District Supervisor Gus Scropos, who, like Walker was himself an up and coming young attorney who hailed from Ontario, rather than Chino, and had been appointed by the board of supervisors to replace Robert O. Townsend. Walker defeated Scropos, who would subsequently make his own deep political mark as Ontario mayor, deputy district attorney, superior court judge and municipal prosecutor.
Upon Walker’s departure as Chino mayor, he was succeeded by Fred Aguiar, who had been elected to the Chino City Council while Walker was on that panel. Indeed, for three decades beginning in the 1960s, the Chino City Council served as a fertile breeding ground for politicians who flourished at the state and county level. Those included Aguiar, who would serve in the California Assembly from 1992 to 1998; Walker; and before them, Ruben Ayala, who after serving as Chino Mayor served as Fourth District county supervisor and then 24 years in Sacramento in the State Senate.
Walker at the time of his election to the board of supervisors represented, with Jon Mikels, the new generation of political leadership in the county, as they were one, two and three decades younger than their board colleagues and those they had replaced. Walker held the further distinction of being the lone Democrat on the board of supervisors, with San Bernardino County at that time being one of the most heavily secure GOP bastions in the state.
Gravitating to Walker was another young Democrat professional, Betsy Starbuck, a political operative who went to work on his staff. In time, she would rise to become his chief of staff. She was instrumental, as well, in guiding Walker’s political fortunes. Starbuck served in both 1990 and 1994 either as the official or de facto manager of Walker’s reelection campaigns. And in 1998, she was at his side when he successfully vied for county auditor/controller/recorder/clerk to replace Errol J. Mackzum. Starbuck subsequently became assistant auditor/controller/recorder/clerk, Walker’s second-in-command. Over the years she acquired a mastery of all or nearly all of the office’s functions. There were grounds to believe, though there was no explicit agreement or arrangement, that Starbuck was being groomed as Walker’s eventual replacement as auditor/controller.
In 2010, as Walker was approaching his third reelection campaign for auditor/controller/recorder/clerk, Prior to the 2010 election, the county moved to consolidate the treasurer-tax collector position with that of the auditor-controller, moving the recorder and county clerk’s functions into the assessor’s office, which is also an independently elected post. The board appointed Walker to replace former treasurer-tax collector Dick Larsen, whose position was eliminated as a consequence of the reorganization. That same year, the auditor/controller’s office was also hit with an internal shake-up. In one fell swoop, Starbuck was out, replaced with Matt Brown, who for more than seven years had been chief of staff to Paul Biane, the Second District county supervisor since 2002.
Brown’s transition into the auditor/controller/treasurer/tax collector’s office was a problematic one. More than a year previously, investigators with the San Bernardino County District Attorney’s Office had uncovered evidence that he had been using political action committees he had set up and controlled, in particular the San Bernardino County Young Republicans and the San Bernardino County Taxpayers Association, to launder campaign contributions to a number of candidates, campaigns and individuals. In this way, Brown facilitated obscuring, masking or in some other fashion hiding where money originated and where it was actually spent or diverted. In some cases the money passed through this process was a contribution from an earnest donor intended for a legitimate political cause. In other cases the money was intended as a bribe, a quid pro quo provided to a politician in exchange for a vote or action that benefited the provider of the money.
Brown, understanding that political action committees serve as legitimate collecting entities for people of a given political mindset to pool their money and effectively vector it to a cause in which they collectively believe, also recognized that a political action committee can be used more nefariously, allowing a candidate to receive money from an individual or entity with an unsavory reputation or record, who or which, if directly connected to the candidate, might hurt his or her electability. His political action committees were used in this fashion, in violation of state reporting laws. Even more seriously, the political action committees he controlled, or at least some of them, were utilized to brazenly convert donations into cash that simply went into someone’s pocket or personal bank account.
Brown became known as the “King of the San Bernardino County PACs,” creating at least four such entities. In addition to the San Bernardino County Young Republicans, which he initiated in 2006, he created one for use exclusively in the City of Grand Terrace, where he resided, and one exclusively for politicians in the City of Colton. On March 17, 2008, Brown formed the San Bernardino County Taxpayers Association PAC and named J.M. Olchawa as the PAC’s treasurer. Olchawa, like Brown was a resident of Grand Terrace. Olchawa endowed the San Bernardino County Taxpayers PAC with its first operating capital in the form of a $100 contribution. Less than a month later, on April 9, 2008, the San Bernardino County Young Republicans PAC contributed $40,000. to the San Bernardino County Taxpayers Association PAC. The following month, on May 29, 2008, a political action committee controlled by county assessor Bill Postmus, the Inland Empire PAC, infused the San Bernardino County Taxpayers PAC with $3,000 and the month after that, on June 2, 2008, with another $2,000. In the less than two month period between the $40,000 contribution from Brown’s own Young Republicans PAC on April 9, 2008 and Postmus’ Inland Empire PAC’s $2,000 donation on June 2, 2008, the San Bernardino County Taxpayers Association PAC received a substantial amount of money in the form of both contributions and loans, all from other political figures. On April 25, 2008, the Committee to Elect Paul Biane gave the San Bernardino County Taxpayers Association PAC a $15,000 contribution. On April 29, 2008 the Committee to Elect Dick Larsen provided the San Bernardino County Taxpayers Association PAC with a $10,000 loan. Larsen was then the county treasurer. On May 5, 2008 the Committee to Elect Gary C. Ovitt made a $15,000 contribution to Brown’s San Bernardino County Taxpayers Association PAC. On May 9, 2008, the Josie Gonzales for Supervisor campaign provided a $15,000 contribution to the San Bernardino County Taxpayers PAC. On May 16, 2008, Bill Emmerson for Assembly 2008 made a $5,000 contribution to Brown’s recently formed PAC. The same day, the San Bernardino Public Employees Association PAC provided Brown’s San Bernardino County Taxpayers Association PAC with a $10,000 contribution. On May 23, 2008, the Committee to Elect Gary C. Ovitt provided Brown’s PAC with a $10,000 loan. On May 27, 2008, the Hansberger for Supervisor Committee made a $25,000 contribution to the San Bernardino County Taxpayers Association PAC. The next day, May 28, the Paul Cook for Assembly 2008 Committee provided Brown’s PAC with a $5,000 loan. The same day, the Committee to Elect Paul Biane made a $10,000 loan to Brown’s PAC. On May 29, Bill Emmerson for Assembly 2008 made a $5,000 contribution to the PAC and on June 2, 2008, the Hansberger for Supervisor Committee made a $15,000 contribution to the San Bernardino County Taxpayers Association PAC.
The lion’s share of the money Brown’s PAC took in was used to fund Hansberger’s effort to be reelected as county Third District supervisor that year. According to campaign disclosure documents, the San Bernardino County Taxpayers Association PAC on May 18 provided the Hansberger for Supervisor Committee with $57,030.70 and on June 30, 2008, more than three weeks after Hansberger had lost the election to Neil Derry on June 3, Brown’s PAC gave the Hansberger for Supervisor Committee $100,920.29.
By 2009, investigators with the San Bernardino County District Attorney’s Office had taken notice of the incestuous relationships among the political action committees of several San Bernardino County politicians. In particular, investigators were zeroing in on political action committees under the control of Brown and Biane; Postmus; Mark Kirk, who was the chief of staff to supervisor Gary Ovitt; and Jim Erwin, a former San Bernardino County sheriff’s deputy who had been the president of the deputies union, the Safety Employees Benefit Association (SEBA), who in 2007 was hired by Postmus to serve as assistant assessor. Based upon the district attorney’s investigators’ findings, prosecutors would later allege that $400,000 in the form of separate $100,000 contributions made to the political action committees controlled by Biane/Brown, Postmus, Kirk and Erwin were in fact bribes. Those bribes had been paid, prosecutors alleged in a 2010 criminal filing and in a superseding indictment handed down in 2011, in return for a vote made in November 2006 to confer upon the Colonies Partners a $102 million payment to settle a lawsuit that company had brought against the County of San Bernardino and its flood control district over drainage issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivision in northeastern Upland. In a 3-2 vote, Postmus, who was then chairman of the board of supervisors, Biane and Ovitt supported the $102 million settlement and supervisors Josie Gonzales and Dennis Hansberger opposed it.
Of particular interest to investigators and prosecutors was that on on April 9, 2008, just 23 days after Brown had formed the San Bernardino County Taxpayers Association PAC on March 17, 2008, it received its first substantial infusion of operating capital from San Bernardino County Young Republicans PAC in the form of a $40,000 contribution. That $40,000 had apparently originated with the $100,000 contribution from the Colonies Partners the previous year, the same $100,000 subsequently categorized as a bribe.
In the spring of 2009 district attorney’s investigators Hollis Randles, Schyler Beaty and Robert Schreiber confronted both Kirk and Brown, aggressively questioning them with regard to action they had taken on behalf of Ovitt and Biane, suggesting the PACs they had set up had been used to launder kickbacks.
Kirk initially responded to some of the questions but became increasingly reluctant to continue, and resisted efforts to wring from him statements implicating Ovitt. He insisted that the interrogation be brought to a close and refused to make any further statements outside the presence of an attorney.
When the investigators isolated Brown, they subjected him to accusations that he had acted illegally on Biane’s behalf  as well as in tandem with him in a criminal conspiracy. Panicked, Brown acceded to cooperating with the district attorney’s office.
Of immediate interest to Schreiber, Beaty and Randles was the San Bernardino County Young Republicans and San Bernardino County Taxpayers PAC. Campaign finance records show that the San Bernardino County Young Republicans PAC became a political force to be reckoned with after the $100,000 check from Colonies Partners was deposited into its account in June 2007. The criminal charges filed in 2010 and the 2011 indictment allege that the series of $100,000 donations to the political action committees founded and controlled by Postmus, Brown, Kirk and Erwin were in fact quid pro quos – bribes – paid in exchange for the approval of the settlement.
Brown, who at that point was still Biane’s chief of staff and had his boss’s full confidence, at the district attorney’s office’s behest agreed to wear a wire, i.e., a surreptitious audio recording device, in an attempt to capture utterances by Biane that would implicate him in bribe taking. That effort continued for nearly a year, apparently ending in failure in the spring of 2010. At that point, with much fanfare, Brown, who was still Biane’s chief of staff, departed from that position on stress leave and filed a claim against the county, alleging Biane was retaliating against him. In the claim, Brown disclosed that he had been cooperating in the district attorney’s office’s investigation of Biane.
Biane, who had been the best man at Brown’s wedding and still considered Brown a trusted and close friend, was completely and utterly taken aback by the claim. He had no inkling, he said, that his chief of staff was working as an informant against him. More to the point, Biane was that year standing for reelection. The publicity about the matter redounded to his political disadvantage and after placing second in the June primary, he ultimately lost to his most successful challenger, Fontana councilwoman Janice Rutherford.
It was in the months prior to the June 2010 primary election, at the apparent direction of county executive officer Greg Devereaux, that Walker brought Brown into his office as his second-in-command, making him assistant county auditor-controller, despite his lack of experience or expertise with regard to the duties of the office. In doing so, Walker forced Starbuck into early retirement.
Four years later, in 2014, Walker again sought reelection, this time to the auditor/controller/treasurer/tax collector post. At that time, he spoke about the strides he had previously made “to improve and evolve the organization and improve customer service. We are developing systems of accountability and improving the electronic  systems so we can provide better service and reduce costs.” He spoke in terms of being “excited about… the things we are doing to make that service available to the public and I am now asking the voters to keep me in that position.”
That he has now chosen, less than two years into his current four-year term, to depart has raised troubling questions. The timing of his announcement, given that the FBI and the California Attorney General have stepped up their parallel inquiries into political money laundering activity in San Bernardino County and into reports of extortion being employed by the county’s more powerful political figures against other county officials, seemingly implicates Walker in a blackmail scheme. That investigation remains viable because the statute of limitations that might otherwise apply to the matter has been extended because there is no indication in any available documentation showing any of the $35,000 in loans made to the San Bernardino County Taxpayers Association PAC by the Larsen, Ovitt, Cook and Biane campaign committees were ever forgiven, repaid or properly retired. Those loans are thus still outstanding.
It is against this backdrop of extortion, blackmail and financial misfeasance and malfeasance that the mystery of Walker’s abrupt departure is playing out. Walker never satisfactorily explained why he had fired the experienced and qualified Starbuck in 2010 and replaced her with Brown, who had no expertise or experience in running the operations of the controller’s office. When queried on the matter over the last five-and-a-half years, Walker would engage only in non-answers, saying simply that he had confidence in Brown.
For more than five years, Walker and Starbuck, who were once so close and major luminaries in the San Bernardino County Democratic Party, have not spoken with one another. Walker has never provided Starbuck with an explanation of why he jettisoned her in favor of an unqualified Republican political operative.
With state and federal investigators now returning to the matter of Brown’s money laundering activity, those investigators appear to be on the brink of lurching ever closer to the answers to the mystery that for over half of a decade have eluded the public.
Brown’s money laundering efforts were far more sophisticated, far more involved, far more convoluted and far more egregious than those of Kirk, who set up only one political action committee and moved only a fraction of the money through it than did Brown in those he operated. Why then did District Attorney Mike Ramos and Attorney General Kamala Harris indict Kirk, but leave Brown out of it?
Part of the answer seems to lie in the depth of Brown’s involvement with and continuing access to the San Bernardino County political establishment as well as an effort on the part of the San Bernardino County District Attorney’s Office to prevent information relating to his activity from reaching the California Attorney General’s Office. It appears that Brown’s boss and protector for the last five years, Walker, is being forced from office just as questions about why he choose to put Brown, widely known and recognized in San Bernardino County as a money launderer, near the pinnacle of the treasurer’s office, the controller’s office, the tax collector’s office and the auditor’s office. Walker’s decision cannot stand up to the scrutiny now being vectored toward it.
A logical inference is that Walker was himself acceding to blackmail in hiring Brown. If indeed Walker was being blackmailed, over what issue and by whom are yet unanswered questions. Answers to those questions may be soon forthcoming and Walker’s exodus at this point, while he can depart on his own terms with some semblance of dignity, might explain why he is leaving now.
Proceeding from this point forward is the question of who Walker’s replacement will be. Based upon the county charter, that decision falls to the members of the board of supervisors, who must appoint a replacement rather than have the county hold a special election.
There are now five obvious possibilities: Brown, who currently holds the title of assistant auditor/controller/treasurer/tax collector; Oscar Valdez, the executive finance officer for the treasurer-tax collector, who previously was the chief deputy contoller in the auditor-controller division; Starbuck; Fred Aguiar, Walker’s previous successor as Chino mayor and Fourth District county supervisor; and Ensen Mason, who vied against Walker in the 2010 and 2014 election.
Brown’s candidacy for the selection is supported, of course, by his current position as second-in-command. He retains the status, stature and credibility of being an assistant county department head. Nevertheless, his selection would require that the board of supervsors overlook entirely his questionable history, the political fund laundering he engaged in and his betrayal of erstwhile best friend, professional sponsor and closest political associate Biane, not to mention the specter of his involvement in the extortion activity now under scrutiny by the FBI and California Attorney General’s Office. Buffeted by scandal after scandal as the county has been over the last two decades, the supervisors may not want to embrace Brown at this point and move him into the most sensitive financial position in the county government’s sturcture. Brown further lacks licensing as a certified public accountant. He overcomes that shortcoming, however, by having served as a senior administrative postion in the auditor/controller/treasurer/tax collector’s office for “a continuous period of not less than three years,” as stipulated in California Government Code sections 26945 and 27000.7.
Valdez represents a safer choice, but he too lacks CPA licensure, though, like Brown, he meets the criteria of having served more than three years as a senior member of the office. He lacks, as well, political reach and contacts, which may or may not recommend him in the minds of the board members.
Starbuck has a comprehensive knowledge of the auditor-controller’s function, but departed just as that office was consolidated with that of the treasurer-tax collector. She has been out of the loop for nearly six years, and is not a certified public accountant, though claiming nearly 12 years experince in a senior position in the auditor/controller’s office. She does, however, have significant political entrée with James Ramos, the chairman of the board of supervisors. Both are Democrats and Starbuck served as his campaign manager during his 2012 election campaign.
Asked if she was willing to return to her previous haunts and succeed Walker as auditor/controller/treasurer/tax collector, Starbuck told the Sentinel, “I’d have to really think about it. It’s been five years since I retired and I’m really enjoying myself. It would mean getting back into the rat race. I wouldn’t rule it out.”
Aguiar, who was chairman of the board of supervisors, was cabinet secretary, deputy chief of staff and senior adviser to Governor Arnold Schwarzeneggar. He is not a certified public accountant. This month he was hired by vice chairman of the board of supervisors Robert Lovingood to serve as senior policy adviser in the county’s First District. His selection would require a declaration of overiding considerations serving to make a waiver of California Government Code sections 26945 and 27000.7.
Mason has consistently put himself forth as a political alternative to Walker and can claim to have received more votes to put him into the auditor/controller/treasurer/tax collector post from San Bernardino County residents in the last two election cycles than anyone else other than Walker. Mason is a certified public accountant.
On January 20, the board of supervisors voted 5-0 to appoint an ad hoc committee, consisting of Ramos and Lovingood, to make a recommendation to the full board on Walker’s replacement. The board is seeking applications for the position from qualified individuals and has given them until January 29 to lodge those applications with the clerk of the board.

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