By Mark Gutglueck
The prosecution in the Colonies Lawsuit Settlement Public Corruption case plodded on this week, seeking to establish through a tedious and mind-numbing exposition of campaign finance-related documents its theory that Rancho Cucamonga-based developer Jeff Burum exploited the greed, ambition and weaknesses of a set of politicians at the pinnacle of county government to obtain a $102 million payout to settle a lawsuit his company had brought relating to the county’s use of flood control facilities on land in Upland Burum wanted to develop.
In that case, Burum, who was the co-managing principal with Dan Richards in the Colonies Partners, stands accused of working in tandem with former sheriff’s deputies union president Jim Erwin to threaten then-county supervisors Bill Postmus and Paul Biane with public exposure relating to elements of their personal lives to induce them into settling the lawsuit the Colonies Partners had brought against the county over flood control issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland. Prosecutors allege that after Postmus and Biane joined with then-supervisor Gary Ovitt to approve the settlement, Burum then provided $400,000 in bribes spread equally between Erwin, Postmus, Biane and Mark Kirk, who had been Ovitt’s chief of staff. Prosecutors allege Kirk influenced Ovitt’s vote.
Early on Monday, redirect and cross-examination of Tim Johnson, a political associate of Paul Biane who parlayed his work on Biane’s campaign for supervisor in 2002 into comfortable and increasingly better-paying positions on Biane’s supervisorial staff for the next eight years, concluded. Johnson’s testimony as a witness called by the prosecution had begun the previous week. Prosecutors grilled Johnson with regard to the San Bernardino County Young Republicans political action committee, which he said he had set up at the urging of Paul Biane’s former chief of staff, Matt Brown. Prosecutors allege that the San Bernardino County Young Republicans political action committee was used as a vehicle by Biane to receive a $100,000 bribe from the Colonies Partners as a reward for his vote to approve the $102 million settlement. That $100,000 was donated to the San Bernardino County Young Republicans in 2007, several months after Biane joined with Ovitt and Postmus in approving conferring the $102 payout on the Colonies Partners. As the prosecution angled to show that Biane had control over the political action committee (PAC), Johns used a host of rhetorical devices that the judge hearing the case, Michael Smith would later characterize as evasive, including claims of suffering from a loss of memory, hedging his answers or attempting to restate the questions he was being asked so that he could answer them in such a way that his response was favorable to Biane.
Later on Monday, Betty Presley, a Santa Margarita-based accountant who has for nearly two decades served as treasurer for more than a score of the political campaigns of San Bernardino County’s Republican elected officials and office seekers, testified. Over a seven-month period in 2007, Presley was brought in to act as the treasurer for all five of political action committees prosecutors maintain were used to receive the bribes that were set up by the three current defendants alleged to have been bribed by Burum and the two PACS set up by Postmus, who previously pled guilty and is scheduled to testify against the others.
As Supervising Deputy California Attorney General Melissa Mandel prompted her with documentation in the form of state campaign finance disclosure forms and emails from the various officials, Presley established that between March and late June 2007 the Colonies Partners provided checks of $100,000 each to the Alliance For Ethical Government PAC associated with Kirk; the San Bernardino County Young Republicans PAC, associated with Biane; the Committee For Effective Government PAC, controlled by Erwin; and that the Colonies Partners likewise provided two $50,000 checks to the Inland Empire PAC and the Conservatives For A Republican Majority PAC, both associated with Postmus. Throughout the questioning of Presley, Mandel layered in questions relating to the other individuals involved in those PACs whose names or signatures were found in the attendant paperwork, including Kirk’s associate Anthony Riley, Biane’s associates Matt Brown and Tim Johnson; Erwin’s associate Steve Hauer and Postmus associate Dino DeFazio.
During testimony, it was established that only one of the five PACs, the San Bernardino County Young Republicans, was in existence before the November 28, 2006 vote by the board of supervisors, with Postmus, Biane and Ovitt in favor and supervisors Dennis Hansberger and Josie Gonzales opposed, to approve the settlement with the Colonies Partners. The San Bernardino County Young Republicans was created more than two years before the settlement, in October 2004 by Biane’s chief of staff, Matt Brown, in conjunction with Tim Johnson, another of Biane’s employees.
Erwin’s PAC, Committee for Effective Government, was formed in February 2007. An amended filing was lodged with the California Secretary of State on March 28, 2007, the same day the PAC deposited the $100,000 check from the Colonies Partners, and by which point Presley had been brought in to serve as treasurer. Mandel elicited from Presley that Erwin utilized the Committee for Effective Government to issue, in 2008, an $8,000 check to attorney Alan Mohill, who defended Erwin in a civil lawsuit filed against him, Postmus and four other former assessor’s office employees over charges that they had engaged in partisan activities from the assessor’s office and used county facilities and assets in so doing. Erwin’s attorney, Raj Maline, was able to get onto the record that ultimately Erwin, who had been one of two assistant assessors, had been dismissed as a defendant in that lawsuit.
Presley’s testimony indicated that the PACs associated with Postmus were set up and ostensibly under the control of others. In response to questions from Mandel, she told the jury that on February 14, 2007, she received an e-mail from Adam Aleman, who was at that time the assistant assessor working for Postmus, directing her to open the Inland Empire PAC, which was to be run by Dino DeFazio, a land developer and Postmus business associate. DeFazio deposited $2,000 into the PAC to actuate its account. On July 5, 2007, a $50,000 check from the Colonies Partners was deposited into the Inland Empire PAC, the last of the $400,000 in total contributions from that company now alleged by the district attorney’s office to be bribes. That $50,000 followed by six days the reception of a check for an identical amount from the Colonies Partners that went into the Conservatives for a Republican Majority PAC, which prosecutors allege was also controlled by Postmus. Presley testified that on June 5, 2007, she received an e-mail from another Postmus’ associates, Mike Richman, telling her he wanted to set up the Conservatives for a Republican Majority political action committee. No further money went into the Conservatives for a Republican Majority PAC other than the initial $50,000 check, and disbursements from it included payment to Presley for her accounting services. In August, the Conservatives for a Republican Majority PAC was closed out and the $43,450 remaining in it was transferred into the Inland Empire PAC account.
Mandel elicited from Presley testimony to indicate that she was not involved in the any of the decision making processes with regard to how the funds in the various political action committee accounts were spent but that she merely processed payments requested by those designated as having the authority to direct the use of the funds. This testimony was buttressed by the display of a number of emails to Presley instructing her to make those disbursements or to write checks.
On Tuesday, the prosecution made further progress, illustrating with the testimony of two older women how one of the political action committees – the Alliance For Ethical Government, which prosecutors allege was controlled by Kirk – was a sham operation.
The first of those women was 89-year-old Lorene “Kitty” Stennett, a Republican Party volunteer who had been involved in numerous campaign efforts. On the organizational documents for the Alliance For Ethical Government, which included the group’s bylaws, Stennett was listed as the vice chair among a litany of the PAC’s officers, next to which were affixed their signatures, or at least what were represented to be their signatures.
In the case of Stennett, she said she was not the Alliance For Ethical Govrnment’s vice-chairwoman and that her signature on the document was a forgery. Stennett further testified that she had never attended a board meeting for the Alliance for Ethical Government. Stennett acknowledged being active in Republican circles and having worked on the campaign Kirk’s father, Robert, waged for the Hesperia School Board. She said she knew Anthony Riley, who was a political associate of both Postmus and Kirk. Riley landed a job with Gary Ovitt’s supervisorial office when Kirk was Ovitt’s chief of staff and Riley, a one-time Hesperia Unified School District board member, was active in several campaigns, including those of Postmus, Postmus’ successor as supervisor, Brad Mitzelfelt, Mark Kirk and of Kirk’s father. Riley was the recording secretary for the Alliance For Ethical Government, and a prime mover in the completion of its registration with the Secretary of State.
Stennett said she did not learn that she was the vice chairwoman of Alliance For Ethical Government PAC until she was called before the grand jury in April 2011, when she was shown the PAC’s bylaws and organizational chart with her name and title therein. She further said she was not even aware of the PACs existence and the only inkling she had with regard to it was when, as she was departing from his house after a “social visit” one day, Riley mentioned that forming a PAC might be something they should look into. “I was at Anthony Riley’s home and he just brought that up as I was leaving, that they were thinking about forming a committee. I was walking out the door.” She said she responded “At a later time, we’ll talk about it. We never got together.”
Asked if she was intrigued with the idea of creating the PAC, Stennett said, “I wouldn’t say I was really interested. I was just out to help these young Republican guys, to volunteer and I really wasn’t interested in getting involved in anything like that.”
Stennett said she had never spoken to the PAC’s treasurer, Presley.
“Did you ever give permission to spend money from the Alliance For Ethical Government PAC?” Mandel asked
“No,” said Stennett
After being blindsided with the PAC’s formation documents during her 2011 grand jury testimony, Stennett said she contacted Riley via e-mail to ask about it.
“I did email him and asked him who signed my name but I never heard from Anthony,” she said. “He never answered me.” To a follow-up question, Stennett said she had not confronted Riley about it when she later met him in person. Mandel inquired as to whether the forgery made her upset. An exasperated Stennett responded, “Wouldn’t you be?”
There followed what has been perhaps the most poignant moment of the trial, when Stennett blurted out, continuing even as defense attorney’s objected and Judge Michael Smith was unable to stop her, “All of the things I went through… I worked thousands and thousands of hours. This was all uncalled for. I didn’t ask for this. I worked for all these guys. It was all volunteer work. I didn’t receive one penny. I’m 89 years old, and look what they’ve done to me,” Stennett said. “They should be ashamed of themselves.”
In what was a cryptic but discernible reference to the implosion of Bill Postmus, who was once the darling of the Republican Party in the High Desert, espousing conservative philosophy and family values and who was later revealed to have been a promiscuous homosexual who put close to a dozen of his boyfriends on the public payroll while descending into a morass of methamphetamine addiction, Stennett said she was having a hard time getting over what had occurred. “I tried to dismiss a lot of this from my mind,” she said. “I’ve been very upset about this.”
Stennett’s testimony was most damaging to Kirk, and Kirk’s attorney, Peter Scalisi, wheeled desperately to mitigate the clobbering she had just administered to his client. Maintaining a kindly inflection in his questions but with direct purpose and firmness, he seized upon some confusion between Mark Kirk’s father’s campaign for the Hesperia school board and Mark Kirk’s campaign for city council. When Stennett made an assertion that she had not worked for Kirk’s city council campaign, Scalisi inveigled her into repeating her assertion that she had not. After a pause to locate it, Scalisi came up with a campaign mailer for Kirk’s campaign that featured Stennett’s photo. This resulted in Stennett reversing herself.
Before Stennett left the courtroom, Mandel asked her to provide the court with a sample of her signature, using both Kitty and Lorene.
Following Stennett, Kathleen Rough, Patrick Riley’s mother, was called to the witness stand.
Rough said she had only limited involvement in politics generally, which consisted of discussing how she would vote in national elections and occasionally doing precinct walking for local candidates, which she described as going door to door to hand out campaign literature. Nevertheless, Rough was listed on the Alliance For Ethical Government’s organization page and bylaws as its chairwoman.
Rough testified Tuesday she first learned that she was the chairwoman when she was brought before the grand jury. To several questions with regard to her function as a member of the PAC’s board, she said she had no recollection. She said she did not know Betty Presley, the PAC’s treasurer and she said she did not know or know of Curt Hagman, a former mayor of Chino Hills, former assemblyman, current county supervisor and Alliance For Ethical Government officer. She said she did not know any of the other officers. Though she could not recall signing the PAC’s bylaws, when shown the document, she acknowledged the signature was hers. She said what was purported to be her signature on a contract authorizing a $10,000 payment to Kirk serve as a consultant to the PAC was not hers, but rather her sons. She said she sometimes authorized her son to sign documents for her when she was not present. Rough said she was in regular contact with her son about the PAC and authorized him to sign her name on documents if she was not available.
Rough said she never attended any meetings with the PAC’s other listed officers.
Rough’s testimony had not concluded by the end of the afternoon session on Tuesday, but because she had a medical appointment scheduled for Wednesday, her further testimony was indefinitely postponed.
The following morning, Rough’s son, Anthony Riley, was put on the witness stand. Riley, a USC graduate, had worked for Bill Postmus in the early 2000s and worked for the now defunct California Charter Academy, which prosecutors in 2007 alleged was swindled of more than $27 million. After the demise of the California Charter Academy in 2004, Riley through his friendship with Kirk landed a job working for Gary Ovitt.
Mandel’s questions to Riley in the main revolved around the Alliance For Ethical Government, which Riley testified he and Mark Kirk formed, with Riley serving in the capacity of recording secretary and his mother, Kathleen Rough, serving as chairwoman.
In some of her questioning, Mandel focused on the signatures on the PAC’s documents, including those of Stennett and those of his mother. Those signatures appeared nearly indistinguishable from that of Riley, whose flourishing and highly stylized handwriting rivals that of a world class calligrapher. Several of those present in the courtroom subsequently made the observation that the Stennett signature on the PAC documents appeared to be in Riley’s hand. Riley identified his own signature and acknowledged that he had signed his mother’s signature on the authorization to provide Kirk with a $10,000 consulting, gratuitously acknowledging he had used “poor judgment” in doing so.
Nevertheless, he denied having forged Stennett’s signature.
When confronted by Mandel with the document bearing Stennett’s forged signature, Riley said he did not recognize it.
“Do you know who signed it?” Mandel asked.
Riley responded, “I have no idea who signed it.”
That denial cast a pall over the remainder of Riley’s testimony, putting Mandel in the position of having to elicit further testimony from a witness now perceived by at least some of those in the courtroom as engaging in perjury. Riley gamely carried on.
Riley said that “Mark [Kirk], Kitty [Stennett], my mom [and] myself were indeed the officers and part of the board.”
In contradiction to his mother’s testimony the previous day, Riley credited her with having oversight and control of the PAC. “The chair was responsible for budgetary items, overall organization, and presiding over meetings,” he said. To Mandel’s query “Did Kathy Rough take care of budgetary items and processing?” Riley said, “The chair was responsible,” clarifying that his mother okayed the issuance of checks but that Betty Presley issued the checks. “Betty Presley’s role was not to make decisions on how money was spent,” he said.
To Mandel’s question as to whether his mother handled the overall organization, Riley said, “There were specific responsibilities to the chair. We did have Kathy preside over all of the meetings,” referring to his mother by her informal first name. But to Mandel’s question as to the meetings taking place, Riley said, “I just don’t recall any of those meetings at this time.”
Pressed further on the meetings, Riley said they were held on Saturday mornings. Typically, once a month we had a meeting. I’m not saying they were formally set up.” When asked if the meetings were actual get-togethers of the board members or PAC officers, he began to backtrack. “What was discussed?” Mandel asked.
“I have no recollection of that,” Riley responded. Mandel pointed out that his testimony clashed with his testimony in 2011, when he testified there were no meetings. Referencing Riley’s role as secretary, Mandel asked, “Did you record the proceedings?”
“I don’t have any records or minutes,” Riley said. “I can’t even recall specific meetings.”
“You were paid a sum of 250 dollars on a regular basis,” Mandel said, for his function as secretary.
“That was allotted to me to perform that duty,” Riley said. “Obviously, I did not perform it very well.
Mandel asked Riley if he knew Curt Hagman, one of the PAC’s officers. He said he did. With regard to four of the other officers of the PAC – Andre Kuhr, Jeff Sorenson, Tim Neel and Charlie Dane – Riley said, “I don’t recall those individuals. Actually, I don’t know who they are.”
Following a series of non-answers provided to Mandel, Riley illustrated that at the very least he manipulated his mother as the chairwoman and Lorene Stennett as the vice chair to obtain official clearance to spend money from the PACs account. Two of the major disbursements consisted of separate $10,000 fees paid to Kirk for his services as a consultant to the PAC. Riley said those payments were justified by the work Kirk provided with regard to campaigns the PAC was supporting.
Mandel took a final run at trying to get Riley to acknowledge he was responsible for affixing Stennett’s signature to the PAC chartering document.
“Did you sign this for Kitty Stennett?” Mandel asked.
“I don’t recall doing that,” he responded.
“Did you obtain it from Kitty Stennett?” she asked.
“I don’t recall that,” Riley said.
Mandel than asked questions which implied Riley had sought to cover for Kirk. “Were you trying to distance Mark Kirk from this political action committee when you were interviewed [by district attorney’s office] investigators in 2010.
“I don’t think there would have been any reason to distance him,” Riley responded.
Kirk’s attorney, Peter Scalisi, elicited from Riley testimony that he and Kirk were “close friends” and that they had purchased homes on the same street in Hesperia. Riley acknowledged they wanted to be close and take care of each other. “I would take trips with Mark,” Riley said. “We went to some really nice places. We had a common bond: Republican politics.”
Scalisi used the PAC’s bylaws to get on the record that Riley’s mother, Rough, had authorization, to spend up to $25,000 of the PAC’s money without approval from its board of directors. Scalisi also established that the bylaws allowed PAC board meetings and business to be conducted by email and through the use of electronic devices.
Scalisi also had Kirk speak to Gary Ovitt’s independence.
“I don’t think you get s far in life [as Ovitt did by kowtowing to others],” Riley said. “I don’t see him as a puppet. I see him as a man of principal. He is able to stand on his own two feet and make decisions, right or wrong.”
Scalisi had Riley relate an exchange he had with Kirk a few days prior to his testimony. Kirk told him, Riley said, “Whatever happens, just tell the truth as you know it.”
Wednesday’s testimony closed out with testimony from former county supervisor Neil Derry and Jeffrey Bentow, who was involved with Bill Postmus’s fundraising efforts.
The prosecution sought to use Derry, who was prosecuted in 2011 for having utilized Postmus’Inland Empire PAC to launder a $5,000 contribution from developer Arnold Stubblefield into his supervisorial campaign account in 2007, to illustrate the way in which political action committees can be used for devious purposes. Derry entered into a misdemeanor plea arrangement over the matter, but his conviction was dismissed in March 2013.
The tension between Derry and prosecutor Lewis Cope was palpable.
On the witness stand, Derry acknowledged that Stubblefield wanted to conceal the contribution because of his friendship with Leroy Hansberger, father of Dennis Hansberger, the incumbent against whom he ran, and ultimately defeated, in 2008.
Derry said one of Stubblefield’s property managers, referred to as “Mr. Parrish” said Stubblefield wanted to keep the contribution to Derry from being known to Hansberger. Derry said he suggested that the money be provided to Postmus’ Inland Empire PAC. To Cope’s questions suggesting he did so with the understanding that Postmus would then pass the money along to him, Derry gave a more nuanced interpretation, saying that Postmus had earlier pledged he would support Derry in the supervisor’s race. Derry, who was represented by Erwin’s attorney, Raj Maline, said he had no recollection of receiving the check that came from Stublefield. “I raised over $700,000,” Derry said.
Ultimately, the Inland Empire PAC provided Derry’s campaign with $10,000.
Burum’s attorney, Stephen Larson, elicited from Derry that it was widely known in political circles that Postmus was affiliated with the Inland Empire PAC.
Jeff Bentow, a fundraiser for Bill Postmus, was listed as the Inland Empire PAC’s community outreach director, but he testified on Wednesday he did not know he held that position until reading about it in the newspaper. Bentow did acknowledge he solicited contributions for Postmus. To Mandel’s questions, Bentow said he never held any fundraisers for the PAC or attended any meetings of its board of directors.
High Desert developer Michael Gallagher, the owner of Oakridge Development testified Thursday that it was unknown to him that the Inland Empire PAC’s chartering documents represented him as the vice chairman of the PAC, which the prosecution maintains is controlled by Postmus. Gallagher, who unsuccessfully ran for supervisor in 1992, acknowledged having made $380,000 to political candidates he believed held pro-growth philosophies over the years, Postmus among them. Like Bentow, Gallagher said he did not learn of his title as an officer in the PAC until he read about it in a newspaper.
Current county supervisor Curt Hagman testified on Thursday that while he was still on the Chino Hills City Council in 2007, he was approached by Mark Kirk, then chief of staff for county Supervisor Gary Ovitt, about starting a PAC to support Republican candidates. Hagman, whose wife worked in Ovitt’s office, said he knew Kirk and consented to being listed as an at-large member and recruited three of his employees, including his brother-in-law, to sign on as at-large members in the PAC.
Hagman, who was elected to the state Assembly in 2008 and leased a home in Sacramento even before his victory in the general election, said he was not active with regard to the PAC after his initial involvement.
On Thursday afternoon, outside the presence of the jury and with Burum absent, one of the attorneys for Jeff Burum, Jennifer Keller, offered oral arguments to Judge Michael Smith in support of a motion to have Mandel reproved for prosecutorial misconduct. Keller set forth that during Mandel’s redirect examination of Tim Johnson she had layered into one of her questions a statement that Postmus had “walked into the district attorney’s office on his own” and admitted to receiving a pre-arranged $100,000 bribe from Burum. That question was prompted by Johnson’s negative response to an earlier question Mandel had asked as to whether he had ever worked with someone involved in bribery. The premise of Mandel’s question was patently untrue, asserted Keller, who quoted multiple passage of Postmus’s testimony before the grand jury as well as his statements to district attorney’s investigators and the FBI/U.S. Attorney, to underscore her assertion that at no point did Postmus state he had unequivocally taken a bribe. Keller dwelled upon the language Postmus used in his exchanges with prosecutors and investigators, pointing out that when they were attempting to box him in with questions that assumed the two $50,000 payments to his political action committees had been promised to him in advance of his vote, Postmus actively resisted those characterizations and asserted he had no knowledge that the $100,000 in donations was coming his way until after the vote. Keller was joined in the call for discipline against Mandel by Erwin’s attorney, Raj Maline, who said the matter was serious enough to warrant a mistrial. When Smith signaled his reluctance to reprove Mandel, another of Burum’s attorneys, Stephen Larson, weighed in, saying that he had been a prosecutor and Judge Smith had been a prosecutor and they both knew that in that capacity “We can’t make false statements,” Larson thundered. “We can’t do that.” By her action Mandel had crossed the line into making misrepresentations – outright lying – to the jury, Larson said. At the least, Larson said, Mandel should be instructed not to engage in addressing improper questions to future witnesses.
Judge Smith, however, rejected the calls for discipline against Mandel, saying, that Mandel’s question was “a proper and appropriate line of redirection. Whether he [Postmus] said those things and whether this [Mandel’s characterization] is a fair conclusion is probably open to question. I think both side will have the opportunity to bring out all of the statements by Mr. Postmus and the jury will have the opportunity to put that into perspective,” Smith opined.
Smith noted that Johnson came across as evasive in his questions by restating Mandel’s questions and by offering his interpretation or explanation that Postmus had not taken a bribe despite having admitted to having done so in his plea. Johnson had also blurred the distinction between “worked with” and worked for,”Smith said.
“I understand your argument,” he told Larson. Nevertheless, he pointed out “Mr. Johnson was being evasive and not answering the questions directly. He was offering an explanation rather than an answer, so I think the prosecution was entitled to press him on that.”
Smith said discipline might be in order “if the prosecution was quoting something that was non-existent, but what they were using was the plea agreement [and] in the totality of that he was admitting he was accepting a bribe. I don’t think it was improper. I don’t think it rises to the level of misconduct. The request for sanctions is denied.”
Smith did say he would instruct the jury not to take the statements of any of the lawyers as proof. The defense attorneys, conveying that such wording might be interpreted as referring to them, said they wanted Smith to make clear his reference was to Mandel’s statement. Smith declined to do so.
By Mark Gutglueck