SAN FRANCISCO — Two former San Bernardino County, Calif., officials were charged with bribery, conspiracy and corruption yesterday for their role in helping to approve a lawsuit settlement that was paid with $103.8 million of judgment obligation bonds.

California Attorney General Jerry Brown and San Bernardino County district attorney Michael Ramos filed the criminal charges against William Postmus, the former chairman of the county Board of Supervisors, and James Erwin, former assistant assessor for the county.

The state alleges that each defendant took $100,000 in bribes via political action committees they controlled to secure the approval of a $102 million settlement for Colonies Partners LP, the developer of a mixed-use development in the city of Upland. The suit stemmed from the county’s construction of a storm drain that emptied onto Colonies’ property.

“These individuals engaged in conspiracy, corruption and bribery that cost San Bernardino taxpayers more than $100 million,” Brown said in a statement. “This is one of the most appalling corruption cases ever seen in California.”

The San Bernardino County Flood Control District in 2007 sold $103.8 million of auction-rate judgment obligation bonds to finance the settlement payment. The bonds were refinanced in 2008 with a combination of fixed- and variable-rate debt.

Brown and Ramos called the settlement “fraudulent,” but the judgment obligation bonds were validated by the Superior Court of the State of California before they were sold, suggesting they’re valid obligations of the flood control district even if the settlement was not. The Board of Supervisors voted 3 to 2 to approve the settlement in 2002 against the advice of its attorneys.

Prosecutors allege that Erwin, the former assistant assessor and later the chief of staff to another supervisor, took $100,000 from Colonies to convince the Board of Supervisors to approve the settlement. The money was allegedly deposited in the Committee for Effective Government PAC that he controlled. Colonies also allegedly bought him trips, meals and the services of prostitutes to pay for his help.

Erwin, who could not be reached for comment, allegedly created political mailers depicting Postmus as a gay drug addict to blackmail him into voting for the settlement. If convicted of the nine felonies he’s charged with, Erwin faces up to 12 years in prison.

Postmus was a member of the Board of Supervisors from 2000 until January 2007, when he took office as San Bernardino County assessor. He resigned that post in February 2009 after being arrested for possession of methamphetamine.

Prosecutors allege that Postmus funneled his bribe into two political action committees, the Inland Empire PAC and Conservatives for a Republican Majority. Postmus faces a maximum of eight years in prison if he is convicted of all five felony counts against him.

Prosecutors said they’ve uncovered four bribes totaling $400,000 related to the Colonies settlement and that the investigation is ongoing and may lead to additional arrests.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.