Riverside County Corruption Probe That Snagged Mission Viejo Developer Widens

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A government corruption and money laundering case that includes among more than a dozen defendants a former vice president of operations with three of Orange County's biggest development companies--the Mission Viejo Co., the Irvine Co. and Arnel Development--is growing like the waistline of a pig feeding at the trough.

Six more people were charged with felonies this week in the scandal that has already led to indictments of all but one member of the San Jacinto City Council. Now, two of those council members' family members must face the music.


The Riverside Press-Enterprise has been all over the story, printing in its daily newspaper and posting on its website breaking news and long investigative pieces about the case that snagged Mission Viejo resident Robert E. Osborne, who is now president of Osborne Development Co.

Charged with conspiring to launder campaign funds into campaign committees, Osborne allegedly participated in illegally returning tens of thousands of dollars to contributors of a councilman in San Jacinto, a fast-growing city on Riverside County's eastern edge, and helping hide the true source of the contributions.

Osborne, 69, and Riverside County developer Stephen Holgate, 62, allegedly funneled more than $190,000 into the campaign accounts of Councilman Jim Ayres, 48, for his failed 2006 bid for the state Assembly 65th District seat and city races.

Besides his roles with Orange County's largest developers before founding his own firm, Osborne formerly served on the Orange County Building Industry Association (BIA) board. He has housing developments across San Jacinto, including--bless his little Mission Viejo heart--the city's first gated community. Osborne also owns a horse farm there.


A special criminal grand jury investigation spanned 18 months and included interviews with more than 120 people.

"This is massive not only in its raw number of dollars, but also in the people who were involved in this," says Riverside County District Attorney Rod Pacheco, a former Republican leader in the state Legislature.

That is why, after last month's indictment of nine people--including Osborne, Holgate and Ayres--the inquiry continued, leading to more charges.

"We are not talking about just nine people," Pacheco explained. "We are talking about a lot more people that were involved with this in small ways, medium ways, and large ways."

The original nine, who include four of the five San Jacinto City Council members, are facing 155 counts, including money laundering, perjury, tax fraud, bribery, falsifying federal documents and conspiracy to hide campaign contributions. All have pleaded not guilty or entered no pleas.

The indicted council members, who have declined to comment on advice from their attorneys, have refused vehement demands from residents to resign. A recall movement has been launched to remove them from office.

The other original indictees are: Mayor Dale Stubblefield, 41; Councilman John Mansperger, 41; Councilman James Potts, 67; Nancy Ayres, 44, who is Jim Ayres' wife and a San Jacinto school board member; and businessmen Byron Jerry Ellison Sr., 70, and Scott Shaull, 45.

At the center of it all is Jim Ayres, who repeatedly voted to approve projects favorable to Shaull and Ellison as the businessmen helped secretly stuff his campaign accounts full of cash. Ayres also did not abstain from voting on the projects of Holgate and Osborne, San Jacinto's two biggest developers, until a month after authorities first searched his home as part of their investigation, the P-E has reported.

It's illegal for elected officials to vote on matters in which they have a financial stake.

"Money laundering can only occur when people agree to launder money through their personal accounts," Pacheco reportedly said of this week's new indictments. "Without these six defendants, the crimes charged in this case would not have occurred."

The six allegedly committed perjury, made political donations under false names and contributed to a candidate through an intermediary.

They are: Shanda Lynn Mansperger, 34, of San Jacinto (John Mansperger's wife); Christopher Ray Mason of San Jacinto (Mansperger's nephew); Marcia Lynn Mathews of Hemet (Mansperger's sister); Kirk William Mathews of Hemet (Marcia's husband and Mansperger's brother-in-law); Carol Ann Gehrum of San Jacinto (Nancy Ayres' mother); and John Richard Gehrum of Hemet (Nancy Ayres' brother).

And here you thought OC was a cesspool of incestuousness!



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