Beaumont corruption case: Four defendants due in court Tuesday
Four former Beaumont officials charged in a conspiracy and embezzlement case are scheduled for a court hearing Tuesday, Dec. 19, two months after a fellow defendant pleaded guilty to a single felony conflict-of-interest charge
Beaumont’s former public works director Deepak Moorjani also agreed Oct. 20 to pay $3 million to settle his part in a separate civil suit seeking to recover $43 million in allegedly diverted transportation funds.
The Tuesday hearing is listed as a felony settlement conference for former Beaumont Planning Director Ernest Egger, ex-Economic Development Director David Dillon, former City Manager Alan Kapanicas and ex-Finance Director William Aylward.
Only former Beaumont City Attorney Joseph Aklufi remains on the court docket for a long-scheduled Feb. 22, 2018, preliminary hearing. The Riverside County District Attorney’s office declined to comment Monday.
Moorjani, like Egger and Dillon, was named as a defendant in the 2016 criminal case as well as the civil case filed in June by the Western Riverside Council of Governments.
That lawsuit seeks to recover money that WRCOG claimed the defendants illegally diverted from it between 2003 and 2009.
The $43 million was supposed to go to the joint power agency’s Transportation Uniform Mitigation Fee, which uses contributions from member cities for regional transportation projects to mitigate increased traffic from housing developments, the lawsuit said.
WRCOG contends the defendants used various ploys through a contracting company they had formed, Urban Logic Consultants, to block Beaumont’s payments to TUMF.
When Moorjani entered his plea in the criminal case, his agreement to pay $3 million in restitution to WRCOG resulted in him being dropped from the civil suit the same day.
Moorjani also signed a statement saying that between July 2003 and June 2009, Urban Logic “received millions of dollars in fees for its work in managing the city from public funds that were collected from developers in the City as Transportation Uniform Mitigation Fees. These TUMF funds should have been remitted to the Western Riverside Council of Governments,” Moorjani admitted.
While Moorjani said he did not make the decision to have Beaumont withhold or divert the transportation funds from WRCOG, “I did personally profit from such diversion.”
“The decision to withhold or divert TUMF funds from WRCOG was made by others,” he said, naming Kapanicas, Aklufi, Aylward, Dillon, and Egger. Five of the seven defendants remain in the criminal case. All have pleaded not guilty.
Starting in 1993, Beaumont contracted with Urban Logic to receive economic development, review of development services and public works engineering services. The company’s current ownership, which does not include any of the defendants in the lawsuit or the criminal action, has denied the lawsuit’s allegations.
The lawsuit was filed as part of a settlement reached earlier this year with Beaumont from a 2010 WRCOG lawsuit, in which the joint powers agency had sued the city to recover the same TUMF money. The final judgment, with fees and interest, amounted to $67 million.
WRCOG had prevailed in that lawsuit, which was on appeal when it was settled earlier this year. As part of the deal, Beaumont agreed to allow WRCOG to pursue the TUMF funds in the current lawsuit. Beaumont guaranteed WRCOG that it will recover at least $7 million from the current action.
The WRCOG lawsuit also names Kapanicas, Aklufi and Aylward as co-conspirators.
The lawsuit is one of several legal actions stemming from local, state and federal investigations into how Beaumont’s city government operated during two decades. FBI agents and Riverside County District Attorney investigators raided Beaumont City Hall in April 2015, as well as the home of then-city manager Kapanicas.
A criminal complaint filed in May 2016 included charges of conspiracy, embezzlement, conflict of interest, and misappropriation of funds against the former Beaumont officials.
In addition to Moorjani, former Beaumont Police Chief Francis “Frank” Coe, pleaded guilty to a misdemeanor conspiracy count Oct. 18. Coe had been accused of taking interest-free illegal city loans amounting to $50,000. He has repaid the loan amount, but owes interest, prosecutors said.
Both the WRCOG lawsuit and the Riverside County District Attorney’s office claim that Urban Logic was used by its founders to self-deal: Pay themselves as the principals of Urban Logic for engineering projects or other work in the city that was approved by the same men, in their role as Beaumont city officials.
When Beaumont joined the TUMF program in 2003, Egger, Dillon and Moorjani and other principals of Urban Logic opposed it, the lawsuit said, and it alleges they worked surreptitiously to keep most developers’ TUMF contributions from reaching WRCOG.
“These guys realized that if they collected TUMF from developers and turned the money over to WRCOG, it would be used for regional work. And if it goes outside the city, it can’t make them any money,” attorney Jeffrey Dunn, one of the lawyers representing the joint powers agency, said in a recent telephone interview. “So instead, they were keeping the money and doing stuff inside of Beaumont.”
Beaumont rejoined WRCOG earlier this year.
Beaumont Mayor Lloyd White spoke at Moorjani’s plea and sentencing, and called it “a step forward in healing our community.”
In a recent phone interview, White said he was not daunted by what lay ahead for the city. He pointed to resolutions over the past year: the WRCOG suit settlement, another settlement with the federal Securities and Exchange Commission over bond financing, and resolution of a development-agreement dispute with Pardee homes.
“We wrapped up all those things. What we are going through right now is not that difficult,” White said of the various court cases. “Right now, our biggest challenge is earning our community’s trust back.”