The High Desert city of Adelanto is investigating whether some of the defendants in the Beaumont corruption case may have committed crimes while overseeing bonds there, Adelanto Mayor Richard Kerr said Thursday, May 19.
The Adelanto city attorney, finance manager and city manager began the probe the day after the arrests of seven former Beaumont officials were announced Tuesday, Kerr said.
“Now’s not the time to worry,” Kerr said. “Once we find out if there were any improprieties, then that will be the time to be a little bit concerned about it.”
Some of those charged in Beaumont also did work for at least four other California cities: Calimesa in Riverside County, Imperial and Calexico in Imperial County and Lincoln in Placer County.
Neither of the district attorney’s offices in San Bernardino and Riverside counties are involved in the Adelanto investigation that Kerr described. They also have not received any reports from Calimesa. But San Bernardino DA Mike Ramos and Riverside DA Mike Hestrin each said Thursday that they would launch new probes if presented with evidence of wrongdoing.
“Just because we filed charges doesn’t mean the investigation stops,” Hestrin said.
Authorities in both the city and county of Imperial and city officials in Calimesa did not respond to requests for comment Thursday. Lincoln officials said they were severing ties with a company owned by one of the Beaumont defendants.
Hestrin’s office has charged the seven former top city officials with misappropriating almost $43 million from Beaumont. Six of them directed portions of $300 million in bonds to companies they created shortly after they began working for Beaumont, court records say. State law prohibits public employees from making contracts that provide personal financial benefit.
Charges include embezzlement, conflict of interest and misappropriation of public funds. Scheduled plea hearings for three of the defendants were postponed Thursday, and the arraignments for the other four were scheduled for July.
None of the defendants have admitted any wrongdoing in court.
BONDS FOR ADELANTO
Bond records kept by the federal Municipal Securities Rulemaking Board show that Urban Logic was part of the team of consultants that prepared Adelanto to issue a total of $32.8 million in water bonds in 1995 and 1996. Principals in Urban Logic who also worked for Beaumont were Deepak Moorjani, the former public works director there; Ernest Egger, the former planning director; and David Dillon, the former economic development director.
Also in 1996, Moorjani prepared water management and conservation plan for Adelanto, in San Bernardino County.
In 2000, Adelanto issued $25.2 million utility bonds with help from Urban Logic that were paid off with the city’s sewer fees.
Also, William Aylward, the former Beaumont finance director arrested this week, had served as finance director in Adelanto in 2007.
CALIMESA WORK
In 1996, the Calimesa City Council hired Alan Kapanicas as contract city manager provided through his General Government Management Services company at $65 an hour.
Kapanicas then served as city manager for both Beaumont and Calimesa until 2001 when he resigned from the Calimesa post, which required him to work 18 hours a week.
William Aylward, the former Beaumont finance director, also did accounting work for Calimesa as an employee of General Government Management Services during Kapanicas’ tenure in Calimesa.
A phone message left with the Calimesa city manager’s office on Thursday seeking comment was not returned.
SPECIAL SERVICES
Federal bond records also show that Kapanicas’ company, General Government Management Services, was active as a tax consultant for cities in Imperial and Placer counties.
The company provided special tax services to the border town of Calexico in 2013 when the city issued $7 million in bonds to build public facilities needed for the development of the Gran Plaza Outlets shopping center.
Kapanicas’ company was involved in at least a half dozen bond issues to facilitate development in Imperial, a small city just north of El Centro. The most recent bond was $5.7 million in debt issued in 2015 to go toward public improvement in a 368-home development.
A spokeswoman for Imperial City Manager Jeorge Galvan said city officials were aware of Kapanicas’ work for the city and would respond to a request for comment Thursday. Nobody called back.
A spokeswoman for the Imperial County District Attorney’s Office said she passed along a message to prosecutors seeking comment regarding the cities of Imperial and Calexico. No one called back Thursday.
At the time of Kapanicas’ arrest Tuesday, his company was still doing special tax consulting work in the Placer County city of Lincoln, said City Manager Matthew Brower.
Like Beaumont, Lincoln has tract-house developments in community facilities districts in which homeowners must pay special Mello-Roos taxes, which are collected to pay off bonds that were used to finance streets and other public work within the developments.
Between 2003 and 2013, General Government Management Services was involved in issuing $123.1 million in such bonds in Lincoln, according to federal records.
The company’s current job consisted of determining how much homeowners had to pay in lump sums to stop paying Mellos-Roos assessments, Brower said.
Given the Beaumont arrests, Lincoln will cut ties with Kapanicas’ company and seek proposals for a new special tax consultant, Brower said.
Contact the writer: br****@pe.com or 951-368-9569