At least one former city official will testify next week before SEC officials.
As the state criminal case against seven former Beaumont officials moves through Riverside County Superior Court, a more secretive federal probe of the city’s troubled finances also is advancing.
Officials with the U.S. Securities and Exchange Commission, which polices stock and bond markets, is expected take testimony next week behind closed doors from at least one former Beaumont official at the commission’s regional offices in San Francisco.
The federal commission is investigating the city’s use of bond funds, which county prosecutors allege pertain to felony crimes that include embezzlement and conflict of interest.
A subpoena from the commission requires Shelby Hanvey, the city’s former administrative services manager, to testify Wednesday and Thursday, Aug 31 and Sept. 1.
Hanvey is the wife of former Beaumont finance director William K. Aylward, one of seven former city officials facing criminal corruption charges in Riverside County, and he also is expected to testify to the SEC, according to letters submitted to the city by Santa Ana-based attorney, Amir M. Kahana, who is representing the couple for the SEC matters.
“We have been in contact with the SEC, and have been advised that a deposition subpoena requiring Mr. Aylward’s deposition testimony and production of documents would be forthcoming,” Kahana said in a July 1 letter to the city.
This letter, as well as a July 26 letter from Kahana, requested that the city indemnify Hanvey and Aylward – essentially take responsibility for their legal defense and costs – for matters stemming from the SEC investigation. The city was obligated, Kahana said, because the SEC probe concerns events that took place when the two worked for the city.
The SEC subpoena compelling Hanvey to testify was attached to Kahana’s July 26 letter. It was not clear when Alyward would testify. Both letters were made public after a Beaumont resident, Judy Bingham, sought them under state public records law.
On Aug. 16, the City Council rejected the couple’s request, following the advice of City Attorney John Pinkney, who said that the city had no such obligation to defend them.
In the state’s criminal case, Aylward, 53, is charged with six counts of embezzlement, 24 counts of misappropriation of funds and two counts of conspiracy. He pleaded not guilty to all the charges.
He was city’s finance director from 2008 to spring of last year, and he previously served the city as a contract accounting manager. He resigned shortly after authorities raided City Hall.
His wife has not been charged with a crime. The couple resides in Cherry Valley.
Hanvey, 44, resigned as Beaumont’s administrative services manager last year. She had worked for the city for 25 years and has also served as deputy city clerk.
The SEC does not disclose any information about its investigations. A spokeswoman for the agency said any testimony taken in San Francisco would be closed to the public.
Earlier this year, the city acknowledged that the SEC served City Hall with subpoenasApril 22 – less than a month before former City Manager Alan Kapanicas and six other former officials, were arrested in the corruption probe.