Seven former top-ranking officials appeared in court Friday.
BEAUMONT, CA – Seven former Beaumont officials accused in a corruption scandal involving the alleged misappropriation of almost $43 million all pleaded not guilty Friday during joint appearances in Riverside.
Joseph Sandy Aklufi, 69, of Riverside, William Kevin Aylward, 53, of Cherry Valley, Frank Dennis Coe, 51, of Beaumont, David William Dillon, 62, of Temecula, Ernest Alois Egger, 59, of Mendocino, Alan Charles Kapanicas, 63, of Palm Desert and Deepak Moorjani, 69, of Yorba Linda were arrested in May following a yearlong joint investigation by the FBI and District Attorney’s Office.
They were arraigned before Riverside County Superior Court Judge Mac Fisher, who scheduled a felony settlement conference for Nov. 4 at the Riverside Hall of Justice. The defendants are free on bail amounts ranging from $100,000 to $1 million.
The 37-count criminal complaint filed against the seven includes charges of misappropriation of funds, conspiracy, embezzlement by a public official and financial conflict of interest.
Aklufi was Beaumont’s city attorney; Aylward the finance director; Coe the police chief; Dillon the planning director; Egger the economic development director; Kapanicas the city manager; and Moorjani the public works director.
District Attorney Mike Hestrin said during a May 17 briefing that the investigation got underway in the spring of 2015, with agents poring over reams of documents, carrying out searches and conducting interviews.
Prosecutors allege the defendants engaged in schemes using complex arrangements tied to bond sales and development fees. Coe was awarded interest- free loans straight out of the treasury that were not vetted by the Beaumont City Council, according to Hestrin.
He alleged that a professional services firm, Urban Logic Consultants — in which Dillon, Egger and Moorjani were executives — was retained by the city in the early 1990s and pulled levers that ultimately resulted in losses totaling $42.96 million.
The trio were handling bond sales for the city and allegedly plowing revenue from the issuances back into ULC, which is no longer in operation.
The ULC executives, along with Aylward, Aklufi and Kapanicas, were also responsible for overseeing Transportation Uniform Mitigation Fee accounts. TUMFs are collected from developers and are assigned to the Western Riverside Council of Governments, which utilizes the money for region-wide transportation projects.
It’s alleged that from 2003 to 2014, $36.6 million in TUMF revenue was collected in Beaumont but not released to Council of Governments. Instead, the funds were retained for local projects that the six men had a stake in, according to prosecutors.
Coe received his $45,000 loan between 2010 and 2013, Hestrin said, adding that other police officers — who were not identified — received smaller loans from the treasury that totaled almost $70,000. Why the other officers weren’t charged has not been disclosed.
Aylward and Kapanicas were allegedly instrumental in setting up the zero- interest disbursals, in addition to arranging equipment purchases for Beaumont Electric, according to prosecutors. Between 2009 and 2015, $6.2 million in city funds were supplied to the private company, without prior authorization from the council.
The alleged scheme further involved allowing Beaumont Electric to use the city’s reseller’s permit, sparing it from having to pay sales taxes to the state Board of Equalization, as detailed in an audit of the city’s finances ordered last year by California State Controller Betty Yee.
Authorities did not amplify on how Aylward and Kapanicas allegedly benefited.
The U.S. Securities & Exchange Commission has initiated its own probe.
— By City News Service.