RIVERSIDE COUNTY, CA – Four of seven former Beaumont officials accused in a corruption scandal involving the alleged misappropriation of nearly $43 million are slated to be arraigned this afternoon in Riverside.
Joseph Sandy Aklufi, 69, of Riverside, William Kevin Aylward, 53, of Cherry Valley, Alan Charles Kapanicas, 63, of Palm Desert and Deepak Moorjani, 69, of Yorba Linda were arrested Tuesday following a yearlong joint investigation by the FBI and Riverside County District Attorney’s Office that uncovered numerous instances of alleged illicit use of taxpayer funds.
Also charged were former Beaumont police Chief Frank Dennis Coe, 51, as well as the city’s former planning director, 62-year-old David William Dillon, and the former economic development director, 59-year-old Ernest Alois Egger,
who surrendered to authorities Wednesday. Coe and Dillon posted bail and will be arraigned in July.
Egger and the defendants appearing at the Riverside Hall of Justice today are each being held in lieu of $5 million bail at Riverside County detention facilities.
The 37-count criminal complaint filed against the men this week includes charges of misappropriation of funds, conspiracy, embezzlement by a public official and financial conflict of interest.
Aklufi was Beaumont’s city attorney; Aylward was the finance director; Kapanicas was the city manager; and Moorjani was the public works director. District Attorney Mike Hestrin said the investigation got underway last
spring, with investigators poring over reams of documents, carrying out searches and conducting interviews.
“Public officials need to remember they serve the public, and nobody is above the law,” Hestrin said. “The defendants had an obligation to serve the people and not themselves.”
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 hired by the municipality in the early 1990s, Urban Logic Consultants — in which Dillon, Egger and Moorjani were executives — was pulling 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, according to the district attorney.
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 designated for 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 was not 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, serving subpoenas last month seeking to examine “memoranda, phone lists, recordkeeping checklists” and a host of other documents pertaining to bond
issuances.
Mayor Mike Lara, elected in 2014 and not implicated in the scandal, said that a “plan of corrective action” is being developed to address policies that permitted wrongdoing to occur.
“The council … is working every day to move the city forward while continuing to provide essential services,” Lara said.