Seven former city officials are about to enter pleas in sweeping criminal case that involves millions of dollars in public funds
The seven former Beaumont city officials charged in May with 94 felony corruption counts, including embezzlement and misappropriation of public funds, face a big day of court hearings Friday, Aug. 19.
The case is as complicated as it is sweeping. Here’s how to make sense of the court case.
Who is in trouble?
The men who were entrusted to run the city, some for as long as two decades. The former city manager, Alan Kapanicas; former police chief, Francis Dennis “Frank” Coe; former city attorney, Joseph Aklufi; former finance director, William K. Aylward; former public works director, Deepak Moorjani; former planning director, Ernest A. Egger; and former economic development director, David W. Dillon.
What are they charged with?
The Riverside County District Attorney’s Office is alleging conflicts of interest, embezzlement and misappropriation of city bonds and transportation-fee funds that added up to more than $43 million. City records show that Kapanicas and Moorjani, acting as contract city employees, signed off on millions of dollars to consulting companies they owned.
Kapanicas, 64, of Palm Desert, and Aylward, 53, of Cherry Valley, are both charged with six counts of embezzlement, 24 counts of misappropriation of funds and two counts of conspiracy.
Dillon, 62, of Temecula; Moorjani, 69, of Yorba Linda; and Egger, 59, of Mendocino, each are charged with one count of conflict of interest and six counts of embezzlement. Aklufi is facing six counts of embezzlement.
Coe, 52, of Redlands, was charged with two counts of misappropriation of funds and one count of conspiracy. Coe’s charges stem from $45,000 in interest-free loans of city funds arranged by Kapanicas and Aylward without City Council approval, according to court papers filed by investigators.
What will happen Friday?
All seven are expected to enter pleas to the charges in a hearing before Riverside County Superior Court Judge Mac Fisher in Riverside. The charges were announced May 17, but all defendants have waived their rights to speedy arraignments.
Each has hired a private attorney. Assistant Presiding Judge Becky Dugan said in court she wanted to get them all before an assigned judge who will handle the case through any trial. If any of them plead guilty, they could be witnesses against the others. Judge Fisher also is expected to hear motions filed by one or more defendants to lift freezes on their assets and to dismiss charges.
What assets are at stake?
Several of the defendants want the judge to lift freezes on their bank and investment accounts. Together, their bank accounts and investments total almost $15.5 million, according to court records.
A district attorney’s forensic real estate investigator also determined that real estate holdings of defendants might produce up to $6 million more if properties were sold. Prosecutors sought these freezes so funds could be used to pay restitution if the defendants are later found guilty.
Because of a Supreme Court decision in an unrelated case, defendants are entitled to hire attorneys and other legal assistance of their choice, and received court OK to spend certain amounts. For example, Dugan authorized a $180,000 withdrawal from Kapanicas’ accounts to pay for attorney fees and investigative costs and $4,500 a month for his wife, Diana, for living expenses from their commingled bank accounts.
Some defendants appear to be wealthy, according to district attorney filings:
• Moorjani has almost $3.8 million in bank and investment accounts and owns four properties, including three in Orange County;
• Dillon has $6.2 million in accounts and owns property in Temecula and Cardiff by the Sea;
• Egger has $3.7 million in accounts, three properties in Mendocino and one in South Lake Tahoe;
• Kapanicas has $1.7 million in accounts and a home in Palm Desert.
What are defendants’ arguing?
The judge may consider multiple motions on Friday. Moorjani’s attorney filed a motion asking that the charges be thrown out, a legal step that can be taken before defendants enter pleas to the charges. Attorneys for some of the other defendants filed legal papers in support.
Dillon, Moorjani and Egger were partners in the Urban Logic consulting firm that “saved the city money and cost effectively executed a plan for organized, measured and controlled growth,” Dillon’s attorney, Paul Grech Jr., said in papers filed this month.
“Urban Logic and its partners stole nothing. They embezzled nothing. They misdirected nothing,” Grech wrote.
Meanwhile, Gregory H. Kassel, an attorney for Kapanicas, contends in a filing that Kapanicas cannot be charged with embezzlement because he was “neither an officer for city of Beaumont nor a person of heightened fiduciary duties during the time of the alleged crimes.” Instead, he was an “independent consultant” for the city through his business, General Government Management Services.
City bonds records show that Kapanicas approved hundreds of bond payments, including payments to his own company, while acting under the titles of city manager and the executive director of the Beaumont Financing Authority, the city entity that issues bonds.
Kassel’s law firm also filed papers saying that former city council members Roger Berg and Brian De Forge may testify that they believe Kapanicas was an independent contractor.
Berg defended Kapanicas and the Urban Logic officials in an interviews last spring. Berg said they simply followed a debt-financing plan approved by the City Council that was needed to accommodate explosive growth and modernized what had been the city’s crumbling roads, and water-delivery and sewage systems.
Berg also said he and other council members knew these were paid with bond funds, and that they earned the money they received.
District attorney’s officials have claimed millions of dollars were diverted from Transportation Uniform Mitigation Fees, which the city was supposed to pool with other local governments through the Western Riverside Council of Governments for regional transportation projects.
What other matter will be considered?
The court also will consider a request by the state board that licenses public accountants to bar Aylward, the former city finance director, from working as a certified public accountant while the criminal case against him is pending because he faces charges for financial crimes.
Aylward’s attorney, James M. Taylor, filed papers saying the California Board of Accountancy is overstepping its bounds and its request should be rejected.
Aylward’s CPA license “allows him make barely enough money to support his family and pay for his legal fees and expenses.”
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