The last of seven Beaumont city officials snared in a corruption scandal involving the misuse of tens of millions of dollars in public funds pleaded guilty Friday, Sept. 14, to a misdemeanor charge and was immediately sentenced to three years probation, closing a case that involved county, state and federal investigations.
Former City Attorney Joseph Sandy Aklufi, 71, of Riverside admitted one count of willful failure to perform the duties of a public officer. In exchange for his admission, the Riverside County District Attorney’s Office dropped seven counts of felony embezzlement by a public official.
Aklufi’s case was set for a preliminary hearing, which would have determined whether there was sufficient evidence to proceed to trial, at the Riverside Hall of Justice when the prosecution and defense informed Superior Court Judge John Molloy that a plea deal had been reached.
Molloy ordered Aklufi to pay $30,000 in victim restitution, as specified under the agreement.
Aklufi’s six co-defendants entered plea agreements last year, resulting in varying lengths of home detention, terms of probation and monetary penalties ranging from $100,000 to $4 million.
William Kevin Aylward, 55, of Cherry Valley, David William Dillon, 65, of Temecula, Ernest Alois Egger, 62, of Mendocino, and Alan Charles Kapanicas, 65, of Palm Desert admitted wrongdoing under agreements with the District Attorney’s Office in December.
They were preceded a few months earlier by former police Chief Frank Coe, 54, of Beaumont, and former public works Director Deepak Moorjani, 72, of Yorba Linda.
Aylward was Beaumont’s finance director. Dillon was the economic development director and ordered to repay the city the highest sum of all the defendants — $4 million. Egger was the former planning director, and Kapanicas was the former city manager.
Like Aklufi, Coe was the only defendant to be convicted of a misdemeanor — conspiracy to commit grand theft. The others pleaded guilty to felonies.
All were arrested in May 2016, following a yearlong investigation by the District Attorney’s Office and FBI. The California State Controller’s Office had also conducted an audit of the city’s finances in the fall of 2015.
Moorjani was the operator of Urban Logic Consultants, which contracted with Beaumont for more than 20 years to provide a range of governmental services. The prosecution contended that Moorjani and his colleagues at ULC — Dillon and Egger — carried out city business with the specific intent of profiting from it personally.
Prosecutors said 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.
District Attorney Mike Hestrin said the ULC executives pulled levers that ultimately resulted in losses totaling $42.96 million.
Moorjani, Dillon and Egger were handling bond sales for the city, plowing revenue from the issuances back into ULC, which is no longer in operation.
The ULC managers, 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.
From 2003 to 2014, $36.6 million in TUMF revenue was collected in Beaumont but not released to WRCOG. Instead, the funds were retained for local projects that the six men had a stake in, according to prosecutors.
Aylward and Kapanicas were instrumental in arranging equipment purchases for Beaumont Electric. Between 2009 and 2015, $6.2 million in city funds were supplied to the private company, without prior authorization from the council.
The U.S. Securities & Exchange Commission conducted its own probe, and in August 2017 announced a settlement with Kapanicas for securities violations arising from his time overseeing the Beaumont Financing Authority.
The SEC said Kapanicas failed to file disclosures and adhere to other fiduciary duties in arranging bond sales in support of a community facilities district between 2003 and 2013. He agreed to pay a $37,500 penalty without admitting anything to SEC attorneys.