Seven former officials of the city of Beaumont have been named in a corruption case that includes charges of embezzlement and misappropriating of funds, according to Riverside County Superior Court records.
In court documents filed Tuesday, the Riverside County district attorney has filed charges against former City Manager Alan Kapanicas, former Economic Development Director David William Dillon, former Public Works Director Deepak Moorjani, former Planning Director Ernest Alois Egger, former Finance Director William Kevin Aylward, former City Atty. Joseph Sandy Aklufi and former Beaumont Police Chief Francis Dennis Coe Jr.
Riverside County Dist. Atty. Mike Hestrin will announce the charges in the corruption case at 3 p.m. Tuesday in Riverside.
Beaumont, about 80 miles east of Los Angeles, was at the center of a public corruption probe in April 2015 when investigators with the district attorney’s office and FBI agents raided City Hall. They hauled away dozens of boxes of records, computers and other items.
Investigators also searched the home of City Manager Alan Kapanicas in Palm Desert and a site in Temecula.
At the time, sources familiar with the investigation said the raid was part of an ongoing investigation of the municipality’s business relationship and contracts with Urban Logic Consultants Group, a Beaumont firm whose offices were also searched by investigators, officials said in a statement.
No arrests were made during the search.
Urban Logic has provided planning, engineering and economic development services to Beaumont, a city of roughly 40,000 residents, for the last two decades.
At the time, attorney Bill Nassar, who was representing Urban Logic President Kieran McKiernan, said FBI officials wanted documents and computers from before his client purchased the company in September 2012.
McKiernan inherited the firm’s city contracts as part of purchasing the company, but none of the firm’s former directors were current Urban Logic employees, Nassar said.
In 2010, several former directors of Urban Logic sued a Beaumont citizens group for defamation and trade libel. The lawsuit was rejected, and in an appellate court ruling affirming the lawsuit’s dismissal, a judicial panel noted that three of Urban Logic’s then-principals — Deepak Moorjani, Ernest Egger and Dave Dillon — had held top posts at Beaumont City Hall until August 2009.
Moorjani has previously stated that the FBI, the city and the company had investigated allegations of misconduct and no wrongdoing had been found, according to the appellate ruling.
In May 2014, an Orange County Superior Court judge issued a ruling that Beaumont failed to contribute to regional transportation projects for nearly a decade and owes more than $42 million plus interest to a regional transit fund.
The state controller’s office audited the city after finding “significant differences between the city’s financial transaction reports to the controller’s office and its audited financial statements over two fiscal years.” Auditors found the city’s accounting controls had “widespread deficiencies that rendered them effectively nonexistent.”
“These kinds of deficiencies are of great concern, especially to the citizens of Beaumont, who rightly expect their city government to safeguard their tax dollars,” Controller Betty T. Yee said. “However, I am encouraged that city leaders now recognize the need to implement major improvements.”
The controller’s office findings were listed as follows:
- The city failed to properly account for bond transactions by three of its units, including financing and utility authorities and a community facilities district that together issued $626 million in bonds. As a result, the controller’s team could not determine whether the bond proceeds were used for the intended purposes.
- The former city manager and former public works director, both principals of outside consultants that provided city staff, received fees from bond proceeds for their services. In the absence of any written agreements, it was unclear whether these services were separate from their responsibilities as city officials. These two officials approved payments to the consulting companies where they were principals, creating conflicts of interest.
- In 2008, Beaumont obtained a reseller’s permit from the State Board of Equalization, allowing it to purchase items outside the city without paying sales tax, even though the city did not appear to be in the business of selling goods. Beaumont also allowed one of its vendors to use the permit. The arrangement allowed the city to shift sales tax revenue from other jurisdictions by moving the supposed point of sale within its boundaries.
- The city did not consistently follow its competitive bidding laws. City staff bought equipment or issued contracts for public works without competitive bidding, arguing that the vendor was the only source, yet failed to provide documents supporting this claim. In 2013, the city entered into a no-bid contract with Urban Logic Consultants that allowed engineering projects to be approved through “job cards” rather than open, competitive bidding.
- The city lacked receipts and descriptions for credit card purchases, supporting documentation for loans made to employees, and sufficient records for a loan to a private business. Invoices were missing, including purchases from a construction company totaling more than $1 million.
- For five years in a row, the city ended the fiscal year with material deficits of as much as $10 million in its general fund. It did not have sufficient revenue to fund existing levels of service. The city said it would cover these deficits with $21.5 million owed by its redevelopment agency. However, the redevelopment agency has been dissolved and it is highly uncertain that amount can be collected.
- Beaumont failed to do timely bank reconciliations and did not segregate staff duties.