May 19, 2016
The arraignments for several former Beaumont city officials accused of orchestrating a web of corruption that allegedly cost taxpayers nearly $43 million were delayed Thursday after several of the defendants posted bond and others asked for their hearings to be rescheduled.
This week prosecutors accused the officials of an elaborate scam going back two decades that involved the sale of municipal bonds for projects handled by companies in which they had a financial interest. They also alleged officials secured interest-free loans for friends and colleagues with taxpayer money.
On Thursday, former Beaumont City Manager Alan Kapanicas, former Finance Director William Aylward and former City Atty. Joseph Aklufi had their bail reduced to $1 million each and their arraignments rescheduled for May 26, Riverside County prosecutors said. The remaining four defendants, former Development Director David Dillon, former Public Works director Deepak Moorjani, former Planning Director Ernest Egger and former Police Chief Francis Coe Jr., had their arraignments delayed until the middle of July and are free on bail, records show.
“Public servants must remember a basic truth: we serve the people. Any money handled by a city or any government is the people’s money and should be handled as such,” said Riverside County Dist. Atty. Mike Hestrin at a news conference announcing the charges this week. “Those who run our governments and make the laws are not above the law.”
Hestrin added that the case should be a cautionary note to other cities to ensure contracting is free of conflicts of interest and waste.
Prosecutors allege that the Beaumont corruption was able to continue for so long in part because it involved so many officials in the city of 40,000 about 78 miles east of downtown Los Angeles.
In court documents filed Tuesday, Hestrin accused the seven former city leaders of years of white-collar crimes.
If convicted, the defendants would be forbidden from ever serving in public office again, prosecutors said. The charges followed more than a year of investigation by the district attorney’s Public Integrity Team, which found that Dillon, Egger and Moorjani had used their public offices to enrich themselves personally and secure interest-free loans for friends and colleagues with taxpayer money.
Beaumont was at the center of a public corruption probe in April 2015 when investigators with the district attorney’s office and the FBI raided City Hall. They hauled away dozens of boxes of records, computers and other items.
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.
Authorities said Tuesday that the investigation turned up evidence of alleged improper ties between the company’s principals – Dillon, Egger and Moorjani – and their decisions as the heads of Beaumont’s economic development, planning and public works departments, respectively.
According to investigators, the three urged city leaders to issue bonds, which were then used to contract work to Urban Logic Consultants and turned them a profit, prosecutors said.
In 2003, the city approved a fee on new developments to help fund regional transportation projects, prosecutors said. Those fees amounted to more than $36 million. But instead of sending the money to regional projects, Kapanicas, Dillon, Moorjani, Egger, Aylward and Aklufi allegedly manipulated city documents, kept the money in Beaumont and then spent it on Urban Logic Consultants contracts.
From 2010 to 2013, Kapanicas and Aylward worked with Coe to secure the police chief two interest-free loans with city money. In total, the group lent more than $113,000 to Coe and other Beaumont Police Department employees, prosecutors allege.
At the same time, Kapanicas and Aylward were also allegedly inflating sales tax by lending its resale tax permit to Beaumont Electric, a private business. The two never requested City Council approval before awarding the company an interest-free $6.2-million loan to purchase electrical equipment, officials said.
Urban Logic has provided planning, engineering and economic development services to Beaumont for the last two decades.
Except for Coe, each of the remaining six defendants has been charged with six counts of embezzlement of public funds. Dillon, Egger and Moorjani have also been charged with one count each of conflict of interest and face up to 16 years in prison.
Kapanicas and Aylward are also charged with 24 counts of misappropriation of public funds and two counts of conspiracy. They face up to 26 years in prison. Coe has been charged with two counts of misappropriation of public funds and one count of conspiracy. He faces up to five years in prison.
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