Beaumont Corruption Case

The seven defendants in the Beaumont political corruption case, in the front row are Francis Dennis Coe Jr., Joseph Sandy Aklufi, William Kevin Aylward, Ernest Alois Egger, Deepak Moorjani, David Willliam Dillon, and Alan Charles Kapanicas, left to right, in the back row are attorneys Melissa Meister, James Taylor and Virginia Blumenthal, left to right, prior court proceedings in Dept. 52 of Riverside Superior Court on Friday. (Kurt Miller – Staff Photographer)

By David Danelski and and Gail Wesson, The Press-Enterprise
Posted: 08/19/16 – 11:20 PM PDT |

The seven former Beaumont city officials charged in May with 94 felony corruption counts, including embezzlement and misappropriation of public funds, each pleaded not guilty to all charges against them Friday.

In a court proceeding that lasted more than three hours, Riverside County Superior Court Judge Mac Fisher ruled on some defense motions but put off other matters, including a defense challenge to the freeze on defendants’ assets and appointment of a receiver to monitor any court-authorized expenditures from defendants’ monetary and property holdings.

The defendants are 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.

The judge rejected a state attorney general’s request to take away Aylward’s CPA license at this point in the criminal proceedings.

Instead, attorneys consented to draft a statement in which Aylward would agree to inform present and future clients of the criminal case against him.

Attorneys also agreed to schedule a hearing on the assets-freeze issue whenever a preliminary hearing is scheduled in the case, or, after filing of a grand jury indictment.

Fisher asked if an indictment was a possibility. Because any grand jury proceedings are confidential, Deputy District Attorney Amy Barajas said she could address not that.

The judge also scheduled a Sept. 16 hearing on the appointment of a receiver to oversee and manage the defendants’ assets.

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 employees with the city, signed off on millions of dollars to consulting companies they owned.

Kapanicas, 64, of Palm Desert, and Aylward, 53, of Cherry Valley, both are charged with six counts of embezzlement, 24 counts of misappropriation of funds and two counts of conspiracy.

Dillon, 63, 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.
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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.

The prosecution’s case describes local government administration run awry.

To save money and increase efficiency, Beaumont’s City Council hired outside consultants to run most of the city’s day-to-day operations and oversee an ambitious plans to rebuild the city’s roads and sewer and water delivery systems. These consultants also set out to foster growth that resulted in a surge of tract housing that quadrupled the city’s population.

Kapanicas was Beaumont’s consulting city manager, the highest ranking city administrator from 1995 to 2011, and he billed the city for his services through a company he and his wife created called General Government Management Services. He then served as an employee until last year.

Dillon, Egger and Moorjani, were Beaumont’s economic development, planning and public works directors. Like most of Kapanicas’ tenure, these men were not city employees. They billed the city through a company they owned called Urban Logic Consultants.

Many of the charges relate to how these companies got paid, according to declarations filed by the district attorney’s office.

General Government Management Services, for instance, billed the city for financial services work associated with repeatedly going to the bond market to take out more $300 million in debt to pay for public works projects.

But the arrangement became criminal, prosecutors allege, because Kapanicas, acting as city official, repeatedly signed off on payments from the bond fund accounts to his own company. General Government Management Services received at least $1.2 million in bond funds, according to city records.

To read expanded article, click here.