More details continue to emerge about how 7 former Beaumont city officials misappropriated roughly $43 million from the Pass community's coffers. KVCR's Matt Guilhem reports on the purported scheme the men employed to line their pockets, and some hard assets in their possession that could prove valuable as the city tries to untangle its financial knot.
Former Beaumont City Manager Alan Kapanicas was hailed as something of a financial whiz. When the methods, formulas, or general practices he used were questioned, officials in Beaumont simply said Kapanicas was a genius.
Following a corruption probe and investigation by the Riverside County District Attorney’s Office and the FBI that lasted more than a year, the financial wonders Kapanicas was known for have resulted in 32 felony charges against him. Both Kapanicas and former Beaumont finance director William Aylward are facing numerous allegations of embezzlement, conspiracy, and misappropriation of funds.
Both men were taken into custody May 17th, and that’s fine by current Beaumont city treasurer, Nancy Carrol.
Nancy: I think it’s great that they are. I think that the taxpayers put up with way too much smoke and mirrors for way too long. And, they needed to see that there was going to be action taken.
Along with Kapanicas and Aylward, authorities also rounded up 3 other men: David Dillon, Deepak Moorjani, and Ernest Egger. They were the past economic development director, public works director, and planning director respectively. They also were the three leaders of Urban Logic Consulting – a firm they founded to consult with the city. Each of the three is facing multiple counts of embezzlement and one charge of conflict of interest.
So how did the scheme, which siphoned away some 43 million dollars from the city work? Riverside County District Attorney Mike Hestrin explained one angle of it plainly at a press conference Tuesday.
Hestrin: The defendants are alleged to have used their positions as city officials to funnel work to their own private companies.
The Press Enterprise reports that Urban Logic Consulting received just over 43 million dollars during an 18 year span from 1994 to 2012.
Along with the alleged conflict of interest between the city and the consulting firm, financial bonds also played a key role in enriching the suspected conspirators. How they specifically did it is complex and hard to explain, but here’s the gloss. Beaumont was growing rapidly between the 90s and late 2000s. Infrastructure needed to be built, so the city issued bonds to pay for the improvements. With many of the alleged conspirators in positions of authority in the city, there was really nobody to question them. The bonds would be issued, and the men would field out consulting work to their own companies. The more bonds issued, the more they stood to gain.
Nancy: This happened over a very long period of time, so I suspect there’s a few people who got a little flamboyant thinking that they were untouchable. And in that case, I hope that there are some real hard assets that they can turn over and give restitution to the city because the people that paid those dollars – they deserve it.
There may be something to Beaumont City Treasurer Nancy Carroll’s suspicion. The Desert Sun newspaper reports that two of the accused, Ernest Egger, the former planning director and Deepak Moorjani, a previous public works director have numerous properties.
When Beaumont’s Mayor, Mike Lara, thinks about trusted city employees living the high life on the taxpayer’s dime, he’s pretty much at a loss for words.
Lara: It’s frustrating. You’re looking at these folks, and … it’s – it’s just very frustrating.
Documents released Wednesday show Egger owning 2 coastal homes up north in Mendocino just a thousand or so feet from the ocean. He also owns a 27acre parcel off the Pacific Coast Highway in Mendocino. But Egger has a taste for the mountains too; he has a cabin in South Lake Tahoe.
Moorjani preferred to stay local; he has houses throughout southern California. He has a two story home in Irvine, another two story home in Yorba Linda, a house in Anaheim, and a fourth home in Beaumont. Moorjani alone also has over 30 bank accounts.
Given the physical assets and numerous accounts – more than 60 – that authorities are looking to freeze, Mayor Mike Lara has some hope Beaumont will be able to recover at least part of the misappropriated 43 million dollars.
Lara: Knowing now what we know as far as the properties that they own and the homes that they own, if – hopefully you know we’ll be able to get some type of restitution back to the city.
While authorities have already charged 7 former city leaders with financial crimes, treasurer Nancy Carrol wants no stone left unturned.
Nancy: I hope the DA really makes sure that he ferrets out anybody else who looked the other way because looking the other way with the public’s money is just as bad as being inappropriate with it.
Matt Guilhem, KVCR News.