Former Beaumont official admits guilt in corruption case

RIVERSIDE, Calif. - A former Beaumont official admitted his part in a corruption scandal involving six other city employees, including a former police chief, who pleaded guilty to a misdemeanor charge earlier this week.

Deepak Moorjani, 70, of Yorba Linda admitted one count of financial conflict of interest and was immediately sentenced by Riverside County Superior Court Judge Mac Fisher to three years probation and ordered to repay the city $3 million in restitution.

Read: Ex-Beaumont official accused of corruption settles securities charges

In exchange for his admission, prosecutors dropped six embezzlement charges against the former public works director.

On Wednesday, in another impromptu hearing, former Beaumont Police Department Chief Frank Coe, 53, admitted a charge of conspiracy to commit grand theft and was sentenced to three years probation and 200 hours of community service.

Coe has already repaid $50,000 in interest-free loans that were arranged for him while he was serving as the chief, according to the District Attorney's Office.

Prosecutors dropped a felony conspiracy count and three counts of misappropriation of funds in exchange for Coe's cooperation.   

Coe's and Moorjani's co-defendants are continuing to contest the allegations against them and are due back at the Riverside Hall of Justice on Feb. 22. They are:
   -- Joseph Sandy Aklufi, 70, of Riverside, former city attorney;
   -- William Kevin Aylward, 54, of Cherry Valley, former finance director;
   -- David William Dillon, 63, of Temecula, former planning director;
   -- Ernest Alois Egger, 60, of Mendocino, former economic development director; and
   -- Alan Charles Kapanicas, 64, of Palm Desert, former city manager.

The defendants are free on bail amounts ranging from $100,000 to $1 million.

They were arrested in May 2016 following a yearlong investigation by the District Attorney's Office and FBI. The 37-count criminal complaint against them includes charges of misappropriation of funds, conspiracy, embezzlement by a public official and financial conflict of interest.

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 carried out city business with the specific intent of profiting from it personally.

Prosecutors allege all 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 Urban Logic Consultants -- in which Dillon and Egger were also executives -- pulled levers that ultimately resulted in losses totaling $42.96 million.

Moorjani, Dillon, and Egger were handling bond sales for the city and allegedly 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.

It's alleged that from 2003 to 2014, $36.6 million in TUMF revenue was collected in Beaumont but not released to Council of Governments. Instead, the funds were retained for local projects that the six men had a stake in, according to prosecutors.   

Coe received his $50,000 loan between 2010 and 2013, Hestrin said, adding that other police officers -- who were not identified -- received smaller loans from the treasury that totaled almost $70,000. Why the other officers weren't charged has not been disclosed.

Aylward and Kapanicas were allegedly instrumental in setting up the zero- interest disbursals, in addition to arranging equipment purchases for Beaumont Electric, according to prosecutors.

Between 2009 and 2015, $6.2 million in city funds were supplied to the private company, without prior authorization from the council.   

The alleged scheme further involved allowing Beaumont Electric to use the city's reseller's permit, sparing it from having to pay sales taxes to the state Board of Equalization, as detailed in an audit of the city's finances ordered in 2015 by state Controller Betty Yee.

The U.S. Securities & Exchange Commission initiated its own probe, and in August announced a settlement with Kapanicas for securities violations stemming from his time overseeing the Beaumont Financing Authority.   

The SEC alleged in court papers that 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.

Kapanicas, without admitting or denying anything, agreed to pay a $37,500 penalty.

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