Beaumont Learns Details Of Corruption Charges Against Former City Officials

May 19, 2016

Today's scheduled arraignment was postponed until next week for three former Beaumont city officials arrested earlier this week on public corruption charges.  In all, seven men who previously worked for the City of Beaumont were charged Tuesday with close to a hundred felonies.  KVCR's Matt Guilhem spoke with current city leaders in Beaumont about the charges, and about the alleged scheme that siphoned from city coffers up to $43 million over 20 years.

The seven former Beaumont officials authorities are charging with embezzlement, conspiracy

and misappropriation of funds among other things, are practically an entire city bureaucracy.

Those facing charges include Beaumont’s former city manager, Alan Kapanicas, the past

financial director William Aylward, the previous city attorney Joseph Aklufi, and a former

police chief, Frank Coe. But wait, there’s more. Also implicated in the alleged scheme are the

previous economic development director, public works director, and the planning director.

The Press Enterprise reports Alan Kapanicas, the former city manager and William Aylward, a

past financial director, face the most charges. Riverside County district attorney Mike Hestrin

explained some of the details of the allegations against the pair at a press conference

Tuesday.

(0:24 Hestrin-6MilLoan) Hestrin: Between 2009 and 2015, Mr. Kapanicas and Mr. Alyward concocted a scheme to

falsely inflate sales tax in the city of Beaumont by lending the city’s resale tax permit to a private business, Beaumont

Electric. The defendants never asked the city council for approval before loaning a total in excess of 6 million dollars of

city money to a private company.

Authorities have charged both Kapanicas and Aylward with 2 counts of conspiracy, 6 counts

of embezzlement, and 24 counts of misappropriating funds.

For more than a year, there was silence from the FBI and the Riverside County District

Attorney’s office – the two agencies leading the corruption probe – on the status of the

investigation. Then, on May 17 th , 6 of the 7 suspects were arrested. There was a uniform

sentiment among current Beaumont city leaders.

(0:11 DoubleSurprise) Lloyd: I was surprised. Nancy: I was surprised. We did not have a lot of advance notice on

that. Lloyd: I learned about it basically through text messages from the city as they were hearing about it.

That’s first term Beaumont city councilman Lloyd White and fellow freshman Nancy

Carroll, Beaumont’s treasurer. Both were voted into office in 2014 in an election that

brought sweeping change to the city and deposed several longstanding incumbents.

When White was running for City Council in 2014, his claims of seeing financial red

flags were met with hostility. Even before the arrests of Kapanicas and the others,

White says he felt validated in his sounding the alarm.

(0:18 LloydWhite-Validated) Lloyd: You know I felt validated when the district attorney came in with the raids

because I did on run on this as a campaign, and I was being told by the past councilmembers as well as Mr. Kapanicas

and his staff that I didn’t know what I was talking about – that everything was fine, everything was wonderful.

While White viewed the FBI raids over a year ago on City Hall, Urban Logic Consulting

– a firm used by city government for decades, which, incidentally, was set up by 3 of

the suspects, and the home of Kapanicas as validation, treasurer Nancy Carroll isn’t

quite there yet.

(0:16 Nancy-NotValidatedYet) Nancy: There’s a lot of citizens who have been spending their own money,

spending their own time trying to get to the bottom of this. I hope they feel validated because they should. I’ll feel validated

when all of the rocks have been uncovered.

Carroll thinks the investigation and arrests of the seven conspirators who authorities

say bilked the city out of around 43 million dollars is only the halfway point in the

Kapanicas / Urban Logic saga.

(0:19 Nancy-NextHalfOfSaga) Nancy: I think that there’s going to have to be a trial. I think that if they find

that, decisively, public money has been spent or taken inappropriately – embezzled – I think that they need to go after it,

and they need to recover as much as they can for the public.

Going off nothing but instinct, Carroll says she has a hunch that some of the 43 million

dollars will be recovered. The lion’s share of those funds, around 37 million, came from

transportation fees that were supposed to be shared with other local governments in

Riverside County for transit improvement projects. Instead of adding to the collective

pool, Beaumont held onto its share of the money. The city is appealing a lawsuit that

found it failed to pay its share of those transportation fees.

Under the shadow of the investigations, arrests, and ongoing litigation, both city

councilman Lloyd White and treasurer Nancy Carroll insist a new era of transparency

has started in the pass community. Again, Carroll.

(0:19 Nancy-NoMoreLoopholes) Nancy: We’ve made extraordinary progress in terms of putting in internal

controls, financial management policies, making people accountable, transparency. None of these loopholes that you

could drive a truck through are any longer in place.

Along with the investigations by the Riverside County District Attorney’s Office and the

FBI, Beaumont is also facing scrutiny from the state controller’s office and the federal

Securities and Exchange Commission.

Matt Guilhem, KVCR News.