Seven former Beaumont officials, including the city manager, city attorney and police chief, were charged Tuesday with stealing nearly $43 million in public funds.
The seven arranged for city contracts and loans that funneled money to companies in which they had personal stakes, prosecutors alleged. In addition, the police chief allegedly received a $45,000 interest-free city loan without City Council approval.
Beaumont, a semi-rural community of around 42,000 people located east of Los Angeles, has in years past struggled with budget deficits of as much as $10 million.
Most of the nearly $43 million allegedly stolen was collected from developers of new projects and was supposed to have been passed on to a regional fund for transportation projects. Instead, prosecutors say city officials illegally held onto the money and funneled it to contracts with their business interests.
In November, a state audit concluded that Beaumont's accounting controls were "effectively nonexistent."
The U.S. Securities and Exchange Commission also is investigating the city, which over the past two decades has issued hundreds of millions of dollars in bonds for public services and works, such as sidewalks. Thousands of homeowners are still paying off the bond debt.
Those charged Tuesday are: former City Manager Alan Kapanicas; former Police Chief Francis Dennis Coe Jr.; former City Attorney Joseph Sandy Aklufi; former Finance Director William Aylward; former Economic Development Director David William Dillon; former Public Works Director Deepak Moorjani and former Planning Director Ernest Alois Egger.
All were arrested Tuesday except for Egger, who was expected to surrender to authorities on Wednesday, according to the Riverside County district attorney's office.
A call to Egger's Mendocino home seeking comment was not immediately returned.
The others remained jailed and it was not immediately clear whether they had attorneys.
Kapanicas and Aylward are each facing more than 30 felony charges including conspiracy and misappropriation of public funds. They could face up to 26 years each in prison if convicted.
Potential sentences range from 16 years for Dillon, Egger and Moorjani to five years for Coe.
The charges come a year after investigators with the FBI and district attorney's office searched City Hall, Kapanicas' home in Palm Desert and the offices of Urban Logic, a consulting firm hired in the early 1990s to head the city's planning, public works and economic development departments. They hauled away computers and dozens of boxes of documents.
Dillon, Egger and Moorjani all previously had principal interests in Urban Logic.