Colin Atagi

Palm Springs Desert Sun

Four former Beaumont officials entered guilty pleas Tuesday for their role in a $43 million embezzlement scheme involving a handful of city officials, including the former city manager and police chief.

The defendants – including Beaumont's former city manager Alan Kapanicas, former economic development director David Dillon, former city planner Ernest Egger, and former finance director William Aylward – appeared Tuesday morning at the Riverside Hall of Justice, where they were ordered to pay a combined $8 million in restitution and placed on probation. None received jail sentences.

The defendants sat quietly during the hearing as victims of the embezzlement scheme read statements in court.

"You nearly brought the city of Beaumont to its knees," Mayor Pro Tem Nancy Carroll told the defendants. "This was your house of cards."

In a statement, Riverside County District Attorney Mike Hestrin said Tuesday's pleas were an important step toward bringing justice to Beaumont and its residents.

"The fact that all these pleas also involve more than $11 million in restitution to the city, to be paid forthwith from the assets previously frozen by the DA’s Office, is significant," Hestrin said.

Following Tuesday's hearing, Gregory Kassel, who represented Kapanicas, said his client "just wants to put this behind them."

Aylward's attorney, James Taylor, made a similar comment and said that his client will start fresh in 2018 and pay his debt to society. But he added "at this point, I would feel (Aylward's) public service career has ended, unfortunately."

Egger's attorney declined to comment and Dillon's attorney could not be reached as the crowded courtroom emptied following the hearing.

The plea deals come two months after Beaumont's former city police chief Francis Dennis Coe Jr. plead guilty to one misdemeanor count of conspiracy to commit theft. He was sentenced to three years of summary probation and 200 hours of community service. He agreed to pay $50,000 back to the city.

ORIGINAL STORY: Former Beaumont officials charged in embezzlement scheme

Days later, former public works director, Deepak Moorjani, entered a guilty plea for his involvement in the case. He was placed on three years probation and ordered to pay back $3 million that he had spread across 23 bank accounts.

Authorities say the suspects used their positions as city officials to funnel tax dollars into their own private companies.

"It is a complicated case and that's how they were able to achieve this fraud for so many years," Riverside County Deputy District Attorney Emily Hanks said following Tuesday's hearing.

The defendants were charged in a 33-count complaint, including alleged crimes of conflict of interest, embezzlement of public funds, misappropriation of public funds and conspiracy, according to a press release from the district attorney's office.

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Kapanicas and Aylward admitted to providing interest-free loans to city employees and a private corporation. Hanks said the loans were for a variety of purposes, but specified Coe used his loan to pay for college courses and a kitchen renovation.

Arrests were made in 2016. They were the culmination of FBI raids conducted in the Coachella Valley and the Inland Empire more than a year earlier on locations including Beaumont City Hall, Urban Logic Consultants and Kapanicas' home in Palm Desert.

Several Beaumont City Councilmembers, as well as Calimesa Mayor Jeff Hewitt, chastised the defendants for their actions and blamed them for denying the region of sufficient roads and transportation that's badly needed.

Prior to Tuesday's guilty pleas, former Beaumont Mayor Deborah Franklin said "there was no acknowledgement of guilt or apology" from the defendants.

"I hope God has mercy on you, because it's hard for me to be forgiving," she said while delivering a victim testimony.

Beaumont had been plagued by scandals involving city officials in recent months.

In September, City Councilman Mark Orozco pleaded guilty to accusations of felony bribery and perjury and he admitted to trying to frame his colleague. He was sentenced to three years probation and ordered to pay a fine of $10,000 and resign from the council.

Orozco's indictment came a year after the embezzlement case was filed against the seven other city officials.

The cases were unrelated. but prosecutors said that contacts made during the first investigation eventually led them to Orozco.

Prior to his indictment, Orozco had criticized authorities about taking their time on the embezzlement investigation.

At Tuesday's hearing, Dillon plead guilty to entering into a contract with financial intent and embezzlement. His restitution was set at $4 million.

Egger plead guilty to entering into a contract for financial gain. He restitution is $3 million.

Kapanicas plead guilty to embezzlement and misappropriation of funds. His restitution was set at $1 million.

And Aylward plead guilty to embezzlement and misappropriation of funds. His restitution is $100,000.