RIVERSIDE, Calif. (CN) – A southern California city has accused its former city attorney of legal malpractice for his role in a $43 million corruption scandal that led to criminal charges being filed against the attorney and six other city officials.
In a lawsuit filed Friday, the city of Beaumont sued former city attorney Joseph Aklufi, former deputy city attorney David Wysocki and their firm Aklufi & Wysocki, alleging legal malpractice, breach of fiduciary duty and breach of contract.
Aklufi and Wysocki represented the city for over three decades, from 1992 to 2014.
The Western Riverside Council of Governments also filed suit against the same defendants on the same day. Both lawsuits were filed in Riverside County Superior Court.
“Defendants, and each of them, negligently failed to require city staff to keep proper accounting and records of bond issuances, fixed assets and inventory; failed to provide adequate oversight over contract awards; failed to advise the city and related entities regarding state law and the city code; failed to require the city to maintain written administrative policies and procedures; and failed to require adequate financial reporting or control over fiscal functions, which caused a massive deficit in the City’s General Fund to go unreported for many years,” the 15-page Beaumont lawsuit states.
In May 2016, county prosecutors filed corruption charges against seven officials alleging they had taken almost $43 million in city money for their own companies.
Prosecutors charged Aklufi; Alan Kapanicas, 64, of Palm Desert; David Dillon, 63, of Temecula; Deepak Moorjani, 70, of Yorba Linda; Ernest Egger, 60, of Mendocino; William Aylward, 54, of Cherry Valley; and Francis Dennis Coe Jr., 52, of Redlands.
Wysocki was not named in the criminal charges.
In the early 1990s, the city appointed Dillon, Egger and Moorjani, executives at Urban Logic Consultants, as heads of planning, economic development, and public works departments, according to the Riverside County District Attorney’s Office.
Prosecutors alleged that City Manager Kapanicas, City Finance Director Aylward, Aklufi and other officials steered work to their own companies.
Dillon, Egger, and Moorjani allegedly told the city to issue new bonds and used the money from bond sales to make payments to their businesses, the DA’s office said in a May 2016 news release.
The officials also collected fees earmarked for transportation projects that the Western Riverside Council of Governments was meant to pool along with other regional contributions. The defendants allegedly used the money for Beaumont projects and awarded contracts to their companies. The accused officials collected $36.6 million in Transportation Uniform Mitigation Fees, according to prosecutors.
Prosecutors charged Moorjani, Kapanicas, Aylward, and Aklufi with embezzling the public funds.
In its lawsuit, Beaumont says that it was exposed to a $60 million judgment after the Western Riverside Council of Governments took legal action. The city says that it has since settled the matter.
Prosecutors also alleged that from 2009 to 2015, Kapanicas and Aylward inflated the city’s sales tax and loaned $6.2 million in city funds to Beaumont Electric for the purchase of electrical equipment.
Over a three-year period that ended in 2013, officials also allegedly loaned then-Police Chief Francis Coe $45,000 in public money without city council approval.
The city loaned members of the city’s police department a total of $113,773 interest-free, according to prosecutors.
Shaun Murphy of the Palm Springs law firm Slovak Baron is representing the city of Beaumont in its lawsuit against Aklufi and Wysocki.
Jeffrey Dunn of Best Best & Krieger represents the Western Riverside Council of Governments.
Aklufi and Wysocki could not be reached for comment Wednesday, as two phone numbers for their firm were both disconnected.