Financial Scandal Worsens in Newport-Mesa Schools

SANTA ANA —  A financial scandal at Newport-Mesa Unified School District worsened Thursday with the disclosure that district officials now believe its suspended chief financial officer, Stephen A. Wagner, misappropriated more than $175,000 of school funds and forged the signature of a top school official.

The Newport-Mesa district filed a six-page complaint in U.S. Bankruptcy Court on Wednesday, alleging that Wagner wrote at least four checks totaling $175,357 to a shoe repair company that he co-owns.

The checks were allegedly written between June 25, 1991, and April 10. He is accused of forging the signature of the deputy superintendent on two of the checks.

The district’s complaint, filed as part of Wagner’s personal bankruptcy case, is the first public record to reveal the preliminary findings of an Orange County district attorney’s investigation into Wagner and possible wrongdoing at the school district.

Wagner has not been charged with any wrongdoing but the district attorney’s office said the investigation is ongoing. His attorney, Paul Meyer, said he was unaware of the school district’s latest findings.

“I have not heard any accusations made by the district attorney of this county. . . . If there is an accusation, we will be happy to respond to it but at this point the investigation continues,” Meyer said, adding that “a preliminary review of all the facts in this case has not revealed that the district is presently out any money.”

In its complaint, the district said Wagner “misappropriated (the) district’s property by fraud and dishonesty.” He used school documents to carry out the alleged scheme and “forged endorsements and deposited forged checks in his bank accounts,” according to the complaint.

Wagner was suspended without pay Oct. 23 after school officials discovered a $57,861 check he had allegedly written to his shoe repair company in Victorville, Cobbler Express Corp. Newport-Mesa Supt. John Nicoll said last week that he will seek Wagner’s dismissal Tuesday at a school board meeting.

School officials say the checks in question came from a health insurance fund.

Reports of Wagner’s lavish lifestyle--he owns a $1-million-dollar home in Newport Beach, several other properties, a Mercedes-Benz and mink formal wear--have incensed parents and teachers. They are especially upset about the allegations because budget problems in the last year forced teacher layoffs, overcrowded classrooms and caused a lack of supplies.

“If it is true that we have a management person in the district wearing mink tuxedos to district functions at a time when we have massive layoffs of classroom teachers, not only is that callous but it’s flatly stupid,” Maya Decker, president of the Newport-Mesa teachers union, said Thursday. “The contrast, of course, is outrageous.”

Newport-Mesa attorney Spencer Covert said the school district filed the complaint against Wagner in order to recoup any funds from his estate.

Wagner, a 21-year veteran of the Newport-Mesa district, filed for Chapter 11 bankruptcy protection from creditors July 28, just days after the Internal Revenue Service filed nearly $2.4 million in liens against him.

Times staff writers Kristina Lindgren and Jodi Wilgoren contributed to this article.