3 Arrested in Tustin City Funds Scheme

A former top financial officer for the city of Tustin was arrested Wednesday along with her present and former husbands on charges stemming from an embezzlement scheme in which she allegedly diverted $164,000 from the city’s coffers over a 4-year period.

Gay Lona Marian Hamblin Patterson, 44, of Orange, who during 11 years as Tustin’s assistant finance director was known as Loni Hamblin, surrendered after a warrant was issued for her arrest by Tustin police on Tuesday. The warrant charged her with embezzlement by a public officer and forgery, both felonies.

Also arrested were Patterson’s former husband, Wallace Brent Hamblin, 45, of Costa Mesa, and Joseph Michael Patterson, 43, whom Mrs. Patterson married after she resigned her position in June. Hamblin was charged with eight counts, and Patterson four counts, of receiving stolen property. All three were released on their own recognizance and ordered to return for arraignment on Sept. 11.

‘No Comment’ on Case

An unidentified woman who answered a call to the Pattersons’ residence Wednesday said the Pattersons had “no comment” on the case.

In 1981, Patterson allegedly began depositing the city’s income checks in an unauthorized Tustin bank account that she had opened in the city’s name, Tustin Police Capt. Fred Wakefield said. The account required that the checks carry a signature in addition to Patterson’s. Patterson allegedly forged city Finance Director Ron Nault’s or another authorized official’s signature on the checks, Wakefield said.

The alleged scheme went unnoticed until May, when another Finance Department employee tipped Nault of irregularities in the city’s records. “It went undetected for so long because of the infrequency and selectivity that she used in the skimming of checks from various revenue accounts,” said Wakefield. “This made identification of the scheme almost impossible.”

Declined to Name Accounts

Police and city officials declined to say exactly what types of income accounts Patterson allegedly pilfered. But Wakefield did say that Tustin holds a number of investment accounts that yield dividend and interest payments at infrequent intervals “that would be hard to spot if they were missing.”

Patterson was responsible for overseeing “practically all of the city’s cash transactions,” said Nault, her former boss. Tustin’s budget this year is about $30 million.

In June, Nault called in a Newport Beach auditing firm, which determined that although income entries had been made for the embezzled funds in the city’s ledgers, the funds had not been deposited in the appropriate accounts, Wakefield said.

Patterson was questioned and placed on leave by Nault on June 18, and she resigned three days later.

“Nothing like this has happened in Tustin before,” said Bill Houston, who has been city manager since 1981. “I am sad and shocked that this would occur, and our first priority is to assure the people that our financial accounting systems are proper.”

“But in today’s computer age, you can have all the safeguards you want--if you have people in trusted positions, these things can happen,” Houston said, adding that even the annual outside audits of the city’s books--performed by Simonis Moreland, the same company called in for the investigation --failed to turn up any irregularities.

“You don’t normally look at every single transaction in an audit,” said Houston.

Embezzlement convictions usually carry a possible sentence of up to four years in state prison, but Patterson’s status as a public official would allow for a stiffer penalty. Forgery and receiving stolen property are both punishable by a year’s imprisonment.