Newport Aide Was Convicted in 1972 Theft

City Utilities Director Robert J. Dixon, who faces arraignment today for allegedly embezzling what investigators now say is more than $500,000, had a prior conviction for that crime while employed at Georgetown University.

City Manager Robert L. Wynn confirmed Tuesday that he knew about Dixon’s 1972 conviction for embezzlement, explaining that the matter came up when Dixon was first hired 17 years ago as a supply clerk and again recently when he was one of nine candidates interviewed to replace Wynn as city manager.

“We . . . determined that the thing had been resolved, and we took the attitude that justice was done,” Wynn said, adding that Dixon resigned his position at the university and made some restitution of the money that was taken.

The 20-year-old embezzlement involved more than $10,000, which was taken while Dixon worked for the university in the area of student activities, several sources said.

Auditors working on the Newport Beach case said the amount allegedly missing from city accounts--first thought to be only $60,000--is now believed to be more than $500,000 and could go higher, Newport Beach Police Lt. Tim Newman said.

He said city auditors and police investigators would be working into the night Tuesday analyzing accounts of the $10-million city water project, from which the funds were allegedly taken.

City Council members Tuesday questioned how an alleged fraud of this magnitude could go undetected since 1988. They asked if the city was too lax in monitoring the authority it gives to department heads.

“The 3 1/2 years concern the hell out of me,” said Mayor Phil Sansone. “We’re going to shake the place apart to make sure it’s 100% secure, and make damn sure it isn’t happening in other places.”

Dixon is scheduled to be arraigned and enter a plea in Municipal Court in Newport Beach on at least one count of felony embezzlement, police said. He allegedly cashed checks that he had the city write to pay nonexistent property owners for underground easements.

In a search of Dixon’s Huntington Beach condominium, police seized more than 100 expensive photographs--including one valued at $750--as well as records that indicated he had an expensive lifestyle, said Sgt. Al Fischer of the Newport Beach Police Department.

Police also found receipts during Monday’s search that showed Dixon had made recent trips abroad and stayed “at what appear to be very nice hotels,” police said.

Friends Tuesday described Dixon as an avid traveler and art collector, who took vacations abroad to attend art auctions. In the past year, he had traveled to Europe, Tahiti and London, and, they said, he often attended performing arts events in New York City on getaway weekends.

Most city employees reacted with disbelief Monday when Dixon was arrested outside City Council chambers by detectives. Dixon, as utilities director for the past five years, was in charge of the city’s water, sewer, gas, oil and telephone services. He was among the finalists to become city manager when Wynn steps down this month, and earned $86,000 as a department head.

“Everybody is in a pretty gloomy mood,” said Personnel Director Duane K. Munson. “We’re all feeling we’ve suffered a tremendous loss, the loss of a friend, but we’re also feeling a loss of our dignity.”

Dixon’s prior conviction for embezzlement was in December, 1972, and involved more than $10,000 taken while he served as an administrator in the student activities office at Georgetown, said a source in Washington who is familiar with the case.

His responsibilities while working at the university, the source said, included “approving and policing” payments from student organization accounts, which the source said totaled more than $250,000. He took the job with the university immediately upon getting his undergraduate degree there. He later received a master’s degree at George Washington University. “I remember the case well,” the source said, adding that Dixon did not serve time in jail. Georgetown University eventually recovered the funds through an insurance policy, the source said. The insurance company then recovered the loss from Dixon.

Dixon was ordered to undergo psychiatric treatment as a condition of his probation, another source said.

The Newport Beach investigation began late last week when the police received a tip from a credit card company that Dixon had allegedly deposited a series of two-party checks drawn on the city to pay for cash advances he had taken on one of his credit cards.

The city checks were allegedly requested by Dixon to pay for nonexistent easements for a pipeline to carry drinking water from Fountain Valley to Newport Beach, police said.

Jeff Staneart, deputy director of the Utilities Department, said Tuesday that there was no need for private easements in the $10-million water project because the lines followed city streets and crossed public property. He said 3 miles of the pipeline belonged to the Orange County Water District and was already in place. The project will also include four wells on two pieces of land in Fountain Valley. Newport Beach presently has no fresh-water wells and imports all of its drinking water.

Most council members agreed Tuesday that they did not expect city auditors to find widespread abuses in other city departments.

Councilwoman Jean H. Watt said “the easement was a special thing, it wasn’t a general, long-term, ongoing kind of (expenditure). If it’s more than that, I don’t know what to say. I’m concerned.”

Most council members also said city government should not depart from its current management style, where directors are given substantial autonomy over their department’s affairs.

Dixon, who had come to the city in 1975 under a federally funded training program called the Comprehensive Employee and Training Act, had included the embezzlement in his resume, Wynn said. He was one of about 20 CETA employees at the time.

Wynn said he was not overly concerned about the 1972 conviction, calling the incident a mistake that city officials were willing to overlook when they hired Dixon in the city parts warehouse.

Wynn said the Georgetown conviction came up again when Dixon was vying for the city manager position. A recruiter had asked Dixon if there was anything that might prove embarrassing later, Wynn said. Dixon immediately told him.

“It’s nothing he’s been hiding,” Wynn said, adding, nevertheless that he was astounded by the charges against Dixon.

“I’m still shocked with it because for 17 years, he has been an exemplary employee,” Wynn said.

Times Correspondent Lisa Mascaro contributed to this story.