NEWPORT BEACH : More City Funds Allegedly Stolen

Auditors combing through city financial records said Monday that they found an additional $600,000 allegedly stolen by the former utilities director, increasing the estimated loss to the city from $1.2 million to $1.8 million.

Michael C. Moreland, a partner in the Newport Beach-based accounting firm Moreland & Associates, said the new estimate is based on city financial records dating back to 1982. He expects the loss to be even higher after his firm completes an audit of the city’s books.

“We want to emphasize that this is an ongoing review of purchasing procedures and an ongoing review of alleged funds (that were) taken,” Moreland said.

Earlier this month, Utilities Director Robert J. Dixon was arrested on suspicion of embezzling more than $1 million from the city. Dixon, who is scheduled to be arraigned Friday, remains in Orange County Jail, unable to post $500,000 bail.

At Monday’s meeting, the City Council agreed to put into immediate effect new accounting procedures to prevent future misuse of city funds as alleged in the Dixon case. Investigators say the former utilities director requested and received checks for property purchases made out to nonexistent landowners. He then deposited the money in his personal accounts, according to authorities.

The new regulations require that all purchase orders or checks issued by the city be mailed directly to the person receiving the funds. If a department head or other staff member needs to pick up the funds and relay them to the person receiving them, the city manager must approve the request.

In addition, logs will be kept detailing purchase orders or checks issued directly to department personnel. The logs will be reviewed periodically by the city finance director and purchasing manager to check for any suspicious activity.

Mayor Phil Sansone requested more controls and city manager approval, saying the accountants’ proposal to allow city staff to convey checks as long as the activities were recorded was not strong enough.

“I’m thinking of cutting the horse’s head off in the beginning,” Sansone said. “However cumbersome it might be, I don’t want even another embezzlement to occur.”

City officials, however, added that the changes were initial measures to immediately curtail the procedure Dixon allegedly used to pilfer city funds. More changes are likely, they said.