Sex Suit Adds to Rough Year for Newport

The Police Department here looks more like a yacht club than a command post for fighting crime. Mercedes-Benzes and BMWs regularly take up space in the visitors lot. Four sailboats heel in the wind on the official city seal, and semaphore flags snap in the breeze on the landlocked mast out front.

Considering the turmoil this conspicuously affluent burg of 70,000 has faced since January, a distress signal should be flown from one of the yardarms.

In January, Utilities Director Robert J. Dixon, a trusted manager who had worked for the city 17 years, was arrested on charges of embezzling nearly $2 million in municipal funds to finance a lavish lifestyle.

Over the next nine months, and as Dixon worked his way through the court system, Newport’s reputation for fiscal strength ebbed. The recession, taking its toll on tax revenue at both state and local levels, forced the city to trim millions of dollars from its budget. Earlier this month, a dozen city employees were laid off. Next year could be worse.

The coup de grace may have been delivered last week. Four female employees of the Police Department, including two sworn officers, filed a sexual harassment lawsuit that has embroiled the police chief and other high-ranking officers in one of the department’s worst scandals in years.

“Christ, look at everything,” Mayor Phil Sansone said. “Dixon, the budget, the police. It has been a rough year. . . . I think that is an understatement.”

To be sure, the city has had its share of controversies in the past. Patios of private property have intruded illegally onto public beach. Citizens have battled over development and the fate of the gracefully aging Balboa Bay Club.

Sundaga Bryant received a $1.5-million court settlement from the city two years ago because a police officer mistook Bryant’s boombox-style radio for a firearm and maimed him with a shotgun blast. Young adults have run amok during the summer in west Newport, during which more party-goers are crammed into beachfront apartments than sardines in a can.

Although there is optimism that this opulent seaside town will certainly survive, some civic leaders say that what it has weathered in the past pales in comparison to what has transpired since Jan. 1.

“Newport is really having a bad year this year--Dixon, the money crunch, state funding, laid-off employees, and now” the police lawsuit, Councilwoman Evelyn R. Hart said. “I’m still confident the city is well run, but we have had some difficulties here--difficulties that have hurt everyone in this city.”

“I think the events of the last year have made a lot of residents aware of the problems and, all of a sudden, we don’t feel so protected,” said Karen Evarts, a community activist who sits on the board of the Lido Isle Community Assn.

The city was stunned first in January when Dixon, 48, a longtime city employee with a sterling reputation, was arrested in connection with a 10-year-old scheme that drained the city treasury of at least $1.82 million.

As head of the Utilities Department, Dixon submitted phony purchase orders to the Finance Department. When a check was issued, he collected it, forged a signature and deposited the money into his own accounts.

With the gains, Dixon bought a 1990 BMW, gold cuff links worth $120,000 and a $250,000 wardrobe that included 600 sweaters, 60 wool scarves and 20 umbrellas. He indulged his taste for artistic black-and-white photographs from the 1920s and ‘30s, amassing a collection of 220 pieces worth an estimated $400,000.

Dixon eventually pleaded guilty to two counts of embezzlement and was sentenced to four years in prison in June. He was also ordered make restitution to the city, which has sued Dixon’s banks and credit card companies in an attempt to recover the lost funds.

“Newport Beach has always had a tremendous image throughout the county. It is unfortunate that guys like Dixon have smudged the name,” said Richard Luehrs, president and chief executive officer of the Newport Harbor Area Chamber of Commerce. “All of this is unfortunate, but we are doing what we can, and we will come out of it. If anyone is pushing the panic button, they shouldn’t be.”

While Dixon caught civic leaders by surprise, the city’s budget problems, though difficult to deal with, did not. Anticipating the recession’s impact on state funding and tax revenue, officials began planning a year ago to reduce the city’s $100-million budget.

They saved more than $10 million by reducing working hours, postponing capital improvements, laying off maintenance workers and refusing to fill another 20 vacant positions.

“Not since 1978 with Proposition 13 has the city had to deal with budget cuts,” Sansone said. “The city is still in the black, but I don’t know if we can stand another year of this without impacting the infrastructure and making layoffs, which would then hurt services. If the problem escalates on the state level, I don’t know where we are going to get the money we need.”

To help with the budget, the city and the Newport Harbor Area Chamber of Commerce have formed a task force to identify possible ways to raise city revenue. Luehrs said the chamber is planning a campaign to encourage people to shop in Newport Beach so the city will not lose sales tax revenue.

“Some of these things are certainly shocking,” Councilman John C. Cox Jr. said. “But this city is still in a healthy, positive situation. We have no debt and deficits that other cities face.

“We are having some hard times, but it is not all doom and gloom,” Cox said. “I think we have had a good year in many respects--hiring a good city manager, upgrading our sewer and water systems, and the Newport Coast Road is open.”

He declined to comment on the the sex discrimination case pending against the Police Department except to say that the force has enjoyed a good reputation.

“We have had outstanding male and female officers in all aspects of community service,” he said. “I don’t know how much truth there is to all of these allegations.”

The lawsuit, filed Thursday in Orange County Superior Court, charges that four current and former female employees of the Police Department were sexually harassed, both on and off the job, by a captain, and that Police Chief Arb Campbell did nothing to stop the behavior though he knew about it.

Capt. Anthony Villa is specifically accused of touching breasts, making sexual overtures and suggestive remarks that included graphic descriptions of a pornographic movie that he had seen.

All four women contend that they were told to socialize off-duty at bars with male officers, especially commanding officers, and to wear short skirts “to show off their legs.”

The case states that several female employees who are intimately involved with high-ranking officers receive favored treatment in contrast to other female employees who refuse to “go along to get along.”

Since the case was filed, legal representatives of the women said they have received numerous calls from Police Department employees offering to testify on behalf of their clients. In addition, they said, four other women are considering joining the lawsuit.

Except for broad denials of the allegations, city officials and Police Department personnel have declined to comment specifically on the lawsuit.

“I’m saddened by these accusations. I hope it’s not symptomatic of something more serious, but it’s too early to be judgmental,” said Jack Skinner, a community activist and member of the Harbor Quality Citizens Advisory Committee. “What’s happening concerns me because I’ve always had great pride in this city.”

Correspondent Mimi Ko contributed to this story.