Wagner Twin Also Did Work for District : Scandal: The brother of Newport-Mesa Unified’s suspended finance chief was paid to design a computer accounting program for a district campus.

The brother of the local school district’s suspended chief financial officer--who is under investigation for allegedly diverting school funds--was paid to design a computer accounting program for a district campus, a school official said Monday.

Thomas A. Wagner, twin brother of Stephen A. Wagner, was a consultant to the firm hired to create the computer accounting program for the Newport-Mesa Unified School District’s adult education center in Costa Mesa.

But when Thomas Wagner recently bid on another school contract for his own financial services company, Supt. John W. Nicoll rejected the proposal, calling it a “conflict of interest” to have both Wagners working directly for the school district.

“Sometimes relatives are hired, but we try not to have one supervising the other. . . . In the case of the two Wagners, perhaps because of the nature of the work to be performed, I didn’t think it was a good idea to hire Tom,” Nicoll said.

Stephen Wagner, who was widely known for his expensive cars, homes and outside businesses, is under investigation by the district attorney’s office, which is conducting a criminal probe into alleged embezzlement of school funds.

Stephen Wagner was suspended without pay Oct. 23 after school officials discovered that he had written a check on a school district health fund for $57,861.25 on July 16, 1991. The check--paid to Wagner’s firm, Cobbler Express Corp. of Victorville--was cashed with only Wagner’s signature in violation of district policy requiring two official signatures. Last week, the school district’s board of trustees took steps to fire him.

As director of business support services, Wagner managed the district’s $95-million budget, Nicoll said.

Stephen Wagner has not been charged with any criminal offense, but Deputy Dist. Atty. Carl Biggs said the investigation is continuing. Wagner, 40, referred all inquiries to his attorney, Paul S. Meyer of Costa Mesa. Thomas Wagner declined to comment Monday.

Meyer, a noted Orange County criminal defense attorney, parried questions about the case. “We’re happy to comment when we feel it would be appropriate to do so, and at this time we feel it’s just not appropriate,” he said. “The district attorney’s office is making their investigation in a thorough, competent fashion, and we feel it is in our best interest to permit (them) to proceed in an atmosphere free of allegation and speculation in the press.”

School auditors and law enforcement investigators continued to sift through school district accounts this week for other questionable checks. Sources familiar with the investigation said Monday that the tally of diverted funds is believed to be approaching $175,000.

The Newport-Mesa school district paid $29,680 to Sherreitt Enterprises of San Juan Capistrano for computer programming and design work done between December, 1990, and June, 1992. The company was hired to create a program that would track invoices, purchase requisitions, payments and debits at the Davis Educational Center.

Michael T. Sherreitt, owner of the design firm, said he hired Thomas Wagner, an accountant, to devise the bookkeeping system after he was highly recommended by a local accountant.

Sherreitt said he knew that his associate had a brother employed by the district, but he said they never had any dealings with Stephen Wagner and reported only to Rosemarie Bodrogi, director of state and federal projects and adult education for Newport-Mesa.

“He did an excellent job, and if I have another project, I’ll use him again,” Sherreitt said of Thomas Wagner.

Nicoll said that Sherreitt Enterprises was hired by Bodrogi and that Stephen Wagner had nothing to do with the selection. He added that he was aware that Thomas Wagner worked for Sherreitt and that he “saw nothing wrong” with that arrangement.

Nicoll did, however, put a stop to Thomas Wagner’s attempt to work directly for the district a few months ago. When a proposed contract for Wagner Financial Services--Thomas Wagner’s company--reached the superintendent’s desk, he rejected it. Hiring Stephen Wagner’s brother “just didn’t feel right,” Nicoll said Monday.

Stephen Wagner also is facing nearly $2.4 million in Internal Revenue Service liens filed last July 28 against his landholdings for back taxes. Two days later, he and his 37-year-old wife, Linda, filed for protection from creditors under Chapter 11 of the federal bankruptcy codes. Chapter 11 allows individuals to work out payback agreements with their creditors.

It was learned Monday that Thomas Wagner and his wife, Jody C. Wagner, filed for bankruptcy on Oct. 23, the same day his brother was suspended from the school district.

The couple list $359,600 in assets and $392,742 in liabilities in their Chapter 7 bankruptcy filing. Chapter 7 will require Thomas and Jody Wagner to liquidate most of their holdings.

The couple do not live in the same style as Stephen and Linda Wagner, who own a Rolls-Royce and seven properties in Orange and Riverside counties and in Texas.

Thomas and Jody Wagner have one home--in Costa Mesa’s Wimbledon Village--and two cars--a 1983 Cadillac Seville and a 1986 Plymouth Voyager.

Thomas Wagner’s income has steadily dropped since 1990, according to the bankruptcy filing. His most recent job was working as a temporary accountant for Accountemps in Newport Beach.

IRS spokeswoman Judith Golden said Monday that the agency has filed no liens against either Thomas or Jody Wagner in recent years, although the couple’s bankruptcy filing says they still owe $6,000 in income taxes from 1991 and $1,645 in 1992 property taxes.

Times staff writers Leslie Berkman and Jodi Wilgoren contributed to this report.