Newport Schools Official Enjoyed Life of Opulence

The license plate on Stephen A. Wagner’s gold-colored Mercedes-Benz read Just Cus.

One employee said that when school district staffers would ask Wagner about the way he handled some financial matters, that was the answer they often got--”just because.”

As a trusted employee of 21 years at the Newport-Mesa Unified School District, Wagner had risen from the ranks of bookkeeping clerks to become the district’s chief financial officer--only to be fired last week. The district said he diverted school funds for personal use, but his attorney insists no money is missing.

Few questioned Wagner’s parade of Mercedes-Benzes, his Rolls-Royce, seven different properties including a $975,000 Newport Beach house or extravagances like a fur-lined bathrobe. He even regaled colleagues with a story--now known to be untrue--about owning Nevis, a Caribbean island.

“My only interest was in the work he did for us and I was perfectly satisfied with that,” said Newport-Mesa Supt. John W. Nicoll. “If I got nervous about all the Maseratis and expensive cars I see in Newport Beach, where would I be?”

Something of a mentor to Wagner, Nicoll was a bit chagrined by his colleague’s expensive tastes. “I saw him at one party last year wearing a mink jacket. I was sporting a brand new tuxedo. . . . I felt kind of shabby after that.”

Everyone knew Wagner’s $79,848 salary couldn’t support his lifestyle but he spoke of successful businesses he had on the side--stocks, real estate, gemstones, even a limousine service and a pair of shoe repair companies.

“I’ve never known Steve not to be ahead of most of . . . us financially,” said Norman R. Loats, former deputy superintendent of Newport-Mesa who retired in 1989. “I always thought that he was just smarter than the rest of us.”

Now, in the wake of Wagner’s firing last week over his alleged misappropriation of at least $175,356 in school funds, Newport-Mesa officials are asking tough questions about the man who had easy access to district funds.

Wagner, in a complaint filed by the school district, is accused of writing four checks from an employee health insurance fund to a shoe-repair company he co-owns, Cobbler Express Corp. in Victorville. The checks were dated between June, 1991, and April, 1992. Newport-Mesa contends Wagner “misappropriated (the) district’s property by fraud and dishonesty” and is conducting an ongoing audit of its books.

Concern about diversion of school funds came to light when a district employee called the Orange County Grand Jury late last spring. After months of investigation, the district attorney’s office went to shocked school district officials on Oct. 13, demanding a copy of a check Wagner had written to Cobbler Express on July 16, 1991.

No charges have been filed against Wagner, but a criminal probe is continuing.

Wagner has hired Paul S. Meyer--one of Orange County’s top criminal defense lawyers--to represent him. Meyer has declined to discuss the checks written to Cobbler Express, but has stressed that nobody has proven the school district is missing any money.

“I haven’t seen anything that shows the district presently has any kind of a deficit,” Meyer said. “I think any story that is written that doesn’t include that is grossly misleading anyone who reads it.”

Wagner’s father, for one, said his son got rich the old-fashioned way--he earned it.

“He is not at the level of success he’s at by thievery or embezzlement or stealing or anything else,” said Stanley Wagner, a wealthy Oregon landowner and businessman. “Stephen has always been a very, very conscientious individual on the job. . . . He had not been at my mother’s funeral--his grandmother--simply because he was so damned involved in that school district and their junk all the time that he couldn’t even be a human being and attend a funeral because he was so involved in budgets.”

But Stanley Wagner--like so many of his son’s friends and associates--was stumped when asked how Stephen Wagner had become a rich man.

Stephen Wagner’s recent bankruptcy filing provides few clues to the source of his wealth. He claims not to own any companies and lists just $15,425 in stock holdings, $36,080 worth of books and art work and $17,500 in furniture and computer equipment. The only income listed is his school salary and a monthly income from rental properties and investment interest of $7,325.

What is left of the Wagner estate is in shambles. The Internal Revenue Service on July 21 filed nearly $2.4 million in liens against him and his wife, Linda. On July 28, the Wagners filed for Chapter 11 bankruptcy protection from creditors because of the liens.

They have put at least four of their seven properties up for sale. Meantime, Linda on Tuesday started a new job--as a saleswoman at the Broadway in Newport Beach’s Fashion Island.

Federal agents won’t say why they claim that the Wagners owe so much. Court documents indicate the Wagners are disputing the IRS case.

Edward Golden, Wagner’s partner in Cobbler Express, said Wagner claimed the IRS matter was simply a mistake by a “keypunch operator in the IRS system.”

Nicoll, Loats and other Newport-Mesa officials say Stephen Wagner was something of a miracle worker when it came to money. He had a command of budgets and was always able to answer any question they threw his way.

“We always felt we were going to get the straight skinny from Steve,” Loats said. “He’s very bright. Numbers are his forte.”

It simply made sense, school officials thought at the time, that Wagner would be equally successful with outside ventures. So long as he didn’t use school time to get rich, what was the harm?

Loats said he and Wagner’s former boss, Terry Zimmerman, once marveled at Wagner’s apparent financial success. Loats recalled that Zimmerman said that Wagner could do no wrong in the business world.

“Whatever he touches turns to gold,” Loats recalled him saying. “He’s got the Midas touch.”

Business records and interviews with some of Wagner’s associates paint a somewhat tarnished picture.

Take, for instance, the track record of Wagner Limousine Service. Though the company had as many as three cars, two people familiar with the firm say it never made substantial money.

Years before the Wagners were married, Anne Bazinet shared a house with Linda Wagner and Stephen Wagner’s half-sister, who kept the books for Wagner Limousine Service.

Following a string of slow months, Bazinet asked Wagner’s half-sister why he kept the limo service.

“She said, ‘Oh, he wants to lose money for a tax write-off,”’ Bazinet remembered.

Golden confirmed that Wagner Limo was a loser. It was “too costly,” Golden said.

Wagner’s colleagues say he got the idea to start Cobbler Express Corp. after he saw shoe shops in Europe that could replace a heel or mend a sole in just minutes. The men now own instant shoe repair stores in Palmdale and San Bernardino.

Golden said, however, that he and Wagner have had to support Cobbler Express with personal assets from time to time.

Very little is known about Wagner’s investments in gemstones or stocks. Newport-Mesa employees said Wagner talked to stockbrokers as many as three or four times a day and regularly had gemstones delivered to school district offices on Bear Street, sometimes by armed courier.

“He put them in the school vault,” said one staffer.

One of the few investments listed in Wagner’s bankruptcy--BRS Partners Ltd.--was a failure. Wagner invested $50,000 in the mid-1980s in an Orange County partnership that intended to make money by converting aluminum cans into ingots.

Charles C. Jennings, who helped organize BRS, said Wagner “seemed a straight-arrow, Eagle Scout type.” Jennings said BRS is now just a shell of a company and Wagner’s stake is worthless.

Wagner’s real estate portfolio indicates that he has invested a good deal of money in homes around the Orange County area and owns property in Rancho Mirage and Texas as well.

He used those properties mostly for rental income, but his bankruptcy filing indicates that the income barely covered his mortgage payments.

The Wagners made their largest acquisition--a $975,000 home in the Dover Shores section of Newport Beach where they live--in July, 1990. He had been Newport-Mesa’s director of business support services for 11 months.

The couple already had a home on exclusive Victoria Drive in Santa Ana, which Stephen had acquired in 1984. Linda had brought at least one of the couple’s seven homes to the marriage.

Homes along Victoria range in style from “Gone With The Wind” Southern Gothic to mini-Mount Vernons and English abbeys.

Wagner had a taste for the finer things in life.

The Wagners were regular customers of Wyndham Leigh, a fine jewelry store in Newport Beach’s Fashion Island mall, for several years.

Ken Saatjyan, a salesman at Wyndham Leigh, said the couple wore expensive but tasteful jewelry. “They’re not flamboyant people, they didn’t go around flashing big rocks or anything,” he said.

Saatjyan said he was shocked to read the news of Wagner’s troubles.

“I could guess that he had some money. Anybody shopping here would have more than a school salary,” he said. “I just assumed he had investments.”

Beginning in the late 1980s, the Wagners were frequent customers at Bizakis Furs in Orange, stopping by once every week or two.

“Stephen liked good furs, but he’s not a showoff,” proprietor Maria Bizakis said. “He worked very hard, he’s worked hard since he was a little kid. Nobody ever gave him anything.”

Both Wagners owned several fur coats, and Stephen had a custom-made bathrobe lined with sheared nutria, a fur similar in texture to beaver, said Bizakis, who recently gave the Wagners’ 4-year-old son a matching fur-lined bathrobe.

“The Stephen that we know is not the one we read about in the papers,” Bizakis said. “The people we know, they’re very decent, decent human beings.”

Stephen Aldrich Wagner and Thomas Aldon Wagner were twin boys born on May 24, 1952, to a 25-year-old restaurant operator and a 23-year-old housewife.

The boys spent their early childhood in Portland, Ore., according to Elaine Robinson, their mother. When the twins were about 7 years old, they moved with their mother to Carson, where she later remarried.

They both graduated from Carson High School in 1970. Robinson described her sons as “average students” who liked to read.

Stephen was ambitious as a child and had an entrepreneurial mind, his mother said. Succeeding in math and business courses, he followed in his mother’s footsteps to become a bookkeeper.

The twins attended local colleges but there is no record of Stephen ever having graduated.

When he was just 19, Wagner went to work for the Newport-Mesa school district. He would become chief accountant in 1979 and then assistant director of fiscal services in 1986.

Soon after he started working at the school district, Wagner moonlighted as a bookkeeper at the Family Twin Cinema in Fountain Valley. Golden was the theater’s owner. Wagner would meet his first wife at the theater too.

“She was one of my candy girls and worked on the snack bar. He was the bookkeeper,” recalled Golden.

Wagner and Donna L. Pixley eventually married in August, 1976. They were divorced less than two years later.

Wagner stayed single for more than a decade until he met Linda, whom he married in 1987.

Reviewing more than two decades of Wagner’s work at Newport-Mesa, Nicoll couldn’t help but be saddened by a scandal that has raised questions among some parents about his stewardship as well.

“He was a young man of promise,” said Nicoll. “It’s part of my job to identify leaders and managers and I have been keeping my eye on him for years.”

Times librarian Sheila A. Kern contributed to the research of this article.

Tax Troubles

The Internal Revenue Service has filed tax liens against Stephen A. Wagner and his wife, Linda, for the following amounts: Year: Amount 1986: $633,542.29 1987: $676,732.14 1988: $494,483.96 1989: $587,709.22 Total: $2,392,467.61 Source: Internal Revenue Service