Few Questioned Fired Official’s Lavish Lifestyle : Inquiry: Former school financial officer’s tastes included Mercedes-Benzes and a fur-lined bathrobe. He is accused of diverting district funds for personal use, but his lawyer says no money is missing.

The license plate on Stephen 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 school 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 bookkeeping clerk 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 that no money is missing.

Few questioned Wagner’s parade of Mercedes-Benzes, his Rolls-Royce, seven properties--including a $975,000 Newport Beach house--or extravagances such as a fur-lined bathrobe. He even regaled school 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 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 could not 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 shops.

“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 aftermath of Wagner’s firing 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. Newport-Mesa contends that Wagner “misappropriated (the) district’s property by fraud and dishonesty” and is conducting an audit of its books.

Concern about diversion of school funds came to light when a district employee called the Orange County Grand Jury last spring. After months of investigation, the district attorney’s office went to school district officials on Oct. 13, seeking a copy of a check that 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 that the school district is missing 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 recent bankruptcy filing provides few clues to the source of his wealth. He claims not to own any companies and lists $15,425 in stock holdings, $36,080 worth of books and artwork and $17,500 in furniture and computer equipment. The only income listed are his school salary, 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 Wagner and his wife, Linda. On July 28, the Wagners filed for Chapter 11 bankruptcy protection from creditors because of the liens.

Federal agents will not say why they claim that the Wagners owe so much. Court documents indicate that the Wagners are disputing the IRS case. Edward Golden, Wagner’s partner in Cobbler Express, said Wagner claimed that the IRS matter was a mistake by a “key punch operator in the IRS system.”

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

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 minutes. The company owns instant shoe repair stores in Palmdale and San Bernardino.

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

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 that 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.

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.

Now the couple have at least four of their seven properties up for sale.

Reviewing more than two decades of Wagner’s work at Newport-Mesa, Nicoll, the district superintendent, said he was saddened by a scandal that has raised questions among some parents about his stewardship as well.

“He was a young man of promise,” Nicoll said. “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.