Restitution Is Offered in Newport-Mesa Theft : Crime: Lawyer for fired school district official says his client is cooperating but it’s premature to discuss plea.

The attorney for Stephen A. Wagner--arrested this week on charges of stealing about $1.2 million from the Newport-Mesa Unified School District--said late Wednesday that his client is cooperating with authorities and intends to make restitution.

But Costa Mesa criminal defense lawyer Paul S. Meyer said it was too soon to say how Wagner will plead next week when he is arraigned in Municipal Court in Newport Beach on single counts of grand theft and misappropriation of public funds.

“It’s premature to discuss a plea, but I think it is evident that he is taking this entire matter very seriously,” Meyer said in an interview at the Orange County Men’s Central Jail, where Wagner is being held in lieu of $1.2-million bail.

“It is Mr. Wagner’s goal to assist in gaining as much restitution as possible,” he said.

Meyer declined to discuss the total amount of money his client would seek to return to the school district but said he has retained a Fullerton attorney with expertise in recouping restitution in cases such as Wagner’s.

That attorney, J. David Pittman, assisted former Newport Beach Utilities Director Robert J. Dixon in making restitution in his embezzlement of $1.82 million in city funds earlier this year.

After visiting with his client in jail, Meyer said Wagner was distraught. On Tuesday, investigators startled Wager when they knocked on the door of his exclusive Dover Shores home at 7 a.m. and took the 40-year-old former school district’s chief fiscal officer into custody.

“He is severely emotionally shaken and depressed, and a large part of that comes from the trauma he realizes is being inflicted on his wife and young son, who are completely blameless in this entire matter,” Meyer said.

If convicted on the charges, Wagner would face up to six years in state prison.

Meyer’s statements capped a hectic day of maneuvering and negotiations as law enforcement officials grappled with the magnitude of the alleged fraud by Wagner:

Earlier in the day, a federal bankruptcy judge ordered that Wagner’s estate be taken over by a special trustee after federal officials said his recent bankruptcy filing may be fraudulent.

* The FBI said it is considering opening its own investigation of Wagner, because some officials suspect part of the money missing from Newport-Mesa may be from federal sources. If the FBI enters the investigation, it raises the prospect that Wagner could face federal charges in addition to the state accusations filed Tuesday.

The appointment of a special bankruptcy trustee to oversee Wagner’s estate came, in part, at the request of the financially strapped Newport-Mesa district, which is reeling after Wagner’s arrest Tuesday amid revelations that he may have siphoned millions of dollars in district funds.

Newport-Mesa’s lawyers appealed to the U.S. trustee’s office in Santa Ana for help in tracing missing money that the Orange County district attorney’s office has said it suspects is held in a number of overseas bank accounts, including some in Canada and the Caribbean.

The U.S. trustee sought the emergency court order, claiming that Wagner and wife, Linda, failed to fully disclose their assets in a July 28 bankruptcy filing, including interests in gemstones, Palm Springs real estate and a Victorville shoe repair corporation, Cobbler Express Corp.

“The United States trustee believes that fraud, dishonesty, incompetence or gross mismanagement are present and thus, a Chapter 11 trustee should be appointed for cause in this case,” U.S. trustee staff attorney Ron Maroko alleged in his court request.

U.S. Bankruptcy Judge John E. Ryan granted the request and appointed Newport Beach attorney Theodor C. Albert to oversee Wagner’s estate.

If Wagner and his wife failed to fully disclose their assets in the bankruptcy filing, they could be subject to criminal penalties of up to five years in jail and $250,000 in fines for violations of federal bankruptcy law, a spokesman for the trustees’ office said.

The Wagners filed for bankruptcy protection a week after the Internal Revenue Service filed liens totaling nearly $2.4 million against the couple.

The Orange County district attorney has charged that Wagner transferred millions of dollars of school funds into an inactive Newport-Mesa bank account and then removed $920,625 worth of the money through the use of cashier’s checks.

Wagner additionally wrote at least four school district checks totaling $175,356 to Cobbler Express and transferred by wire $90,525 to a gemstone investment company in Florida, according to an affidavit filed Tuesday.

The total funds reportedly missing from Newport-Mesa coffers are $1,186,507, but investigators say they believe the final tally could go to $2.2 million or more.

Representatives of the U.S. attorney and the district attorney met for more than an hour Wednesday afternoon to discuss whether the Wagner case should remain on a state level or be converted into a federal case that could levy additional criminal charges.

The agencies didn’t come to any agreement. Discussions are expected to resume next week.

“At the present, he is charged on the state level, and no decision has been made as to whether charges will be pursued on a federal level,” said James Donckels, the FBI’s senior supervisory resident agent in Santa Ana.

“I can confirm we talked with an FBI agent and an assistant U.S. attorney,” said Guy Ormes, supervising deputy district attorney. “We have not come to any conclusion and we are not relinquishing in any way this case.”

Wagner could be investigated by FBI agents under a variety of federal statutes, including wire fraud, mail fraud, making false statements to a bank, theft from a program receiving federal funds or money laundering, sources said.

Some of those statutes impose severe prison terms and heavy fines.

For instance, the statute covering false statements to a bank carries with it a penalty of up to 30 years in prison and a $1-million fine if the crime occurred after November, 1990. One other law--which regulates theft from a program getting federal funds--imposes a prison sentence of up to 10 years in jail.

Prosecutors need not prove that the money taken was the same money that came from federal sources; only that the missing money came from an account that contained at least $10,000 in federal funds. The school district receives federal money for a variety of programs.

Meyer, Wagner’s attorney, has asked psychologist Wesley Maram to visit his client, court records show. Maram evaluated Dixon and concluded he suffered from feelings of inadequacy.

“I think that the mental stability of my client and his family are very important,” Meyer explained, adding that Linda Wagner is having “an exceptionally difficult time with this--she is suffering tremendously. . . .

“There are things you do as a lawyer that go beyond the courtroom,” Meyer said, “and in this case, the mental stability of his family is of deep concern to me.”