Ex-Official Gets 6-Year Prison Term for Embezzling $3.5 Million From Schools

A former Orange County school official who embezzled at least $3.5 million from the school district and used it to support a lavish lifestyle was sentenced Friday to six years in prison.

Stephen A. Wagner, 41, former chief financial officer for the Newport-Mesa Unified School District, pleaded guilty in December to diverting school funds to his personal accounts between 1986 and 1992 and failing to disclose the income on his tax returns. Wagner said he used the money to buy real estate, cars, doorknob-size gems, a fur-lined bathrobe and other luxuries.

In court records made public for the first time Friday, Wagner told a deputy probation officer that being caught “was in some way a relief” because he could not bring himself to confess his crimes.

“It is hard to understand, but since I did not hide the money and used it openly to invest in the gem accounts, I now see that I must have had some psychological reason to do such a blatant and open act. All of my problems, however, do not erase one single cent from the money that I took.”

Wagner will spend about 2 1/2 years in prison if he earns the maximum credit for work, good behavior and time served. School officials who wanted the maximum penalty of almost nine years denounced the sentence as grossly inadequate for the crime, believed to be the largest embezzlement ever from a school district.

Orange County Superior Court Judge John J. Ryan ordered Wagner to pay back $3.5 million to the district, but school district officials say they have little hope of being fully reimbursed.

Wagner and his wife, Linda, filed for bankruptcy last July. They face $2.4 million in Internal Revenue Service liens for unpaid taxes. The FBI is investigating whether any of the stolen school funds included federal monies.