Investigators Digging for Answers : Long Beach: State officials attempting to determine whether nearly $500,000 was misspent from cemetery’s endowment fund, which once surpassed $1 million.

State officials have seized bank accounts and launched an investigation into Sunnyside Cemetery, the final resting place of some of Long Beach’s most prominent historical figures.

Officials from the state Cemetery Board and the attorney general’s office will attempt to determine whether nearly $500,000 was misspent from the cemetery’s endowment fund, which once surpassed $1 million. The fund is supposed to remain intact, with only interest to be used to cover cemetery expenses, officials said.

Raymond Giunta, executive director of the Cemetery Board, said last week that investigators plan to seek a temporary restraining order to prevent Sunnyside operators from selling plots or conducting any business during the investigation.

The 13-acre graveyard at 1095 E. Willow Ave. has fallen into disrepair. The owner, Dean A. Dempsey, is battling terminal lung cancer.

Dempsey said the endowment fund has not earned enough interest to cover expenses, and he was forced to use about $300,000 of the principal to pay cemetery bills. He denied any wrongdoing.

“There’s been no money given to me, no deposits into any personal accounts and no checks written to me,” Dempsey said, his voice strained and hoarse. “When they do the investigation, they will see that.”

Giunta said the endowment fund’s balance was $1,049,000 when Dempsey bought the property in 1987. An unofficial audit done recently by the cemetery board revealed that the balance has dropped to $517,000, Giunta said.

Cemetery operators are required by state law to maintain the endowment fund to provide steady income once they no longer have plots to sell. For example, when customers buy plots for about $2,500, between $200 and $300 is set aside for the endowment fund, Giunta said.

State cemetery officials began to look into Sunnyside’s condition after receiving nearly a dozen complaints in two weeks about the lack of maintenance at the historic graveyard.

“I thought the condition could best be described as unacceptable and deplorable,” said Giunta, who visited the cemetery recently. “Many graves were covered over by two or three inches of dirt. There is no running water, the weeds are long and the grass has died.”

Dempsey, 41, said his failing health has prevented him from keeping up the grounds. “I just cannot operate it,” he said. “I can barely walk. The best thing that could happen is that state could take it over and put it up for auction.”

The cemetery, which has had more than 18,000 burials, opened in 1907. Monuments bear prominent Long Beach names, including Walker, Ziegler, Price, Knox, Fry, Stearns and Buffum. Ray Clark, a former mayor who died in 1925, is interred there, as are the city’s first schoolteacher and first police chief.

In 1987, Dempsey reported to the state that 400 plots remained for sale. With about 40 burials a year since then, Giunta estimates about 200 unsold plots remain.

If the investigation determines that funds have been misspent, Giunta said, the attorney general’s office could suspend Dempsey’s license, revoke it or file criminal charges.

Cemetery Director Nancy Turney, who has apparently been running the burial ground since Dempsey fell ill, is being questioned for selling plots without a license. Giunta said, however, that she is not the focus of the investigation. “In our estimation, (Turney) was trying to run the cemetery in good faith,” he said.

Dempsey, who bought Sunnyside for $100, said he has struggled with the cemetery’s finances for seven years.

“I made a bad business decision,” he said. “Who’s going to sell a cemetery for $100 if it’s profitable? They were losing money and I continued to lose money.”