Stephen Wagner; Embezzler

Stephen A. Wagner, the former finance officer who was convicted of embezzling $3.7 million from the Newport-Mesa Unified School District nearly three years ago, has died of AIDS-related pneumonia in a medical facility at Vacaville prison, authorities said.

Wagner, 43, whose embezzlement ranks as the largest such theft in California school history, died Sept. 9.

The crime’s widely publicized disclosure shocked administrators, teachers and parents, and prompted school districts throughout the state to take a closer look at their books. In the wake of the embezzlement, the Newport-Mesa superintendent resigned, a new financial officer was selected, and new financial controls were instituted.

Before the embezzlement, Wagner enjoyed a reputation as a financial wizard, but his expensive tastes were less well-known. His opulent lifestyle included a collection of rare artworks, seven properties, luxury cars, a fur-lined bathrobe and a collection of gems--all on a $79,800 annual salary.

The embezzlement came to light after an unidentified district employee contacted the Orange County Grand Jury about a questionable district check having only one signature--Wagner’s--instead of the required two.

The district attorney’s investigation revealed that Wagner diverted nearly $4 million from the district’s accounts to his many personal accounts between 1985 and 1992.

Wagner pleaded guilty in December, 1992, to theft and failure to pay taxes on the stolen income and was sentenced to six years at Vacaville.

After Wagner filed for bankruptcy, the district was able to recoup $1.7 million from the sale of Wagner’s assets, leaving about $2.3 million that Wagner had not paid the district.

He also was convicted of federal mail and wire fraud charges in March, 1994.

As a result of the embezzlement, the school district was forced to reduce the number of classroom aides by 50% and lay off 59 teachers and 150 other employees, according to a comprehensive Orange County Grand Jury report.