Beach District Investigates Fired Manager, Asks County for Audit

The former general manager of the Channel Islands Beach Community Services District, who was fired from his job last fall, is being investigated for allegedly withdrawing $85,000 from his deferred compensation plan without proper authorization.

The district has asked the county auditor’s office to assist in that investigation and also to conduct an audit of the agency to help determine whether former district manager Gerard Kapuscik mismanaged other accounts.

“They have some concerns they would like us to look at,” county Auditor-Controller Thomas O. Mahon said Thursday. “We have no thought at this time that anything has been done wrong or illegal. We have no preconceived notions. We just want to get the facts.”

Both Mahon and district officials declined to discuss the specific scope of the proposed audit.

But sources said the probe would examine cash transfers between district accounts, compensation and benefits paid to managers and why the district apparently kept two separate disbursement ledgers.

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In addition, district board member Frank Chiella said during a public hearing Tuesday that numerous billing documents related to the construction of a proposed water treatment facility had disappeared during the last two months Kapuscik worked for the district. Kapuscik, 44, left his job Dec. 11 after 13 years with the district.

Kapuscik, who was hired last month as a senior assistant to county Supervisor John Flynn, did not return phone calls Thursday.

But Flynn said Kapuscik had assured him that he had done nothing wrong and that he had not taken any agency documents from the district when he left.

Flynn said Kapuscik admitted to him that he had made an early withdrawal of $85,000 from his own employee-deferred compensation plan in part to help pay the medical bills of his parents, both of whom died during the past two years. Flynn said Kapuscik, who administered the district’s deferred compensation plan, told him that he was entitled to make an emergency withdrawal--as are other employees--as long as he followed certain guidelines.

“He said he met those guidelines,” Flynn said, adding that Kapuscik will have to pay a significant penalty to the Internal Revenue Service for the early withdrawal, along with state and federal taxes.

Ed Lacey, Kapuscik’s attorney, said his client knew nothing about the district’s investigation until this week and that he would be happy to cooperate in the probe.

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Although he declined comment on other aspects of the investigation, Lacey also stressed that Kapuscik had not taken any documents belonging to the district with him upon his departure three months ago.

“All of the documents belonging to the district were left in the district’s offices,” Lacey said. “And no one ever contacted him to help find the documents. I hope that they are not looking to make him into a scapegoat.”

Lacey said Kapuscik and the district had parted on amicable terms and that his client was fired without cause. In fact, Lacey said, Kapuscik was given six months worth of severance pay and medical benefits upon his departure.

The independently run beach district, which employs six people and has an annual budget of $2.3 million, provides water, sewer and trash services to Hollywood Beach, Hollywood by the Sea and Silver Strand Beach communities.

Flynn said that the grand jury had reviewed the Channel Islands Beach Community Services District two years ago and gave it good marks for its operations.

The supervisor said he believed the brouhaha over Kapuscik’s management of the district had mostly to do with politics and the fact that some board members opposed construction of the multimillion-dollar water treatment facility in Port Hueneme, which detractors say will result in higher water fees.

“I think this is all part of a grand design to ruin Gerard’s reputation and to blow this water project apart,” Flynn said. “To me, that’s the intent. But we’ll have to wait and see what the auditor determines.”

The beach services district is planning to build the treatment facility as a joint project with the Navy and the city of Port Hueneme.

Because of the apparent loss of earlier billing records, the district recently asked the city of Port Hueneme to provide it with invoices for the past three years to justify a $2.1-million bill charged to the district for preliminary construction work. District officials said they did not know that the city had been charging them 8% interest, or $119,000, on a loan for the work.

Port Hueneme officials could not be reached Thursday for comment.