Embezzlement Lawsuit Stuns a Neighborhood

A prominent community activist and major fund-raiser for Laguna Beach schools is accused in a civil lawsuit of embezzling $2.7 million from a computer company where he served as chief financial officer.

The allegations--which Jon E. Jenett strongly denies--began spreading through the community this week, stunning residents of the tight-knit, wealthy Three Arch Bay neighborhood. The suit pits Jenett against a longtime neighbor and business colleague, Tom Hopper, owner of Mission Electronics Corp.

According to the suit, between 1990 and 1998, Jenett “engaged in [a] massive scheme of embezzlement and concealment,” siphoning off millions of dollars while in full control of Mission’s finances.

In response to an appeal from Mission’s attorneys, an Orange County Superior Court judge on Tuesday imposed a freeze on assets belonging to Jenett and the companies that state records say he owns an interest in.

Jenett was in Japan on Friday. His attorney, Brett J. Williamson, said the allegations in the suit are “completely false.”

“Mr. Jenett’s position is that this is a groundless and baseless litigation that has been filed against him,” Williamson said.

A spokeswoman for the district attorney’s office said there are no criminal cases pending against Jenett.

Jenett is the former president of the school booster group SchoolPower and the commissioner of the city’s American Youth Soccer Organization chapter. Many neighbors, who have long turned to Jenett for leadership, said the charges leave them feeling awkward and hope they will not be asked to take sides.

“Jon’s this great guy,” said one friend of both Jenett and Hopper, who asked not to be identified. “He’s a great leader, a great emcee, this charismatic guy who gets other people going. So it just blew me away that it was going on like that--if it did. It’s going to be ugly.”

Some neighbors are quick to defend Jenett.

“Jon is a really good community guy,” said Jim Conrad, a Laguna Beach architect who serves as vice president of SchoolPower. “I know him very well. He’s very, very involved in the community. You’re not going to find anyone who’s going to say anything bad about Jon, I can tell you that.”

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In Laguna Beach, where participation in local school and sporting events is common, Jenett cuts as high a profile as any volunteer.

Jenett, who has three children in the school system, was SchoolPower’s president for the 1996-97 school year and has headed the organization’s endowment fund. Just last weekend, he donned black tie to attend a $250 per plate dinner-dance fund-raiser for SchoolPower, Conrad said.

The Hoppers, who have three children, also are active in community life, Thomas as a soccer and baseball coach, his wife, Sarah, as president of the PTA at El Morro Elementary School.

Jenett and Hopper both live in Three Arch Bay, an exclusive, gated community at the south end of Laguna Beach where homes perched on steep hillsides command spectacular ocean-front views.

But the two men fell out after Hopper began liquidating Mission’s assets last year following a market slump that devastated sales of computer parts, according to court records.

Hopper alleges that as he began trying to balance the books, he discovered financial documents were missing and that Jenett had paid millions of dollars to himself and a company he owns, Clearwater Capitol Inc., without Hopper’s knowledge.

“When I confronted Jenett with this information, Jenett apologized and explained that he had to take the money because of personal financial reversals” due to poor investments, Hopper claimed in an affidavit. Jenett promised to start repaying the money, but never did, Hopper alleges.

But Jenett’s attorney, Williamson, maintains that there were no documents missing and that all compensation was approved by Hopper. Jenett’s compensation, he said, though sometimes more than Hopper’s, was “consistent with the pattern of the earnings of the company.”

According to Hopper’s suit, Jenett’s total compensation since 1990 is $3,278,319. The company has debts of $337,000, for which Hopper is liable, according to court documents.