Lobdell: Wagner can’t be topped

I usually think about Stephen Wagner — Newport-Mesa’s most accomplished embezzler of public money — only when I happen to pass by his former upscale home in Newport Beach’s Dover Shores neighborhood.

My stream of consciousness goes something like this: mink-lined tuxedo, Rolls Royce, the island of Nevis. What a sad, tortured and short life.

Last week, a house wasn’t needed to trigger thoughts of Wagner. He immediately came to mind when the news broke that Jeffrey Hubbard, superintendent of the Newport-Mesa Unified School District, had been charged with two felony counts of misappropriating public funds.

The alleged crimes took place while Hubbard, who was hired by Newport-Mesa in 2006, was superintendent of the Beverly Hills Unified School District. He has denied any wrongdoing.

If prosecutors are to be believed, the money was funneled to a former facilities director at the Beverly Hills school district over four years.

However these allegations unfold, it’s doubtful that the melodrama of Wagner’s embezzlement, which took place in the late ‘80s and early ‘90s, will be surpassed.

Wagner, who was 40 went he was arrested in 1992, had risen through the school district’s ranks, starting as a bookkeeper and ending up as its chief financial officer.

“He was a young man of promise,” said then Supt. John W. Nicoll, who has died in 2006. “It’s part of my job to identify leaders and managers, and I have been keeping my eye on him for years.”

Somewhere along the way, Wagner figured out a way to write cashier’s checks to himself from a health insurance account that everyone thought had been closed. The cashier’s checks meant the auditors had no paper trail of the crime.

He had earned enough trust that he operated with little oversight, allowing him to replenish the secret account with school funds without detection. He was finally caught when a fellow employee grew suspicious and alerted authorities. Wagner had also grown a little sloppy, writing large school district checks to a shoe repair business he co-owned.

In the end, the school district credited Wagner with stealing more than $3.7 million from taxpayers over a half-dozen years. I’ve heard from several insiders over the years that the actual figure was much higher — double or triple the amount — but a real total was nearly impossible to calculate because Wagner had covered his tracks so well. Even at $3.7 million, it was the largest embezzlement of a school district in state history.

But that’s not what made the Wagner caper so juicy — and such an embarrassment to the district. The amazing part was that Wagner hid in plain sight.

Though making less than $80,000 annually, the district’s moneyman drove a Rolls Royce and fleet of Mercedes-Benzes (one with the license plate, “Just Cus”).

He showed up at a district holiday party wearing a mink-lined tuxedo (at the time, he and his 4-year-old son also had matching fur-lined bathrobes). He and his wife owned seven properties. He told colleagues that he had bought Nevis, a Caribbean island (that turned out to be untrue).

He had precious stones delivered by armored truck to his office and stored them in the school district’s vault. He had fine works of art on the walls of his Newport home. He and his wife were regulars at one of Fashion Island’s toniest jewelry stores.

Nicoll, school board members and district colleagues had swallowed whole Wagner’s simple cover story: He had an amazing knack for business and his private investments had made him a fortune.

No one questioned, for example, why a millionaire would want to keep working as the numbers man for a school district. At the time, a group of parents, which included now-Trustee Dana Black, had begun to look into the district’s finances, which they viewed as sloppy. They didn’t realize many of their concerns stemmed from an undetected embezzlement.

Wagner was a great con man, someone who gave explanations that seem ludicrous in hindsight but were taken unquestioningly as the gospel truth at the time.

For instance, Nicoll told The Times why he ignored potential warning signs that Wagner was a thief.

“My only interest was in the work he did for us, and I was perfectly satisfied with that,” Nicoll said. “If I got nervous about all the Maseratis and expensive cars I see in Newport Beach, where would I be?”

He went on to say, “I saw him at one party last year wearing a mink jacket. I was sporting a brand new tuxedo … I felt kind of shabby after that.”

The embezzlement caused a tsunami of change, leading to Nicoll’s resignation (cries from his firing came immediately, even as he lay ill at Hoag Memorial Hospital Presbyterian); layoffs of 50% of the district’s classroom aides, 59 teachers and 150 other employees; and new financial reforms.

I always thought Wagner badly wanted — at least unconsciously — to get caught. He did everything but put a neon sign above his head that read: “I’m stealing money! Please arrest me!”

He led a double, and maybe even a triple ,life. Here was probably the most trusted employee in the school district, a golden boy being groomed for a superintendent position. To complete the seemingly Rockwellian life, he also had a beautiful wife and young boy.

But much of his energy had to be spent either stealing money or covering up his crimes from the authorities, his boss, his colleagues and, I believe, even his wife. It must have been nearly an unbearable burden.

There also were rumors that Wagner led yet another secret life, this one as a gay man (this gossip would gain credibility when the cause of Wagner’s death was revealed).

When Wagner’s scheme was finally brought to light — thanks to a courageous and observant employee in the school district’s finance department — it must have been a relief to him in many ways. He may have gotten his first good night’s sleep in years after his arrest.

Wagner eventually admitted to his crimes in December 1992 and was sentenced to six years in state prison. He died of an AIDS-related illness in Vacaville prison’s medical facility less than three years later. He was all of 43.

The former golden boy never explained to the public why he started stealing the school district’s money. Like most embezzlers, I bet, he thought he’d be able to repay the money before anyone knew it was gone, and it snowballed from there.

In the end, it all seemed like such a waste. Wagner squandered his considerable talents, choosing instead to live a lie and attempting to satisfy his longings with expensive trinkets paid for on the backs our children, teachers and school employees.

It’s hard to feel sorry for Wagner, but nearly 20 years after his crimes were uncovered, that’s exactly what I’m feeling.

WILLIAM LOBDELL is former editor of the Daily Pilot, former Los Angeles Times reporter and editor, and a Costa Mesa resident. The column runs Tuesday and Friday. His e-mail address is williamlobdell@gmail.com.