New Charges Brought in Wagner Case : Crime: Prosecutors accuse ex-Newport-Mesa official of failing to report on tax returns $3 million he is accused of embezzling from the district.

NEWPORT BEACH — Prosecutors on Wednesday filed four more criminal charges against Stephen A. Wagner, claiming that he failed to report on his state tax returns the $3 million he is accused of embezzling from the Newport-Mesa Unified School District.

As Wagner and his attorney sat down with investigators to discuss details of the alleged embezzlement, search warrants made public Wednesday provided a further glimpse into Wagner’s wealth beyond the Rolls-Royce, two Mercedeses and fur-lined bathrobe that have become legend in the corridors of the school district.

Gemstones found in Wagner’s safe, for instance, included a 16.28-carat rough emerald, an opal, a diamond and sapphire ring, diamond earrings, a blue sapphire and rubies.

Reacting to the deepening scandal, leaders of the Newport-Mesa teachers union Wednesday called on members to cast a “no-confidence vote” against district Supt. John W. Nicoll, acting Supt. Carol Berg and Assistant Supt. Thomas A. Godley.

Maya Decker, president of the Federation of Teachers, said union officers voted to recommend to teachers that the district’s school board “conduct an outside search for competent new leadership.”

“Recent disclosures about the extremely lax oversight of Wagner’s performance by his superiors underscores the lack of competent supervision,” the officers said in a memorandum to members. Wagner had served as the district’s chief financial officer until his recent termination.

The union leaders noted that the district had cited financial hardship when it violated contract provisions on class size, preparation time for elementary school teachers and cost-of-living salary adjustments.

The district also laid off about 30 to 35 teachers and about 165 non-teaching employees over the summer in an effort to close a $2.7-million budget shortfall for the 1992-93 school year. The previous year, the district had to borrow from special funds to close a $2.4-million deficit.

“Now district employees face the prospect that several million of those ‘shortfall’ dollars have actually been pilfered by one of the very people who had been telling them how grim the financial picture was a year ago,” the memo said. “The time is appropriate for (teachers) to let the members of the Board of Education know that they have lost all confidence in current district-level management.”

Ballots in the no-confidence vote will be counted on Dec. 7.

Deputy Dist. Atty. Carlton P. Biggs said his office was contacted by the state Franchise Tax Board after officials there learned of the Wagner investigation. The charges filed Wednesday accuse Wagner of filing false tax returns for the years 1988 through 1991.

The IRS has already taken action against Wagner. In July the agency filed $2.4 million in liens against Wagner and his wife Linda. Those filings were civil, not criminal.

Wagner pleaded not guilty on Monday to grand theft and misappropriation of public funds, which carry a maximum six-year prison term. The new charges could add two years to Wagner’s sentence if he is convicted.

Biggs said Newport-Mesa’s losses “probably will go higher” than $3 million as auditors comb through school district records for 1986 and earlier. Already the case is believed to be the largest fraud ever against a California school district.

“It’s $3 million now. But it could go to $3.5 million,” said Assistant Supt. Godley. “We still need documentation from the bank. It could go even higher than that.”

“We’re just still digging and waiting,” Godley said.

He said among the $3 million allegedly missing was:

* $500,000 in developer fees from the Capital Facilities Fund. Godley said developers pay the fees to offset the cost of new students who come into the district as the result of residential construction.

* $784,000 from the Cafeteria Fund. The funds missing from that account were supposed to have reimbursed the district’s general fund for the salaries of cafeteria employees.

* Much of the remainder is what school districts’ call “unscheduled income,” or funds that are unanticipated. Much of Newport-Mesa’s unscheduled income was insurance reimbursements for employee health care expenses over $100,000.

Wagner, who will be arraigned on all charges on Dec. 15 in Superior Court, was scheduled to spend most of Wednesday afternoon huddled with investigators. He has said he will fully cooperate in the case against him and wants to pay back the school district.

Also on Wednesday, Linda Wagner staked claim to about $3,500 found in the family’s safe.

Linda Wagner claimed in court papers that the money was a loan from her parents to help her and the couple’s 4-year-old son get by following Wagner’s Oct. 23 suspension from the school district. She asked that the money be returned.

Municipal Judge Suzanne S. Shaw declined the request.

“It’s laughable they would need a $3,000 loan,” said Shaw, citing some of the couple’s assets.

Wagner waived his rights to a preliminary hearing Wednesday. Judges in a preliminary hearing weigh available evidence and determine whether there is enough evidence to warrant a trial.

“The evidence against Mr. Wagner is overwhelming,” Biggs said.

But Paul S. Meyer, Wagner’s attorney, said his client “suffers from a very complex psychological problem.” He declined to elaborate, saying “at this point it is premature to discuss my client’s psychological profile.”