U.S. Judge Gives Wagner Added Time in Prison : Courts: However, some think the ex-school official who embezzled $3.7 million should stay behind bars longer still.

SANTA ANA — A federal judge Monday sentenced former school finance officer Stephen A. Wagner to 57 months in prison on federal mail and wire fraud charges.

That effectively adds about 13 months to the time Wagner is expected to spend behind bars on state charges of embezzling $3.7 million from the Newport-Mesa Unified School District.

Under terms of a plea bargain that Wagner’s attorney struck with prosecutors, his federal prison sentence will be served concurrently with the six-year prison sentence he received from a state judge.

But because of credits he can earn under both penal systems for good behavior and work in prison, he could complete both prison terms and be free in January, 1997.

Citing the magnitude of his theft and the harm it had done to a school district that has suffered staffing and course cutbacks, federal prosecutors had argued for a nine-year prison term, which would have kept him behind bars much longer.

U.S. District Court Judge Linda H. McLaughlin agreed, however, with a probation department recommendation that Wagner be sentenced to 57 months. In doing so, she imposed a term harsher than the normal 37- to 46-month prison sentence that federal guidelines prescribe for Wagner’s crimes.

McLaughlin also ordered Wagner to pay restitution of $2.77 million, the balance of the embezzled money that the school district still has not recovered.

“The amount of dollar loss does not capture the seriousness of the crimes,” McLaughlin told Wagner at sentencing. “The embezzlement of $3.7 million seriously jeopardized the school district and caused the public to lose confidence that the district could protect its money.”

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The sentence, she said, was based on Wagner’s 6.5 years of criminal activity at the district and his “failure to restore the money or present a credible accounting of where the money went.”

Although she would have liked to have the 57-month sentence start only after Wagner completes his state prison term, McLaughlin said there was nothing in the law that permitted her to require that the federal sentence be served consecutively, or after completion of the state sentence.

“This is just ridiculous,” said school board member Jim deBoom, who attended the hearing and shook his head after the sentencing. “I can’t believe it.”

Ever since Wagner pleaded guilty to state embezzlement charges and was sentenced to what many considered a relatively light six-year prison term, federal authorities had contemplated charging Wagner with mail and wire fraud violations.

He was ultimately charged with three counts of wire fraud and one count of mail fraud that were linked to the embezzlement scheme. The wire fraud charges cover three transfers of school district funds into out-of-state bank accounts that Wagner maintained to cover his investments. The mail fraud count involved Wagner’s use of $35,503 in district funds to pay his American Express bill in 1989.

Federal penalties for white-collar criminals are much more severe than those that can be imposed by the state. By filing federal charges, prosecutors exposed Wagner to a maximum 20-year prison term and up to $1 million in fines.

In federal court on Monday, Wagner’s attorney, Paul S. Meyer, asked that Wagner be sentenced to no more than 47 months.

Outside court, Meyer praised McLaughlin’s sentence and her resistance to being influenced by a recent barrage of letters from school district officials, students and others who asked for the toughest sentence possible.

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“The judge did a very, very fair job of sentencing and she was able to stick to the facts rather than look at the emotional overlay of the case,” Meyer said. “I am absolutely satisfied that this was a fair sentence.”

Assistant U.S. Atty. David A. Hoffer said he was gratified that McLaughlin had increased the sentence slightly over the normal guidelines but did not comment further.

In court, Hoffer had urged that the severity of Wagner’s sentence be based on the impact that the embezzlement had on the district’s educational system, its health insurance plan, the loss of district jobs and the overall negative impression the public now has on the district.

“It caused a dramatic loss of public confidence in an institution which lives on that confidence to function,” Hoffer said.

The district superintendent, Cloyde McKinley (Mac) Bernd, said Monday that it may be impossible for any sentence to make amends for Wagner’s crimes.

“When I look at the pain he has caused and the residual pain that is still here, I don’t know what you could do to redress it,” he said. “If there’s anything healthy about what has happened it is that this is the final chapter, and it does begin to close the book on this situation. There is a strong feeling that it is time for us to move on and beyond Stephen Wagner.”

Seven students from Costa Mesa High School, accompanied by their parents, attended the sentencing as part of a class assignment after several freshman classes were encouraged to write letters to the judge.

All of the letters implored McLaughlin to impose the strictest sentence possible. Susan Allenbaugh, the teacher who came up with the assignment, added her own cover letter. “What this man did, and some administrators seem to condone, has slapped me and my students in the face,” she wrote.

After the sentencing, her students returned to school and relayed the judge’s ruling to Allenbaugh.

“I asked them, ‘What did you learn from this?” Allenbaugh said Monday. “They said, ‘If you want to commit a crime, be white and male and don’t use violence.’ What a lesson!”