A former Riverside County Fire Department manager accused of working with a colleague to embezzle about $1 million in cash and equipment pleaded not guilty Wednesday to all charges.
Authorities say that in a four- to five-year period ending in January 2005, fire communications manager Michael A. Burton and one of his employees, Steven Vaughn, developed elaborate schemes and serpentine paper trails to siphon cash and pay for vacations and home furnishings.
As director of the communications division, Burton handled an annual department budget of $750,000 to $2.5 million for equipment purchases, repairs and installations, authorities said.
Deputy Dist. Atty. Michael Cabral said after Wednesday's arraignment that Burton was "approving invoices that appeared to be for legitimate purposes that were not for legitimate purposes."
The prosecutor gave an example in which one of the defendants allegedly bought flowers by drawing up a phony invoice for "light bar repairs," to fix the lights atop firetrucks.
"Purchases were made and invoiced for something different," said Cabral, who did not elaborate on each man's respective role in the alleged scheme.
A two-year investigation culminated in the arrests of Burton and Vaughn over the weekend.
Vaughn had retired as a county sheriff's lieutenant before joining the Fire Department as a "paid volunteer" and then part-time worker, and worked under Burton. He handled the Fire Department's cellphone contracts.
Burton, 55, and Vaughn, 61, are accused of illegally profiting from service and maintenance contracts between the department and several Inland Empire companies over four years.
Cabral would not elaborate on whether the vendors were aware of or involved in the illegal activities.
"A lot of people had their hands in the pie," Cabral said. "The investigation is ongoing."
Burton is accused of benefiting from service and maintenance contracts with Aslyn Communications, Comtronix of Hemet, Inland Valley Communications and Rivcomm.
From 1999 to May 2004, unbeknown to many county officials, Vaughn was vice president of Aslyn Communications, which was headed by Vaughn's son, Cabral said. Burton and Vaughn are accused of unlawfully benefiting from the department's contract with Aslyn for communications services.
Vaughn is also charged with possession of stolen property because when authorities raided his house in January 2005, they said they found Fire Department radio equipment, as well as an ounce of stolen rock cocaine and a kilogram of stolen marijuana.
He is also charged with possession of an illegal assault weapon and grand theft for allegedly accepting his $233,000 in retirement from the Sheriff's Department from October 1998 to 2004, while he was working for the Fire Department.
Under regulations for CalPERS, the state employee pension fund, a public safety employee taking retirement cannot work for more than 960 hours a year for another CalPERS-covered agency, and Vaughn was being paid for more than 960 hours a year serving the Fire Department, Cabral said.
Craig Anthony, the former county fire chief who triggered the investigation by asking the Sheriff's Department to look into it in 2004, said he discovered serious irregularities in the communication division's purchasing programs almost immediately after taking over in 2004.
It was clear to Anthony, who oversaw about 1,300 employees and another 1,300 volunteers, that the normal checks and balances -- dividing purchase approvals, processing of payments and verification of equipment deliveries among different employees -- were not in place.
"It became apparent to me after coming to Riverside that the three different sets of eyes didn't appear to be working in Riverside," said Anthony, who is now general manager of the Pebble Beach Community Services District. "I went to the County CEO and said, 'Hey, it looks like I've got a real problem here.' "
Soon after Anthony launched the internal investigation and made it clear that "things were going to be done right," he said many county employees came forward to report problems in the communications division.
He said the problems never significantly degraded the level of services or resources available to firefighters, but the outflow of cash "resulted in the appearance of the Fire Department needing more money."
"It takes a lot of effort to have a loss of this magnitude," said Anthony, who served as chief from July 2004 to June 2006.
Anthony said he put Burton on administrative leave in January 2005, and Burton retired soon afterward -- "he kind of disappeared off the radar screen."
Anthony told Vaughn, an at-will employee, that his services were no longer needed.
The Fire Department is operated and controlled by the California Department of Forestry and Fire Protection, which is under contract to serve as the county fire agency.
Vaughn did not enter a plea Wednesday, and his arraignment was delayed until Jan. 29 at his attorney's request. Burton's lawyer, Rena Wallenius of Oceanside, declined to comment on the case.
If convicted of all charges, Cabral said, Burton could face 19 years in prison and Vaughn could face a 10-year sentence.
Both men are being housed at the Robert Presley Detention Center on $2.5-million bail.