Newport Aide Accused of Embezzling Money : Crime: Utilities Director Robert J. Dixon, a city manager candidate, is arrested in City Hall.

NEWPORT BEACH —  Utilities Director Robert J. Dixon, a city official for 17 years, was arrested in City Hall on Monday for allegedly embezzling $60,000 from a municipal project.

Dixon, 47, a veteran administrator, allegedly cashed checks that he had the city write to pay non-existent property owners for underground easements as part of a $3-million drinking water project, police said.

“It is almost unbelievable,” Mayor Phil Sansone said. “It’s shocking.”

Police Sgt. Andy Gonis said city checks were allegedly deposited in Dixon’s accounts at a rate of about $7,500 a month beginning sometime last year.

Dixon is being held in City Jail in lieu of $500,000 bail.

‘I was shocked and saddened by the news of his arrest,” City Manager Robert L. Wynn said. “I thought he was an excellent department director and an excellent city employee.”

Dixon was one of the finalists vying to replace Wynn, who will leave the post this month.

Well-liked and respected in city government, he rose up through the ranks to head the Utilities Department, where he earns $86,000 a year.

Police came to question Dixon on Monday afternoon while he was attending a study session in the council chambers with City Council members. They asked him to step outside, Wynn said.

“He apparently didn’t have the right answers and he was taken into custody,” Wynn said.

Dixon lives in Huntington Beach where friends describe him as a patron of the cultural arts. He is unmarried and, according to city officials, had spent many years caring for his parents who lived in Newport Beach. They died eight years ago.

The investigation began two days ago when police received “a tip” from a credit card company that Dixon had deposited a series of two-party checks to a personal credit card account. According to police, the money would be moved from there to other personal accounts.

Dixon allegedly ordered the checks drawn to pay for easements needed for a city-owned pipeline that will bring well water from Fountain Valley to Newport Beach. The allegedly fraudulent checks were mixed in with legitimate ones, and all were sent to Dixon’s office, which was to send them to the property owners, police said.

Police said that the alleged embezzlement was clumsily done and that it would be only a matter of time until it was detected. On Monday morning, Wynn said, when police raised questions with him about the project, city officials were able to find four suspicious easements in 90 minutes.

“I was very surprised because sooner or later it would have been detected,” Wynn said, adding that city auditors will begin a complete review of the easement program today.

Dixon, who had been named to head his department five years ago, gained visibility this past summer with his public talks on water conservation.

He was well liked by his peers as well as his subordinates, said numerous city workers and officials.

Word of Dixon’s arrest spread through City Hall on Monday afternoon, where many employees refused to believe that he had been arrested.

“This is an April fool’s joke, right,” said Jeff Staneart, Dixon’s deputy director of the department. “What a joke!”

Personnel Director Duane K. Munson, a friend of Dixon, said: “I have to assume this has to be some kind of mistake. There has to be a plausible explanation. It does not fit. . . .”

Planning Director James Hewicker said: “As far as I know, he’s as honest as the day is long. I have never heard anyone speak unkindly about Bob Dixon or even suggest a hint of impropriety.”

Many city employees considered Dixon a shoo-in for the coveted city manager’s job that pays $143,000 a year, where the field last week was said to be reduced to nine.

“I would say that list is now down to eight finalists,” Wynn said.

Talk at City Hall in the last few days was that Dixon had made the final cut and was among the final three or four being considered for the job.

Friends and co-workers could not imagine Dixon needing any extra money.

“I don’t know what his financial resources are, but I’ve always had the feeling that he’s very comfortable,” Hewicker said.

City Public Works Director Benjamin Nolan said his impression has been that Dixon was independently wealthy. “Just the opposite of the kind of person who would be in a tight spot.”

Dixon received his undergraduate degree at Georgetown and his master’s at George Washington University. He is president of the Newport Beach City Employees Federal Credit Union, a city official said.

Times staff writer Eric Young contributed to this story.