Former Central California water manager stole $25 million in water over 23 years, prosecutors say

[Leroy N. Soetoro]

https://news.yahoo.com/former-central-california-water-manager-
032955526.html

The former general manager of a Central Valley water district has been
charged with stealing more than $25 million worth of water over 23 years,
the latest development in a years-long saga of corruption and theft,
federal authorities said Thursday.

A federal grand jury returned a five-count indictment against 75-year-old
Aptos resident Dennis Falaschi, according to the U.S. attorney's office
for the Eastern District of California.

He faces one count each of conspiracy and theft of government property,
and three counts of filing false tax returns, according to the indictment.

Falaschi was the general manager for the Panoche Water District, which
serves portions of Frenso and Merced counties near Dos Palos, Firebaugh
and Los Banos, according to court documents.

The indictment does not name the water district, but in 2018, then-
California Atty. Gen. Xavier Becerra announced the arrest and filing of
felony charges against five individuals for the misuse of public funds
amid widespread corruption at the district.

Falaschi is among the defendants in the ongoing state case.

The water theft scheme began in 1992, according to the federal indictment.

That year, Falaschi was informed that an aging, abandoned drain turnout on
the Delta-Mendota Canal, part of the federal Central Valley Project, was
leaking water into a parallel canal that the water district controlled,
the document stated.

A gate inside a pipe that connected the two canals had been cemented shut
years earlier when the drain was abandoned, but the cement had cracked,
according to the indictment.

After learning about the leak, Falaschi allegedly told a water district
employee to install a new gate inside the standpipe, which could be opened
and closed on demand, the document stated. He later told the employee to
put in a lid with a lock on top of the standpipe, and a roughly two-foot
elbow pipe angled at 90 degrees into the water district's canal.

"The lid concealed the theft because it prevented people from seeing that
the gate inside the standpipe was functional," prosecutors said. "The
elbow pipe further concealed and expedited the theft because it enclosed
the water flow from the Delta-Mendota Canal into the water district’s
canal and was installed in such a way that it was generally submerged
under the water."

Falaschi then told employees to use the new gate and pipe to steal federal
water from the canal "on multiple occasions," prosecutors said.

"He used the proceeds of the theft to pay himself and others exorbitant
salaries, fringe benefits, and personal expense reimbursements,"
prosecutors said.

The diverted water was unmetered and traveled to a water district pump
station, where it was lifted into the district's broader canal system,
according to the indictment. It was combined with the district's other
water sources and either sold to customers or pumped back into the federal
canal so the district could collect water credits.

During the scheme, Falaschi allegedly told water district employees to
misclassify the stolen water as reclaimed runoff from from farms in
reports presented to the district's board of directors, court documents
stated.

In all, more than 130,000 acre-feet of water was stolen, according to the
indictment.

An acre-foot is the amount of water needed to cover one acre of land in a
foot of water and is the standard unit of measurement in the water
industry.

In April 2015, drought lowered the canals' water level enough for the
pipe, lid and drain turnout to be discovered by authorities, according to
the indictment.

Federal authorities also alleged Falaschi falsified tax returns from 2015
to 2017 and failed to report over $900,000 in income to the Internal
Revenue Service that he received from private water sales, according to
court documents.

The federal case comes after state officials opened an ongoing criminal
case against Falaschi and four other defendants.

In 2017, investigators discovered 86 drums holding thousands of gallons of
hazardous waste illegally buried in a Panoche Water District yard,
according to coverage of the state case by The Times.

The state's case expanded to include allegations of misconduct that were
revealed by an audit.

In a statement, Falaschi's attorney Marc Days said his client plans to
plead not guilty to the federal charges.

"We just received the indictment and need additional time to review it,"
Days told The Times. "The indictment appears based on lies and
misstatements."

The attorney said he plans to make further comments on the case "in the
very near future."

If convicted on all federal charges, Falaschi faces a maximum sentence of
18 years in prison and up to $750,000 in fines, prosecutors said.

For the record:
5:48 p.m. April 15, 2022: An earlier version of this article misspelled
the name of one of the cities served by the Panoche Water District. It is
Dos Palos, not Dos Patos.

This story originally appeared in Los Angeles Times.



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