Recent vignettes of water management on the west side of the San Joaquin Valley
"What happened (Wednesday) is very much about the past," Azhderian said. "The Panoche of today is not the Panoche of yesterday. The board is progressive in addressing, adopting and implementing new policies." -- Shankar, Los Banos Enterprise, Feb. 23, 2018
Critics draw a parallel with Westlands’ history of internal accounting problems in 2016, paying a $125,000 fine to the Securities and Exchange Committee for misleading investors in a bond offering, which its general manager, Tom Birmingham, had conceded was “a little Enron accounting.” -- Lochhead, San Francisco Chronicle, Feb. 25, 2018
West-side water districts have been, are, and always will be politically well-connected criminal enterprises. But from time to time, they get so arrogant they forget they are criminals, and then they get caught. -- blj
Los Banos Enterprise
Panoche Water District taking steps to address 'failures,' manager says
By Vikaas Shanker
Panoche Water District officials want to rebuild public trust in the embattled agency in the wake of criminal charges accusing former district leaders of embezzling thousands of dollars and illegally dumping hazardous waste.
Ex-General Manager Dennis Falaschi, former Office Manager Julie Cascia and the district's San Luis River Improvement Project Manager, Atomic Falaschi, were arrested Wednesday by FBI and California Department of Justice officials after they were alleged to have used the water district's credit cards to pay for personal items or services, according to a criminal complaint filed in Fresno Superior Court.
"Throughout the entire time I've been here, the district has cooperated and is continuing to cooperate with any official investigation," said Ara Azhderian, who has been the general manager for the water district since October.
Atomic Falaschi, who is currently the water district's director of maintenance, was placed on paid administrative leave following his arrest and the agency is conducting its own investigation on his status, Azhderian said.
Azhderian said along with a change in executive management, the water district has changed its policies and procedures to address the "failures" in prior financial practices.
The criminal complaint states that Dennis Falaschi and Cascia approved using the water district's funds for dubious loans, items for personal use such as kitchen appliances and personal car repairs. They also reportedly paid the water district's employees for performing landscaping services on private properties on district time.
Dennis Falaschi also signed off on transporting 1,500 pistachio trees owned by the water district to private property owned by Atomic Falaschi, his son, according to the complaint.
Court records indicate former shop supervisor Dubby West and part-time employee Jack Hurley have been charged with illegal dumping of hazardous waste after the DOJ and California Department of Toxic Substances Control last year found 86 drums of chlorine, caustic soda, iron chloride and mixtures of used antifreeze buried on the water district's property.
That discovery happened about two months after a audit report by the Office of State Controller Betty Yee that raised serious questions on how the water district was managing its finances.
That discovery also started an investigation into illegal dumping that branched into a probe into the district's finances and led to Wednesday's arrests, according to court records and news releases.
The water district has taken several steps to address findings detailed in the State Controller's audit report, Azhderian said.
Those include ending the practice of personal loans to employees, setting up more adequate review and oversight into credit card expenses and hiring a new director of finance and administration with experience from the corporate banking world and non-profits.
Azhderian said the water district also created a compliance officer position to make sure new, written policies and procedures are being followed within the agency.
The contaminated site of the hazardous waste also has been cleaned up, Azhderian said.
A new computerized time-keeping system will keep track of work hours, and board-meeting minutes are now being recorded and kept by a dedicated individual., Azhderian said, adding that there was still more work to be done.
"What happened (Wednesday) is very much about the past," Azhderian said. "The Panoche of today is not the Panoche of yesterday. The board is progressive in addressing, adopting and implementing new policies."
San Francisco Chronicle
Arrests may hold up feds’ deal to settle with water district over runoff disaster
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WASHINGTON — The manager of a San Joaquin Valley water district seen as a model for how to manage toxic agricultural runoff was jailed last week in Fresno on charges of embezzlement and burying 86 drums of toxic waste on the water district’s property.
The arrests of former Panoche Water District General Manager Dennis Falaschi and four others on Thursday could further muddy congressional passage of a multimillion-dollar settlement between the federal government and the nearby Westlands Water District over selenium-tainted irrigation runoff that led to an environmental disaster at the Kesterson National Wildlife Refuge in 1983.
San Joaquin Valley Republicans, led by Rep. David Valadao of Hanford (Kings County), have been trying to push the settlement through Congress for two years, over opposition by Bay Area Democrats who call the deal a taxpayer giveaway.Their last attempt, in December, included a similar deal for the smaller Panoche, Pacheco and San Luis water districts north of Westlands known as “the northerly districts.”
Rep. Jim Costa, a Fresno Democrat allied with Republicans on water issues, had introduced the legislation for a settlement for the smaller districts. Water districts are public agencies that distribute public water, and in farming areas, they are typically controlled by farmers.
California Attorney General Xavier Becerra filed felony charges against Panoche district officials, including Falaschi’s son, Atomic Falaschi, alleging their embezzlement of more than $100,000 in public money for slot machines, landscaping, home remodeling, loans, car repairs and other personal expenses. Of the 10 felony counts, eight were related to embezzlement allegations and two to the charges involving hazardous waste disposal.
The investigation into the district’s finances began after the California Department of Toxic Substances Control found the drums of hazardous waste buried on the district’s property.
The Panoche water district’s drainage program “was held up as the model for the Westlands settlement and the architects of that model now have their mug shots in the post office,” said Rep. Jared Huffman, D-San Rafael, who has battled congressional approval of the deal. The criminal charges “touch on the management of federal drainage funds,” he said, “and just added another huge waving red flag that hopefully will cause Congress to slow down.”
Johnny Amaral, deputy general manager for Westlands, said the Panoche arrests should have no effect on the legislation before Congress because Panoche is independent of the Westlands settlement.
“We do not anticipate that actions involving agencies that are not party to the settlement will affect the settlement’s chances of approval,” Amaral said.
The proposed settlement was negotiated by the Obama administration after years of litigation, and has been endorsed by the Trump administration. The agreement relieves the federal government of its obligation to provide $2.7 billion to drain selenium-polluted runoff from Westlands, a district that waters 600,000 acres of cropland on the arid west side of the San Joaquin Valley.
That obligation stemmed from the government’s decision in 1960 to extend the Central Valley Project to the arid west side of the San Joaquin Valley, despite the knowledge that the soils are laden with salts and selenium, a mineral lethal to wildlife and humans.
Under the settlement terms, Westlands would be forgiven the $375 million it still owes the federal government for the construction of the 1960s-era extension of the Central Valley Project that delivers water to the district, which runs along Interstate 5 from Mendota in Fresno County to Kettleman City in Kings County. The district also promises to deal with the drainage problem on its own.
Although federal agencies have recommended that Westlands retire up to half its cropland to prevent further drainage problems, the settlement requires the retirement of only 100,000 acres where farming has already been abandoned because of drainage problems.
Late last year, House Majority Leader Kevin McCarthy of Bakersfield attempted to attach the Westlands settlement, along with one for Panoche and the other northerly districts, as a rider to a big military authorization bill.
But the effort was blocked by Senate Armed Services Committee Chairman John McCain, R-Ariz., after the Interior Department’s inspector general raised alarms about “significant questionable costs” in a Panoche demonstration water treatment plant intended to show that irrigation runoff can be treated.
Critics draw a parallel with Westlands’ history of internal accounting problems in 2016, paying a $125,000 fine to the Securities and Exchange Committee for misleading investors in a bond offering, which its general manager, Tom Birmingham, had conceded was “a little Enron accounting.”
“The justification for the Westlands mega-deal has been that local districts manage toxic drainage more effectively and with some federal help ... they can solve the problem,” said Hal Candee, a San Francisco attorney for environmental groups in pending drainage litigation. “Yet now current and former leaders of the ‘model district’ for this local approach are charged with crimes directly related to the management of toxic wastes and the management of public funds.”
Observers expect that the next opportunity for the drainage settlement to pass Congress will be as a rider to giant spending bill set for consideration next month.