FRESNO, Calif. (CN) — A former California public water district manager pleaded guilty in federal court Tuesday in connection with the theft of federally owned water.
Dennis Falaschi, 78, of Aptos, appeared before U.S. District Court Judge Jennifer Thurston, where he entered pleas on conspiring to take federally owned water and filing a false tax return.
Falaschi, formerly the general manager of a public water district in Fresno and Merced counties, faces a maximum of five years’ incarceration and $250,000 fine on the conspiracy charge, and three years in prison and $100,000 fine on the tax charge.
All remaining charges will be dropped.
The sentence is in the judge’s hands. However, prosecutors in Falaschi’s plea agreement stated that they will recommend the guideline range — a system used to determine a potential sentence in federal court — be dropped by up to 50%, if he provides significant assistance to the government.
Prosecutors in a statement said the water, taken over several years, was valued at between $1.5 million and $3.5 million. A civil settlement three years ago resulted in the water district paying the federal government $7.5 million.
Sentencing is set for Sept. 16.
The conspiracy happened between 1992 and 2015, prosecutors said.
Falaschi was the manager of the water district at the time. It bought water from the federal government and collected drainage water from farms. It then sold water to farmers who had over 38,000 acres.
The water the district bought came from the federally owned Delta-Mendota Canal. Falaschi’s district had a contract with the U.S. Department of Interior’s Bureau of Reclamation for its water purchases.
That federal water was fresh and could immediately be used for farming. However, the drainage water the district collected had salt and toxins in it. That water needed to be blended down with fresh water before it was used.
In fact, prosecutors wrote in the plea agreement that most of the water Falaschi faces responsibility for was used to blend down and reuse drainage water. That helped protect farms and improve water quality in the San Joaquin River.
“The improved water quality contributed to the San Joaquin River being removed from the list of impaired waters under California’s Clean Water Act,” prosecutors wrote.
There’s no evidence Falaschi directly benefitted from the conspiracy, they added.
Sometime before 2000, Falaschi discovered that canal water was leaking from a standpipe into a nearby canal in his district. The nearby canal was owned at the time by the president of the district’s board of directors. The president told Falaschi not to report the leak. District employees then altered the standpipe, stopping the leak and also allowing the district to tap into it.
“Evidence obtained during the government’s investigation further showed that Mr. Falaschi was just one of several individuals who were involved in the misconduct, and the full extent of the misconduct was unknown to him,” prosecutors wrote in the plea agreement. “(Public water district) board members, supervisors, and lower-level employees likely acted on their own accord and took federal water for their own use and benefit at times.”
The tax filing charge stems from private water sales Falaschi made between 2011 to 2016. That water was properly sourced from outside his district’s system and wasn’t federally owned. However, in March 2016 Falaschi filed a federal income tax return and didn’t report the income he gained from those water sales.
Agencies involved in the case include the U.S. Department of the Interior’s Office of the Inspector General, the IRS Criminal Investigation and FBI. Assistant U.S. Attorneys Joseph Barton and Henry Carbajal III are prosecuting.
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