Former Panoche Water District Staff Charged With Embezzlement, Illegal Disposal of Hazardous Waste

By Dan Bacher | February 23, 2018 | 

Just when you thought the corruption that infests California water politics couldn’t get any worse, it does. 

California Attorney General Xavier Becerra on Thursday announced the arrest and filing of felony charges against five people for the misuse of public funds and illegal disposal of hazardous waste “amidst widespread corruption” at the Panoche Water District (PWD) in Firebaugh.

The scheme resulted in an estimated loss of over $100,000 in public funds, according to a news release from the Attorney General’s Office. The arrests were the product of a joint year-long investigation by the Attorney General’s Office and the Department of Toxic Substances Control (DTSC).

Located on the arid west side of the San Joaquin Valley, Panoche is a member of the San Luis Unit of the Bureau of Reclamation that receives water exported from the Sacramento-San Joaquin River Delta.

The Federal Bureau of Investigation (FBI) on Wednesday arrested and booked into Fresno County Jail Dennis Falaschi, the water district's former general manager; Julie Cascia, the former office manager; and Atomic Falaschi, the manager of the San Joaquin River Improvement Project.

Dubby West, the district’s shop supervisor, surrendered to the Los Banos Police Department on Wednesday. Part-time employee Jack Hurley is expected to surrender to authorities Friday.

The five defendants were charged in a felony complaint with a total of ten counts, including eight counts relating to the theft of public funds and two counts relating to crimes involving hazardous waste disposal. Two of the defendants are charged with misusing over $100,000 in public funds.

The California Department of Toxic Substances Control (DTSC) found 86 drums of hazardous waste, varying in size from 35 to 55 gallons, illegally buried on the water district’s property. The drums contained chlorine, caustic soda, iron chloride and a mixture of used antifreeze, used solvents, and used oil, according to a DTSC news release.

“Following that discovery, DTSC’s Office of Criminal Investigations (OCI) also investigated the water district for possible financial crimes, first identified by the California State Auditor. These activities included illegal employee loans and the use of district credit cards for sporting events, slot machine purchases, concerts, kitchen remodeling, residential landscaping and other purchases,” DTSC said.

DTSC referred the criminal case to the California Attorney General’s Office in September 2017.  

“In California, those in public posts who abuse the public's trust for personal gain will be held accountable,” said Attorney General Becerra. “The California Department of Justice will investigate and prosecute those who embezzle and misuse public funds. We will work with our law enforcement partners to get the job done.”

The criminal complaint alleges that Dennis Falaschi, the ex-General Manager of PWD, “ran the District as his own personal operation and bank account, spending excessive amounts of District money using credit cards issued by PWD.”

“Under the direction of Dennis Falaschi, Julie Cascia used PWD credit cards and money orders for personal expenses, while mischaracterizing the charges as business expenses,” the A.G.’s Office stated.

Dennis’ son, Atomic Falaschi,  took items from PWD, including trees, equipment, and other goods, and used them on his own personal property, the Attorney General alleges.

The remaining defendants, Jack Hurley and Dubby West, illegally buried barrels of hazardous waste without permits or authorization from DTSC, acting under the direction of Dennis Falaschi.

“These arrests send the strong message that violations of the state’s hazardous waste laws are taken seriously and will be pursued and prosecuted to the maximum extent possible in order to protect public health, the environment and public resources,” said DTSC Director Barbara A. Lee.

Lee said that during removal of the drums from the property, DTSC discovered that the liquid hazardous waste was leaking into the ground. The contamination is being remediated.

Other hazardous waste was sent to businesses not permitted to receive the waste, resulting in the felony charge of illegally transporting hazardous waste, according to the criminal complaint.

Dennis Falaschi, Julie Cascia and Atomic Falaschi are expected to appear in Fresno Superior Court on March 7.

Panoche Water District officials have not responded to my request for their comments on the arrests and filing of charges.

The joint year-long investigation by the Attorney General’s Office and the Department of Toxic Substances Control (DTSC) followed in the wake of an audit of the district by State Controller Betty T. Yee.

On January 31, 2017, Yee announced that her team’s detailed review of the Panoche Water District’s administrative and accounting controls found “prevalent and severe deficiencies, with 76 percent of internal control elements deemed inadequate.”

“The district’s egregious lack of spending oversight is shocking,” said Controller Yee, the state’s chief fiscal office, said at the time. “It is especially troubling in a region where effective water governance is so vital for the agricultural community. I am looking into what options are available to ensure small entities like Panoche Water District are kept accountable.”

More information on Yee’s audit is available here: www.dailykos.com/… 

Panoche Water District (PWD) receives Delta water from the Central Valley Project via the Delta Mendota Canal and the San Luis Canal. It is one of many west side San Joaquin Valley water districts that export Delta water at enormous cost to winter-run Chinook and spring-run Chinook salmon, Central Valley steelhead, Delta and long fin smelt and other fish populations.

PWD is a public agency that distributes water for irrigation, domestic, and industrial uses, serving an area of about 38,000 acres in western Merced and Fresno counties. The district is overseen by a five-member board of directors.

OCI is a special investigation unit within DTSC, comprising of peace officers, scientists, and a computer forensic specialist who investigate criminal misconduct and other serious violations of hazardous waste laws.

A copy of the complaint is attached to the press release at oag.ca.gov.

View documents related to the case here.