A manager was accused of stealing a lot of California water. Prosecutors struck out | Opinion

It’s not every day that a former source gets indicted. So when a San Joaquin Valley water manager was charged by federal prosecutors two years ago with allegedly stealing millions of dollars worth of water for lavish personal gain, it stopped me cold. It simply did not square with the person that I thought I knew.

Former general manager Dennis Falaschi of the Panoche Water District ended up agreeing to a plea deal last week, acknowledging that he stole some water and falsified some income on a tax return.

But upon any objective examination, the deal is far more of a black eye to federal prosecutors than to Falaschi himself because the feds had accused him of stealing $25 million worth of water - more water than some California cities use annually.

The government utterly failed to prove anything close to its original case.

Falaschi’s “stolen” water, a small fraction of the alleged total of 130,000 acre-feet (or 42 billion gallons) of looted supply, actually went to improve water quality in the San Joaquin River at no personal profit, according to a narrative in the plea deal. And while Falaschi failed to report some unrelated income, apparently he paid sufficient taxes anyway.

Perhaps Falaschi was never much of a crook in the first place, despite the United States government’s considerable efforts to prove so.

Serving 38,000 acres of farmland in Fresno and Merced counties, the Panoche Water District is headquartered on the west side of the San Joaquin Valley in the hard-working farm town of Firebaugh.

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Firebaugh now has two claims to fame. One is its hometown star from his high school years, the renegade quarterback Josh Allen of the National Football League’s Buffalo Bills. And now it is home to California’s greatest unsolved water mystery.

Will those federal prosecutors in their air-conditioned offices on Tulare Street in Fresno claim a hollow victory and walk away from Firebaugh? Or will they wise up, lick their wounds and head out to the valley’s hot west side to solve this suspected thievery once and for all?

“This is a tragic tale,” said Tom Birmingham, the retired general manager of the neighboring Westlands Water District who is still one of the best minds in the business. As the largest farming district in the nation, Westlands made Birmingham one of California water’s most prominent figures for more than a generation.

I am squarely with Birmingham on this score. After covering water and working in the water industry for decades, I can’t recall an allegedly notorious water crime fizzling so spectacularly when the prosecution revealed its real case.

About two decades ago, while I had this same job at the Bee before 16 years of strategic communications work at the Metropolitan Water District of Southern California, I went to the west side for a day to meet with Falaschi and tour his district.

He and Birmingham faced the same adversary. They shared west side soils high in salt and selenium, a naturally occurring element that had leached into the drainage that led to a historic dieoff of birds at, of all things, a wildlife refuge.

Falaschi was on the cutting edge of some drainage ideas that used a series of salt-tolerant vegetation to soak up as much of the pollutants as possible. The Falaschi I met was passionate about farming and this worthy mission.

What I didn’t know then was that Falaschi was holding one hell of a secret.

Both Panoche and Westlands depend on water from the Sacramento-San Joaquin Delta via the federal Central Valley Project via its Delta-Mendota Canal. Below this canal near Firebaugh is a separate one operated by Panoche.

In its spectacular 2022 indictment, the United States alleged that Falaschi had known since 1992 that the federal canal was secretly leaking downward into the Panoche canal through some faulty infrastructure known as a standpipe. He allegedly ordered staff to construct a new gate so that Panoche could divert federal water undetected into its canal whenever Panoche wanted. And over the years, Falaschi allegedly stole about four times the water that San Francisco, as a comparison, uses annually - a market value on the west side estimated at more than $25 million.

“Defendant Falaschi used the proceeds from the theft to pay himself and other co-conspirators exorbitant salaries, fringe benefits, and the personal expense reimbursements,” the indictment alleged. These charges instantly made Falaschi one of the most notorious figures imaginable in California water.

This week’s plea deal? Falaschi admitted to conspiring to take a single count of taking government property. And he admitted to filing a single false tax return. And the federal prosecutors, in so many words, admitted that their original case was a crock.

“There was no evidence that Mr. Falaschi directly benefited from the misconduct,” reads an exhibit.

The leaked water orchestrated by Falaschi “helped protect farmland and improve water quality in the San Joaquin River.”

How about that falsified tax form? “The parties agree that the taxes Mr. Falaschi owed the IRS on his unreported income were in fact paid.”

The “stolen” water that Falaschi dedicated to the environment was only eighth that was estimated in that original indictment.

So who really stole the rest?

“PWD board members, supervisors, and lower-level employees likely acted on their own accord,” according to this so-called plea deal. Talk about a teaser.

So with no proven evidence that Falaschi profited a penny, the federal government nonetheless extracted two nothing burger guilty pleas. And for what possible end of true justice?

Falaschi, who could not be reached for comment, awaits sentencing.

Water is complicated —its hydrology, its plumbing, its governance, its legal rights, its everything. So far these federal prosecutors have proven to be completely out of their league in grasping the world of water on the San Joaquin Valley’s west side and how to solve this crime.

Perhaps the feds will learn from this botched maiden effort and stay a long and difficult course until the true water thieves of the west side are brought to justice. I salivate for a ringside seat.

Otherwise, the thievery in greater Firebaugh will only grow in California water lore as the crime that forever escaped justice.

As for Falaschi, said counterpart Birmingham, “I pray Dennis can find peace.”