LA TimesLA Times
Santa Nella, CA, January 18, 2022 -The Delta-Mendota Canal runs south along the western edge of the San Joaquin Valley, parallel to the California Aqueduct for most of its journey, but it diverges to the east after passing San Luis Reservoir, which receives some of its water. The water is pumped from the canal and into O'Neill Forebay. Then it is pumped into San Luis Reservoir by the Gianelli Pumping-Generating Plant. (Carolyn Cole / Los Angeles Times)
The Delta-Mendota Canal runs along the western edge of the San Joaquin Valley. Prosecutors say the former general manager of the Panoche Water District stole more than $25 million worth of water from the federal canal over 23 years. (Carolyn Cole / Los Angeles Times)

The former general manager of a Central Valley water district has been charged with stealing more than $25 million worth of water over the course of 23 years.

Dennis Falaschi was indicted by a federal grand jury in the Eastern District of California.

He is accused of conspiracy, theft of government property, and filing false tax returns.

Falaschi was the general manager of the Panoche Water District, which serves parts of Frenso and Merced counties.

The water district is not named in the indictment. The arrest and filing of felony charges against five individuals for misuse of public funds is the result of widespread corruption at the district.

Falaschi is one of the defendants.

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

Falaschi was told that an old drain turnout on the Delta-Mendota Canal was leaking water into a parallel canal that the water district controlled.

When the drain was abandoned, a gate inside the pipe that connected the canals had been sealed shut, but the cement had cracked, according to the indictment.

Falaschi told the water district employee to install a new gate inside the standpipe, which could be opened and closed on demand, according to the document. He told the employee to put in a lid with a lock on top of the standpipe and a two-foot elbow pipe.

The gate inside the standpipe was functional, but people couldn't see it because of the lid.

Falaschi told employees to steal federal water from the canal on multiple occasions.

He used the proceeds of the theft to pay himself and others excessive salaries, fringe benefits, and personal expense reimbursements.

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

Falaschi told water district employees to misclassify the stolen water as reclaimed water from farms in reports to the board of directors, according to court documents.

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

The standard unit of measurement in the water industry is an acre-foot.

The water level in the canals was lowered in April of 2015 due to the weather.

Falaschi failed to report over $900,000 in income he received from private water sales to the IRS, according to court documents.

Falaschi and four other defendants are facing a criminal case in the state.

According to the state case, investigators discovered 86 drums of hazardous waste in a Panoche Water District yard.

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

Falaschi will plead not guilty to the federal charges, according to his attorney.

The indictment appears to be based on lies and misstatements, according to Days.

The attorney plans to make further comments in the near future.

Falaschi could face a maximum sentence of 18 years in prison and up to $750,000 in fines if he is convicted on all federal charges.

The story was originally published in the Los Angeles Times.

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