A brazen water theft in California uncovered, prosecuted and punished

A brazen water theft in California uncovered, prosecuted and punished

San Joaquin Valley Water District chief pleads guilty to conspiracy to steal public water for more than 20 years

Former Panoche Drainage district manager and convicted water thief Dennis Falaschi (Source: Fresno Bee)

Recently, Dennis Falaschi, former general manager of the Panoche Drainage District, pleaded guilty in federal district court in Fresno to stealing millions of gallons of public water from California's Central Valley Project (CVP) for private use. This secret water theft apparently went on for more than two decades before Falaschi was finally brought to justice.

The story of this water scandal was originally reported by former Sacramento Bee reporters Dale Kasler and Ryan Sabalow and published in 2022. According to the Bee story, Falaschi was accused in a federal indictment this year of ordering his water district employees in Fresno and Merced counties, beginning in 1992, to illegally divert water from the CVP's ​​Delta-Mendota Canal to benefit his district, other county officials and himself. He did this without ever informing federal officials of these diversions, let alone paying the federal government the millions of dollars in water he ordered Falaschi to steal from the CVP.

Falaschi's legal troubles apparently began in 2017, when the California State Controller conducted an audit accusing the Panoche Water District of overly lax financial controls that allowed district officials to use district credit cards for their personal gain — e.g., sports and concert tickets, private slot machines, etc. Shortly thereafter, the California Attorney General's Office charged Falaschi and three other district employees with embezzling $100,000 in district funds for their personal gain. (The state case is apparently still pending.)

At this point, Falashi resigned from his post as general director of the district. But his legal problems were only just beginning.

In 2021, the Panoche Drainage District entered into a civil settlement with the federal government in which the district agreed to pay the government $7.5 million for the illegally diverted water.

Fast forward to May 29, 2024. On that day, Falaschi pleaded guilty in federal court in Fresno. He admitted to conspiring to steal the CVP water and filing a corresponding false federal income tax return in which he failed to report his undeclared, illegal sales of CVP water to third parties during Falaschi's tenure as the district's general manager.

Falashi's sentencing hearing is scheduled for September 16. He faces a maximum sentence of eight years in federal prison and a $350,000 fine.

But that is not the end of this shameful water saga. Late last month, federal prosecutors released a simultaneous statement saying that “evidence obtained during the government's investigation further demonstrated that Mr. Falaschi was only one of several individuals involved in the misconduct,” including “county board members, supervisors and employees” who “stole federal water for their own use and benefit…”

So it's entirely possible that Falashi's deal also includes his agreement to serve as a government witness in future criminal proceedings against his former district colleagues for the same illegal acts he himself has now admitted to. So stay tuned.

Unfortunately, the Falaschi case and his conviction are not isolated cases. On the contrary, illegal diversion, use and black market sales of the population's limited and precious water supplies have probably been going on for decades, if not centuries. (If you doubt this, I recommend two excellent books on the history of water in the Western United States: Cadillac Desert by the late Marc Reisner and The dreamed land by Mark Arax.)

Effective enforcement of federal and California state water laws is hampered by at least two things: First, federal and state penalties for illegal water diversions are often far too light to be an effective deterrent. Second, unfortunately, some prosecutors do not consider water theft and other environmental offenses to be “real crimes” like robbery, bribery, and tax evasion.

So kudos to the federal prosecutors who brought charges against Dennis Falaschi and (hopefully) his fellow water thieves. And we hope that the federal judge in charge imposes a sufficiently harsh sentence on Falaschi that will serve as a clear signal to others that environmental crimes like water theft are indeed illegal acts that will be vigorously prosecuted and punished.

(Later this week: Why water theft is a particularly big problem under California law and a bill currently being considered to toughen penalties for such environmental theft.)

Cadillac Desert, Central Valley Project, Delta-Mendota Canal, Dennis Falaschi, environmental crime, Fresno County, Marc Reisner, Mark Arax, Merced County, Panoche Drainage District, San Joaquin Valley, The Dreamt Land, water theft

Anna Harden

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