Ex-manager indicted in multi-million dollar water theft scheme in Fresno, Merced counties
Dennis Falaschi, the embattled former manager of the Panoche Water District, was indicted by a federal grand jury Thursday and charged with conspiracy, theft of government property, and filing false tax returns.
The indictment accuses the 75-year-old Falaschi of exploiting a leak in the Delta-Mendota Canal and engineering a way to steal more than $25 million in federally owned water. The 117-mile canal provides water to irrigate land on the west side of the San Joaquin Valley.
As general manager, Falaschi oversaw operations for the Panoche Water District, a public agency that delivers water to landowners for irrigation, municipal and industrial uses in western Merced and Fresno counties.
Falaschi’s attorney, Marc Days, couldn’t immediately be reached for comment Thursday.
Court documents show that in 1992, Falaschi was told that an old, abandoned drain turnout was leaking water from the Delta-Mendota Canal into a parallel canal that the water district controlled. Access to the turnout was sealed years earlier, but the cement had since cracked.
Falaschi then instructed a water district employee to fix the blocked access so they could open and close it on demand, according to court documents.
Prosecutors also allege Falaschi told the employee to disguise the area where the water was being diverted.
“Falaschi subsequently instructed employees to use the site to steal federal water from the Delta-Mendota Canal on multiple occasions until the site was discovered in April 2015. He used the proceeds of the theft to pay himself and others exorbitant salaries, fringe benefits, and personal expense reimbursements,” according to a news release from the U.S. Attorney’s Office.
Falaschi, who left the water district in March of 2017, is also charged with filing false tax returns from 2015 through 2017. According to court records, he failed to report over $900,000 in income to the Internal Revenue Service that he received from private water sales.
Falaschi faces a maximum of 18 years in prison and up to $750,000 in fines if convicted on all charges.
Falaschi is also fighting embezzlement charges in Fresno County Superior Court. He and former office manager Julie Cascia are accused of embezzling more than $100,000 from the district.
Ara Azhderian, the Panoche Water District’s current manager, had not seen the indictment Thursday.
Last year, Panoche agreed to pay the U.S. Bureau of Reclamation nearly $7.5 million to compensate for the “unauthorized diversion of water” from two federal canals, according to a settlement agreement obtained by The Sacramento Bee. The settlement was approved by the U.S. attorney’s office.
In a separate agreement, the water district agreed to pay the San Luis & Delta-Mendota Water Authority $798,000, plus $172,000 in interest, for damages sustained from the diversions. Panoche didn’t admit to any wrongdoing.
The authority is an umbrella agency that delivers water from the Bureau of Reclamation to Panoche and 28 other member districts on the west side of the Valley.
This story was originally published April 14, 2022 at 6:19 PM.
