Ex-Panoche Water District officials charged with misspending thousands in public funds
Update: Judge Kristi Culver Kapetan in February 2020 found there was not sufficient evidence to put Atomic Falaschi on trial and dismissed all charges against him. Read the full report.
Panoche Water District officials spent more than $100,000 in public money to buy themselves slot machines, car repairs, and kitchen appliances, funded landscaping on at their own homes, and covered interest-free loans, according to the California Department of Justice.
Five people - including the district’s former general manager - have been charged with embezzlement and other allegations in connection with a year-long probe that also turned up alleged evidence of illegal dumping of toxic waste on the water district’s property, authorities said.
The Panoche Water District is a public agency that facilitates water delivery to landowners for irrigation, municipal and industrial uses in western Merced and Fresno counties.
The water district’s ex-general manager Dennis Falaschi, ex-office manager Julie Cascia and manager of the San Joaquin River Improvement Project Atomic Falaschi, were arrested by the FBI on Wednesday and booked into Fresno County jail, officials said.
The district’s shop supervisor, Dubby West, surrendered to the Los Banos Police Department on Wednesday, Los Banos Police Cmdr. Jason Hedden said. Part-time employee Jack Hurley is expected to surrender to authorities Friday, according to news releases by the California Attorney General’s Office and the State Department of Toxic Substances Control, the agencies that worked on the investigation.
Officials at the Panoche Water District did not respond to multiple requests for comment Wednesday and Thursday.
According to a criminal complaint filed Feb. 16 in Fresno Superior Court, Dennis Falaschi used the water district’s funds for personal uses and directed or allowed employees to spend excessive amounts of money with district credit cards.
Dennis Falaschi used district funds to purchase two slot machines costing $2,805 and $2,701.58 and were delivered to him in Reno, Nev., according to the complaint.
Dennis Falaschi also signed off on moving 1,500 water district-owned pistachio trees to private property owned by his son, Atomic Falaschi, the complaint states.
Cascia reportedly used a water district’s credit card to purchase $4,109.22 in kitchen appliances and renovation costs, according to the complaint.
Cascia also used $6,459.05 in district funds for major repairs on a district-owned luxury SUV that she retained for personal use, the complaint states. Dennis Falaschi later allegedly sold that SUV to another employee for $5.
Dennis Falaschi and Cascia also signed off a loan of $20,882.79 for another employee to cover debt-collection, according to the complaint.
The complaint also states Dennis Falaschi fashioned agreements involving more than $60,000 in auto repairs to personal vehicles from a man identified in the complaint as Alan Sagouspe, who had unreported contracts or agreements of at least $800,000 with the district, according to an audit by the Office of the State Controller.
Employees allegedly spent district time performing landscaping services to private properties, according to the complaint.
The state Attorney General’s Office worked with the California Department of Toxic Substances Control on the investigation which launched after authorities discovered 86 drums of hazardous waste last year buried illegally on the water district’s property, officials said.
Following the discovery of 86 drums of chlorine, caustic soda, iron chloride and mixtures of used antifreeze, solvents and oil, the California DTSC launched an investigation into the district, according to a news release. That investigation branched out into allegations of embezzlement, authorities said.
The liquid waste leaked into the ground and the site was being decontaminated, according to the release.
Hurley and West are charged with illegally burying the barrels of waste, officials said.
“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,” DTSC Director Barbara A. Lee said.
Dennis Falaschi was charged with six felony counts of embezzlement by a public official, one count of conspiracy to embezzle and one count of illegal disposal of hazardous materials, according to Fresno Superior Court records.
Cascia was charged with four counts of embezzlement, one count of conspiracy to embezzle and one count of illegal transportation of hazardous materials, court records indicate.
Atomic Falaschi was charged with one count of embezzlement and one count of conspiracy to embezzle, according to court records.
Two others, Jack Hurley and Dubby West, were charged with illegal disposal of hazardous materials in connection with the embezzlement, according to court records. West also was charged with a count of illegal transport of hazardous materials.
The water district was the subject of a scathing report last year by the office of California State Controller Betty Yee, claiming there was an “egregious” lack of oversight for how officials spent the district’s money from 2013 to 2015, the Fresno Bee reported.
Yee’s office cited several financial issues in an audit report, including more than $86,000 interest-free loans to employees with lengthy repayment plans, unaccounted free housing and fringe benefits to employees, personal use of district credit cards, and dubious use of district vehicles.
“In California, those in public posts who abuse the public’s trust for personal gain will be held accountable,” Attorney General Xavier Becerra said in a news release.
Dennis Falaschi, Julie Cascia and Atomic Falaschi are expected to appear in Fresno Superior Court on March 7, according to court records.
This story was originally published March 16, 2020 at 6:17 PM with the headline "Ex-Panoche Water District officials charged with misspending thousands in public funds."