FRESNO - Dennis Falaschi, 78, of Aptos, pleaded guilty today to one count of conspiring to take federally owned water and one count of filing a false tax return, U.S. Attorney Phillip A. Talbert announced.
According to court records, from 1992 through approximately April 2015, Falaschi was the general manager for a public water district in Fresno and Merced Counties (PWD) that sold water to farmers with over 38,000 acres of farmland. PWD obtained water that it sold by purchasing water from the federal government and collecting drainage water from farms.
The federal water that PWD purchased came from the Delta-Mendota Canal (DMC), a federally owned canal operated by the United States Department of the Interior’s Bureau of Reclamation. PWD entered into a contract with the Bureau of Reclamation to purchase federal water from the DMC.
The federal water that PWD purchased from the DMC was fresh water that could be used immediately for farming. The drainage water that PWD collected from farms was high in salt content and toxins, and it needed to be blended down with fresh water before it could be reused.
Falaschi learned that water from the DMC was leaking from an old standpipe into a parallel canal in PWD. The then-president of PWD’s board of directors owned the parallel canal. PWD employees subsequently modified the old standpipe so it would not leak and could be opened and closed. This allowed for water to be taken from the DMC on demand.
The amount of federal water illegally taken, for which Falaschi was responsible, was valued at over $1.5 million but under $3.5 million. Nearly all that water was used to blend down and reuse drainage water.
Moreover, according to court records, from 2011 through 2016, Falaschi entered into private water sales for which he received payments. The water sold was legitimately sourced from outside PWD and was not federally owned water. Thereafter, in March 2016, Falaschi signed and filed an individual income tax return with the Internal Revenue Service, but he did not report the income that he received from the private water sales.
This case is the product of an investigation by the U.S. Department of the Interior’s Office of Inspector General, the IRS Criminal Investigation, and the Federal Bureau of Investigation. Assistant U.S. Attorneys Joseph Barton and Henry Carbajal III are prosecuting the case.
Falaschi is scheduled to be sentenced on Sept. 16, 2024, before U.S. District Judge Jennifer L. Thurston. For the conspiracy to commit water theft, Falaschi faces a maximum statutory penalty of five years in prison and a $250,000 fine, and for the tax charge, three years in prison and a $100,000 fine. The actual sentence, however, will be determined at the discretion of the court after considering any applicable statutory factors and the Federal Sentencing Guidelines, which consider several variables.
