Former Panoche Water District manager enters guilty plea to stealing federal water

Dennis Falaschi has agreed to a plea deal with federal prosecutors.

A former California water official in Fresno and Merced Counties pleaded guilty in federal court on Tuesday of conspiring to steal federally owned water. 

U.S. Attorney Phillip Talbert announced Tuesday that Dennis Falaschi, 78, also pleaded guilty to one count of filing a false tax return. 


The backstory: Court records state that Falaschi was the general manager of the Panoche Water District from 1992 to 2015. 

  • The water district sold water to farmers with over 38,000 acres of farmland. 
  • Panoche Water District obtained water that it sold by purchasing water from the federal government – which came from the Delta-Mendota Canal – and collecting drainage water from farms. 
  • The water that came from the Delta-Mendota Canal could be used for farming immediately, while the drainage water was high in salt content and toxins and needed to be blended down with fresh water. 

Driving the news: Falaschi learned that water from the Delta-Mendota Canal was leaking from an old standpipe into a parallel canal that was owned by the then-president of the Panoche Water District’s board of directors. 

  • Water district employees then modified the old standpipe so that it would not leak and could be opened and closed, which allowed for water to be taken directly from the Delta-Mendota Canal on demand. 
  • Falaschi was responsible for taking water valued between $1.5 million to $3.5 million, and almost all of it was taken to blend down and reuse drainage water. 
  • Further, Falaschi was privately selling non-federal water legitimately from 2011 to 2016 and did not report the income from those sales on his tax return. 

What we’re watching: Falaschi is scheduled to be sentenced in federal court on Sep. 16 and faces a maximum of five years in prison and $250,000 fine for conspiracy to commit water theft. 

  • He also faces three years in prison and a $100,000 fine for filing a false tax return. 

State of play: The plea deal that Falaschi agreed to is a far cry from the initial allegations that he faced in court two years ago. 

  • Federal prosecutors initially accused Falaschi of stealing over $25 million of water from the Delta-Mendota canal. 
  • Accusations initially included lofty salaries and fringe benefits including interest-free loans, free housing for employees and using district credit cards for personal use, among others. 
  • Documents for the plea deal state that Falaschi was just one of several individuals who were involved in stealing the water. 
  • Some board members and employees likely took federal water for their own use, according to court documents. 
  • The plea deal also states that other employees also likely continued stealing water after Falaschi left the district. 
  • Falaschi, according to the plea deal, also did not directly profit from the water theft. 
  • Falaschi has agreed to cooperate with the federal government in any further investigations as part of the deal. 
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