As Part I of this two part series pointed out, the Clark County, NV, District Attorney filed a Complaint for Forfeiture in October 2011 against $167,300 and two homes that were allegedly purchased by Michael Johnson and Robert Coache from a $1.3 million bribe they purportedly received from John Lonetti, Jr., a local Bunkerville businessman. The alleged criminal actions involved a water right sale and swap conducted between the Virgin Valley Water District, the Southern Nevada Water District, and Lonetti in 2008. (See MCJ story VVWD Corruption Case Gains Two More Legal Actions
Johnson was the then-Chief Hydrologist for VVWD. Coache was the then-Deputy State Engineer for Southern Nevada in the Nevada Division of Water Resources.
Almost immediately after that legal action was filed, Bo Bingham, legal counsel for the Virgin Valley Water District, filed a second legal action along the same lines, only his was to intervene in the Las Vegas Metropolitan Police Department's sole claim to any proceeds from Johnson and Coache's ill-gotten gains. His intent is to recover, as much as possible, any remaining funds and property that can help restore some of the millions of dollars the District lost in two water right share sales carried out by Johnson, Coache, and Michael Winters, former VVWD General Manager.
Indeed, in the court documents that Bingham filed on behalf of the VVWD on Nov. 17, 2011, (recently obtained by the Mesquite Citizen Journal), he claimed that "VVWD has a supreme claim to the proceeds of such malfeasance including the seized property. In contrast, there is no legal basis whatsoever to support Metro's claim of a right to the seized property superior to that of VVWD."
He added that "Metro is not seeking to protect VVWD's rights to the seized property but to extinguish them. Metro seeks to claim the seized property for itself 'free of all claims of all persons.' By failing to even mention VVWD as a claimant notwithstanding the facts described in Forfeiture Complaint and in the criminal action, Metro has made clear that it does not intend to protect or preserve VVWD's rights to the seized property."
The "Memorandum of Points and Authorities Introduction" in Bingham's Motion to Intervene filed in Clark County District Court says, "VVWD has a supreme right to the moneies, real estate, and other property that has been seized by authorities as the ill-gotten gains of Michael E. Johnson, Robert A. Coache, and their fellow co-conspirators' unlawful activities (the 'seized property'). VVWD was victimized by the conspirators including VVWD's own Chief Hydrologist, Johnson, and VVWD's own General Manager, Michael Winters."
In essence, it appears from the court documents filed by the Clark County DA that Metro Police was the victim and deserves to receive any remaining cash and/or property under the auspices of the Racketeer Influenced and Corrupt Organization (RICO) law.
But, as the VVWD documents point out, the Water District conducted its own investigation of Johnson's activities that led up to the more formal investigation by Metro Police.
"Following an investigation by VVWD's attorney into Johnson's activities, VVWD conducted a performance evaluation of Johnson in August 2010, while Johnson was still serving as VVWD's Chief Hydrologist. During that evalution Johnson, who also had his own attorney present during the evaluation, was confronted and questioned by VVWD's attorney, manager, and board members. As a result, VVWD obtained admissions from Johnson of his and his fellow conspirators' roles in the nefarious transactions," says the court documents Bingham filed.
Additionally, the documents state, "Following the August 2010 evaluation, VVWD continued its internal legal investigation and compiled the evidence including Johnson's admissions which had been recorded during the August 2010 evaluation. With such evidence in hand, VVWD arranged a meeting with the Clark County District Attorney which was also attended by Metro detectives."
Water District officials and Bingham turned over all the evidence they had gathered to Metro with two goals in mind. First, if Johnson, Coache, and Winters had committed crimes, Metro and the DA would press criminal charges. Second, "VVWD desired financial restitution to VVWD and its rate payers who had been the victims of the unlawful activities."
Bingham explained in the court filing that "VVWD had not brought its own civil action against the suspected conspirators because VVWD hoped to save VVWD the legal expenses associated with such action. Instead, VVWD requested that the district attorney pursue criminal restitution on behalf of VVWD including an order from the criminal court that the conspirators restore and repair the financial harm they had done to VVWD."
Because time was running out to pursue legal actions against the alleged co-conspirators, Bingham filed a civil action against them "in an effort to recover from the significant damage." (Past Mesquite Citizen Journal stories document the civil action. See story list at the end of this article.)
Subsequent to that filing, "and as a result of the criminal investigation VVWD had requested, the district attorney brought formal criminal charges against Johnson and Coache including at least twenty-five felony counts. Notably, the criminal action failed to identify VVWD as the 'victim' of the unlawful activities."
A hearing was held in Clark County District Court on Dec. 19, 2011, to consider VVWD's Motion to Intervene in the DA's original Complaint for Forfeiture. The judge granted VVWD's right on Jan. 23.
The VVWD Motion takes the illegal activities of Winters, Johnson, and Coache all the way back to 2005 whereas the District Attorney's action focuses solely on the 2008 water right deal gone bad for the VVWD.
The legal document states that "From 2003 to 2008, Johnson and his fellow conspirators arranged certain water rights deals involving VVWD and Lonetti. The deals were designed to personally and unlawfully enrich the conspirators. More specifically, in 2005, Johnson, Lonetti, and Winters orchestrated a deal whereby Johnson and Winters convinced the VVWD Board to purchase certain water rights from Lonetti for $2.9 million more than the rights were worth."
"According to Johnson's own recorded admissions, Johnson, Lonetti, and Winters had discussed that Lonetti was willing to sell his water rights to VVWD for $10,000 per acre foot (afy) of water. However, Johnson and Winters admittedly failed to inform the VVWD Board of this and instead induced the VVWD Board to pay Lonetti $15,000 afy for the water. As a result, VVWD overpaid Lonetti by almost $3 million."
"In 2008, the conspirators arranged another deal whereby Johnson and Winters purposely deceived and induced the VVWD Board to trade away certain VVWD water rights for other water rights held by Lonetti worth $3.8 million less. Lonetti made millions on the deal and paid more than $1.3 million of the ill-gotten gains to the conspirators for their roles including convincing the VVWD Board to agree to the dubious trade."
In the 2008 water right deal, John Entsminger, General Counsel for the Southern Nevada Water Authority (SNWA) told Johnson that if he could convince the VVWD Board to trade one set of water rights for another more valuable set of water rights, SNWA would purchase the rights from Lonetti "for approximately $3.24 million."
"VVWD lost almost $4 million in the deal," that gave it less valuable water rights.
"Lonetti made millions in the transactions. SNWA came out ahead by almost $4 million. In the end, the substantial profits and property obtained by these parties came at the overwhelming expense of VVWD to the tune of almost $7 million," says the Motion to Intervene.
So while Las Vegas Metropolitan Police Department did in fact complete several investigations in the criminal case, VVWD's legal counsel claims that had it not been for the evidence that VVWD officials had uncovered and presented, the police department and the DA would not have had a case at all against the co-conspirators.
Under RICO rules, the "harmed" party can attempt to recover any proceeds gained by alleged criminal actions. Based on the manner in which the DA filed his Claim for Forfeiture, only the LV Metro would have received any recovered proceeds.
By Bingham filing the Motion to Intervene in that action, the VVWD and its ratepayers stand to potentially gain some of its losses should it ever come to that.
The criminal trial for Johnson, Coache, and Winters is currently set to begin May 7.
Winters' trial on original Misconduct of a Public Officer has been postponed five times and has now been rescheduled from Apr. 2 to Aug. 12, 2013.
For a copy of the Complaint for Forfeiture filed by the Clark County District Attorney, click here.
For a copy of the Motion to Intervene filed by the Virgin Valley Water District legal counsel, click here.
For more information about the additional civil and criminal cases involving the alleged corruption scandal in the Virgin Valley Water District, read these Mesquite Citizen Journal stories:
Former VVWD GM Indicted in Criminal Bribery Case
Former VVWD Officials and Business Owner Face Mounting Legal Woes
Former VVWD Officials Corruption Scandal Widens - Part II
Civil Court Documents Reveal Corruption in VVWD - Part III
VVWD Corruption Case: How They Allegedly Spent the Money-Part IV