Saying probation was not an option, Clark County District Court Judge Richard Scotti sentenced two former water officials to a minimum of three years in prison plus restitution of $1.3 million dollars to the Virgin Valley Water District (VVWD) on Wednesday, Jan. 18.
Former VVWD Chief Hydrologist Michael “Boomer” Johnson and Robert Coache, former Deputy State Engineer, State of Nevada Division of Water Resources were convicted in November on felony charges of extortion by a public officer, a public officer asking for and receiving a bribe, money laundering and illegal financial transactions. They were also found guilty of conspiracy to commit extortion by a public officer, conspiracy by a public officer, and conspiracy to use monetary instruments from unlawful activities; all gross misdemeanor charges.
Johnson was also convicted of misconduct of a public officer while Coache was found not guilty of the same charge.
Judge Scotti sentenced the two men equally giving them 364 days on several counts concurrently and 12 to 32 months on other counts concurrently. However, the separate sentences will run consecutively giving them a total of 36 to 94 months in the Nevada Department of Corrections. They will be eligible for parole after three years. The monetary restitution was split equally between the two men.
The maximum range of prison time that could have been levied against them was 48 to 187 years.
Johnson, Coache, local businessman John Lonetti and former VVWD General Manager Michael Winters, allegedly arranged for water purchases and trades in 2008 with Southern Nevada Water Authority (SNWA) in which VVWD came out $3,8885,000 on the short end.
The complaint specifies that Johnson and Coache received $1,327,500 from Lonetti for their alleged actions in the 2008 deal. Lonetti was not charged in the criminal case and charges against Winters were dropped in 2014.
Deputy District Attorney Mark DiGiacomo, who prosecuted the case said, “I am extremely happy to get justice for the Virgin Valley Water District ratepayers. The corruption was caused by a state official who is supposed to be protecting their rights and a hydrologist who is supposed to be working for them. That Lonetti was willing to give up $1.3 million to get this deal done, tells you that something was dirty about the deal. He could have paid a lawyer $100,000 to get the deal done.”
DiGiacomo was satisfied with the sentence even though he asked for four and a half to 12 years prison time. “A three to eight year prison sentence is a significant sentence in the criminal justice system no matter what crime you’ve committed. These are two individuals with no criminal history who were involved in a nonviolent crime. It’s a significant statement to the community.”
Johnson admitted to having engaged in the illicit 2008 transaction and the admission is on audio recording. Specifically, Johnson admitted that he was personally compensated by Lonetti in connection with the 2008 transaction between SNWA, Lonetti, and VVWD; that Johnson concealed from the VVWD Board Johnson’s real and personal involvement in the 2008 transaction; and that Johnson would not have been able to obtain his secret profits if VVWD had purchased [water shares] directly from Lonetti. Johnson also admitted that [he] and Coache used a portion of the secret profits to purchase a home in Las Vegas, NV in the name of their company Cibola Investments, LLC” among other purchases and investments.
“How can we expect there to be transparency and integrity in our public officials if we don’t punish them for straying?” Judge Scotti said after Coache’s attorney Bret Whipple asked that his client not receive any jail time.
Whipple argued that there were no victims in the case, especially VVWD, and that the $1.3 million should go to Lonetti rather than the water district. “The only victim is John Lonetti and he doesn’t believe he’s a victim,” Whipple said.
VVWD Board of Directors President Nephi Julien appeared at the sentencing hearing and read a victim’s statement that said in part that all of the district’s ratepayers were victims because of rate increases and a monthly $10 surcharge based on bond debt the district took on to pay for the water transactions.
Even though Johnson said he respected the guilty verdicts he asked the judge for leniency because “there was no direct harm to the Virgin Valley Water District and the transactions were beneficial to all parties including the Water District, Southern Nevada Water Authority and Lonetti. At no time did I attempt to defraud anybody or do harm to anyone.”
Coache also asked for leniency in his sentence explaining that he had lost his professional engineer’s license shortly after the guilty verdicts were rendered in November. “I couldn’t work for any government agencies after I was charged. After the verdicts, I had to shut down my consulting business. My family has gone through this for five and a half years,” Coache said. “To say that nothing has happened to me and my family is a ridiculous statement.”
DiGiacomo lauded the assistance he and his office received from the water district’s legal counsel Bo Bingham and his staff. “Without Bo, we likely would not have heard about this crime. Since the time that he brought the case to us, he’s been an asset. His lawyers know all of the discovery in the case. Our office just didn’t have time to read hundreds of thousands of pages of documents. Anytime we needed to know something he and his lawyers were fantastic about helping us. I still don’t understand water law like they do but I understand crime. That’s what I’m an expert in. While we didn’t always see eye-to-eye on the victimization of the water district and what that value is, we always agreed that these guys didn’t deserve the $1.3 million that they got.”
After criminal charges were filed against Johnson and Coache in May 2011, the water district filed civil charges against the four men for not only the 2008 water transaction but another one in 2005 in which the district allegedly lost approximately $8 million worth of water rights.
The civil case was settled in 2014 with Lonetti returning some of the water shares and close to $4 million to the Water District.
The civil settlement required Johnson to pay $200,000 to the water district but he has not paid any of it to date.
[Publisher’s note: Ellestad is a member of the Virgin Valley Water District Board of Directors.]