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Ex-Water Official Indicted in Contract Fraud

Courts: A grand jury accuses agency's former engineering director of funneling $1 million to himself through two businessmen, who are also charged.

June 08, 2002|SCOTT GOLD | TIMES STAFF WRITER

A top official for a state contractor that supplies water to a 4,900-square-mile swath of the high desert has been indicted on federal corruption charges in connection with two pipeline projects, officials said Friday.

Russell John Mullins, 61, formerly the Mojave Water Agency's director of engineering, operations and maintenance, was accused by a grand jury in Los Angeles of working with two Inland Empire businessmen to funnel contracts to his own surveying firm.

Mullins operated the surveying firm, San Bernardino-based R.J. Mullins and Associates, while also working as the No. 3 official in the water agency, authorities said.

The Rancho Mirage man is accused of steering contracts to companies run by the two businessmen--who, in turn, subcontracted work back to Mullins, federal authorities said.

"He surreptitiously granted contracts to himself, using two proxies" said Assistant U.S. Atty. Daniel O'Brien.

The contracts, which brought Mullins about $1 million, were connected to two important water pipeline projects in the high desert of San Bernardino County, officials said.

The first was the Morongo Basin Pipeline, part of a system that delivers water to a 5-million-gallon reservoir in Landers, then distributes the water to percolation ponds that recharge the groundwater in a 455-square-mile area near Yucca Valley. The project serves about 57,000 people.

The second was the Mojave River Pipeline, which broke ground in November 1999. That pipeline is also responsible for addressing the "overdraft"--meaning that more water is used in the region than is naturally available--that has plagued the high desert for decades.

The 21-count indictment also charges the two businessmen through which Mullins allegedly funneled business. They are James Dale Cole Jr., 48, a Yucaipa resident and the owner of J.D. Cole and Associates, and Pasquale Benenati Jr., 70, a Riverside resident and the owner of Aero Tech Surveys of Riverside.

Federal authorities accused Cole and Benenati of submitting inflated invoices to the Apple Valley-based water agency, and failing to mention Mullins' involvement on the invoices. The U.S. Environmental Protection Agency, one of the government agencies that funds the pipeline projects, also reimbursed the water agency for some of those invoices, O'Brien said.

Mullins could not be reached for comment. He had been a manager at the water agency since February 1993 before he was fired, O'Brien said. Benenati did not return telephone messages left at his office Friday seeking comment.

George B. Newhouse Jr., a Los Angeles attorney who represents Cole, said his client "obtained contracts and did the work at a fair and reasonable price and he got paid for it."

"Mr. Cole is confident that he will be exonerated at trial," Newhouse said. "It's unfortunate he was dragged into this."

Mullins did supply Cole with surveying equipment, trucks and office space through the contracts, the attorney said--but Cole merely reimbursed Mullins, he said.

"It's difficult to conceive how that could be a corrupt relationship," Newhouse said.

Mullins and Cole are charged with conspiracy, theft from a program that receives federal funds, 11 counts of mail fraud, two counts of wire fraud and six counts of "honest services" fraud--essentially for abusing the trust of taxpayers.

If convicted on all counts, they could be sentenced to 105 years in federal prison and fined $11.5 million, officials said.

Mullins has been released from custody after posting $50,000 bond. Cole is expected to surrender when he is arraigned later this month in Riverside.

Benenati, charged with one count of aiding and abetting theft from a federally funded program, has entered into a plea arrangement with federal prosecutors, O'Brien said. As part of the arrangement, he will provide information against the other two men, the prosecutor said.

The indictments come on the heels of a complex web of corruption scandals that have plagued San Bernardino County government for years. A key trial in those unrelated cases is scheduled to begin next week.

"The No. 1 priority for this office is attacking corruption," said O'Brien, the head of an office that coordinates federal prosecutions in Riverside and San Bernardino counties. "So this is a very significant case for us."

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