In a black eye for one of rural California’s most powerful water agencies, the Westlands Water District agreed Wednesday to pay $125,000 to settle charges that it misled investors over a bond sale.
Westlands, which serves a major portion of the San Joaquin Valley west of Fresno, agreed to pay $125,000 to settle a Securities and Exchange Commission investigation into a 2012 bond offering. Tom Birmingham, Westlands’ general manager and one of the most influential players in California water, agreed to pay $50,000. Louie David Ciapponi, the district’s former assistant general manager, agreed to pay $20,000.
The SEC said Westlands used “extraordinary accounting transactions” to inflate revenues in 2010, a year when drought-like conditions led to lower-than-expected water sales to the hundreds of farmers in the district. The $10 million shortfall meant a key measure of Westlands’ financial health, comparing revenues to debt, would fall below a critical threshold.The accounting adjustment enabled Westlands to make its financial records look healthier as it went to market with a $77 million bond offering in 2012.
According to the SEC, Birmingham, who lives in Sacramento, jokingly told Westlands’ board of directors that the district was engaged in “a little Enron accounting,” a reference to the defunct energy company that was notorious for cooking its financial books.
Westlands made the settlement without admitting or denying any wrongdoing. In a prepared statement, Westlands said it adjusted the 2010 financial results after its independent auditor said the “accounting transactions were permissible.”
Unpopular among some environmental groups, Westlands is among the biggest players in California water, known for using litigation and political connections to press its case for heftier water deliveries from the Sacramento-San Joaquin Delta.