DA Confirms Investigation into Water District Deal with RMC

The District Attorney’s office has launched an investigation into conflicts of interest and allegations of fraudulent billing at the Santa Clara Valley Water District.

Last week, John Chase, head of the DA’s public integrity unit, began requesting documents related to district contracts with consultant RMC Water and Environment, which were the subject of a San Jose Inside investigative report. In August, water district CEO Beau Goldie signed a single-source contract with RMC to begin preliminary work on a recycled groundwater project that could cost as much as $800 million.

Board chair Gary Kremen called on the DA to look into the matter after San Jose Inside identified conflicts of interest and uncovered internal emails that showed a civil engineer for the district had identified as much as $512,000 in improper payments to RMC. The employee has been raising the issue to superiors to no avail for roughly 18 months.

“The District Attorney's Office is in the process of reviewing Santa Clara Valley Water District records to determine whether there is any evidence of a crime,” Chase said in a statement.

San Jose Inside’s report also focused on a flimsy “firewall” agreement that failed to prevent a high-ranking district deputy administrator, Melanie Richardson, who is married to one of RMC’s co-owners, from coming into contact with RMC business. In 2009, she had a role in approving two RMC contracts with the district worth a total of $10.7 million. Forms declaring outside economic interests show Richardson owns RMC stock valued between $100,000 and $1 million.

In an interview this summer, Richardson admitted that her firewall agreement, which the district refuses to release, does not even require her to leave meetings where RMC business is discussed. The District Attorney began looking into the situation back in 2013 but called off the investigation due to statute of limitations.

None of these issues were disclosed by the water district’s CEO in March or April, when Goldie went to the board for permission to sign $10 million in single-source contracts to begin work on a new indirect potable reuse plant. Goldie insisted that due to the worsening drought, now in its fourth year, there was no time for standard contract qualification and review processes. RMC’s deal, originally slated for roughly $4 million, was the largest of the single-source agreements Goldie proposed.

“I’m more convinced now than ever that there are real internal control issues at the top,” board chair Kremen said last month.

San Jose Inside’s report also concentrated on a bribery scandal involving RMC in Monterey County, where a board member pleaded no contest in March to conflict of interest charges after accepting $160,000 from the company. RMC president Alyson Watson defended the company as an innocent bystander in the bribery scandal, but former RMC employees told San Jose Inside that one of the company’s partners, Lyndel Melton, attempted to cover up the crime.

“We were asked to destroy documents, and we refused,” said a former member of RMC’s financial team.

Due to media scrutiny surrounding RMC’s dealings with the local water district, the largest of Goldie’s proposed single-source contracts—a $4 million deal with RMC—has now been scaled back to $1.3 million. The contract wasn’t signed until August, however, more than three months after Goldie told the board it needed to take emergency action, which has raised additional questions.

Along with a DA investigation, San Jose Inside has also learned that an internal district investigation has been underway for more than a month, based on staff complaints related to RMC. It is not clear who is overseeing the inquiry, as Leeann Pelham, the district’s director of ethics and corporate governance, resigned shortly after Goldie announced his plan to sign a single-source contract with RMC.

District communications manager Teresa Alvarado told San Jose Inside that the board of directors and CEO met in a special closed session meeting Thursday night, and a full discussion of the district’s dealings with RMC will be discussed in open session Oct. 27.

The next regularly scheduled board meeting is Oct. 13, but the item had to be pushed as CEO Goldie will apparently be out of the area on that date to attend a conference.

“The board has decided they want to get to the bottom of this in open session, so they want to hold a public meeting and investigate this further,” Alvarado said. “They want to hear about any investigations that have taken place and ask the CEO questions about these allegations, or items, that you raised in the paper.”

Goldie has refused multiple requests for an interview over the last month.

Josh Koehn is the managing editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected] or follow him on Twitter at @Josh_Koehn.

9 Comments

  1. “The next regularly scheduled board meeting is Oct. 13, but the item had to be pushed as CEO Goldie will apparently be out of the area on that date to attend a conference.” Well no, the meeting didn’t HAVE TO be pushed back so the accused Mr. Goldie could attend a conference. If the board had any cojones, it would have TOLD Mr. Goldie to skip the conference and attend the meeting. Sounds like the spineless SCCOE Board to me. “Goldie has refused multiple requests for an interview over the last month.” What does that suggest? Has he lawyered up yet? Does he need time to get his ducks in a row? Time for a D.A. subpoena and/or a Grand Jury investigation? Sounds like a new “…-gate” in the making.

  2. JK

    If you do not investigate the issues I have raised with RMC and the Environmental Services Department well, somebidy else will. maybe it wiil be the Santa Clara County Grand Jury.

    David.

  3. The public’s trust in the Santa Clara Valley Water District is of paramount importance to our Board of Directors and to me, as our charge is to effectively manage the public’s money in delivering vital water resources services to the community. Recent news articles and allegations from an employee may have raised concerns that impact this trust.

    As the water district’s chief executive officer, I have complete confidence in our systems of checks and balances and of the people who manage our contracting processes. I believe that the public’s money has been used appropriately and the district’s executive staff has behaved properly. I welcome any objective third party review.

    To provide the opportunity to openly address these matters, the Board will be discussing them at its regular board meeting on October 27, 2015. The public is encouraged to attend or view on-line (www.valleywater.org/About/BoardMeeting.aspx).

    Beau Goldie
    Chief Executive Officer

    • Problem is board is stacked with ex upper managers, golden goldie and the CIAO ETC, ARE PROVEN LAIRS, PULL THE LAWSUITS, ASK HOW MANY IT MANAGERS HAVE BEEN FIRED? ASK WHY THEY PROTECT MANAGERS WHO FOLLOW COMPANY LINE, ASK WHY THEY LET THE BOAR ROOM FALL APART, ASK TO READ THE AUDIT 2012 OR GOOGLE IT, IT WILL SHOW A PATTERN OF MISCONDUCT.. IF MR. GOLDI HAD THE PUBLIC IN MIND HE WOULD BE PREPARE FOR A DROUGHT, MAYBE EVEN BUILDING DESAL PLANTS NOT BUY HEARING AID FOR EX DIRECTORS, OR FOOD FOR MEETINGS WHICH WAS TO STOP. iTS NOT JUST ME THAT CAN SUPPLY INFO BUT MANY OTHERS. WATCH THE TAPES, SCVWD IS LIKE MOST OTHER WATER DISTRICTS, CORRUPT,, TAKE EMPLOYEES FOR WALKS TO TELL THEM HOW THINGS WILL BE. ASK WERE THE REST OF MY PERSONNEL EQUIPMENT IS? OR WHY MY PICTURE IS AT THE FRONT DESK. i CAN GO ONE AND ONE AS WILL MANY OTHERS. SAD FOR 500K THE TOP MAN IS UNPREPARED.. THE PUBLIC IS ENCOURAGED TO ATTEND, BUT THEY WILL OT LET ME IN? IT WAS NO ME COMMITTING ETHICS VIOLATIONS OR TAX PAYER FRAUD.
      PG

  4. “Recent news articles and allegations from an employee may have raised concerns that impact this trust.” MAY have raised concerns? You’re kidding, right? The decades-long waste of taxpayer money by the organization you now “lead” has been well documented. Your PR post is an absolute joke; but the joke is on us. You can’t make the October 13 meeting? Are you in the Andes taking photos of llamas too? The DA’s investigation is long overdue; but I have as little confidence in Rosen as I have in you.

  5. Inquire about all units and the board room upper management let fall apart so they can build another, fell free to contact me and i can show you the millions already wasted by IT staff and backing by upper management…temps have been fired to keep them quite also. pull the purchase records of all depts. read the links on earlier posts, the DA should look into how management wrecked the boardroom so they can spend another 3 million ontop of the around
    3-4 million already spent on boardroom and tons of equipment that just sits. they want another video conference system, which was installed used once and taken out, ask what the control system will do, but they dont know what in the board room as they never use it. or contracts to programmers that got paid but again no work done.

  6. sorry don’t write the best as, to excited that the whole show is falling apart every unit almost every manager plus the top is guilty.