DA Investigation Questions Former Marina Coast Board Member Who Claims Feds Are on the Desal Case

The only thing that moves slower than Monterey Peninsula’s water-supply plan seems to be the case against former Monterey County Water Resources Agency board member Steve Collins, the focus of the conflict-of-interest scandal that sank the Regional Desalination Project.

It’s been nearly a year since prosecutors laid out the basis of the case against Collins. In a preliminary hearing last October, Assistant District Attorney Stephanie Hulsey displayed documents on the courtroom overhead projector that asked, “Who knew what when?”

Based on an audio recording obtained by the Weekly, it appears prosecutors aren’t done asking.

In the 41-minute recording, District Attorney Investigator Tracey Spencer asks former Marina Coast Water District board member Ken Nishi who knew what when: “Was it ever specifically mentioned that Collins was working for [desal project manager] RMC?”

Hulsey provided a pretty substantial answer to that question during the hearing, presenting evidence that officials knew Collins was being paid on the side by contractor RMC Water and Environment. Monterey County Superior Court Judge Pamela Butler blocked the bulk of Collins’ defense, which would’ve involved calling several county officials, including members of the Board of Supervisors, as witnesses.

Collins’ then-attorney, Michael Lawrence of Salinas firm Lawrence & Peck, fought back in an Oct. 19 defense memorandum. He urged Butler to allow him to get testimony from County Supervisor Lou Calcagno; his chief aide, Henry Gowin; County Counsel Charles McKee and Deputy County Counsel Irv Grant; former MCWRA General Manager Curtis Weeks; RMC Principal Lyndel Melton; and former Marina Coast Water District General Manager Jim Heitzman.

Without them, Lawrence wrote, “The hearing will be limited to the testimony of prosecution investigators.”

Ultimately it was, since Butler blocked the defense from calling anyone to the stand. But Spencer’s conversation with Nishi makes it sound like the DA isn’t done trying to fill in the gaps.

“You probably have an impression it’s a very one-sided investigation, but we want to sit down and talk to everybody that could know anything,” Spencer tells Nishi on the tape. “If you have information the Board of Supervisors were aware, and can tell me where that information came from… that’s important… information we want to know.”

Calcagno has been advised by his attorney, Ted Cassman, not to respond to the Weekly’s questions. McKee would neither confirm nor deny knowledge of a federal investigation. Potter says he’s never been approached by federal investigators: “I have heard absolutely nothing to that effect, other than what seems to be generated by Steve Collins.”

Chief Assistant District Attorney Terry Spitz declined to verify the authenticity of the recording, which is dated Aug. 12. However, during a break from the conversation with Nishi, Spencer is heard answering a ringing phone. She tells the caller they have reached a conference room in the District Attorney’s office and provides a different number to call.

In the tape, Spencer questions Nishi about a July 25 opinion piece he wrote for The Monterey County Herald. That could be the basis for an investigator to follow up, Spitz says: “I would expect the DA to send someone out to say, ‘Tell us more.’” Spitz would not comment on specific evidence in the ongoing case.

Nishi, who retired from Marina Coast in 2012, declined to confirm the interview happened or talk about specifics, but says, “They made Steve Collins the scapegoat, and it worked.”

In the recording, Nishi lays out a long cast of characters he says attended meetings with Collins and tells Spencer who among them knew about the RMC deal. Among them, Nishi claims, are County Supervisors Calcagno and Dave Potter, Heitzman, Weeks, Grant and other county attorneys.

“[Collins] was the sacrificial lamb,” Nishi tells Spencer. He also claims to know about a federal investigation into officials who were involved in the desal project: “That’s just what I hear, that there’s a federal investigation.”

A spokesperson with the FBI’s San Francisco office would neither confirm nor deny an investigation is underway. Multiple local sources with stakes in the desal project or an intimate knowledge of Monterey County water issues say they’ve been interviewed by FBI agents.

Nader Agha, a partner in the People’s Moss Landing Water Desal Project, says two FBI agents from the San Francisco office interviewed him in Monterey about three to four months ago, but he won’t say what they discussed.

“I have committed to them not to discuss it, not to talk to anyone about it,” Agha says. Agha and Collins are in discussions about developing a fish-farm business together at Agha’s Moss Landing Commercial Park.

A Public Records Act request by the Weekly to county counsel concerning possible meetings with U.S. Internal Revenue Service officials turned up nothing. The IRS responded to a Freedom of Information Act request from the Weekly with an explanation about privacy rules.

The feds may be filling in where county prosecutors can’t. They’re not allowed to file aiding-and-abetting charges in conflict-of-interest cases like this. That’s based on a 2008 decision by the Fourth District Court of Appeal, which let an Orange County city administrator, Robert D’Amato, off the hook for helping a former public-works official secure contracts.

“A lot of us are, quite frankly, shocked at that case, but that’s the published opinion,” Spitz says. A potential challenge to the case could change that.

Meanwhile, Collins’ new attorney, Daniel Clymo of San Francisco, is considering trying to get California Attorney General Kamala Harris to take the case out of county prosecutors’ hands. “I think the case would be best suited, due to [its] political nature, to where the funding isn’t tied to the Board of Supervisors,” he says. “I could write a letter to the Attorney General. I’ve not ruled that out.”

A pending California Fair Political Practices Commission investigation into Collins, Calcagno, Potter, Weeks and Heitzman continues, but is likely to remain on hold until the criminal case wraps up.