Westlands Water District Receives Federal Fines for Unlawful $1.4 Million Loan
SAN FRANCISCO, CA - California’s Westlands Water District is coming under fire from federal litigators this month for a $1.4 million loan to one of its executives to purchase a riverfront home. Described as “a little Enron accounting,” according to the Los Angeles Daily News, the loan has earned Westlands “a rare federal penalty” of more than $100,000.
Now unpaid for nine years, the loan was reportedly for the district’s former Deputy General Manager, Jason Peltier. The loan’s value has since risen to $1.57 million with a 0.84 percent annual interest rate.
While this deal is allowed under the agency’s salary rules, such lax loan details raised red flags for federal officials. The real issue here, the Daily News reports, is whether Peltier and Westlands were compliant with set laws that mandate disclosure of the use of public funds.
Under California law, public officials are required to file financial disclosure forms annually, including public loans. Peltier reported that he had begun disclosing the loan in his most recent annual filings, although his reports through 2015 make no mention of the outstanding loan.
“Show me the statute that allows this,” added Peter Detwiler to the news source, retired consultant for the California Senate’s local government finance sector. “Where else could you borrow $1.6 million dollars for 0.84 percent? Who wouldn’t want a real-estate deal like that?”
Terms for the deal initially required Peltier to repay the money within a year, the 2007 housing crash persuaded the district into allowing greater flexibility. Records show Peltier signed repeated one-year loan extensions, and in 2012, he and Westlands revamped their agreement giving him until 2021 to pay off the loan. The filing shows Peltier made monthly payments of about $5,000 from January 2013 to February 2015.
Westlands first became the subject of federal scrutiny this March, when federal regulators imposed a $125,000 penalty. The Securities and Exchange Commission has since concluded that Westlands misled bond investors about its financial condition.
