Central Basin Water District Fiscal Meltdown Looms After Insurance Agency Drops Coverage

By Brian Hews and Brian Hews

The politically explosive Central Basin Municipal Water District (CB) appears to be within a few days of financial armageddon after the agency was officially put on notice this week that its public insurance carrier is dropping them as a client.

Hews Media Group-Community Newspaper confirmed on Thursday that the Association of California Water Agencies and the Joint Powers Insurance Authority officially informed Central Basin officials earlier this week that their insurance coverage has been discontinued citing the “workings of a dysfunctional Board of Directors.”

On Friday, officials at CB placed the item on this coming Monday’s Board of Directors agenda for discussion.

“We are looking into the situation, and looking at our best options.  This doesn’t happen that often, as a matter of fact this is a rare situation,” said Rich Aragon, Director of Finance for CB.

Aragon confirmed to HMG-CN that he is holding out hope that “there can be a resolution to the matter, and quickly, but it doesn’t look good.”

Aragon also told the newspaper that CB has a AA 3 Rating by Moody’s.  The entire report will be released to both members of the public and to the media on Monday.

“I will be pushing that all of our bonds are restructured, if possible.  The spike in any future payment schedules could be astronomical as a result of this decision by JPIA and the ACWA,” Aragon said.

According to a former top executive at CB, dropping a government agency’s insurance coverage represents “reaching the bottom of the barrel.”

During the past year, HMG-CN has published dozens of exclusive investigative reports documenting deep legal problems caused directed by Directors Robert Apodaca, James Roybal and Leticia Vasquez that could be the reasons for JPIA dropping the agency.

HMG-CN disclosed the details of a sordid sexual harassment complaint lodged by a female employee against Apodaca.  The newspaper has learned that the alleged victim in the case could be handed a high seven-figure settlement. Sources also tell HMG-CN that other females may be in the process of coming forward to file additional cases of sexual harassment activities against Apodaca.

It was also revealed by the newspaper that Director James Roybal is currently enrolled into the infamous “Teacher Jail” at the Los Angeles Unified School District on grounds of misconduct.  Roybal denied that he was first enrolled in Teacher Jail when initially queried by HMG-CN reporters. It was then proven by a public records request by HMG-CN that Roybal was in jail. Roybal has never spoken publicly about the situation during Central Basin board meetings.

Several popular radio talk shows lambasted Roybal’s participation in the highly controversial program including KFI’s John Kobylt and Ken Chiampou  hosts of the popular “John and Ken Show,” as well as its sister station KTLK-AM 1150 that is now known as “Patriot Radio.”

HMG-CN also was the first news outlet to confirm and disclose the details of Director Leticia Vasquez’ filing of a highly controversial whistleblower lawsuit against her own agency.

Vasquez, who denied she filing the lawsuit until it was revealed by HMG-CN, claims to have been “victimized” by many parties, individuals and law firms who have banked millions in questionable contracts with the agency during the past decade.

Vasquez’s lawsuit also goes after her top political alley and heavy campaign contributor Ernest “Ernie” Camacho who is the owner of Pacifica Services. It also cited the Calderons, and other companies.

Camacho and his company have banked millions in exclusive contracts with Central Basin.

Vasquez staged a bizarre press conference two weeks ago where she demanded that another director, Art Chacon resign his seat after it was learned that he had been involved in one accident while performing district business.

Vasquez at her own press conference.

The accident is in litigation, JPIA is fighting the fact that Chacon was working despite multiple sources coming forward to HMG-CN saying he was working, and is set for arbitration August of this year.

The three also went after current General Manager Tony Perez at that same meeting. Vasquez, Roybal, and Apodaca were unsuccessful in having him released from his five year contract.  Perez has been on the job for just one year and has been credited for being a “stable force” as the political battle continues to swirl inside the Basin’s two story office complex.

Former Central Basin District executive Ron Beilke also filed a complaint alleging wrongfully termination, retaliation, and harassment during his short tenure at the agency.  Beilke confirmed to HMG-CN that he is plans to file a seven-figure lawsuit and plans to name Roybal, Apodaca and Vasquez individually in the complaint.

Director Art Chacon said that “ACWA’s decision sums it all up for the year-long leadership of Apodaca, Roybal and Vasquez. This action is like their report card and they got an ‘F’.”

“Never in CB’s 55-year history have worst, more destructive Board Members ever existed,” Chacon said.

Phil Hawkins, who recently took over as President of the Board of Directors after Roybal was removed with the support of Apodaca and Chacon also chimed in on the current insurance crisis.

“This District is hanging on by a thread and our General Manager and staff has done amazing things to right this ship.  Our General Manager (Perez) just completed the biggest water sale in our District’s history and has aggressively been identifying potential long term recycled water customers, but somehow our Board continues to drag this agency through the mud,” said Hawkins a former state assemblyman from Cerritos.

“What I will say to this Board is that the cancellation of our insurance is the ultimate wake-up call.  Let’s settle down, let staff do their jobs and try to remember that it’s not about us, it’s about our 2 million customers,” Hawkins continued.

The agency is also being investigated by the Federal Bureau of Investigation, the Los Angeles County District Attorney’s Office, the Internal Revenue Service and the United States Attorney’s Office in connection with a case involving current State Senator Ronald Calderon and former Assemblyman Thomas Calderon.