U.S. drops most charges against irrigation district

RENO - Federal prosecutors have agreed to drop the charges against all but one of the officials for a Nevada irrigation district accused of conspiring to defraud the U.S. government by falsifying water delivery documents.

In a surprise move Thursday in U.S. District Court in Reno, two assistant U.S. attorneys and lawyers for the Truckee-Carson Irrigation District told Magistrate Judge Robert McQuaid Jr. they'd reached an agreement to dismiss the indictments against TCID, its lawyer Lyman McConnell and employee John Baker.

The remaining indictment against project manager David Overvold will effectively be suspended for 18 months. Overvold has agreed to resign as part of the agreement, said his lawyer, Craig Denney.

If Overvold remains a law-abiding citizen during that period, his indictment also will be dismissed, Denney told The Associated Press after the hearing. He also had to agree not to seek re-employment with the district.

He said the terms of the agreement must be accepted by U.S. District Judge James Mahan, the lead judge in the case.

"We think it is an extremely favorable resolution," Denney said. "We were steaming ahead for trial preparation in February 2010 then this proposal was made to us (by prosecutors), and we accepted it.

"This essentially was an offer we couldn't refuse," he said. "It saves the defendants and the district from the significant stress, uncertainty, risk and expense of trial."

There was no further explanation of the agreement or the reasons for it during the five-minute appearance in court.

Assistant U.S. attorneys James Keller and Sue Fahami declined to comment afterward, referring inquiries to Natalie Collins, spokeswoman for the U.S. attorney's office in Las Vegas. Collins confirmed the government has agreed in principle to the deal but said the final agreement has yet to be signed.

A federal grand jury in Reno handed up an indictment last December accusing the Fallon-based district and the three men of falsifying records documenting the delivery of water to area farmers and ranchers.

Federal prosecutors had accused them of carrying out a scheme from 2000-05 to alter water delivery data to earn special "efficiency credits" that would entitle the district to more water from the U.S. Bureau of Reclamation and reduce a court-ordered water debt owed to the Pyramid Lake Paiute tribe.

Had they been convicted, they would have faced up to 20 years in prison for each of three counts of falsification of records, and five years in prison for each of seven counts of false claims, false statements and conspiracy to defraud the United States.

McQuaid had ordered what had been scheduled as a status conference by saying he was "intrigued" by a recent court filing that suggested a resolution to the case might be pending.

"It does appear all the parties have entered an agreement to resolve this matter," Fahami said.

Denney said in an earlier motion seeking dismissal of the indictments that the defendants were victims of a "witch hunt" by overzealous special agents and confidential informants who were mostly disgruntled employees with axes to grind.

He maintained that the improper coaching and influencing of witnesses - and in some cases altering witness statements - tainted the grand jury proceedings and robbed Overvold of his right to due process.

Denney, a former assistant U.S. attorney in Reno, also argued that the government illegally had been withholding documents - including records of wiretaps and statements from informants - that contain information that would help prove Overvold's innocence.

Keller said in an April 11, 2009, letter to Denney that his claim the government has not complied with discovery requirements was "nonsense." He said at the time the government already had provided more than 7,000 documents to the defense lawyers.

Lawrence G. Brown, acting U.S. attorney for the Sacramento office that was supervising the prosecution, said at the time he would vigorously oppose the motion to dismiss the indictments.

"We strongly disagree with the defense contentions," he said.