Curated News

Nov 22, 2013 7:16 PM by Eric Ross

News 5 Investigates: Water board approves new fee schedule to balance budget

For the first time, the attorney for the Arabian Acres Metropolitan District is speaking on-camera about why it took so long to discover approximately $206,000 in missing funds.

Terry Malcom, the former water administrator is being investigated for embezzling those funds. To this date, not a dime has been collected.

"The water district is looking strongly into raising our rates out here as a way of beginning to fix the problem," Arabian Acres Property Owners Association President Jim Nash said. "We're are scrambling right now to pay the bills that we have."

The district is missing a $100,000 loan that was supposed to go toward building new wells along with $106,000 in general funds.

To balance the budget, the water board approved a new supplemental operations fee of $100 per month. A drought fee was removed and water usage rates are staying the same. However, residents will see a 5-percent increase in their monthly service fees.

"We're projecting we should be in the black in 2018," Peter Italiano with Special District Management Services, Inc. said Thursday.

Meanwhile, the water board's attorney is working with the 4th Judicial District Attorney's Office to track down the cash allegedly stolen by the district's water administrator who has since been fired.

Criminal charges have not yet been filed, and attorney Joan Fritsche admits the investigation into Terry Malcom has hit a road block.

"The accounting trail is difficult to follow," Fritsche said. "This was a very smart individual. He did this over a period of years."

News 5 Investigates uncovered more than $800,000 in missing funds from the Cascade Metro District where Malcom had been the director prior to making his way to Arabian Acres. A forensic audit in June 2013 shows money had been stolen from Arabian Acres dating back to January 2012. The embezzlement could have been caught that year, but we learned the audit was not done.

"When a local government has less than $500,000 of revenue or expenditures, it's not required to do an audit," Fritsche said. "They can file an audit exemption with the state and that's what the district has done."

We are still working to uncover who filled out the audit exemption for 2012 and years prior but were unable to get answers from the Board's president, Charles Hallam.

The new fee schedule for Arabian Acres takes effect Dec. 1.



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