I-Team: FBI steps up probe into alleged water district purchasing scheme

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The FBI has stepped up its investigation of an alleged multi-million dollar purchasing scheme within the Las Vegas Valley Water District. The I-Team first revealed details about the alleged operation weeks ago. The I-Team has now learned that FBI agents interrogated about half a dozen district employees within the last few days.

Clark County Commissioner and Southern Nevada Water Authority board member Steve Sisolak says he was shocked when he was first told about the alleged purchasing scheme.

“It’s one thing if people are stealing a box of pens or pencils. This is just, the enormity of the entire thing is mind boggling,” he said.

The Las Vegas Valley Water District started its internal investigation in December 2015 after discovering the name of purchasing agent JJ McCain attached to astounding numbers of orders for printing cartridges.

Records obtained by the I-Team show McCain placed more than 300 individual orders per year with, sometimes, hundreds of printer cartridges per order. All of those boxes were reportedly shipped from Staples, the seller, to McCain’s office at the district, where pre-made labels were used to re-direct the packages to an obscure company in New Jersey.

“It’s an enormous amount of money, and it’s an enormous amount of physical product. It’s boxes and boxes and boxes that came in and went out on a regular basis,” Sisolak said. “That’s disturbing to me. I can’t imagine how many thousands of ink cartridges we’re talking.”

Although the scheme was discovered in December, board members were not informed until around February, which is when the I-Team first contacted the water district to ask about the scandal.

McCain told the I-Team in a phone conversation that she had been assured the matter would remain confidential. She resigned from the district and is now the focus of an FBI investigation. 

The audit firm hired by the district never noticed the millions of dollars being spent on ink, but someone in the district did get a glaring hint something was amiss.

The I-Team obtained an internal memo from July 2015 which states McCain received calls from Stapes, complaining that office supply purchases could not be completed, because various district credit cards were being maxed out.

The solution? The finance department decided to increase the credit card limits. For instance, the monthly limit was bumped from $200,000 to $220,000.

Sisolak acknowledges several people had to drop the ball for such a scheme to persist undetected for more than four years. But, he defends Southern Nevada Water Authority General Manager John Entsminger.

“There were several channels along the way that it got missed on, and, in fairness to the general manager, he inherited this. He inherited this employee. He inherited this procedure. He inherited the lack of an audit function,” Sisolak said.

It’s an indirect way of pointing out that the mess began and grew under the previous water boss: Pat Mulroy.
The FBI investigation is ongoing, but no charges have been filed. The I-Team has obtained additional documents related to the alleged scheme and will be making them public in the days ahead.

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