When I was just a little girl, the Archer Daniels Midland price-fixing scandal broke. Forever after, my father and I would mutter “bunch of crooks” in unison when we heard their ads on NPR. Today, wonderful people at the SEC tell us that Westlands Water District lied to investors to disguise the fact that they’d rather sell bonds they can’t afford to pay back than raise their water rates. Evidence shows that General Manager Tom Birmingham advised to his board to do some “Enron accounting” and then verified the financial lies in their Official Statement. For this he was personally fined $50K.
My thoughts:
- The SEC holding is very clear, very clean writing. If you can follow this blog, you can read the holding itself. You might enjoy that as much as I did.
- Mr. Birmingham should be disbarred for perjury.
- Westlands Water District is broker than it looks from the outside. Without “Enron accounting”, they can barely afford their debt service. I have occasionally wondered how they could afford their very pricey stable of politically connected managers, plus the tens of millions they’ve shoveled into BDCP. Apparently they can’t, not without raising their water rates.
- I wonder how the SEC found this crime and why they pursued it. If you know, please do email me. I would love to hear the story.
My father sent me the breaking article about the SEC fining Westlands and two of their managers. I am sure he’d be happy to append “couple of crooks” to their name, as a cozy father-daughter activity.
MORE, 3/10:
It looks like Ms. Schifferle was the person who drew Westland’s illegal activities to the attention of the SEC. Great tactic, great work.
Schifferle said she filed a complaint with the SEC in 2011, and last year sent the agency minutes of a 2010 Westlands finance committee meeting, obtained through the Public Records Act, that discussed the debt ratio and revenue shortfall.
“I thought it was going in the round file,” she said. “Maybe they finally took a look at it.”
This is what comes of Westland’s willingness to make enemies. Making many enemies means having a lot of people out there trying different ways to expose any wrongdoing.
On the public record 
Years ago, I went on one of the excellent Water Education Foundation tours. Tom Birmingham was on the tour and I sat next to him on the bus. This was when he represented LADWP and worked to help them avoid their Mono and Owens Lakes environmental responsibilities. He seemed pleased to tell me that his children were embarrassed by his efforts. I’m sure they are even less proud today.
Thanks, you said it much clearer than Iâ¦.but here is the PRA document that helped pull back the veil on the crooks and some other documents that helped out.
Patricia
Patricia. could you include the link in your reply?
Terry
I think of the crooks every time I see “Archer Farms” food at Target. I blogged about Westlands for #GroundwaterAwarenessWeek.
http://badmomgoodmom.blogspot.com/2016/03/groundwater-awareness-week.html
But, I’m going to follow it up with how gravitational pull on satellites can be used to measure groundwater draft.
Meanwhile, enjoy the table at the bottom of this page.
https://water.usgs.gov/edu/earthhowmuch.html
Gee, why am I not surprised? I have long believed that their end game is not to be viable, let alone responsible, growers, but to get the Feds, the state, or SOMEBODY, to bail them out and fallow the land. Or turn it into solar farms. I sure don’t see anything here to change my mind.
Five hour interview with Birmingham. He’s always angling: http://www.aguanomics.com/2009/12/tom-birmingham-of-westlands-water.html
Oh what a story. But why the Wall Street Journal story about this would repeat Westlands’ spin that all their farms are FAMILY owned is beyond me.
Tom Birmingham should absolutely disbarred.. Yes indeed it would be fascinating to know who tipped off the SEC and is the documentation regarding the Westlands investigation available to the public.? Anyone know where one could get a copy of the last audit of Westlands?
There’s a pretty good article on this in the California section of today’s
LA Times. St least no mention of “family farms”, LOL.
Also a good column by George Skeleton on the scary Trojan horse bullet train vs water power grab initiative. Wanna bet that Westlands is a big player in that?
If I may I would like to offer a counter argument. There is no doubt that what the Westlands management staff did was wrong, and they should be punished for it. But if I was a Westlands landowner, I might be ok with what he/they did. So long as the District was paying its bills, this action may have kept my water rates much lower in a time of low water availability. The amount of revenue required for the bond requirements was probably much much more than the combined $195K SEC fines.
The most unbelievable thing was how the Enron accounting quote was obtained. It must’ve been in the committee minutes.
Yeah, right. Who cares if it’s illegal or unethical. As long as it keeps my water rates down, go for it!
I am sure that their actions were in the best interests of the landowners and I presume they are happy with Mr. Birmingham and the Board. But the people who bought their bonds deserved accurate information about what they were buying.
As someone who works for a large agricultural district (not Westlands), I did find this article illuminating. The fact that the SEC could get involved was something I had never contemplated.
There’s another article in today’s Times. The Fitch bond rating agency placed a “negative watch” on several existing Westlands related bond issues including a bond partially funding the “conveyance”.
Which begs the question of what the “conveyance” bond was for? Maybe to fund the “environmental studies” and/ or whatever design work has been done to date? According to the Times, the amount is $29.8 million.
Behind every agency, there is a political backstory, which usually has an economic backstory. These explain both the successes and failures of agencies at any level.
I don’t know you, but I love you! Thanks so much for reminding us of the Archer Daniels Midland scandal and NPR. I used to work at a PBS television station, KQED, and it gave me heartburn every time I saw that underwriting spot. It didn’t seem to bother anyone at KQED.
Many thanks,
diane
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Diane Livia
510-290-5295