$5 Million for Sewers Missing; 2 Arrested : Investigation: The money vanished several years ago, but the loss was discovered only recently with the help of a tipster.

A former accountant for the state Water Resources Control Board and his ex-wife have been arrested for allegedly stealing more than $5 million in state funds earmarked for the construction of sewage plants, authorities announced Monday.

Louis Fowler, 35, was arrested Saturday in Mesa, Ariz., where he had been using the identity of William David Rice, a Sacramento man who died in an electrocution accident. Jill Baume, 26, Fowler’s ex-wife, was arrested at her home in Citrus Heights near here.

Fowler is accused of embezzling an estimated $5.1 million by transferring the money into fictitious accounts to which only he and his ex-wife had access.

The money was allegedly taken between 1983 and 1985 from a sewage and water treatment facilities bond measure approved by the voters in 1978.

State officials were at a loss to explain how so much money could vanish and how the theft could go undetected for such a long time.

The theft--and Fowler’s new identity--were discovered only recently when state authorities were tipped off in January by a confidential informant, said Kati Corsaut, a spokeswoman for the state Department of Justice. It was not until last month that state officials confirmed that money was missing from the account.

Corsaut said state officials received the tip in January and confirmed in October that money was missing from the account.

Fowler resigned his post in 1985 and moved to Arizona, where he began using the name Rice.

“We have absolutely no reason to believe he (Fowler) knew Rice or that Rice had anything to do with this,” Corsaut said. “Rice was about Fowler’s age, and Fowler may have picked the name out of a newspaper obituary.”

State authorities said they do not know what has become of the missing funds. But officials obtained warrants Monday to search Fowler’s house in Arizona.

Fowler had operated a video rental shop in Mesa called Club Video, which closed shortly before his arrest.

After the state Department of Justice received the tip, an audit of the water board’s books showed that the money was missing. Bank records and canceled checks indicated that Fowler had handled the missing money after it disappeared from the board, officials said.

In order to divert the funds, Fowler allegedly created a phony water district called the Sacramento Community Services District. The bond funds were intended for local government agencies that could not afford to pay for improvements in water treatment facilities.

The amount of money that was missing would have been enough to pay for a very small expansion of a sewage treatment plant in a small community, said James W. Baetge, executive director of the Water Resources Control Board.

Sandra A. Salazar, a spokeswoman for the water board, said the theft went undetected in part because voters approved additional water treatment funds in a subsequent election and the state fund was never depleted.

Since the funds were taken, accounting methods have been changed so that such a theft could not occur, water board officials contended.

After the arrests, Baetge called for a complete outside full audit of the agency’s accounting procedures.

Fowler faces 15 counts of felony grand theft and two counts of filing false tax returns. His bail was set in Arizona at $6.85 million.

Baume faces two counts of filing false tax returns and one count of receiving stolen property. Her bail was set at $100,000 in Sacramento.