2 Water District Managers in Expense Scandal Put on Leave

The Santa Margarita Water District’s board of directors placed its two top managers on paid leave Friday in response to disclosures of excessive spending and gift-taking that are now the subject of investigation by state and federal authorities.

Walter W. (Bill) Knitz, the district’s general manager for 17 years, and Michael P. Lord, his longtime assistant, will continue to collect their salaries and benefits but will lose their leased district cars. Knitz makes $113,292 a year and Lord makes $109,116.

The five-member board will select an interim manager to oversee the operations of the district, which provides water and sewer service to more than 80,000 customers. Knitz and Lord were ordered to be available whenever needed.

The removal of Knitz and Lord comes amid a public furor over business expenses claimed by both men, including stays at luxury hotels, four-figure room service tabs and even a $245 sightseeing tour of Manhattan.

At the same time, both men have accepted more than $46,000 worth of gifts from vendors who have received substantial contracts from the district. In many cases, Knitz and Lord recommended contracts to the board for vendors who had given them more than $250 the previous year, possibly in violation of the state Political Reform Act of 1974.

Those recommendations are the subject of a joint investigation by the Orange County district attorney’s office and the FBI. Both agencies are trying to determine whether the managers violated conflict-of-interest laws by recommending that the board award contracts to companies that gave them gifts, such as hunting and fishing trips.

Attorneys for Knitz and Lord could not be reached for comment Friday. Board Chairman Don B. Schone said removal of the two managers does not mean they are guilty of wrongdoing.

“Our actions in no way should be construed as an admission of violating any laws or administrative procedures,” Schone said. “Clearly, due process has not yet occurred.”

Board members would not comment on how long Knitz and Lord would remain on paid leave.