Conroy Tightens Screws on Water Board : Investigation: Assemblyman urges Santa Margarita district to stop paying suspended officials. Acting general manager says the board could take additional action against the two as early as today.

Saying the suspensions of two top officials of the Santa Margarita Water District amounted to nothing more than a “paid vacation,” Assemblyman Mickey Conroy (R-Orange) asked the district’s board Wednesday to stop paying the $100,000-plus salaries of Walter W. (Bill) Knitz and Michael P. Lord.

In a letter to district Chairman Don B. Schone, Conroy said the board did not go far enough last month when it voted to suspend Knitz and Lord with pay and kept their benefits intact.

Knitz, the district’s general manager, and Lord, his top deputy, were suspended after disclosures in The Times that the two had spent the district’s money lavishly over the years, treating themselves to expensive limousine rides, room service and liquor tabs that often exceeded $1,000 during stays in luxury hotels, and other perks.

The Times also revealed that the two men had accepted nearly $60,000 in gifts, mostly from contractors and other vendors they recommended for district contracts worth millions of dollars.

Their actions are under investigation by a joint task force formed by the FBI and the Orange County district attorney’s office.

Board members have told The Times that the two officials would remain on suspension with pay until the investigation is concluded. But acting general manager Dan Miller said the board could take further action against Knitz and Lord as early as today.

“On a daily basis, the residents that your board serves are treated to new revelations concerning the activities of the ‘Santa Margarita Gold Dust Twins’ while your board sits mute on these daily disclosures,” wrote Conroy, who represents the water district.

Conroy estimated that Knitz and Lord have been paid more than $14,000 in salary and benefits since their suspension April 9. Knitz, who earns $146,739 a year in salary and benefits, and Lord, who earns $141,100, lost only their district-issued cars after the board voted unanimously to suspend them.

“In no other business would employees be given a paid vacation for jeopardizing the structure of a company by engaging in such apparent unethical acts,” Conroy said.

Last month, Conroy said he would introduce legislation that would overhaul the way that the district’s board members are elected.

With the Santa Margarita district one of the last two remaining “landowner districts” in Orange County, voting is limited to landowners who get one vote for each dollar in assessed value of their holdings.

Conroy, who is proposing legislation that would impose the “one man, one vote” rule on the district, is proposing a similar overhaul for the Los Alisos Water District, the county’s other landowner district.

Jim Bieber, Conroy’s spokesman, said dozens of constituents have called to complain about Knitz and Lord, many of them outraged that both men were still being paid.

Board members were concerned that firing Knitz and Lord or cutting their pay would spark legal action.

Lord’s attorney, Gary M. Pohlson, said the board acted correctly.

“Mr. Conroy’s request is doing nothing but denying both of these men due process,” Pohlson said. “These men will be vindicated once the investigation is complete. The board (members) in my opinion should stay right where they are. . . . These guys have not been convicted and all there are are allegations that I believe will prove to be unfounded.”

Knitz’s attorney, Marshall M. Schulman, dismissed Conroy’s action as “just another politician grandstanding. We don’t need some politician jumping on the bandwagon.”

Dan Miller, the district’s interim general manager, said the board was following its lawyer’s instructions in deciding to suspend Knitz and Lord with pay.

“We need to go through a process to review all the issues prior to us making a decision,” Miller said. The board must “ensure we are not subject to costly litigation if we act overzealous in making decisions until we have all the facts and information. . . . As soon as we are in a position to take further action, we will.”

Conroy could get an answer to his request as early as today when the board holds another closed session to discuss personnel matters.

“Something will happen one way or another in terms of action within the next week,” Miller said.

Conroy threatened to have the state “intervene” if the board does not act properly.

” . . . If there is a failure in the duties of the water board, which oversees the management of that entity, I believe the state has an obligation to intervene,” he said. “I hope that further intervention by the state, beyond the current legislation I have authored . . . will be unnecessary.”