2nd Water Official to Pay Fine

The Santa Margarita Water District’s chief engineer became the second official punished over conflict-of-interest allegations when he agreed Friday to pay a $10,000 fine to settle a civil lawsuit filed by the Orange County district attorney’s office.

William B. Dye, 58, the district’s head engineer for the past 15 years, agreed to pay the fine and settle the complaint that charged him with six civil violations of the state’s Political Reform Act.

The complaint alleges that between 1990 and 1992, Dye failed to disclose about $5,000 in gifts he received from two companies that did the bulk of the district’s engineering work.

Dye played a role in awarding contracts to those companies. But state law requires officials to abstain from influencing any action that could benefit a donor that gives them gifts worth than $250 in value in any 12-month period.

“Mr. Dye paid a fine that was twice the amount of gifts he received and we think that’s substantial,” said Marc Kelly, the deputy district attorney who is handling the cases against four Santa Margarita Water District officials involved in a scandal that broke last year.

“There was no evidence of criminal intent. Mr. Dye was not living the high life, riding in limos or going on trips. But he still got quite a lot of meals and we felt it was appropriate to file the civil lawsuit against him,” Kelly said.

The lawsuit and fine against Dye mirrors similar action taken Wednesday against Don B. Schone, the district’s former chairman. Schone agreed to pay the $10,000 fine after prosecutors filed a civil lawsuit charging him with infractions similar to those Dye faced.

The Times reported in January that Dye and his chief assistant, Dan Ferons, had been treated to hundreds of meals and at least two hotel stays in resort towns by the Irvine-based engineering firm of Robert Bein, William Frost & Associates.

The district attorney’s office said Friday that the civil lawsuit also embraced actions Dye took on behalf of a second engineering firm, MacDonald-Stephens Engineers in Mission Viejo, which also lavished gifts on Santa Margarita officials.

Ferons is not under investigation.

Until Dye amended his financial disclosure forms in March and listed $6,068 in meals and entertainment from the two firms, he had never disclosed a gift on the statements of economic interest he has been required to file annually with the district.

At the time of the amended filing, Dye said he had never listed gifts on his statements because he misunderstood the laws governing such filings and had not received proper guidance. He said his statements were filed “in good faith.”

Neither Dye nor his attorney, James A. Stotler, returned calls for comment Friday.

Dye’s boss, John J. Schatz, the current general manager of the district, said Dye would be taking early retirement within the next month, but that the decision had nothing to do with his involvement in the scandal. As part of his retirement, Dye will get two extra years of service added to his pension.

“Anytime you’re under a cloud like this, it’s a serious situation. But I’m glad for him and for the district that this had been resolved,” Schatz said.

With the cases against Dye and Schone completed, prosecutors can now turn their attention to resolving the criminal cases against former general manager Walter W. (Bill) Knitz and his top assistant, Michael P. Lord. Together, they are charged with 38 criminal counts stemming from their failure to disclose the gifts, trips and meals they received from firms they recommended for contracts.

Because Knitz and Lord received about $60,000 in gifts--including extensive travel and entertainment from Bein-Frost, MacDonald-Stephens and others, and then recommended they receive contracts totaling millions of dollars--prosecutors believe their cases are more serious, and of a criminal nature.

“Dye and Schone were clearly on a different level,” Kelly said.

It is likely that the cases against Knitz and Lord could be resolved next week. Kelly is working out plea bargains with both men that would require them to pay fines and perform community service. Knitz is scheduled for a hearing Monday in South County Municipal Court in Laguna Niguel. Lord’s hearing is scheduled for Thursday.