$850,000 siphoned from rural water association, auditor says

By SUSAN MONTOYA BRYAN Markets Associated Press

A former office manager is accused of siphoning some $850,000 from a rural drinking water system that serves thousands of people in southeastern New Mexico, the state auditor's office said Tuesday.

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State Auditor Tim Keller confirmed that his office has forwarded information to authorities about the alleged theft at the Otis Mutual Domestic Water Consumers and Sewage Works Association.

Preparations for the group's annual audit uncovered financial discrepancies. Officials said the office manager's credit card was used for cash advances at casinos in New Mexico and other states starting in March 2015.

No charges have been filed, but the auditor's office said the manager has resigned. The manager wasn't named in a letter from the auditor to prosecutors.

An attorney for the water association declined to comment on the allegations or what they might mean for customers, including more than 4,300 rural residents, farmers and ranchers in Eddy County.

The auditor said the money that was withdrawn was meant for general operations and maintenance of the water system and may include both federal and state funds.

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"This is a staggering amount of money for a small community that should be used for water, not an employee's bank account," Keller said in a statement. "While the community recovers from having nearly the entire bank account drained, we urge them to implement policies and procedures to keep this from happening again."

The association is cooperating with his office, Keller said.

It is one of more than a few hundred rural water groups around the state responsible for providing drinking water to over half of New Mexico's population. They are often managed by volunteers and funding is far from flush, with the associations having to compete for loans and grants.

Infrastructure needs among the small systems are estimated at about $1 billion, according to the New Mexico Rural Water Association.

"There's not enough funding in any year for all the demand. There's a lot of need in New Mexico and a lot of need nationwide. It's an aging infrastructure overall," said Bill Conner, executive director of the statewide group. "It's something we just have to keep chipping at and working on and trying to get as much funding out there and available for the systems as we possibly can."

As for the Otis association, Conner said the missing money could make it difficult to respond to emergency needs, such as repairs to wells or water lines. Federal and state officials also look at a water association's funding situation and reserves when considering awarding grants or loans.

The state auditor said it marks the second recent case involving alleged theft or misuse of funds within a rural water association. The previous case resulted in charges last year against the former president of the Hanover Domestic Water Consumer Association in southwestern New Mexico.