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Topic: More Flint water fraud?

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El Supremo

Investigator: New Flint probe looks at financial fraud
The Detroit News Published 7:24 p.m. ET March 23, 2018 | Updated 10:55 p.m. ET March 23, 2018

The lead investigator into Flints water crisis has launched a new probe amid allegations of financial fraud and greed behind the decision years ago to switch the citys water source.

Without getting too far into depth, we believe there was a significant financial fraud that drove this, Andy Arena, the FBI Detroit offices former director, said Thursday during a Senate Appropriations Subcommittee on General Government hearing.

The alleged scheme benefited individuals, said Arena, who added that I believe greed drove this.

Attorney General Bill Schuette started the original investigation in January 2016 after Michigan Gov. Rick Snyder declared a state of emergency involving Flints lead-contaminated water. The probe has resulted in criminal charges against 15 local and state officials, resulting in four plea deals and preliminary exams involving six defendants including state Health and Human Services Director Nick Lyon and Chief Medical Executive Eden Wells.

But this new spin-off investigation is looking into the motivation behind the decision to switch the city of Flint from the Detroit area water system to the new Karegnondi Water Authority. When Flint decided to join the regional authority, it ended its arrangement with the Detroit water system and started drawing water from the Flint River as an interim source, which eventually resulted in contaminated drinking water.

When Sen. Mike Nofs, R-Battle Creek, asked whether the probe involved local, state and federal entities, Arena responded: It kind of cuts across all lines right now. ... I dont know that they were working so much in concert, but the end game was people were trying to make money in different ways.

Arena also reiterated that his team has been heading the Flint criminal investigation for more than two years but could not determine when it would end.

Were moving at lightning speed. ... I can assure everyone here that we are working as quickly as we possibly can, he said. Our bottom line is we want justice for the people of Flint, and we have to do that methodically.

Arena added that state investigators were cooperating in a probe of the crisis led by federal authorities. He has talked with Matthew Schneider, the U.S. attorney for the Eastern District of Michigan who formerly was Schuettes chief deputy, and had several meetings, Arena said.

Were sharing information, but its a little tricky, he told the lawmakers.

In March 2013, Flints City Council members voted 7-1 to join a new regional provider rather than remain a customer with the Detroit system as it had for decades. Three days earlier, Flint Emergency Manager Ed Kurtz had approved the deal as well, and it had the support of Genesee County Drain Commissioner Jeff Wright.

Then-state Treasurer Andy Dillon was initially skeptical about whether the new regional authority made financial sense. But Dillon said he was persuaded the deal was financially sound before a failed April 2013 last-ditch meeting between Detroit and Flint officials to try to save the existing arrangement.

Kurtz signed off on a subsequent order in June 2013 that allowed the upgrading of the Flint Water Plant to ready it to treat water from the Flint River to serve as the primary drinking water source for approximately two years and then converting to KWA delivered lake water.

Flint used river water from April 2014 until October 2015, when the city was moved back to the Detroit system following an outbreak of Legionnaires cases and evidence of elevated levels of lead in the citys children.

The city of Flint has since decided to leave the Karegnondi authority because of the high cost of upgrading and fixing the Flint Water Plant and connecting it to the new regional system.

In October 2017, a federal judge dismissed objections by Flints council and paved the way for Flint officials to move forward with a long-term water contract with the Detroit area Great Lakes Water Authority supported by Mayor Karen Weaver to keep the city from bankruptcy.

Weaver, Snyder and the U.S. Environmental Protection Agency supported a proposed 30-year deal with the Great Lakes Water Authority, but the Flint City Council dragged its feet and balked.

The Michigan Department of Environmental Quality successfully sued the city to get the agreement approved after warning that the council was endangering public health in the wake of a crisis that has largely been blamed on the state.
Post Sat Mar 24, 2018 7:37 am 
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El Supremo

Flint investigator says greed and fraud led to drinking water crisis
Paul Egan, Detroit Free Press Published 4:56 p.m. ET March 23, 2018 | Updated 7:38 p.m. ET March 23, 2018

The highest-ranking government official charged in the Flint water investigation, Nick Lyon, heads to court. Wochit

LANSING A "spin-off" criminal investigation related to the Flint drinking water crisis is under way, and the suspected crimes involve greed and financial fraud, the lead investigator has told a legislative committee.

"Without getting too far in-depth, we believe there was a significant financial fraud that drove this," Andrew Arena told the Senate Appropriations Subcommittee on General Government on Thursday, speaking about the 2014 switch in the city's water supply that exposed residents to lead-contaminated water.

"I believe greed drove this," said Arena, a former director of the FBI's Detroit office who has led the Flint criminal investigation for Attorney General Bill Schuette for a little more than two years.

"We believe what caused the series of bad decisions (was) a pretty substantial financial fraud," with a number of people driven by greed and personal profit, Arena told the committee.

Though investigators have spoken in the past about possible fraud related to approvals for a bond issue to pay for a new Karegnondi Water Authority pipeline to Lake Huron, which was to serve Flint in place of its Lake Huron water supplied by Detroit, Arena's comments Thursday went beyond previous public statements.

More: Supreme Court: Flint water cases to return to trial court to move forward

More: Sh-h-h. Snyder state update left out 75% drop in reading proficiency in Flint

Arena didn't identify who was under investigation for the financial-related crimes or when charges might be brought.

"We're moving at lightning speed," he said.

Two state senators who are members of the subcommittee said they were left with the clear impression that more criminal charges are coming.

Sen. Mike Nofs, R-Battle Creek, a former Michigan State Police trooper who pressed Arena on the new disclosures, said Friday he was surprised to learn that new charges are being investigated related to financial motives and greed.

"I'm just glad we're holding people accountable," Nofs said. "What happened was a travesty."

Sen. Coleman Young II, D-Detroit, said he, too, was surprised by Arena's presentation. Until now, Young believed the crimes under investigation related to people being "careless, reckless and negligent."

Adding financial crimes motivated by greed adds "a whole other sinister and ghoulish layer to this," Young said.

To date, 15 current or former state and City of Flint employees have been charged by Schuette with crimes ranging from misdemeanors to involuntary manslaughter. Four defendants have entered no contest pleas to misdemeanor charges.

Schuette has said that the probe has generally moved from the investigation phase to the prosecution phase, but he has not ruled out additional charges against new defendants.

"We've never said the investigation is closed or over," Schuette spokeswoman Andrea Bitely said Friday.

"We still have investigators who are actively pursuing leads every week."

Arena told the subcommittee that state investigators are also cooperating, to the extent possible, with a separate and ongoing Flint criminal investigation spearheaded by the FBI and the U.S. Attorney's Office in Detroit.

Young said the investigation should get whatever financial resources it needs.

"You can't penny pinch with things like this," Young said. "This is about administering justice for the people of Flint, who are still going through this."

Flint's water crisis began in April 2014, when a state-appointed emergency manager switched the city's drinking water supply from Lake Huron water treated in Detroit to Flint River water treated at the Flint Water Treatment Plant. It was a temporary, cost-saving measure, but turned out to be a disastrous mistake. The Michigan Department of Environmental Quality has acknowledged it failed to require needed corrosion-control chemicals as part of the water treatment process.

Before the 2014 water switch, the Flint City Council had backed a plan to join the KWA pipeline as a new water source, though members have said they thought the city would stay on Detroit water until the new pipeline was completed.

After Flint River water began flowing, corrosive water caused lead to leach from from joints, pipes and fixtures, causing a spike in toxic lead levels in the blood of Flint children and other residents.

Flint switched back to Detroit water in October 2015, but some risk remains because of damage to the city's water distribution infrastructure.

Investigators are also examining possible links between the water switch and a spike in deaths related to Legionnaires' disease.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Staff writer Kathleen Gray contributed to this report.
Post Sat Mar 24, 2018 11:03 am 
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