MISUSE OF FUNDS PROBED PROSECUTORS LEAD INQUIRY INTO FORMER OFFICIALS.

SANTA CLARITA - Three months after the two top staff members of the Newhall County Water District resigned amid allegations that they misused at least $1 million of taxpayer funds, the investigation is still incomplete and the officials have yet to be replaced.

An inquiry, launched in June 2000 by board members, found that General Manager Thomas Shollenberger and Operations Manager Jeffrey Maupin had steered big-ticket contracts to three firms operated by a long-time friend of Maupin's, according to district officials.

The Public Integrity Division of the Los Angeles District Attorney's Office is investigating the allegations and has a lawyer and an investigator assigned to the case. David Demerjian, the head of the division, said he could not comment on the review, which started a month ago.

``The sooner we get involved in a case, the better,'' Demerjian said. ``We have trained investigators who know what to look for and the power of search warrants and subpoenas.''

None of the firms operated by Maupin's friend Joseph Perry of Castaic - Santa Clarita Valley Construction Inc., Big J Equipment Rental and J.S. Perry Trucking - submitted bids for the dozens of district pipeline and paving project contracts they were awarded over an 18-month period, nor were any of the companies licensed by the state or insured.

Shollenberger, Maupin and Perry have not returned phone calls since the allegations came to light.

Dore, an auditor, has been poring over invoices and memos, gathering information and details about the misappropriated money.

``We have to provide (the District Attorney's Office) with as much information as possible to capture their interest and prompt an official investigation and charges,'' Dore said, pledging to turn over all the documents she has gathered. ``People shouldn't feel like it's a cover-up.''

Director Lynne Plambeck, who often casts the lone dissenting vote on the board, said she was concerned about the length of the investigation and the lack of active involvement by the District Attorney's Office.

``I know they want to have enough to go to the D.A. with,'' Plambeck said. ``But sometimes there just isn't a smoking gun.''

As much as $1.5 million may have been misappropriated, Dore said. That figure includes SCV Construction's $300,000 contract to pave over a newly installed sewer along Pine Street in Newhall. The company cracked the new manhole covers, forcing the district to hire another contractor to repair the damage at a cost of $1,800, according to the district's finance director, Karin Russell.

After Shollenberger and Maupin's resignations, the district's bank refused to pay $300,000 worth of miscellaneous invoices because of concerns that the money was misspent and the work was substandard. At the bank's request, the district hired an engineer for $50,000 to certify the work and the expenditures, Russell said.

To help unravel the scandal, the NCWD board has retained a new law firm, Los Angeles-based Liebert, Cassidy and Whitmore, and the firm has hired a private investigator to look into the matter.

Demerjian said in-house investigations are typically less comprehensive than law enforcement reviews, and often lead to the loss of evidence.

Board members have interviewed seven people for the general manager position, but have hired none of the candidates. The district is still accepting applications and resumes, Dore said.

Board members and the district's other employees have shouldered the additional workload.

``Our employees have been fabulous and extremely cooperative,'' Dore said.

The upheaval has become an issue in November's board elections. Directors Dore, Valerie Thomas and Richard Unger are seeking re-election.

Joan Dunn is the only challenger to the incumbent directors, and said she decided to run in order to get to the bottom of problems. She and her husband, Ed, have been frequent critics of the agency.

``The district has been rather secretive about all of this,'' Dunn said. ``I am upset that they haven't got a general manager yet.''