AG took 2 years to charge NDOT workers in Las Vegas theft ring
A pattern of suspicious tire purchases by the state Department of Transportation helped investigators uncover at least $35,000 in theft — and the possibility of hundreds of thousands of dollars in additional taxpayer losses.
The results of the 2014 investigation were so well-known within the department that workers dubbed it “Tiregate” because the employees suspected in the theft had resigned or been fired but not prosecuted, according to half a dozen current and former workers.
But the attorney general’s office finally filed criminal charges against the former workers in December — two months after the Las Vegas Review-Journal requested case documents and more than two years after investigators discovered the theft.
District engineer Mary Martini, head of the Las Vegas office where the thefts were alleged to have occurred, said transportation officials for months had been asking the attorney general for updates on the case.
“I don’t know all the reasons,” she said when asked why the attorney general waited until December to file the charges. “That decision-making really lies with the AG’s office.”
Nicholas Trutanich, Attorney General Adam Laxalt’s chief of staff, said Friday morning that the charges were filed when they were ready.
“It’s a complex public integrity case involving alleged fraud by employees,” he said. “The criminal conduct was concealed and we needed to do a complete investigation of the charges.”
Trutanich said Laxalt’s office has been aggressive in prosecuting criminal cases, reducing the backlog of untested rape kits, preventing elder guardianship abuse and fighting the opioid epidemic.
The office declined to comment Thursday because of pending arrests, but as of Friday afternoon investigators arrested six of the men and Steve Deno Pappas agreed to turn himself in, authorities said.
The workers at the Las Vegas facility charged items with their state procurement cards and then changed work orders to justify the use of the tires, audit and court records show. The defendants were charged with embezzlement, fraud, theft and possession of stolen property. Investigators tracked the missing tires to a storage unit, but a subsequent search found that all of the equipment had disappeared, Martini said.
All the defendants, with the exception of Virgilio Homero Quezada, were Department of Transportation employees who resigned before the investigation was completed. David Liam DiNicola, alleged by Martini to be the ringleader, was fired in September 2015, records show.
The Review-Journal did not contact the defendants named in the case because authorities have yet to make any arrests.
Quicker prosecutions
In a similar case, it took the attorney general’s office about six months to file charges against a Department of Transportation worker who stole more than $250,000 from a Northern Nevada facility in Fallon, the criminal complaint and emails show.
Transportation supply clerk Tal Pierre Smith pleaded guilty and was sentenced to up to four years in prison, according to an attorney general’s news release.
State workers started reporting suspicious purchases in October 2013, and then-Attorney General Catherine Cortez Masto filed the charges in April 2014.
“We have been losing more money out the back door than we have been using in the front door,” Gary Erskine, a supervisor in Fallon, wrote in an email to his supervisor.
The Smith case helped auditors find flaws in the Department of Transportation’s purchasing system and led state officials to the “Tiregate” thefts, Martini said. State officials have since improved computer security and oversight to prevent theft, she said.
Thefts disputed
The defendants in the Las Vegas case put in orders for new truck tires even though existing tires had low mileage, according to documents. One truck logged fewer than 11,000 miles, but work orders show the vehicle required 34 new tires. To cover their tracks, the defendants used passwords for employees who were out sick, records allege.
The amount of the theft outlined in the criminal charges is likely far smaller than the actual loss because auditors limited their review to a three-year period. Auditors decided against conducting a more extensive review because the large number of purchase orders would have required too much time.
Martini conceded taxpayers could be out hundreds of thousands of dollars.
“It’s not out of the realm of possibility,” she said in phone interview. “We don’t know. We don’t have a ballpark figure.”
DiNicola, in a 2015 email to his union representative, claimed his innocence, saying the computer system was not secure and that paperwork is often incorrect.
“You have no physical proof that any of this was me,” he wrote. “I have been a dedicated, unselfish employee and sacrificed much for DOT for 22 years and have never been suspected of nor have I been a part of any group to obscure the loss of any thing from the department!”
DiNicola received more than $113,000 in pay and benefits during his last full year with the state, records show.
While DiNicola received good job reviews, he tested positive for drugs or alcohol on the job in 1996, records show. Even so, his supervisors promoted him in 2002 and gave him supervisory duties over the other men charged in the case.
Department spokesman Tony Illia said employees who are found to be intoxicated on the job often receive treatment.
“It’s hard to say what happened before I was here,” he said. “What I can tell you is everyone deserves a second chance.”
Contact Arthur Kane at akane@reviewjournal.com. Follow @ArthurMKane on Twitter.
Nevada Department of Transportation criminal complaint by Las Vegas Review-Journal on Scribd
The Nevada Attorney General charged former state employees with felony embezzlement and theft in December.
— David Liam DiNicola
— Anthony Vaughn Canada
— Richard Lee Matters
— Dale Alan Wageman
— Steve Deno Pappas
— Benito Santiago-Morena
— Virgilio Homero Quezada
