Flint investigator says greed and fraud led to drinking water crisis

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.

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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.