Valley Electric board in Pahrump denies financial cover-up

Valley Electric Association’s board members are denying allegations of a financial cover-up and are accusing the Nye County Sheriff’s Office of acting unlawfully during a search of the cooperative’s offices Friday morning.

The officers at the Pahrump utility were looking to find evidence that former CEO Tom Husted had used cooperative money as hush money for a sexual harassment cover-up, leading to rate hikes for members, according to the search warrant.

“We would like to express our outrage at the unnecessary and likely unlawful search,” the Valley Electric board of directors said in a statement Monday. “We believe the heavy-handed manner in which the search was conducted violated Nevada law, as well as the constitutional rights of those detained.”

The sheriff’s office disputed these claims in a Facebook video released Monday night, and said statements from Valley Electric were “riddled with dishonest statements.”

Denying allegations

Valley Electric board members disputed the allegation in the search warrant that rate hikes stemmed from a cover-up and said rates were raised to offset increasing costs to operate the utility, not for hush money to cover sexual harassment allegations.

The company did not provide comment on the sexual harassment allegations.

Michael Hengel, Valley Electric’s executive vice president of communications and regulatory affairs, said in email questions involving sexual harassment allegations involve “an internal personnel matter, and as much as VEA would like to clear the air, we cannot comment on such issues.”

Hengel is a former editor in chief of the Las Vegas Review-Journal.

The board’s statement emphasized that the board of directors had accounting firm Hunton Burdick look at its financial activities from Jan. 1, 2016, through July 31, 2018, and the firm found “no significant transactions lacking supporting documentation, or of an unidentifiable nature.”

A representative of Hunton Burdick declined to comment.

The Nye County Sheriff’s Office said it was aware of the forensic audit and is investigating financial handlings that are not included in the report, such as whether Husted was receiving his salary months after leaving in May 2018.

‘Unprofessional manner’

According to the statement from Valley Electric’s board of directors, they had no knowledge of the allegations laid out in the search warrant and argued that “much of the contents” of the search warrant were “withheld” for “more than five hours after the search began.”

The Nye County Sheriff’s Office showed video of board members and CEO Angela Evans reviewing the the search warrant.

The company’s board also said deputies closed Valley Electric’s main office for two hours while searching through cellphones, personnel and financial files and more.

“Important member services were needlessly disrupted, and members were unnecessarily inconvenienced,” the board said.

The sheriff’s department said the administration office reopened less than an hour after it arrived on the premise, with a number of employees returning to work.

Evans, along with staff in human resources, finance and IT, were kept separated from the computer network “to ensure evidence was not destroyed.”

Right to search

Local attorney Aviva Gordon said none of the actions depicted in the statement seemed to break Nevada law.

“There’s not enough there for me to say conclusively that there was something inappropriate that was done,” she said.

Gordon said it’s common for officers to keep people away from access to records, files and communication tools like computers during searches so they “can’t access or destroy or alter the things they’re searching for.”

“While it may have been frightening and uncomfortable, that doesn’t necessarily mean they have a right to counsel,” she said.

Local attorney Vincent Savarese III disagreed and said he would be “very comfortable” challenging the lawfulness of the search because the affidavit did not establish probable cause to search the business.

“It is not appropriate, in my opinion, to hold all of these people up on the basis of rumors and the conclusions of the police,” he said. “If I were the judge, I would deny this search warrant application.”

Ongoing investigations

The board accused the sheriff’s department of having a “media-obsessed environment” that led to the search warrant.

“It was no surprise to us to learn at the end of the day Friday that no current VEA employee is under investigation,” the board said. “This was at heart a publicity stunt instigated by a small group that is spreading a false narrative about the motives and actions of our cooperative.”

Nye County Sherriff Lt. David Boruchowitz said Valley Electric’s CEO, the board of directors, as well as human resources and finance staff are under investigation.

“The name-calling characterization by the board against the sheriff’s office in this release is a response that the sheriff and her staff are used to seeing from individuals who are the subject of a criminal investigation,” the sheriff’s office said.

The board accused Sheriff Sharon Wehrly of being personally responsible for the search, and said Valley Electric intends to pursue all legal options.

“We feel like the way the search was conducted was not proper, and so we’re going to pursue all options that we have,” Hengel said.

The sheriff’s office said Nye County investigators are combing through “copious amounts of evidence” to see if there is probable cause for any arrests.

“When probable cause is established the sheriff’s office staff will appropriate arrest those implicated in the crime,” the sheriff’s office statement said.

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.