Former plumbing official accused of pocketing over $100k in fees

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Jay Arnold, the former utility services administrator at S&WB, was this week charged with embezzlement by a government official.

NEW ORLEANS — Federal prosecutors have charged the former top New Orleans sanitation official with stealing over $100,000 in permit fees that should have gone to the Sewerage & Water Board.

Jay Arnold, the former utility services administrator at S&WB, was this week charged with embezzlement by a government official. He was indicted by evidence rather than a grand jury indictment, which usually means a defendant is cooperating and planning to plead guilty.

But Arnold’s attorney, Brian Capitelli, said he was “unable to comment at this time.”

For more than a decade, Arnold, a Harahan resident, ran the City of New Orleans Sanitary Inspection and Permitting Department in a fiefdom. It was the only building permit office housed at the Sewerage & Water Board rather than at City Hall. And Arnold was responsible for all city sanitation inspections, though he hasn’t had a license to inspect in Louisiana since at least 2016.

But Arnold was suspended in November 2021 after WWL-TV reported that he and one of the inspectors at his office had engaged in a web of self-negotiation with plumbers in the area to issue permits and inspect each other’s work.

The morning after WWL-TV reported, the FBI searched Arnold’s office at the S&WB and confiscated all outstanding plumbing permits and inspection records, which at the time existed only on paper and index cards.

At this point, there was no computerized record in the S&WB Sanitary Department, not even a database of what records existed. This appeared to help Arnold keep his alleged arrangement with plumbers a secret.

“Arnold would direct Plumber to make him payments for the fees required to obtain plumbing permits,” prosecutors allege. “Arnold would keep the payments for his personal use and then have S&WB issue the permits without S&WB receiving the required fees.”

The US Attorney’s Office alleges that Arnold made fee payments of $108,290 between 2012 and 2021.

The Louisiana State Licensing Board for Contractors, which investigates alleged license violations by Arnold and other contractors, sent a letter in January 2021 saying that Arnold’s plumbing department was “hindering” its investigators’ efforts to root out fraud.

Brad Hassert, head of the State Licensing Board’s investigative division, told WWL-TV in December 2021 that his investigators were repeatedly denied access to public records in Arnold’s office.

“We couldn’t access anything,” he said. “We have been told to make public record requests regarding this.”

He said the state had been telling local officials for years that the handwritten plumbing records made it harder to prevent fraud.

“It’s 2021 and the permit applications, inspections, etc. are all stored in an index card system that we’ve never been able to get any documents from,” Hassert said.

S&WB chief executive Ghassan Korban commended WWL-TV’s coverage for revealing the extent of the issues that led to Arnold’s resignation in February 2022.

In a statement Thursday, Korban said, “The Sewerage & Water Board has fully cooperated with a federal investigation and we trust that justice will be served.”

S&WB said the WWL-TV story also prompted them to revise the policy “to prohibit work on inspections of utility services or connections of any kind within Orleans Parish.” The agency also signed an agreement with the city late last year to shift the process of applying for and improving plumbing permits under City Hall’s OneStop permitting system.

The city has said it will unveil the new consolidated permitting and inspection system late next month.

In December 2021, while Arnold ran the sanitation department, Korban said no one told him state investigators had such problems.

As WWL-TV reported in 2022, someone also used Arnold’s online city permit account to illegally change the name of dozens of his gas permits, as well as some of his expired licenses, after his suspension.

The unauthorized changes to the city’s records caused headaches for some homeowners who were awaiting important gas work on their home construction or repair projects.

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https://www.wwltv.com/article/news/investigations/david-hammer/fbi-raid-embezzlement-charge-former-swb-plumbing-official/289-2d076deb-0748-4508-9c74-0acc982922e3