NEW ORLEANS — Federal prosecutors have charged New Orleans’ former top plumbing official for stealing over $100,000 in permitting fees that should have gone to the Sewerage & Water Board.
Jay Arnold, the former utility services administrator at the S&WB, was charged this week with embezzlement by a government agent. He was charged through a bill of information rather than a grand jury indictment, which typically means a defendant is cooperating and plans to plead guilty.
But Arnold’s attorney, Brian Capitelli, said he was “not in a position to give a statement at this time.”
For more than a decade, Arnold, a resident of Harahan, ran the city of New Orleans’ plumbing inspections and permit division like a closed fiefdom. It was the only construction permitting office housed at the Sewerage & Water Board instead of City Hall. And Arnold was in charge of all city plumbing inspections even though he had not been licensed to do inspections in Louisiana since at least 2016.
But Arnold was suspended in November 2021 after WWL-TV reported how he and one of the inspectors in his office had been engaging in a web of self-dealing with area plumbers to issue permits and inspect each other’s work.
The morning after WWL-TV’s report, the FBI raided Arnold’s office at the S&WB and seized all open plumbing permits and inspection records, which then existed only on paper and index cards.
At the time, there was no computerized record-keeping in the S&WB Plumbing Department, not even a database of which records existed. That appeared to help Arnold keep secret his alleged arrangement with plumbers.
“Arnold would instruct plumbers to provide him with payments for the fees required to obtain plumbing permits,” prosecutors allege. “Arnold would keep the payments for his personal use and then cause the S&WB to issue the permits without the S&WB having received the required fees.”
The U.S. Attorney’s Office alleges Arnold pocketed $108,290 in fee payments between 2012 and 2021.
The Louisiana State Licensing Board for Contractors, which has been investigating alleged permit violations by Arnold and other contractors, sent a letter in January 2021 stating that Arnold's Plumbing Department was being "obstructionist" to its investigators’ efforts to root out fraud.
Brad Hassert, head of the State Licensing Board’s Investigations Division, told WWL-TV in December 2021 that his investigators were repeatedly denied access to public records in Arnold’s office.
“We haven't been able to access anything,” he said. “We've been told to submit public records requests for same.”
He said the state had been telling local officials for years that the handwritten plumbing records make it harder to prevent fraud.
“It's 2021 and the permit applications, inspections, etc., are all kept on a file card system that we've never been able to get any documents from,” Hassert said.
S&WB Executive Director Ghassan Korban credited WWL-TV's reporting with exposing the depth of the problems, which led to Arnold's termination in February 2022.
In a statement Thursday, Korban said: "The Sewerage & Water Board fully cooperated with a federal investigation and we trust justice will be served."
The S&WB said the WWL-TV story also caused it to revise policies "to prohibit work on utility service inspections or connections of any kind within Orleans Parish." The agency also signed an agreement with the city late last year to shift the plumbing permit application and improvement process 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, Korban said nobody told him that state investigators were having such problems while Arnold was running the Plumbing Department.
As WWL-TV reported in 2022, someone also used Arnold’s online city permitting account to improperly change the name on dozens of his gas permits after he was suspended, as well as some of his expired licenses.
The unauthorized changes to the city records caused headaches for some homeowners who were waiting for critical gas work on their home construction or repair projects.