On Friday, about two years after a pair of mountain water districts turned financial documents over to the District Attorney's Office, authorities arrested Terry Malcom in connection with embezzlement of more than $1 million ("A serious soaking," News, March 12, 2014).
Cascade Metropolitan Water District lost $840,000 to theft from 2004 to 2013, and Arabian Acres Metropolitan District, $206,000 from 2005 to 2013 — periods during which Malcom was managing each district.
Malcom was hired by Cascade first, because an old pal, local attorney and developer P.J. Anderson, was in charge of the district. Anderson has said he didn't know upon Malcom's hiring that Malcom had served time in Nebraska state prison for theft and forgery, and in federal prison for mail and wire fraud stemming from mishandling client funds.
"I considered him to be one of my best friends since our law school days," Anderson says via email upon learning of his arrest. "I would have taken a bullet for him. Just didn't realize he would be holding the gun."
Malcom was arrested on three counts of felony theft and two counts of embezzlement of public property, the DA's Office says via email. According to the El Paso County Sheriff's Office, he was picked up at a two-story home on Treeledge Drive in northeast Colorado Springs. He's being held on $1 million bond.
Anderson has said that Malcom's activities involved numerous banks from which records had to be secured and evaluated by investigators.
The Cascade district has 350 customers, and Arabian Acres about 145. After prior rate increases to cover the embezzlement losses, Arabian Acres saw another increase in January due in part to the embezzlement, Peter Italiano, a consultant who helps manage the district, has said. He could not be reached for comment Monday.
Both districts want to recover their losses, but Anderson has said he wonders if any cash that's available might go toward the $2.7 million in restitution Malcom was ordered to pay by the federal court in Nebraska. (A year ago, federal court records showed he had paid only about $145,800. An updated figure was not immediately available.)
Arabian Acres board secretary Rebecca Seaman says in an email that board members aren't "going to hold their breath on ever receiving anything" in restitution, but adds that the board and property owners are glad he's been arrested and that Malcom "doesn't get to continue living life as if nothing ever happened."
Malcom, whose could not be reached Monday, a year ago told the Indy that "a whole bunch of things will happen over the next couple of months," and that "the whole [story] will change a lot."