WHEN IT WAS ANNOUNCED IN 1998, the criminal case against Waste Management had all the makings of an epic saga. Newspapers reported breathlessly about the big garbage-hauling firm's alleged attempt to destroy a little water outfit that was blocking its efforts to build the nation's largest dump in San Bernardino County, Calif.

Two years later, 12 of the original 23 criminal counts have been thrown out, and the headlines have slowed to a trickle. The dump was quashed by voters four years ago. Still, the damage to Waste Management's reputation has already been done, while a county official and a Waste Management lawyer have also been indicted in the mess.

Why does the case, which will likely go to trial this fall, drag on? In California it's hard to separate water and politics. And when it comes to Cadiz Inc., the $115 million (1999 sales) company that made many of the original allegations against Waste Management, there are few companies that are as deft at political maneuvering.

Cadiz's British-born president and chief executive, Keith Brackpool, is notorious for having parlayed a relationship with Governor Gray Davis into a major policy role on water issues. The fact that these same issues can make or break his publicly held company is apparently of little concern to the governor, who has been the beneficiary of $144,705 in campaign funds from Brackpool and Cadiz since 1998.

This is one well-connected company. Directors include Anthony Coelho, a former California representative and currently general chairman of Al Gore's presidential campaign.

Another beneficiary of Cadiz's generosity is the San Bernardino district attorney's office, which has received $8,100 from Cadiz or its proxies since 1993. Pocket change compared with the money Cadiz has showered on the governor, but enough to get your phone calls returned.

So when county sheriffs stumbled onto a computer sales scam run by an ex-convict in 1996, they became suspicious when Joseph Lauricella, going by the name Tony Bergschneider, squealed that he was also doing dirty work on behalf of Waste Management.

Lauricella bragged that he was carrying out a devious plan intended to drive down the price of Cadiz's stock. Cadiz loudly complained that Waste Management's dump would contaminate Cadiz's 20 million acre-feet of nearby groundwater. By spreading rumors, buying stolen trade secrets from a former Cadiz clerk and committing securities fraud, Waste Management used Lauricella to harass Cadiz into backing off--or so Lauricella claimed.

Lauricella has been singing from prison, where he's serving six years for his role in the bizarre case. As a star witness for Cadiz and the prosecution, Lauricella isn't exactly credible. A convicted drug dealer, he recanted bribery allegations after failing a lie detector test. He's been blackballed as a federal witness and was nailed for trying to entrap his own lawyer on drug charges. Now, Lauricella claims he was forced to lie by the prosecutors, alleging they threatened his family.

"He's the most incredible witness I've ever met," roars Waste Management's lead attorney, Robert Bonner, a former U.S. attorney and federal judge. "An unmitigated liar." While there's no denying that Waste Management hired Lauricella as a "consultant," the dispute is about whether he was doing the dirty tricks on his own.

So why does the prosecution persist with the case, for which they created a special unit, and which has cost Cadiz over $5 million fighting Waste Management in civil court?

"This is a political prosecution based on Cadiz's connections with the DA," snarls John Newell, another defense lawyer. Newell admits that Waste Management used "corporate hardball" tactics in the dispute over the proposed dump--such as attacking the viability of Cadiz's water scheme. But he denies that his client did anything illegal, like instigating securities fraud.

Newell cites such oddities as Cadiz's payment of $40,000 to Lauricella for what Cadiz now claims were copying fees, but which Brackpool once testified were payments to help pay Lauricella's legal fees and acquire a police report. In other instances Cadiz's law firm gave meal money to Lauricella, which Cadiz claims was going to be reimbursed. It hasn't been. At other times the prosecution tapped Cadiz employees and consultants for research assistance.

Counters Cadiz attorney Crystal Lautrup: "They're not looking at the actual case; they're looking at the prosecution. First they go after Lauricella. Once they finish with him, they claim we're colluding with the prosecutors. But they don't dispute what they've done. They admit it every time they go into the courtroom and say, 'Hardball is not a crime.'" But Lautrup doesn't deny that Cadiz helps the prosecution. "They [the investigators] have limited resources. We help with the case whenever we're asked because we are the victims." Ironically, the case may amount to an exercise in futility for Cadiz. A recent report from the U.S. Geological Survey poured cold water on the company's scheme to store water under its land. At a recent $7.25 Cadiz shares are worth scarcely half what they were two years ago.