September 26, 2013 at 2:05 PM
Ex-employee pleads guilty to stealing $1.1M from Seattle Public Utilities
A former employee of Seattle Public Utilities (SPU) pleaded guilty this afternoon to 67 counts of theft for stealing more than $1 million from the utility in what is believed to be the largest embezzlement of public funds in modern King County history.
In his plea, Joseph Phan acknowledged his crimes were major economic offenses and and that a judge could sentence him to a longer term than the standard range of 3 1/2 to nearly 5 years in prison. Prosecutors told King County Superior Court Judge John Erlick that they would seek a sentence of 7 1/2 years.
Phan, 46, a project engineer for SPU, was arrested and charged with 70 counts of first-degree theft in March 2012. By that time, he had been fired from the utility.
Prosecutors said Phan diverted checks written to SPU from developers and homeowners for water-main extension projects and water-meter installations into his own private account. They say that in 2006, Phan opened a bank account in his name and that of the city and began depositing those customer payments. By January 2011, the checks totaled almost $1.1 million.
Phan used the money to buy a rental house, a car, other property, and pay off credit cards. Police seized $220,000 from a Phan bank account.
At the time of Phan’s arrest, King County Prosecutor Dan Satterberg said the theft was the largest embezzlement of public funds in modern King County history.
“I don’t know what is more shocking, the sheer greed involved in this scam or the simplicity with which the defendant allegedly perpetrated this fraud,” Satterberg said.
The criminal charges against Phan came after a year of critical audits of the utility’s financial controls and the firing of five employees, including Phan, for improperly accessing and in some cases crediting their own utility accounts.
City records following his arrest showed Phan earned $77,488 in 2010 as a civil engineer. He had worked for the city since 1995 and was promoted to associate engineer in 2000. As part of his job, Phan had access to customer-service accounts so he could research and issue water-availability certifications to property owners and developers, according to the utility.
In 2010, Phan accessed his own residential account and that of a rental property to show payment when none had actually been made.
After Phan was fired, a developer contacted Phan’s manager to ask about the crediting of a previous deposit and provided a copy of the check. Phan’s manager could find no record of the check ever being deposited with the city.
SPU investigators eventually found copies of dozens of checks in Phan’s project files, and police ultimately established that all the checks had been deposited in Phan’s account and not the city of Seattle’s bank account, according to prosecutors.
Phan will be sentenced on Nov. 15.
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