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City of Seattle
Ed Murray, Mayor

SUBJECT: City sues to recover funds missing from SPU

3/13/2012  9:00:00 AM
Kimberly Mills  (206) 684-8602

The City of Seattle has asked the King County Superior Court to freeze all assets of the former Seattle Public Utilities engineer who stands criminally accused of embezzling at least $1,090,762.16 from the utility between 2008 and 2010.

Our goal is full financial recovery for ratepayers through swift and aggressive civil remedies," said City Attorney Pete Holmes, who filed the civil complaint against Joseph Phan (aka Chau Quang Phan) and his wife, Tra My Thi Le. "The county prosecutor will address the criminal consequences of Mr. Phan’s conduct."

The complaint filed March 9 accuses Phan of civil fraud, conversion of City funds, breach of fiduciary duty and unjust enrichment.

"We are exhausting all possible means of recovering ratepayer dollars in this case,” said Seattle Public Utilities Director Ray Hoffman. “We really appreciate the efforts of the City Attorney in pursuing all avenues to get our money back."

Phan’s responsibilities at the City included managing water main extension projects for real estate developers and other SPU customers. He was fired in February 2011 for accessing the utility’s billing system and crediting his own utility account.

According to the civil suit, Phan did not arrange for SPU’s accounting department to issue invoices regarding projects that were assigned to him. As a result, SPU’s accounting department was not able to trace funds payable to SPU regarding the projects that Phan managed, and the funds were not included in the reconciliation of SPU’s accounts.

After Seattle police arrested Phan on March 1of this year, the complaint states, Phan admitted using the City funds, which he deposited in a Bank of America account, for personal purchases, including credit card debt, a car and property.

The complaint alleges Phan made the following real property purchases, all in Seattle, with City funds:

• April 2009: undeveloped real estate on SW Charlestown Street at 21st Avenue SW in the couple’s name.

• April 2009: undeveloped real estate north of South Snoqualmie Street on 47th Avenue South in Phan’s name alone.

• January 2010: a single-family house at 6557 20th Ave S. in the couple’s name (now being used as a rental).

• December 2010: undeveloped real estate at 4142 23rd Ave. SW in the couple’s name.

Phan faces 70 counts of first- and second-degree theft filed by King County Prosecutor Dan Satterberg. Approximately $220,000 of the stolen money has been recovered from one bank account. The defendant remains in the King County Jail on $750,000 bail. His criminal arraignment is scheduled for March 19.

City of Seattle v. Joseph Phan, COMPLAINT FOR CIVIL FRAUD

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