City freezes assets of ex-employee accused of stealing $1M

A judge has granted the city of Seattle’s request to
freeze the assets of an ex-public utilities employee
accused of embezzling more than $1 million.

King County District Court Judge Carol Schapira granted a
request Tuesday for a temporary restraining order to
prevent Joseph Phan and his wife, Tra My Thi Le, from
disposing of their assets before the city can recover
stolen funds.

The complaint, filed by City Attorney Pete Holmes, lists a
rental home and at least three other parcels of Seattle
real estate in Phan’s name.

“At this point, the city does not know where its money
is,” Assistant City Attorney Katrina Kelly told the judge.
“Whatever assets he has at the end of the day […] that
is where we will seek to recover our funds.”

Judge Schapira also granted the city’s request to block
Phan from accessing roughly $116,000 in his pension
account with the Seattle City Employees Retirement System.

The hearing was part of a lawsuit filed Friday in King
County Superior Court that accuses Phan of civil fraud,
conversion of city funds, breach of fiduciary duty, and
unjust enrichment.

Phan, 44, has already been charged with 70 counts of
criminal theft in what prosecutors have called the
“largest embezzlement of public funds in modern King
County history.”

“Our goal is full financial recovery for ratepayers
through swift and aggressive civil remedies,” Pete Holmes
said in a statement. “The county prosecutor will address
the criminal consequences of Mr. Phan’s conduct.”

Phan is accused of stealing $1.1 million from Seattle
Public Utilities between 2008 and 2010. Prosecutors allege
he diverted customer checks for water main extension
projects into a personal bank account as a project
engineer for the utility.

“This defendant both presented the bill to customers and
collected the payment. That’s a recipe for embezzlement,”
said King County Prosecutor Dan Satterberg. “It was a lot
easier than one would expect to steal a million dollars
from the city.”

Seattle Public Utilities Director Ray Hoffman, who was
present at the hearing Tuesday, expressed his
“disappointment” in Phan, who he told KIRO FM was a
“trusted employee.” He said the utility has launched a
“comprehensive review of all of our internal controls over
our financial practices” given the size and magnitude of
the theft.

“I’m mad,” Hoffman said. “We need to show the public that
we’re doing everything we can to recover the money that’s
been lost.”

To date, investigators have seized $220,000 from Phan’s
personal Bank of America account. According to court
documents, Phan was able to open up the account in his own
name and “The City of Sea.” More than 70 checks made
payable to the City of Seattle or to Seattle Public
Utilities were deposited into the account totaling
$1,090,762.16.

“We are working closely with police and prosecutors to
make sure that Mr. Phan retains none of his ill-gotten
gains,” City Attorney Holmes said.

Phan remains in the King County Jail on $750,000 bail. His
criminal arraignment is scheduled for March 19.