Report details failings at Seattle Public Utilities
Sep 7, 2012, 4:58 PM | Updated: 6:27 pm
The City of Seattle expects to recover more than a million dollars that was allegedly stolen by a former Seattle Public Utilities employee. Meanwhile, a report released by the city auditor Friday details failings that allowed for the embezzlement to occur.
Joseph Phan, 44, was charged with 70 counts of criminal theft in March for what prosecutors called the “largest embezzlement of public funds in modern King County history.”
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.
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.
The funds will be recovered in part through Phan’s assets, including a retirement fund, a home, and a car. In March, King County District Court Judge Carol Schapira granted a request for a temporary restraining order to prevent Phan and his wife, Tra My Thi Le, from disposing of their assets before the city could recover stolen funds.
“We need to show the public that we’re doing everything we can to recover the money that’s been lost,” Seattle Public Utilities Director Ray Hoffman said in March.
A report from the City Auditor’s Office cited lack of segregation of duties, lack of financial oversight, and unauthorized system access as contributing factors to the fraud.
“The findings identified by the auditor and other assessment efforts taken by SPU will go a long way toward improving internal controls,” said Councilwoman Jean Godden, chair of the Libraries, Utilities and Center Committee. “I’m pleased with SPU’s rapid response to the fraud and the steps they have taken to get their financial house in order. I will continue to monitor their progress and ensure that ratepayer dollars are secure.”
Godden said it may take until 2013 for SPU to fix problems that allowed the embezzlement to occur.
