City Recovers $1 Million Stolen by Employee - $500,000 from Insurance Payoff

Joe Phan is the Seattle Public Utilities worker whose cool, methodical embezzlement of more than $1 million in City Hall bank checks went undetected for five years – a seemingly perfect crime done without computers by a man who drew no one’s suspicion until a supervisor happen to notice he was cheating on his comparatively paltry monthly utility bill. That broken twig lead to an ever-widening trail of good, old-style thievery on a scale never before seen at 4th and James, even back in the old police payoff days.

Starting in 2006, Chau Phan, a Vietnamese immigrant and 20-year city employee who goes by Joe, took the checks written by water hookup customers and one by one and put them in a bank account he made up to look like a joint account with the city (“Joe Phan and the City of Sea,” having needed only his driver’s license to open it). Using a rubber stamp he created, and depositing checks at ATMs to avoid tellers, he stuffed his Bank of America account with 70 stolen checks for amounts from $675 to $217,655, a total of $1,090,762.16. The hookup payment process was off the grid, recorded in Phan’s ledger by hand, without safeguards. Trusting Joe was the only security measure, and he was the bell that never rang. Working alone over the years, the likeable $81,000-a-year city engineer and father of two slowly turned himself into a modest millionaire with three homes and a very happy family.

Today, 15 months after his indictment on 67 counts of first-degree theft and three counts of second-degree theft, Phan, 45, is no longer happy. He is essentially broke. So is his wife, Tra My Le, 39, who speaks Vietnamese and must have an interpreter in court. She works in a bakery and the $2,000 a month she makes barely covers her expenses. She took their two children, daughters age 11 and 6, and left Phan after his arrest in March, 2012. He spent months unable to make $750,000 bail, then was allowed out on daytime work release, cleaning the inside of marine tanks aboard ships. Two months ago, his wife filed for divorce and he agreed to go along with it, as he’s likely headed for prison. A criminal trial is set for September and a civil trial is still on the docket for early 2014.

It was in one sense a marvelous caper, Joe Phan and his rubber stamp taking down City Hall for a big score. It was a clean getaway and a crime unseen, until the supervisor saw that Joe had gotten on the city computer one day and entered a fake $500 payment on his utility account. The department began to take a closer look at his payments, and his work, and maybe Joe didn’t ring any bells but alarms began to go off everywhere.

While the embezzlement has a sad ending for Phan and his family, it turns out the city now has gotten almost every dollar back, says City Attorney Pete Holmes. In hopes of working a deal on his criminal case, Phan has turned over almost everything he owns to taxpayers. The assets include $96,000 from his city retirement account, $43,000 from an educational savings plan, and $20,000 from a life insurance account. Sale of the three homes, due to low equity, netted only $162,000, and the auction of Phan’s car, a used Honda Element, brought $8,900. Though Seattle Police have another $220,000 of Phan’s money, confiscated from his bank account and being held while the criminal trial is pending, the city still came up about a half-million short.

But we’ve learned City Hall carries special insurance with a Zurich company that made the difference. “The policy covers losses to the city for things like this, which happen rarely,” says Holmes spokesperson Kimberely Mills. The Zurich payoff, made a few months ago, comes to almost $541,000 (although it included a $30,000 deductable). Thus, of the $1,090,000 police and prosecutors say Phan stole, $1,060,000 has been recovered. Mills thinks that’s pretty good. On her office wall, she has a copy of the cover of the April 10, 2012 Seattle Weekly which contains the story of Phan’s million-dollar haul. “How about updating your readers?” she asked in a recent e-mail, happily sending along a copy of the recovery breakdown.

So the city and its taxpayers appear to have survived Phan’s rubber stamp heist. As for Phan, he can at least cherish the times he had with the half million dollars he apparently can no longer account for. Questions about that may be answered at the criminal trial, or perhaps the civil trial, which is now being handled by attorneys for the insurance company. They have stepped in for city attorneys in hopes of getting back some that half-mil. But, really, from who? Phan faces 10 years in prison, where an inmate is fortunate to make $1 an hour. If he’s going to pay his tab after his release, Joe Phan is going to have to learn some new skills in prison, or polish his old ones.

 
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