As the 19-month-old case of ex-city utilities worker Joe Phan winds down

As the 19-month-old case of ex-city utilities worker Joe Phan winds down toward sentencing next month for his $1.1 million heist of City Hall funds, Seattle Public Utilities officials are concluding an investigation into the misuse of SPU’s accounting system by other employees.

Department sources say as many as a dozen City Hall workers were found to have improperly used SPU’s computer billing system to post false water, sewer, and garbage payments or to adjust charges on their own accounts. SPU spokesperson Andy Ryan says final figures are still being firmed up. “But we’ve actually gone back through 10 years of records, meticulously searching for evidence of other people misusing the system.” Some employees have already been fired and a number of others face internal discipline, he said.

Five SPU employees were fired in 2011 after the department first discovered they were misusing the system to post false payments, waive late fees, and create extended payment plans for themselves and others. Since then, at least two other SPU employees have been disciplined for billing improprieties, according to records of the Seattle Ethics and Elections Commission. One agreed to pay a $500 fine last November. The other agreed two weeks ago to a $900 fine.

(A third SPU worker was assessed a $1,000 fine for an unrelated cause—using city facilities to run her family’s business; similarly, a City Light worker was fined $500 for selling Avon products from her city desk and sending or receiving 1,800 city e-mails with the word Avon in them).

SEEC executive director Wayne Barnett says that, altogether since 2011, nine SPU employees have been disciplined and fined for bill tampering. All worked in SPU’s Customer Service Center. Three were fined $1,500, and one—a supervisor who made changes to her account and her parents’ account as well—was fined $2,000, says Barnett.

An employee fired in the 2011 actions tells us that “What’s different about this current crop is they are being spared their jobs and merely suspended.” Says SPU’s Ryan: “Several employees have been fired, and a couple others face internal discipline. One of the people that Ethics fined, we fired.”

Ryan couldn’t say whether the utility had conclusively solved its computer and accounting security issues. “We’re working to make lots and lots of changes to our internal control system that, we hope, will make it much more difficult for this sort of thing to happen again,” he said.

False utility payments proved to be Phan’s downfall, although the bill-fixing fortuitously led to the discovery of his astonishingly larger theft. The $81,000-a-year water hook-up engineer had become a rich man through his SPU embezzlement plot, yet in 2011 greedily entered two phony $500 utility computer payments on two of the three homes he owned. Confronted about that, Phan lied to his superiors, and was fired.

Going through his ledgers and receipts later, however, the department stumbled across Phan’s million-dollar caper, in which he’d diverted customer water hook-up checks into his own personal account. He was trusted to accept the City of Seattle checks at construction sites or through the mail, then send them along to accounting. Some he did; others he kept.

At one point, he was stealing hook-up payments at the rate of $360,000 a year, depositing most checks without question through a Bank of America ATM machine into an account the bank had allowed him to name “City of Sea.”

Phan, 46, who is also going through a divorce and has been in jail on work release since April, faces anywhere from four to eight years in prison when he is sentenced on November 15. The city has recovered the $1 million through the $500,000 sale of Phan’s properties and a $500,000 insurance payoff. The insurance company is now attempting to collect their half-million from the penniless Phan. E

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