Former City employee arrested for allegedly stealing utility deposits

A former Seattle Public Utilities employee has been arrested, following an investigation by SPU and the Seattle Police Department.

Chau Phan, 44, was fired by SPU a year ago for adjusting his own utilities accounts. He was arrested Thursday for allegedly diverting SPU funds for water main extension projects into a private bank account, and then using the funds for personal expenses.

Phan stole more than $1 million over the course of five years.

SPD was informed by SPU about the case in January 2012. Detective Keith Savas of the SPD Fraud, Forgery and Financial Exploitation Unit worked closely with SPU’s Risk and Quality Assurance Division.

“SPU was incredibly helpful during the course of the investigation. We knew we had to act quickly in order to recover as much of the stolen monies as possible. Those efforts are an immediate priority and remain active and ongoing,” said Detective Savas.

The SPU/SPD probe into the activities for which Phan was arrested Thursday grew out of a separate, ongoing investigation into utility employees who had improperly accessed, and in some cases credited, their own utility accounts. Five SPU employees, including Phan, have been fired since the investigation began, in November 2010, and a sixth suspended.

For more than a year, SPU has been systematically reviewing a decade’s worth of department billing data, looking for irregularities and ways to improve its system.

Late last year, SPU investigators uncovered information that caused them to suspect former employee Phan had diverted SPU funds for water main extension projects into a private bank account. SPU notified the Seattle Police Department, which then began working on the case with SPU investigators.

SPU Director Ray Hoffman said that, over the past year, SPU has taken a number of steps to enhance internal accounting procedures, including the introduction of  more stringent controls on accounts receivable.

SPU is also hiring an independent consultant to work on issues identified during the Phan probe, and to review all of SPU’s financial practices.

“We are committed to protecting every penny of our ratepayers’ money,” Hoffman said.

“The legal process still needs to determine the guilt or innocence of this individual, but obviously this kind of alleged misconduct is unacceptable and reprehensible.”

Hoffman expressed SPU’s appreciation for the Seattle Police Department’s assistance in the case — saying that their work will greatly contribute to the utility’s efforts to obtain restitution.

The City’s insurance carrier has been notified and SPU will be seeking to recover the missing funds.