Placentia finance manager arrested on suspicion of embezzling $4.3 million – OCRegister

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SANTA ANA – Placentia’s finance manager was arrested Wednesday night on suspicion of embezzling $4.3 million from the financially fragile city, the Orange County District Attorney’s Office said Thursday.

Michael Minh Nguyen, 34, Irvine, was charged with 17 felony counts of misappropriation of public funds.

Nguyen was being held in Orange County Jail on $4.3 million bail, and appeared briefly Thursday morning in Orange County Superior Court. He told the judge he did not have money to pay for an attorney; he will be appointed a public defender.

Hired in April 2008 as the financial-services manager, Nguyen had access to city accounts and kept its financial ledgers.

“He was fully responsible for all wire transfers and was also the point-of-contact for the banks to verify the wire transfers, so it was like the fox guarding the hen-house,” Deputy District Attorney Marc Labreche said.

Nguyen has been fired from his job, city officials said.

Between April 22, 2015, and April 12, 2016, Nguyen is accused of making 17 wire transfers from a Placentia account to several accounts belonging to him and others.

On Monday, prosecutors said, he wired more than $300,000 to a personal account. The next day, he is suspected of wiring another $1.5 million. Nguyen is accused of concealing the embezzlement by altering the city’s financial ledgers.

The city became aware of the alleged embezzlement on Tuesday, when the FBI alerted officials of suspicious transfers from city accounts, Labreche said. The transfers on Monday and Tuesday totaled $1.85 million.

To avoid any potential conflicts of interest, Placentia officials asked the District Attorney’s Office to investigate on the part of the city’s Police Department. That investigation is ongoing, Labreche said, and trying to determine whether money was mishandled prior to April 2015 and if anyone else was involved.

A forensic auditor will be hired to conduct a comprehensive review of the city’s internal controls, officials said.

With the FBI’s help, Tuesday’s $1.5 million transfer was frozen and the money returned to Placentia, prosecutors said.

“This alleged embezzlement and theft of public funds is an affront to the people of Placentia and to our hard-working employees,” City Administrator Damien Arrula said in a statement. “Placentia will not tolerate any misconduct by any city employee to ensure the highest level of standards are being followed.”

The allegations against Nguyen stunned those who worked with him.

“I was flabbergasted when I heard the name,” Councilwoman Connie Underhill said. “He is a nice young man. It’s kind of like, who would have thought?”

Colleagues who’ve worked with Nguyen said he was a pleasant man who recently married and has a young child. His father died late last year.

Councilman Scott Nelson was similarly shocked.

“For the past year, I’ve had two city treasurers get up every other meeting and tell me how good our cash situation is, tell us everything is OK,” Nelson said. “They work directly with the Finance Department. This is tremendously disappointing, especially for the taxpayers of Placentia.”

Placentia has been financially teetering on the edge of fiscal disaster for years.

In 2000, Placentia created OnTrac to orchestrate a multimillion-dollar push to relieve traffic clogs at 11 rail crossings and silence dead-of-night train whistles. OnTrac was supposed to be a regional project to sink five miles of tracks into a trench, but OnTrac had trouble persuading its neighbors to join.

In the end, OnTrac sucked down $54.4 million, forced Placentia to borrow heavily, and resulted in conflict-of-interest charges for several former city officials. OnTrac was eliminated in 2006, but its scars remain.

Before OnTrac’s troubles, the city had $13 million in reserves but that had virtually disappeared, an official told the Register in December.

The Great Recession, which led to slumping sales-tax revenues and flat property-tax revenues, hit.

Property was sold and employees laid off. Even so, the city is projecting a $6.1 million deficit for 2017-18 – which means that Placentia needs to raise an extra $6 million per year just to keep services at current, scaled-back levels. Officials are considering proposing a sales-tax hike.

If convicted, Nguyen faces a maximum sentence of 29 years in state prison and a fine of $8.6 million.

Anyone with information about this case is encouraged to contact Supervising District Attorney Investigator Damon Tucker at 714-648-3667.

Staff Writer Denisse Salazar contributed to this report.

Contact the writer: 714-796-7767 Twitter: 2thechalkoutline

Placentia finance manager arrested on suspicion of embezzling $4.3 million – OCRegister}