PLACENTIA – A top Placentia financial manager accused of embezzling $4.3 million from the cash-strapped city had pledged to pay the equivalent of most of his salary to help his parents, who were in bankruptcy proceedings, according to federal court records.
The records begin to fill in a picture of the personal finances and pressures on Michael Minh Nguyen, who prosecutors allege made 17 illegal wire transfers of city funds from April of last year to this month to several accounts belonging to him and others.
Nguyen declined to talk about the charges Monday during a brief interview at the Central Men’s Jail, but said his family’s support is helping him.
“I talk to my family daily,” Nguyen, wearing orange jail-issued clothing in addition to glasses with black frames, politely said.
City officials say they still are trying to recover missing funds, and prosecutors have not publicly indicated possible motives or how the city money ultimately was used.
Bankruptcy records show Nguyen, 34, an Irvine resident, pledged last year in a letter to a U.S. court to contribute $4,328 monthly in rent to his father, Van Minh Nguyen, who is now deceased, and his mother, Hong Thi Vuong.
He submitted two pay stubs indicating he earned close to $100,000 annually at the time and took home about $6,200 monthly, records show.
The parents filed for Chapter 13 bankruptcy protection in January 2015, listing debts of nearly $700,000 and assets of just more than $500,000, almost entirely from an Anaheim home.
Rabin J. Pournazarian, an Encino attorney handling the bankruptcy case for the parents, could not be reached for comment regarding whether Michael Minh Nguyen made any payments.
Orange County Public Defender Stacy Kelly, who is representing Michael Minh Nguyen, could not be reached for comment.
Susan Kang Schroeder, chief of staff for the Orange County District Attorney’s Office, said the amount suspected to have been stolen is believed to be more than the $4.3 million initially uncovered by investigators. She declined to elaborate.
So far, about $1.5 million has been recovered by authorities.
Prosecutors have said motive is not an element and is not part of the case.
Michael Minh Nguyen has been charged with 17 felony counts of misappropriating public funds and remains in custody in lieu of $4.3 million bail. He was fired from his job with the city of Placentia.
Gary Caporicci, a forensic auditor from Santa Ana, said authorities are probably less interested in reasons why the theft may have occurred and are concentrating more on where it is and how they can get it back.
In most cases of public corruption, by the time the fraud is discovered, the money is already spent, Caporicci said.
“That money is gone. He gave it to people who used it,” he said. “Maybe his parents’ bankruptcy hurt him so bad he had to give it to them.”
Caporicci, who sits on Orange County’s auditing committee, recommended all municipalities double-check their wire transfers to make sure they don’t get cheated. He said the county auditing committee is likely to review the case when it meets June 2.
“You don’t think this is going to be talked about? Oh, boy,” Caporicci said.
Placentia officials say they believe Michael Minh Nguyen bypassed accounting safeguards and manipulated computer software to alter bank ledgers to keep city officials and auditors from noticing that he had wired money from the municipality to himself and others.
LSL CPAs, based in Brea, conducted an audit for Placentia for July 1, 2014, to June 30, 2015, and identified “several material weaknesses, significant deficiencies in internal controls and instances of noncompliance,” said Rich Kikuchi, a managing partner for the company.
“It was not a clean audit,” he said. “We are not currently privileged with information regarding the investigation, so it is unclear whether the breakdown occurred internally at City Hall or externally with the financial institution.”
City Administrator Damien Arrula, however, said in a statement Wednesday, “Despite some minor deficiencies unrelated to wire transfers, an independent, outside auditing firm recently reviewed the city’s accounts and issued an unmodified clean opinion.”
He said, “This unmodified clean opinion was presented and issued by LSL” at the Feb. 16, 2016, City Council meeting, and the final audit report was approved by the City Council during the March 1 meeting.
He reiterated that the city has hired a forensic auditing firm to identify where the breach of wire transfers occurred and to strengthen the city’s financial controls.
During a raucous Placentia City Council meeting Tuesday night, several residents demanded the resignations of Arrula and several City Council members because of the alleged embezzlement.
No officials have quit their jobs.
Michael Minh Nguyen, who rose quickly during his eight years as a city employee for Placentia, is married and has an infant son.
Last month, City Councilwoman Connie Underhill was at City Hall when Michael Minh Nguyen’s wife, accompanied by their son, brought in chocolate-covered strawberries to celebrate her husband’s birthday.
“They just seemed liked a normal family,” she said.
Following graduation from Valencia High School in 2000, Michael Minh Nguyen earned a bachelor’s degree in business administration at Cal State Fullerton in 2005.
He joined Placentia as a senior accountant in 2008 and two years later was promoted to finance-services manager. In April 2014, he was named the city’s employee of the quarter.
Staff writers Kelly Puente, Tony Saavedra and
Denisse Salazar contributed to this report.
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