Source: United States Department of Justice
Created shell company and submitted false documents to illegally collect more than $465,000 in property tax funds
Seattle – The former long-time Commissioner of an East King County drainage district and his wife were convicted today in U.S. District Court in Seattle of multiple federal felonies connected to their scheme to steal tax dollars intended for flood control, announced U.S. Attorney Nick Brown. In all, Allan Thomas and Joann Thomas were convicted of conspiracy; four counts each of wire fraud and mail fraud, and one count of aggravated identity theft. Joann Thomas was convicted of an additional count of aggravated identity theft and four counts of money laundering. The jury deliberated for about four hours following the eight- day trial. U.S. District Judge Richard A. Jones scheduled sentencing for September 23, 2022.
“Allan and Joann Thomas didn’t just defraud taxpayers, they abused a position of public trust, and repeatedly invented new lies to cover up old ones,” said U.S. Attorney Nick Brown. “I am thankful the jury saw the truth, rejecting the defense attempt to paint the couple as victims of small-town political intrigue.”
According to records in the case and testimony at trial, Allan B. Thomas served as Commissioner for Drainage District 5 and 5A in King County for more than 35 years. As a commissioner, Thomas was involved in estimating the costs of drainage maintenance for the district so that the county auditor could set and assess the appropriate taxes. The Commissioners then authorized payment to service providers who were supposed to do maintenance work on the drainage system.
As early as 2012, Joann Thomas set up a joint bank account with Allan Thomas’ son from a previous marriage. The account was a business account for a company called A C Services. Over the next six years, Allan Thomas had $413,323 of local tax dollars paid to A C Services claiming it was for drainage ditch maintenance. However, Thomas’ son testified that other than two small jobs performed in 2012, he did not perform any drainage ditch work. At trial, a current drainage district commissioner testified that he saw no work done on the ditches during that time period, and that when he took on the commissioner job, it was clear the ditch network had had little maintenance for many years.
Financial records admitted at trial show that over those six years (2012-2017), shortly after the tax dollars were deposited into A C Services’ account, the money was quickly transferred to other accounts belonging to the Thomases or was used to pay their expenses for such things as hay, mortgage payments, or property taxes. More than $68,000 was withdrawn as cash.
Allan and Joann Thomas worked together on the scheme. Both were involved in submitting false documents by mail and wire (the mail fraud and wire fraud counts) and the funds that were fraudulently obtained were then moved through various bank accounts (money laundering). The couple forged the signatures of Allan Thomas’ son and a second drainage commissioner on various records and checks. The forgeries constitute Aggravated Identity Theft. Those counts carry a mandatory two-year sentence that must run consecutive to any sentence imposed on the other counts of conviction.
In 2018, after the couple became aware of an investigation into their conduct, they began funneling the tax dollars through another company: City Biz. The couple submitted warrants for City Biz to be paid for drainage maintenance work and within days of the funds arriving in City Biz bank accounts, nearly all the money was transferred directly to Allan Thomas or the Thomases’ dairy farm. The Thomases’ friend who agreed to help with the City Biz fraud, now also has a federal felony conviction for repeatedly lying to the FBI.
In all, the couple defrauded taxpayers of $468,165.
“Public funds are gathered from our communities for the benefit of all residents. Instead of stewarding these funds for the public’s interest, Mr. and Mrs. Thomas abused Mr. Thomas’ position as an elected official and betrayed the trust of their neighbors and friends by diverting these funds to line their own pockets,” said Special Agent in Charge Bret Kressin, IRS Criminal Investigation (IRS:CI), Seattle Field Office. “IRS:CI will continue to work with our partners in law enforcement and be vigilant in protecting the public from corrupt officials like Mr. Thomas, who think only of their own greed.”
“For years, Commissioner Thomas and his wife chose to betray the public’s trust both by failing to maintain the property under their care and by stealing from the hardworking taxpayers of King County for personal gain. Today’s verdict reinforces that public servants will be held accountable for their actions and to a high ethical standard,” said Donald M. Voiret, Special Agent in Charge of the FBI Seattle Field Office.
The IRS Criminal Investigation (IRS:CI) and the FBI led the investigation with assistance from the Enumclaw Police Department. The Enumclaw City Attorney initiated the review of the district finances. The Washington State Auditor’s Office also conducted an audit of the district in 2019. The King County Prosecuting Attorney’s Office, in consultation with the U.S. Attorney’s Office, determined the case was appropriate for federal prosecution.
The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Andrew Friedman.