Placentia financial manager arrested, accused of embezzling $4.3 million from city

It wasn’t long ago that Michael Nguyen was considered a rising star at Placentia City Hall.

He had been a local hire, a graduate of Valencia High who studied at Cal State Fullerton just down the road.

After two years as a senior accountant with the city, Nguyen was promoted to finance services manager, earning praise for helping to ensure that “operations were maintained at the highest level,” according to a 2014 newsletter distributed by the city administrator at the time.

“Mike’s efforts and continued contributions have made him a tremendous asset to this agency,” read the bulletin, which also announced Nguyen’s selection as Employee of the Quarter.

Now Nguyen, 34, is accused of depositing $4.3 million into accounts for himself and other unnamed recipients — all siphoned from a bedroom community that has been challenged by drastic decreases in sales and property tax revenues and has struggled for years with solvency.

Orange County Deputy Dist. Atty. Marc Labreche said Placentia administrators first noticed something was amiss when federal officials alerted them earlier this week about “inappropriate wire transfers.” By Tuesday evening, city leaders had reached out to the district attorney’s office.

The following day, officials arrested Nguyen at his mother’s home and charged the Irvine resident with 17 felony counts of misappropriation of public funds.

“This is a city already in dire financial straits. This is the last thing they need to happen,” Labreche said, adding that investigators are looking into the possibility of additional stolen funds.

Prosecutors believe the wire transfers began April 22, 2015, and that $2 million was stolen over the last four months. On Monday, Nguyen wired more than $300,000 to a personal account, prosecutors said, and took an additional $1.5 million the next day. With assistance from the FBI Cyber Task Force, officials successfully froze the most recent transfer and returned it to Placentia.

Investigators believe Nguyen tried to hide his actions by altering financial ledgers, according to the district attorney’s office. The city is working with authorities to reclaim the rest of the money.

Nguyen’s arrest shocked colleagues, some of whom have known him since he began in 2008.

“He was somebody that I completely trusted,” said Councilman Chad Wanke, a former city treasurer who had worked closely with Nguyen. “Nobody noticed this — internally and externally. Everything reconciles.”

Placentia, a city of 52,000, has long been plagued with financial and leadership woes.

Plans for a $650-million OnTrac rail project dragged on for years and drained the city’s finances before it was announced a failure. In 2007, Placentia was about $30 million in debt, and the new finance director said the city had been hurt by shoddy bookkeeping. That same year, two of its former city officials were facing felony conflict-of-interest charges.

A 2013 memo from an outside consulting firm said the city had experienced significant budget challenges since at least 2008 and would need to find ways to increase revenues and reduce costs or face serious consequences.

A recent audit predicted that things looked “grim” for the 2016-17 fiscal budget.

On Wednesday, Nguyen was placed on leave and city leaders “locked him out of any financial control,” City Administrator Damien Arrula said. Officials said Nguyen was fired Thursday.

Placentia’s website listed the finance services manager base salary at $94,000.

Six employees remain in the financial services department, according to Arrula, who asked the district attorney’s fraud team to appoint a forensic accountant to work with his staff. The city manager also plans to hire a forensic auditor to help implement more controls.

“This was a fairly dedicated, hardworking employee,” Arrula said of Nguyen. “This can happen to any organization where you have someone that’s very knowledgeable. We want to make sure the public has faith in our ability to catch these things.”

If convicted, Nguyen faces a maximum sentence of 29 years in state prison, plus a fine of $8.6 million, according to the Orange County district attorney’s office. He is being held in lieu of $4.3 million bail — the same amount he is accused of stealing — and is required to prove the money is from a legitimate source before posting bond.

Nguyen has requested a public defender, and he is scheduled to be arraigned May 6.

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