Enumclaw, Washington man sentenced for criminal scheme to steal flood control tax dollars

Seattle – The former long-time Commissioner of an East King County drainage district was sentenced today in U.S. District Court in Seattle to 30 months in prison and three years of supervised release for multiple federal felonies connected to a scheme to steal tax dollars intended for flood control, announced U.S. Attorney Nick Brown. Allan Thomas, 70, was convicted of conspiracy; four counts each of wire fraud and mail fraud, and one count of aggravated identity theft. At sentencing U.S. District Judge Richard A. Jones noted that Thomas involved his own son in the fraud scheme when he was barely out of high school. “You were a public officer in a position of trust… People trusted you not to enrich yourself,” Judge Jones said. “These funds were ill-gotten gains, they were not earned…. It was a breach of trust.”

“Mr. Thomas and his wife treated taxpayer money as if it was their own,” said U.S. Attorney Nick Brown. “And they repeatedly lied, claiming tax dollars for ditch maintenance work that was never performed. They not only cheated taxpayers out of money, they also increased the risk of damage from flooding due to an overgrown drainage ditch network.”

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 estimated 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 had supposedly done maintenance work on the drainage system.

Thomas’ wife, Joann, was sentenced to three years in prison last month for her role in the scheme. 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 before 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 that little maintenance work was done on the ditch network 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.

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.

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). Joann Thomas forged the signatures of Allan Thomas’ son and a second drainage Commissioner on various records and checks. Allan Thomas was convicted of participating in the forgeries related to the second drainage Commissioner. The forgeries constitute Aggravated Identity Theft. This count carries a mandatory two-year sentence that must run consecutive to any sentence imposed on the other counts of conviction.

In all, the couple defrauded taxpayers of $468,165. Judge Jones has scheduled a hearing to set the amount of restitution in early April 2023.

“Today, Allan Thomas is being held accountable for his lengthy public corruption scheme, which took the majority of the district’s budget for years for his own gain,” said Richard A. Collodi, Special Agent in Charge of the FBI’s Seattle field Office. “Not only did he betray the public’s trust, but he also stole property tax dollars from taxpayers and involved others in the fraud.”

“Mr. Thomas did not do his job in maintaining critical drainage ditches, but he and his wife still fraudulently paid themselves using taxpayer dollars as if he did,” said Special Agent in Charge Bret Kressin, IRS Criminal Investigation (IRS-CI), Seattle Field Office. “And when the couple realized they were being investigated, the Thomases attempted to cover up their fraud. They were quite literally digging themselves deeper into a ditch of lies.”

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.