Enumclaw, Washington, woman sentenced for criminal scheme to steal flood control tax dollars | USAO-WDWA

Seattle – The wife of the former longtime commissioner of an East King County drainage district was sentenced today in U.S. District Court in Seattle to three years in prison and three years of supervised release for multiple federal crimes related to a scheme to steal tax dollars earmarked for flood control, US Attorney Nick Brown announced. Joann Thomas, 67, was convicted of 15 federal crimes in May 2022: conspiracy; four counts each of wire fraud and mail fraud, two counts of aggravated identity theft and four counts of money laundering. Because the attorney for Allan Thomas, 70, claimed he was unable to adequately represent his client due to illness, Allan Thomas’ sentencing on ten federal felonies was postponed until February 3, 2023.

During the sentencing, US District Judge Richard A. Jones noted that the Thomases engaged in a seven-year fraud scheme, “This was not isolated conduct, it involved regular and continuous requests for funds.” Judge Jones also noted that Joann Thomas had not been telling the truth, “You chose to get on the witness stand and you chose to lie to this court.”

“Allan and Joann Thomas not only defrauded their neighbors by stealing tax dollars, they abused a position of public trust, eroding trust in government,” said U.S. Attorney Nick Brown. “Thomas’ theft caused nearly 700 neighbors in Enumclaw to pay higher property taxes that many could not afford and for which they received no service. Mr Thomas must also be held accountable at his sentencing next month.”

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 drainage maintenance costs for the county so that the county auditor could set and assess the appropriate taxes. 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 AC Services. Over the next six years, Allan Thomas had $413,323 in local taxes paid to AC Services, claiming it was for sewer maintenance. However, Thomas’ son testified that apart from two small jobs carried out in 2012, he has not carried out any drainage works. At trial, a current drainage district commissioner testified that he saw no work done on the canals during that time period and that when he took over as commissioner it was clear that the canal network had seen little maintenance for many years.

Financial records admitted at trial show that during those six years (2012-2017), immediately after tax dollars were deposited into the AC Services account, the money was quickly transferred to other accounts belonging to Thomas or used to pay their expenses for things like grass, mortgage payments or property taxes. More than $68,000 was withdrawn in cash.

Allan and Joann Thomas worked together on the scheme. Both were involved in submitting false documents by mail and wire (mail fraud and wire fraud) and the fraudulently obtained funds were then moved through various bank accounts (money laundering). 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 forgeries. Forgeries constitute Aggravated Identity Theft. These charges carry a mandatory sentence of two years that must be consecutive to any sentence imposed on the other counts.

In 2018, after the couple became aware of an investigation into their conduct, they began funneling tax dollars through another company: City Biz. The couple filed for City Biz to be paid for the drainage maintenance work, and within days of the funds arriving in City Biz’s bank accounts, almost all of the money was transferred directly to Allan Thomas or the Thomases’ dairy farm. Thomases’ friend, who admitted to helping with the City Biz fraud, now also has a federal felony conviction for repeatedly lying to the FBI.

In total, the couple defrauded taxpayers of $468,165. Judge Jones has requested information on the amount of restitution and has scheduled a hearing to determine the amount for early March 2023.

The IRS (IRS:CI) Criminal Investigation and the FBI led the investigation with assistance from the Enumclaw Police Department. The Enumclaw City Attorney began the review of the district’s 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 that the case was appropriate for federal prosecution.

The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Andrew Friedman.