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

Seattle – The wife of the former long-time 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 felonies connected to a scheme to steal tax dollars intended for flood control, announced U.S. Attorney Nick Brown.  Joann Thomas, 67, was convicted of 15 federal felonies 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,  the sentencing  for Allan Thomas  on ten federal felonies was postponed until February 3, 2023.

At sentencing U.S. District Judge Richard A. Jones noted that the Thomases were involved in a seven-year fraud scheme, “This was not isolated conduct, it involved regular and ongoing requests for funds.” Judge Jones also noted that Joann Thomas had not been truthful saying, “You chose to get on the witness stand and you chose to lie to this court.”

“Allan and Joann Thomas didn’t just defraud their neighbors by stealing tax dollars, they abused a position of public trust, eroding faith in government,” said U.S. Attorney Nick Brown.  “The Thomas’ theft caused some 700 neighbors in Enumclaw to pay higher property taxes, which many can ill afford, and for which they got no services.   Mr. Thomas also needs to 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 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).  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.  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.  Judge Jones has asked for briefing on the amount of restitution and has scheduled a hearing to set the amount in early March 2023.

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.