Lao Center Embezzlement Suspect Has Repaid $19,000, Attorney Says

While maintaining his innocence, the former executive director of a community services agency serving Southeast Asian refugees has paid back $19,000 of the $57,000 he is accused of stealing from the organization, his attorney said Friday.

“He’s not a thief,” attorney Bruce Bridgman said of his client, Kao Thao, 30, who was charged by the state attorney general’s office with misappropriating public funds, embezzlement and grand theft from the Lao Family Community Inc.

Although the state investigation has centered on the alleged embezzlement by Thao, Lao Family Community also has been cited by the Internal Revenue Service for non-payment of payroll taxes.

A lien filed in January by the IRS against the agency, headquartered in Garden Grove, totals $119,256 and remains unsettled, IRS spokeswoman Judith Golden said Friday. Other liens totaling $94,562 were filed and settled in 1988, before Thao’s employment at the community center.

Lao Family Community acting director Gayle Morrison said the IRS lien is “part of our internal investigation we are under right now.”

Thao served as the group’s national director from December, 1988, until his termination in mid-July, a day after the state Department of Education completed a financial review of its child care contract with the center.

“The alleged embezzled funds are not derived from that one funding source,” state Deputy Atty. Gen. James D. Dutton said. He would not elaborate because of the ongoing investigation.

Nhuhao Duong, coordinator for refugee services in Orange County, said the county’s $10,000 contract with the community organization to provide child abuse counseling expired in June and will be reviewed before further funding decisions are made.

Because of the investigation, state education officials also are reviewing the current contract with the community agency, which provides a multicultural learning program for infants in a Huntington Beach facility. The annual contract is for a maximum of $376,262.

The only issue involved in the investigation is the expenditure of funds, not the center’s job performance, the chief monitor for the education department’s child development division said.

“They are providing child development services, and we have no concerns about the services they provide,” said Robert Holcomb, oversight unit manager. “Our reviews have been good.”

State funding makes up about half of the agency’s total annual budget, with other public sources making up the difference, said Morrison, who added that she hoped the center would not lose its financial sources because of the investigation.

“This came as a complete shock to everybody at Lao Family,” she said, “to the board of directors and the entire community, and it’s taking a real toll. It’s like throwing a stone into a small pool, and it just sent out ripples that affect the entire community.”

Garden Grove Police Department Investigator John Enriquez said an unnamed official with the community center requested the investigation in June after becoming suspicious “through their normal checking of their bank statements.”

The Police Department’s findings were turned over to state officials, who also had received reports that checks to buy food for the child care program and to meet payroll were bouncing, investigators said.

While Thao has repaid out of his own pocket some of the funds in question, attorney Bridgman said his client spent the money with the full knowledge of his board of directors on items related to the center, including the payment of delinquent federal taxes.

“I think he (Thao) would say it was in the interest of the Lao community center,” Bridgman said. He added that there are “significant issues” that would dispute whether a crime was committed.

“It’s clear that he cooperated with the authorities,” Thao’s attorney said. “It’s clear that when it became a problem, he took it (the money) back.”

The attorney also said the full amount would be repaid within 30 days.

“The state is going to be reimbursed every red cent,” he added.

Bridgman said he has received letters of support for his client from members of the Southeast Asian community.

“He’s really been a major force in his community doing good,” Bridgman said. “This is very sad for him. He’s broken that this happened.”

Thao, who was released from jail Monday after posting a $50,000 bond, is scheduled for arraignment Wednesday in Orange County Municipal Court.