SANTA ANA – Placentia’s finance services manager was charged Thursday with embezzling $4.3 million from the financially fragile city.

Michael Minh Nguyen, 34, of Irvine faces 17 felony counts of misappropriation of public funds and is being held in the Orange County Jail in lieu of $4.3 million bail.

Nguyen, the No. 2 in the city’s Finance Department, had access to city accounts and kept Placentia’s financial ledgers.

“He was fully responsible for all wire transfers and was also the point of contact for the banks to verify the wire transfers, so it was like the fox guarding the henhouse,” said Orange County Deputy District Attorney Marc Labreche.

Nguyen appeared briefly Thursday in Orange County Superior Court, telling the judge he did not have money to pay for an attorney. He will be represented by the Public Defender’s Office.

Nguyen was placed on administrative leave Tuesday, arrested Wednesday night and fired Thursday morning, officials said.

ALLEGED CRIME

From April 22, 2015, to April 12, 2016, Nguyen is accused of making 17 wire transfers from a Placentia account to several accounts belonging to him and others.

Prosecutors allege he wired more than $300,000 to a personal account on Monday. The next day, he is suspected of wiring another $1.5 million. Nguyen is accused of trying to conceal the embezzlement by altering the city’s financial ledgers.

Placentia officials learned of the alleged embezzlement on Tuesday, when the FBI alerted them to suspicious transfers from city accounts, Labreche said. The transfers on Monday and Tuesday totaled $1.85 million, authorities said.

The District Attorney’s Office is trying to determine if money was mishandled prior to April 2015 and whether anyone else was involved, Labreche said.

With the FBI’s help, Tuesday’s $1.5 million transfer was frozen and the money returned to Placentia. A forensic auditor will be hired to conduct a comprehensive review of the city’s internal controls, officials said.

That leaves $2.8 million outstanding.

“Our focus is to make sure we can recover the missing funds and that’s the next step of the investigation,” said City Administrator Damien Arrula. “We are working towards recovery.”

Arrula said the funds appear to have been taken from investment accounts, and the embezzling would have been noticed by others if statements weren’t doctored. The city’s auditor wasn’t able to detect problems.

“We just had a clean audit,” Arrula said. “Anything can happen in any organization where an employee has a lot of authority.”

BIG SURPRISE

The allegations against Nguyen stunned those who worked with him.

“I was flabbergasted when I heard the name,” Councilwoman Connie Underhill said. “He is a nice young man. It’s kind of like, who would have thought?”

Nguyen married in 2012, has a young child and was widely liked, colleagues said. A graduate of Valencia High School, he earned a B.A. in business administration from Cal State Fullerton in 2005 and joined Placentia as a senior accountant in 2008.

He did well. Two years later, he was promoted to finance-services manager, and in April 2014, he was named the city’s employee of the quarter.

“Mike has done an excellent job in serving Placentia, assisting with strong leadership and professional contributions in managing the city’s financial resources,” said the city’s internal newsletter announcing the award. “Mr. Nguyen has gained significant experience and consistently demonstrated high levels of proficiency over the last six-plus years of performing in all operational areas within the Finance Department.”

Nguyen earned $101,521 a year, according to state data.

He served as Placentia’s interim finance director when his former boss departed for another job.

“His countless efforts during this transitional period were critical to the city and helped ensure that the Finance Department’s operations were maintained at the highest level,” the newsletter said. “Mike’s efforts and continued contributions have made him a tremendous asset to this agency.”

Councilman Scott Nelson said he felt blindsided.

“For the past year, I’ve had two city treasurers get up every other meeting and tell me how good our cash situation is, tell us everything is OK,” Nelson said. “They work directly with the Finance Department. This is tremendously disappointing, especially for the taxpayers of Placentia.”

Prosecutors declined to discuss possible motives. But colleagues said Nguyen’s late father had financial difficulties.

If convicted, Nguyen faces a maximum sentence of 29 years in state prison and a fine of $8.6 million.

MONEY TROUBLES

For years, the city of Placentia has teetered on the edge of fiscal disaster.

In 2000, Placentia created OnTrac to orchestrate a multimillion-dollar push to relieve traffic clogs at 11 rail crossings and silence dead-of-night train whistles. OnTrac was supposed to be a regional project to sink five miles of tracks into a trench, but OnTrac had trouble persuading its neighbors to join.

In the end, OnTrac sucked down $54.4 million, forced Placentia to borrow heavily, and resulted in conflict-of-interest charges for several former city officials.

The Great Recession, which led to slumping sales-tax revenues and flat property-tax revenues, hurt, too.

Before OnTrac’s troubles, the city had $13 million in reserves but that had virtually disappeared, an official told the Register in December.

Property was sold and employees laid off. Even so, the city is projecting a $6.1 million deficit for 2017-18 – which means that Placentia needs to raise that total per year just to keep services at current, scaled-back levels. Officials are considering proposing a sales-tax hike.

Contact the writer: 714-796-7767 or sschwebke@ocregister.com Twitter: @thechalkoutline