Seattle police arrested Joseph Phan, a city of Bothell project inspector in the utilities department, while on the job Thursday for allegedly diverting funds from his former employer, Seattle Public Utilities, into a private bank account and then using the money for personal expenses, according to a Seattle Police Department report. Phan was fired from his Bothell job following his arrest.

Phan, 44, who is believed to have stolen $1 million over five years time, has not been charged. A Seattle court set his bail for $750,000 on Friday.

The city of Bothell hired Phan last summer and spoke with three Seattle Public Utilities (SPU) references, who said they would rehire him without any reservations, according to Bothell public information officer Joy Johnston. Two of the references were Phan’s direct supervisors and one was someone who worked with him for 10 years.

Phan’s thorough six-month review did not reveal any performance problems, Johnston added.

Det. Keith Savas of the Seattle Police Department Fraud, Forgery and Financial Exploitation Unit worked closely with the SPU Risk and Quality Assurance Division in the investigation.

“SPU was incredibly helpful during the course of the investigation. We knew we had to act quickly in order to recover as much of the stolen monies as possible. Those efforts are an immediate priority and remain active and ongoing,” said Det. Savas in the report. Five SPU employees, including Phan, have been fired since the investigation began, in November 2010, and a sixth suspended.

Over the past year, SPU Director Ray Hoffman said they have enhanced their internal accounting procedures by keeping closer watch on accounts receivable.

“We are committed to protecting every penny of our ratepayers’ money,” Hoffman said of hiring an independent consultant to review SPU’s financial practices. The city of Seattle’s insurance carrier has been notified and SPU will be seeking to recover the missing funds.